Founder Series: Neil Mitchinson – Owner & Director Edinburgh Asset Finance

Neil Mitchinson
Neil Mitchinson

What does your company do?

Edinburgh Asset Finance provides short term loans secured by high value assets such as watches, pictures, jewellery and vehicles. We store these assets securely in our own warehouse or vaults until the loan, plus a modest element of interest, has been paid. We sell unredeemed items, but these represent less than 5 per cent of the assets we take in. We do all of this promptly and with total discretion.

The big advantages of borrowing money in this way are that we can normally have a loan in place in a very short time period, we have no need to conduct any lengthy affordability assessments and the process has no impact on an individual’s credit rating.

People are often surprised to learn that we return money to them if we are obliged to sell off an unredeemed item. We lend around 60 per cent of the asset’s re-saleable value, so there’s usually a surplus after we have deducted our loan and interest.

We over-insure all the assets on which we lend so should anything go wrong, and it hasn’t happened so far, both we and our customers would be fully covered.

Our operation is straightforward and transparent and regulated by the Financial Conduct Authority which reviews our business annually. 

What do you do there / what is your role?

Owner and Director

What was the aha moment that led to the company founding?

I spotted a gap in the market. When I was building up a previous enterprise, an online furniture business, I found that cash flow within the business was extremely tight at certain times as we had to pay up-front to buy stock before we could sell it – sometimes months down the line. If I was having this problem, I supposed, then so might many other business owners.

My father, a very successful self-employed man who has built up 14 or 15 businesses, always told me to seek opportunities wherever they arose, not to focus in one particular sector or another.

The cash flow issue gave me the idea of developing an asset-backed lending operation, so when I sold the furniture business the funds were used to set up EAF. The gap in the market is, I think, the result of a fundamental change in the banking sector. People still need to raise cash for a variety of reasons, but what was previously the source of most lending, the high street banks, have withdrawn to a significant degree from this activity. 

Our customers use our service in the same way as they might have used an overdraft with the bank – they know with certainty that we can help and normally within a few hours of them picking up the telephone.

Where did you get assistance when you started?

I initially contacted the NPA (National Pawnbroking Association) who were very helpful in providing information on how best to get the business started.  From there I had to apply to the FCA (Financial Conduct Authority) for the necessary licenses and take it from there.

Having successfully started and operated a number of businesses over the years, once I had enough information I drew up a business plan for getting the business started and worked my way through that.

Give us a brief history of the growth of the company

Lending on assets is a highly regulated activity and it took us over six months just to obtain the necessary licensing. Once that was in place it took a further 2 months before we did our first loan – which felt very exciting when it happened. Within the first year we made our first 6 figure loan. It was a really big deal at the time but now it’s quite a regular occurrence. Since then the company has enjoyed steady growth over the last 5 years.

Have you taken any external funding? If so from who and when?

The business is largely self funded, but external funding has been necessary as we have grown.  We have been able to attract a number of HNW private investors who have been willing to offer long term loan capital to the company in return for an attractive rate of return.

So, what does it look like now with regard to staff and turnover?

We have six core staff and a team of specialist asset valuation contractors on call. Turnover currently stands at around £500,000.

What’s the difference between when you started and now in your marketplace?

Our marketplace has changed very little since we started the business in 2013. The High Street Banks are still often slow or reluctant to lend to small businesses and the cash-flow challenges faced by both individuals and company owners are still there. Our biggest challenge as a business is to increase awareness of what we offer to those who would never have considered such a service before.

What is your target market – Who is using your service?

We sell money predominantly to commercially savvy business people who may have experienced a financial bump in the road, but also to any individuals who own an asset worth more than £1000 or so and who have a short-term cash flow requirement. We don’t operate in the micro-loans market; it’s not what we are about.

Essentially our customers are anybody who find themselves temporarily asset rich but in need of some short term finance.

What is your background?

I graduated in marketing and HRM from the University of Stirling then had jobs with Aggreko and Walker’s Crisps, where my role was to visit around 180 corner shops and sell the product. I enjoyed it. It was a brilliant training in how to get on with a wide range of people. I started my first business, a sign installation company, in 1999 when I was 24. Since then I have started and been involved in a number of very diverse businesses including a storage company, a Harris Tweed furnishings manufacturer and a publishing house.

What are your goals for your business?

To keep enjoying what we are doing and to keep communicating our offering of a straight forward and sensible alternative to more traditional funding routes. Business owners in particular always need to have a financial safety net and that is what we offer.

What are your biggest current challenges?

Our biggest challenge as a business is to increase awareness of what we offer to those who would never have considered such a service before. Our customers are often amazed at the simplicity and effectiveness of the service and we enjoy a very high level of repeat business from customers who have used the service in the past.

What has been the biggest challenge so far?

The biggest personal challenge that I faced in starting the company was getting comfortable with being a lender of money. My background is in establishing and running small businesses rather than financial services. As the business started to grow I knew I had done the right thing as I could see that I was routinely assisting professional people who appreciated the unique service on offer.

What do you do outside work?

Week days can be extremely busy for me, so I always try to avoid ever working at weekends – I love spending time with my family and weekends are our time. I like to exercise and get to the gym two or three mornings a week. I also play hockey at a reasonable level and represented the Scotland Masters’ hockey team last Summer at the World Cup in Barcelona.

What do you know now that you wished you had known earlier?

I once loaned money on a package of sporting memorabilia which included a pair of boxing gloves that had belonged to a world record holder, an England cricket test match issued blazer and cap, a football strip signed by Pele – 80 items in all. We loaned £7,000 on it but it was never re-deemed, and I struggled to sell the lot for £3000 or so. I don’t touch sporting memorabilia now.

What’s the secret to good leadership?

I don’t think there is any secret. Treat people as you would like and expect to be treated. This works in the context of dealing with customers, but also equally well with colleagues. I have always found that treating people well and being transparent and straightforward creates trust and loyalty. Colleagues need to know what your vision is and how we plan to work towards the goals of the company together. This philosophy has served me well in business.

Where do you see the company in five years?

We aim quadruple its size within the next five years. We’ve doubled it year on year so far, so I think that’s a reasonable and very achievable ambition. We have the capacity both financially and in our storage facilities. I have considered expanding into England, but I think that for the time being there is lots of scope to grow here in Scotland.

How can the Scottish start-up/entrepreneur landscape be improved to help more businesses start up and grow?

Scotland has a long history of producing highly resourceful and innovative entrepreneurs. There is a wealth of experience and help available to new start up businesses through Scottish Enterprise which can only help.

Over and above that, any Scottish government initiative which helps to reduce costs for smaller businesses such as the rates relief bonus for SME’s is massively helpful.

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