Entrepreneurs: A Case Study with Philip Milburn

Philip Milburn begs to differ. He believes that regardless of the economic climate, being prepared, and always thinking of the long term, is the key to future success, whether it’s in building a business, choosing an investment, or simply enjoying your life. “At my last meeting with Paul Kilby and Sean Knights of Coutts they were taken by surprise when I unveiled my 21-year plan, which would allow me to retire at 75. It calculates how many houses my wife and I would own by then on a variable basis according to house price inflation. When you have that sort of perspective, the fact that house prices dipped a little in Norfolk in 2008 is not really important,” he says.

Being presented with such a plan may have been an unusual experience for his private bankers, but this attention to detail and understanding of the bigger picture will come as no surprise to anyone who has worked with Milburn or is aware of his business record. A natural entrepreneur, he started his first venture, Highway Windscreens, in 1973. Specialising in windscreen replacement across the UK, Milburn oversaw its growth into a national franchise and its diversification into domestic and commercial glazing. “Following investment from ECI Ventures, we re-purchased the franchises to become a directly employed model and the company became known as Highway Glass Limited, the UK’s largest provider of emergency glazing services. We had sales of nearly £50 million, over 800 staff and most UK insurers relied on our services,” remembers Milburn.

In 2002 Highway Glass was acquired by FTSE 250 business Homeserve plc and after successfully overseeing the company’s expansion into plumbing and drainage services, Milburn left in December 2006.

Today, although he claims to be semi-retired, he is actively involved in Lloyds underwriting and investing in developing businesses. He also deals in buy-to-let properties in partnership with his wife; a venture, which like Highway Glass, he has successfully guided through previous bear markets.

“Things are no different this time round. Whether you’re investing in equities or property you have to concentrate your effort on fishing for the bottom and making sure you are liquid enough to act quickly when you find it,” he explains.

As for the property market, Milburn has focused exclusively on houses within his local geographical region. This has two clear advantages. The first is that he doesn’t need to research the area first before deciding if a property represents a good deal and the second is that he can travel to, from and between his houses quickly and easily. “Virtually all of our buy-to-let houses are located in places like Lowestoft, Gorleston and Great Yarmouth, all of which are within 35 minutes of our home and all of which are locations surrounded by areas where property prices are between 50 and 300% higher.

“Most of our three-bedroom houses, for example, were brought for £100,000 and there is a limit to how much they will fall. Less than 30 minutes due south is Southwold where a typical terrace is over £300,000. Twenty miles due east a typical terrace in Norwich is £180,000 and due north in north Norfolk houses are again considerably higher. We are now starting to get yields of 7-8% which you couldn’t dream of in those other areas,” he explains.

As for Milburn’s next property investment, he intends to “keep his powder dry” until he starts to see prices moving upwards again. He accepts that there is currently a lack of confidence in the UK market but thinks that the situation is being unnecessarily exacerbated by commentators and pundits who continue to compare the UK property market with the US property market. Institutions on both sides of the Atlantic may have been guilty of granting mortgages to people who couldn’t afford to meet the repayments, but that’s where the similarities end.

“I think the fundamentals are entirely different. In America supply has completely outstripped demand. Many cities have very limited planning restrictions, so developers have bought huge tracts of land, built thousands of houses and as a result have 4.5 million unsold units.

“I have a number of friends who are developers in the UK and any site that is less than half finished they are moth balling. None of them have any plans at all to start any new sites and this is likely to be the case for some considerable time so, at least for the foreseeable future, new build starts in the UK will be nowhere near the recently stated Government targets. Unlike, say, Japan, the UK population is still growing, thus in the medium term demand will again exceed supply and prices will increase,” he says.

Until prices start to rise again, Milburn intends to put his spare time to good use. Since leaving Homeserve he has been able to spend much more time with his family, while his financial success has enabled him to really indulge his favourite pastimes. “I run three sizable shoots in Norfolk and look forward to heading up to Scotland for the fly fishing. I’ve also recently become interested in horseracing and currently have three horses in training,” he says. And when asked what advice he would pass on to others he responds: “To limit what you lose, whether it’s time with your family, or money on a deal. When I was building up Highway Glass I spent most of my time on the road, leaving me little time to do anything else. Whenever I have experienced a bad deal, whether in equities or currencies it was because I didn’t have stop losses in place, something that I can assure you will never happen again.”