Saturday 16 December 2017

Helping keep heads on beds brings material rewards

Sean Gallagher with Garry McMahon of Linen Direct at his Balbriggan base. Photo: Frank McGrath
Sean Gallagher with Garry McMahon of Linen Direct at his Balbriggan base. Photo: Frank McGrath
Sean Gallagher

Sean Gallagher

Garry McMahon set up his own business in 2004 to service the linen needs of the hospitality sector. Today, his company, Linen Direct, based in the M1 Business Park, Balbriggan, in North Co Dublin, employs nine staff and has an annual turnover of more than €5m.

"We supply the hospitality trade with everything from bed linen and table linen to towels, quilts, pillows, robes, slippers and mattress protectors," says Garry.

"Our customer base can broadly be divided into three main segments. Firstly, we sell direct to hotels, hostels, student accommodation and B&Bs. In fact, anywhere there are heads on beds," he says.

"Secondly, we sell to resellers who, in turn, sell our products on to their own customers in the hospitality space.

"And finally we sell to large commercial laundries who supply linen as a service to hotel where they then collect it when it needs washing, launder it off site, iron it and then return it to the hotel to be used again."

Garry goes on to explain that if you have ever stayed in a hotel, then you'll be familiar with the room service staff arriving in the early morning to clean your room and dress it again for the next guest. This usually includes changing the bed linen, pillow cases, four towels and a bath mat. Add to this the table linen from the restaurant where the guests may have dined the night before and you get the typical laundry needs of each guest.

Given the amount of work involved, most hotels tend to outsource this service to commercial laundries which, in turn, buy much of their linen needs from Garry's company.

But Garry's journey did not start out in the linen business. He grew up in Dublin's Drumcondra where his father ran a successful drapery wholesale business, Frank McMahon & Co. During his school holidays, the young Garry would help out in the business.

However, having finished school, he decided to take a different road and joined Irish Shipping where he spent the next seven years working his way up from a deck cadet to second mate. However his seafaring days ended abruptly when, in 1984, Irish Shipping went into liquidation, leaving him without a job.

He then joined his father full-time in his wholesale drapery business and when in 1994, his father semi-retired, Garry and his brother Terry took over the running of the company.

"However, I could see the writing was on the wall for the drapery wholesale sector," says Garry. "So I began looking around for other opportunities. I started by asking myself what items from our existing stock in the wholesale business could I sell to new customers?

"I had, by then, built up good relationships with a number of key suppliers of household textiles and so had the contacts with suppliers for these.

"I could also see there was growth taking place in the whole hotel and hospitality sector and I decided that selling linens and towels into this sector might be a good place to start," he says.

At that time too, the hospitality sector was predominantly being serviced from the UK and having assessed what they were offering, Garry felt that he could easily provide a faster service and at more competitive prices.

In 2004, he set up Linen Direct with a small range of products that included table linen, white cotton sheets and pillow cases. As the business grew, he added additional items such as towels and duvets.

"The whole world of men's, ladies' and children's wear was a complex one with many different styles and variations whereas the home textiles business was a much more straight forward and simpler business model," says Garry.

However, his journey got off to a bumpy start when having just landed his first container of stock, his competitors suddenly dropped their prices resulting in the margins he had planned for being immediately eroded.

"There was only myself in the business at the start and it was certainly an uphill struggle in the beginning," says Garry.

Again in 2008, when the downturn in the economy kicked in, Garry found that many of his hotel customers went into receivership leaving him with bad debts.

Rather than give in or give up, Garry's response was to dig in and work even harder than before.

"I decided I would invest further and increase our range of stock and by doing so, we actually increased our sales," says Garry

Working with commercial laundries also brought increased sales.

They began passing business to Garry for items they did not supply such as pillows, quilts and mattress protectors. With a commitment to quality, good customer service and value for money, Garry's reputation within the sector began to rise.

But the business was to face further challenges when three years ago, Garry needed funding to expand in line with increasing demand.

He was disappointed when the bank with whom he had been a customer for 37 years turned him down for a loan.

"It was a case of 'the computer says no'," says Garry. "I was determined, however and changed to Ulster Bank. They could see the potential we had at the time to grow the business and that's what we have since done. We have now more than doubled our turnover in that three-year period," he adds.

The business is now no longer just Garry on his own. Today, he has a small but hard-working team.

"We operate with a relaxed informal atmosphere but when needed, everyone is willing to jump up a gear and get the job done, whatever it takes," he says.

As he looks to the future, Garry is focused on continuing to grow the Irish market.

He has also recently begun to supply a small amount of stock into the UK and sees opportunities there. For now at least, he is content to keep an eye on what happens with Brexit before pursuing more business there.

Garry's story is a fitting example of how it is possible to create a business by combining your existing experience to harness opportunities that are often right in front of you.

Related: Use our calculator to estimate your small business loan repayments

Proving that success can often come from doing what you can, with what you have, starting right where you are.

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