Richard Harpin, Chief Executive, HomeServe

Oct 26 2009 by Peter McCusker, The Journal

One of the region's most successful sons returned to his roots recently to encourage pupils at his former school to become entrepreneurs. Peter McCusker spoke to Richard Harpin, the boss of insurance and maintenance giant HomeServe, during his flying visit.

THE first time Richard Harpin was in the headmaster’s office at the Royal Grammar School (RGS) in Jesmond, Newcastle, he was being admonished for selling conkers and running a tuck shop from his locker.

A little later, aged just 15, after he’d launched his first enterprise, a national mail order fishing tackle business, he recalls another visit.

“It was 1979. I was 15 and I would skip lessons to go to the bank to pay in cheques and see the bank manager.

“I was called into the see the headmaster, who wasn’t happy, but my mother Phillipa said, ‘Yes, but he’ll be a millionaire before you’. The headteacher replied ‘I have no doubt’.”

Now worth more than £200m, which marks him in the top five of richest North Easterners according to the Sunday Times Rich List, Harpin returned to the RGS in his personal helicopter last week to spread the entrepreneurial message.

“It’s up to entrepreneurs to spread the business message, not the Government.

“By the time I was 20 I had started five businesses, and while many of the pupils at the Royal Grammar will go into the professions; be it doctors, accountants or lawyers, if I can encourage one or two to be entrepreneurs then it will be worth it.”

Harpin, 45, realised he wanted to start his own business when he was only four and witnessed at first-hand what the fruits of business could provide.

“I was born in Huddersfield and a helicopter used to regularly land at the end of our estate.

“It was Lord Hanson (private equity giant James Hanson) coming to visit his parents who lived nearby, and at the time I said I wanted a helicopter.”

It took Harpin 39 years to buy one and now he commutes from work in it every day.

Harpin’s mail-order business was set up with a £200 investment. The materials to make the fishing flies were imported from India and America and he employed a workforce in Kenya to make them. By 1986 the business had achieved a turnover of £45,000 with a 40% gross margin and more than 2,500 customers.

While running the business Harpin established an earring making business called Hookers, which involved using the fly fishing patterns and turning them into fashion jewellery, which were then distributed through hair salons across the UK.

In 1987 he established Tyneside Nurseries to import and sell Christmas trees and, while studying economics at York University, he established a student magazine called Connect, for which he sealed a national distribution deal with WH Smith.

On leaving university with a 2:1 he took the corporate route, returning to the region to work as a brand manager for Procter and Gamble, where he stayed for three years, before setting up a consultancy business which secured work with South Staffordshire Water.

Harpin’s working day normally starts at 5am when his chauffeur driven car picks him up at the family home, near York, he shares with his wife Kate and their children aged four, seven and nine.

“It takes two hours to get to our headquarters in Walsall and I stop at Lichfield to spend an hour in the gym. While in the car I get the opportunity to do my in-tray.

“I like to leave the office between 5.30pm and 6pm and it takes 40 minutes to get home in the helicopter.”

But HomeServe’s continued growth in recent years now means he spends more time away from home than he would probably like.

The company was listed on the London Stock Exchange in 2004 and now has a market capitalisation of more than £1bn with Harpin owning 17% of its shares.

It offers a rapid-response service for home heating and plumbing emergencies for an annual fee, it has an annual turnover of £517m and operating profits of £100m.

As Harpin says: “Every homeowner has a problem in getting a tradesman in an emergency.”

With operations in the US, France and Spain, it has recently launched in Belgium and has plans to expand into more countries with Harpin particularly interested in the US.

“The US is an insurance-minded country but only 4% of homes have the insurance cover which we offer, compared to 23% in the UK.”

Harpin started the business in 1994 when he identified a universal consumer service for homeowners seeking fast help in the face of a home emergency.

Initially in partnership with South Staffordshire Water Company, he invested £100,000 in plumbing insurance cover and struggled for the first year, but he had that business eureka moment when he widened the cover to other emergency home needs.

“We sent out 1,000 leaflets and got 38 replies, a response of 3.8% was fantastic - 1% is normally good.

“At that point I jumped up and down on my desk and did a dance. I knew we were on to something.

“I had originally envisaged making a profit of £1m by year five and we actually made a £7m annual profit by year five.

“By 2004 we had outgrown the water group and floated on the stock market.

“This is a business which is recession-proof. Our customers are people who like to plan in advance. We now have 7.1m UK customers and 2.1im internationally.”