Golden rules for business growth
When expanding your business rapidly, it can be easy to forget the essentials. Nick Britton speaks to heavyweights from five big hitting companies and finds out which rules should never be broken.
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Title: Chairman and chief executive
Company: Mears Group, a supplier of social housing repairs and maintenance services
Turnover: £254 million (est)
Leadership and vision are the key. If someone in my position hasn’t got that, it would be very difficult to create a growing business, especially if you intend to use the capital markets.
I can only talk about my own management style as not everyone has the same values as me. I’m very passionate about our business – I care about the tenants in the homes we look after. It’s important to demonstrate to my staff that I do community work because that inspires people to go out and do it themselves, and be passionate about it. We have over 100 locations and I go out and see those regularly.
I’m a people person. I don’t necessarily sit behind a desk, although there are times when I have to do that. While I do have an accountancy background, my character and attitude is: ‘Let’s get out there, let’s see the troops and get things done.’
Leadership can drive an organisation, but a business like ours isn’t created by one person or one ideal. It’s about a team of people that you encourage to go out there and explore the market and create value, and therefore having a good management team in place is crucial.
I’ve worked with many people in the service sector since 1980: managing and motivating them is not an easy task. We’ve got 5,000 employees, and some very capable managers in place.
What I’m looking for when I acquire a company is someone that I can look in the eye if something difficult crops up.
It may not be their fault, but I want to be able to have a challenging conversation with them and still have a working relationship afterwards. If I’m dealing with that kind of person, then fine, let’s try and convince them to join.
Success is all about people: building, rewarding and motivating a team.
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Name: Michael Howard
Title: Chairman
Company: Maris Interiors, a specialist in office design, project management, fit-out, refurbishment and furniture supply
Turnover: £47 million
It doesn’t matter how many people you have, you’ve got to get everyone on side and all working to the same goals. In a lot of companies, not everyone knows what they’re supposed to be doing or how it fits into the bigger picture. So if everyone is aligned, the business has a much better chance of success.
As soon as anyone joins we have an induction. It’s always done by me, taking them through the company culture, explaining who we are and what we believe in. My goal is that everyone knows what’s really important to us. We don’t tolerate any office politics or backstabbing.
There are no big egos in our company. We have a flat management structure, so people can make quick decisions. I don’t want people to have a boss with a boss with a boss. And I don’t want to see people in the office on a Friday afternoon worried about writing their Friday afternoon report, which will never be read anyway.
You have to spend time with and look after people. Last year we took everyone to Las Vegas for the company’s Christmas party. This year we’re going to Miami. When we go to the pub, the company pays.
Because we allow people to self-manage, the system is open to abuse. There’s always a percentage of people who take advantage. Five years ago, we were not that focused on everyone’s individual performance and then we discovered that 10 to 15 per cent of people were not really performing. So we had to face the question: do we retrain or is it appropriate that these people even be here?
Having said that, I wouldn’t change how we operate. I’m convinced that if you build a company that’s fun, with like-minded people, and also focused, it’s hard not to be successful. I want people to think: ‘I’d love to have a job here.’
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Name: Paul Simmonds
Title: Chief executive
Company: Glisten, a confectionery and snack foods group
Turnover: £55.6 million
Understand and stay very close to the people you are selling to. We’re a very market-oriented business; our strategy on day one was to remain focused on where we see stronger growth and where we are closer to consumers’ hearts. I have a marketing background, so you would expect me to have that orientation. We stuck with that strategy and it’s been a rock–solid foundation for growth throughout our five-year journey.
We’ve acquired several businesses along the way, but the first thing we consider in making those decisions is always the market position of the other business. That’s before we get to the financials or any other metrics. The fit has to be exactly right.
One thing we don’t do is buy tons of market research. We buy some, but it really comes down to people, especially in small businesses (and I still regard this as a small business).
We deal in fast-moving consumer goods and it is a fast marketplace. Our job is to meet and anticipate changes regarding what customers want rather than trying to sell what we make. As a result, the culture in this business is creative and dynamic. We’re problem solvers.
Every year, we aim for 10 per cent of our profits to come from new products. Yes, we make mistakes at times, such as launching products that haven’t lasted very long but the real sin is not taking a chance or not understanding what went wrong. It’s incumbent upon the business to have at least one risk initiative each year, one investment in which we’re almost prepared to lose money.
When the results don’t meet our expectations, we usually adapt and find ways to achieve the same endgame.
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Name: Pieter Totte
Title: Non-executive chairman
Company: Real Good Food, a supplier of food to niche markets
Turnover: £251 million
We started Real Good Food from scratch four years ago, with a mission to form a food group that was managed differently. Our business model was that we were not centralised.
We have autonomous businesses, each operating with an old-fashioned management team consisting of a managing director, financial and commercial directors, and an operations guy. We promote the business from the centre, but we don’t centralise all the finances.
Our business model allows the profit centres to specialise, thereby concentrating totally on their own business: the products, development, their vision of their operations within the marketplace and how they build their resources (both people and equipment). How that is planned is down to the team of four.
We communicate regularly within the group, not every day but on an ad hoc basis and through monthly board meetings. There are reporting systems feeding into the centre with an agreed format, giving us a feel for where the business is, where it’s going and any issues that may need to be dealt with. The MDs have their own vision for how they’re going to drive their business on. Where we feel we can add value on any subject (financial, commercial or whatever), we let them know.
People spread themselves too thinly. I have another company, Aquabella, which is a fish farm in the south of the country. That totally focuses on one area, which is fish. Because of the market culture in food, there’s no way this business will stray from this area.
It’s all about focus.
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Title: CEO
Company: Worthington Nicholls Group, an installer of air-conditioning units
Turnover: £25 million
You have to know your business very well and understand the clients you’re dealing with. Make sure the focus is on what they require, not what you want to offer.
In 2003, we looked at the hotel sector and saw that it was poorly served by builders. We had secured a large contract around the UK with Holiday Inn and realised that it would be better for them to have us as a principal contractor rather than a subcontractor. It would deliver savings for their business while increasing margins for our organisation. That’s the model we’ve used across 16 hotel groups.
Although we’ve become the largest group in the sector through consolidation and expansion, we’ve remained focused on key clients. We still work for Boots, which was our first customer back in 1973.
We make all our staff aware that it’s a lot harder to win a customer than to lose a customer. Everyone knows that customer retention is essential to growing a business, while not keeping focused on existing business is a recipe for disaster.
To make sure this approach is maintained throughout the group, we have a robust training regime. People need management skills and we give them the training they require to nurture and develop them. We also made sure that all of our staff were shareholders in the business prior to floating [on AIM].
Everyone then has a reason to stay committed to what we are trying to achieve.