Oktra and Pellings are two companies who are growing, albeit at different speeds and through different means. They both have one thing in common, though: a simple, well-defined business plan for the future.
- Team effort
- A single vision
- Targeting growth
- Remaining on course
- Best-laid plans
Planning is vital for any business, no matter the size or sector.
We often hear about major contractors’ ambitious growth plans – but SMEs should also consider both long- and short-term plans.
This is particularly true in construction, which had the highest number of liquidations of any sector in 2013, showing that companies are especially vulnerable.
This need not be the case, though. Sitting down and developing a strategy could mean the difference between a thriving company and a struggling one.
Property and construction consultant Pellings was run by founding partner John Pelling until his retirement in 2003. After he stepped down, the remaining partners realised that there was an opportunity to step back and take a look at the company’s strategy.
“We decided to be more structured, and we saw it as a chance to engage the five or six partners that were left,” explains chairman Richard Claxton.
“You look over your shoulder and realise you could be doing things better. We realised we could improve the business by working to a common strategy”
Richard Claxton, Pellings
“Two of us were tasked to develop the plan in consultation with the others, which was then shared with staff.”
The partners had realised that some of their competitors were moving ahead and finding more success – either through faster growth or by working in areas that Pellings were not.
“You look over your shoulder and realise you could be doing things better. We realised we could improve the business by developing it and working to a common strategy,” Mr Claxton says.
Pellings used an external business planning consultant to help them get off the ground. She gave them direction of what to include in the plan and where to start.
“We didn’t have any of that experience in-house – the training we get in this industry is often very technical, but there’s not much in business development,” Mr Claxton says.
A single vision
Office fit-out and refurbishment specialist Oktra has a plan that was initially put in place by owner and managing director Geoff Andrew when he acquired the company in 2006, rather than by a team of partners or directors.
“My starting point was a business plan for the acquisition of the business,” he says.
“I firmly believe a strong leadership team is integral to any growth strategy”
Geoff Andrew, Oktra
“I always had a three-phase plan. Phase one was £0-10m – with £10m chosen because I believe that’s when the single owner-operator has time to come up for air and think more strategically.
“Then it was £10-30m, and we’re now in phase three, which is £30-45m.”
Oktra has experienced rapid growth, with turnover rising by 733 per cent between 2007 and 2010. Mr Andrew has now restructured the company, bringing in a comprehensive leadership team with full knowledge of the firm’s finances and goals.
“I firmly believe that’s integral to any growth strategy,” he adds.
Pellings has also focused on growth, aiming to grow fee income by 10 per cent in each year of the plan.
It began by examining who its clients were, what fee income it received from them, what sectors they worked in and, most importantly, what services they wanted in future.
“A plan should always be founded on the future, not historically – there is no guarantee that work will still come from existing sources in future,” Mr Claxton says.
“A plan should always be founded on the future, not historically – there is no guarantee that work will still come from existing sources in future”
Richard Claxton, Pellings
The partners realised they had limited customer data when they sat down to develop a strategy, so that was the first priority.
The focus became to identify what existing clients would want going forward, as well as looking at sectors that could be developed.
“Our work was 70-80 per cent housing, so we saw that there was potential for us to focus on education and commercial work to increase income,” Mr Claxton says.
“It was also about the realistic sectors – there are probably a lot of opportunities in health, say, but are we really able to get involved in that easily? You have to create a business case to evidence you can develop it.”
Remaining on course
Oktra’s plan has seen it focus on its core competencies of office fit-out and refurbishment, with this largely unchanged thus far.
Rather, each phase, which was scheduled for five years, has been completed in less time than planned – three years for phase one, and two years for phase two.
“Our plan is very simple and clearly communicated – we boil it down to its essence, put our heads down and focus on hitting the next milestone”
Geoff Andrew, Oktra
“The overarching plan has always remained absolutely steadfast because the team and I all believe in it so much,” Mr Andrew says.
“This is because it is very simple and clearly communicated – we boil it down to its essence, put our heads down and focus on hitting the next milestone.”
The company does intend to branch out beyond its core areas soon and create revenue streams from three new companies to continue its rapid growth so far.
“My dogged determination and enthusiasm tells me growth will continue on a similar path, but my business realism tells me we’re stepping out of our core competency areas and there will be major challenges. But overcoming that is what keeps me going.”
External factors can cause even the best-laid plans to change. Pellings finished its first business plan just prior to the economic collapse in 2008.
It has now begun to introduce new services that were not envisaged as part of the strategy six years ago.
“External factors can swamp a plan entirely,” Mr Claxton says. “Some things we’ve planned for long term, and other things, like setting up an asset management team, weren’t in our original plan.
“You have to be flexible, still, and accept that the plan is not a complete bible for everything that you do.”
Ultimately, despite being willing to take action away from the plan, having the structure in place has benefited both businesses. For Oktra, the clear vision has seen buy-in from staff at all levels, leading to rapid growth.
And for Pellings, it has helped to provide consistency across the company and ensure that everyone has the firm’s targets in clear sight.
“Having a plan has made it easier to vocalise what our goals are – everyone should understand them,” Mr Claxton says.
“It has made a very big difference to our business.”