Whatever the economic background, there are always companies that get ahead. The Business Initiative Award was introduced to recognise those stone companies that have done that. And this month (February) Stone System of London became the first winner of the Award.
The winner of the first Business Initiative Award, BIA 2011, is Stone System of London Ltd. The Portland limestone trophy and winner’s certificate marking the success was handed over, along with a new iPad computer from sponsors Waters Stone Group Ltd, at the Stone System headquarters in Woking, Surrey, by NSS Editor Eric Bignell last month (January).
The Business Initiative Award was introduced to recognise and reward the efforts of companies that had assessed where they were compared with where they wanted to be, how they were going to make the transition, and how successfully they achieved it.
As Alan Gayle’s regular Marketing column on page 10 of this magazine makes clear, marketing is about a lot more than simply placing a few advertisements, although advertisements certainly have their place as part of the marketing mix and play their part in getting the message that Stone System of London want to convey out into the market place.
But marketing is an attitude that runs through an entire company, not an activity by one person or department, and it was that feeling of the whole company being involved that came across in the entry from Stone System of London which impressed the BIA judges.
There are two ways of increasing sales. One is to broaden your customer base. The other is to sell more to your existing customers. For BIA 2011, Stone System demonstrated both approaches. It has broadened its range of products to sell more to existing customers and it is finding new customers.
One way it is expanding its customer base is through Lisa Brunt, the sister of General Manager Daniel Brunt. She was recruited last year to find more kitchen and bathroom retailers for Stone System to supply.
It also has a now freelancing former employee of Cosentino representing it in London. And at the end of the month will open a showroom at its 1,600m2 premises in Woking, Surrey, to attract more consumers.
Woking is a good location for a business like this, being in a wealthy area and offering ready access to London, which has its own economy resilient to downturns. But it is a double edged sword. The rent is £150,000 a year and Stone System of London is tied into it for the next five years. Mark Mills, the Managing Director, says: “I think the challenge is to stay here and make the business pay.”
The opening of the showroom is a little behind schedule. It will take place on 25 February with the Mayor of Woking, Ken Howard, and the MP, Jonathan Lord, both attending – which should ensure plenty of coverage in the local press, especially with politicians so keen to be associated with any business that smacks of success.
Stone System of London have established a subsidiary called Surrey Kitchen Company Ltd to run the showroom, which will have its own sales staff and kitchen designers. It will be advertised in the consumer press in the catchment area to attract people to it.
Mark Mills and his wife (as HSH Investments) now own Stone System of London following Mark’s management buy-out of it in 2010, two-and-a-half years after he had been recruited by Cosentino, who then owned it, as its General Manager.
He said in his BIA 2011 submission: “Through transparent discussions with staff we kept them informed of the intention to halt the sale of Stone System to a competitor company and open negotiations for an MBO. Without exception the staff got behind this idea and during months of uncertainty about our futures everyone worked tirelessly to ensure the business ran normally and an excellent service was provided to our customers.”
Mark came from a stainless steel chimney manufacturer and before that was Sales Director of window company Velux. He believes it was probably a benefit to him not knowing anything about the stone industry. “It means you can think about the best way of doing something rather than just doing it the way it has always been done,” he says.
Cosentino are the Spanish company best known for their Silestone quartz kitchen worktops. Mark discovered that Cosentino expected Stone System of London to perform an awkward dual role of supplying the market with worktops, from which it was supposed to make a profit, while also promoting Silestone.
Freed from that constraint after the MBO, Stone System of London has increased its product range to include more granite and marble. Silestone still accounts for about half the output of the well-equipped factory and Mark is happy for it to stay that way, believing Silestone is an excellent product that he wants to retain in his range, but he does not want to exclude those people who prefer natural products.
A priority after the MBO was to get a website up and running. Cosentino had registered the domain name stonesystemoflondon.co.uk but had not allowed Mark to develop the site – a consequence of the difficult position of Stone System in relation to the sale of Silestone to other fabricators. After the MBO a business contact of Mark suggested a web designer and a fixed price was negotiated for the creation of the site. Mark feels he has had good value for money.
The site is maintained by Daniel Brunt and perhaps 5% of enquiries received come from it, although the number of visitors it attracts is growing month on month – and it is all new business from customers the company might otherwise never have reached.
One significant new customer Stone System has gained is Roosters, the newish fast food business that aims to provide more interesting meals than the average fast food outlet. There are about 40 outlets and Stone System have installed Blanco Zeus Silestone worktops in six of them so far.
To sell more to existing customers, Stone System of London has branched out into sinks and taps to go along with its worktops and vanity units, obtaining distributorship for the 1810 Sink Company. And, recognising that glass splashbacks are in vogue, it now sells iGlass. It would much rather sell granite or quartz splashbacks that it can make in its own factory at a better margin, but it would also rather not lose a sale because someone wants glass. “The view is: we have to maximise every sale we make,” says Mark.
That the factory is well equipped is a legacy of Cosentino. Along with CNC workcentres, an edge polisher and sundry other machinery, it has given Stone System probably the only Breton Joycut saw in the UK, although the company has plans to replace it with something a little more versatile.
The latest addition to the factory is a Farnese MitreForma supplied by Waters Group. Production Manager Adam Paulik praises it for producing more accurate mitres than the company’s CNC workcentres or edge polisher in a fraction of the time.
If you want to expand your business the one thing you don’t want to do is lose customers (at least, not those from your target audiences). That means you have to meet and, if possible, exceed their expectations. At Stone System, one way of doing that is having the factory working 6am-3pm. The early start means that when the templater-fitters arrive at 7am everything is ready for them to get away and be at their first jobs for 9am.
Eleven of the company’s 25 employees work in production and they like the arrangement because at both ends of the day they avoid the worst of the traffic on some of the busiest roads in the country. There are eight templaters/fitters, and six people in the office.
The 6-3 factory hours also leave the way open for a second shift when demand does eventually pick up.
And Mark Mills has to admit his business plan at the time of the MBO did anticipate the worst of the downturn being over by now. He had forecast growth for Stone System in 2012 of 20%. He no longer believes that is achievable and has adjusted his forecast down to 10%.
Taking over and developing the business has not been all plain sailing – NatWest pulled out of the MBO late in the day, although fortunately Lloyds was keen to join the party; a major customer went into receivership just after the MBO was completed – and the subdued wider economy has not made it any easier.
But Stone System of London (and now also Surrey Kitchen Company) has a clear idea of where it is, where it wants to be, and how it is gtting there. Mark concludes: “I think this year will be very difficult but I believe we will grow.”