There’s an A and an O road to growth, says Kevin Morgan, Group Commercial Director of The Crystal Group. Acquisition is exciting and quick, organic less risky, cheaper and a bit slower.
Strategically, there are just two ways to grow. You can grow by acquisition, the A road, or organically by taking the O road. Sensibly, many grow using a combination of A and O.
Acquisition is undeniably exciting and high profile. It’s quicker and more expensive, with an element of risk. It demands your full attention, both in the buying and in the bedding in to make sure your acquisition delivers what you expected with fast profitable growth. An added risk is that like-for-like organic growth may take a back seat and opportunities on your door step may be missed. Acquisition masters are admired for managing the difficult task of doing both at the same time, growing by acquisition and organically.
Organic growth is lower cost, lower profile and lower risk, and comes easily in the early life of a business. Maintaining that momentum requires a sustained appetite and skilled focus on new opportunities to develop the potential of markets on your doorstep.
Last month the annual BMN Leading Lights supplement highlighted the stellar performance of the national and top independent builders’ merchants. Some merchants have grown substantially in turnover and profit in the past twelve months. It was an impressive performance for individual merchants and the builders’ merchant sector. Most have grown by adding branches in their existing areas, either by acquisition or greenfield set up, and a few have extended their geographical catchment areas. Some of the acquisitions were quite chunky.
Despite political turmoil and uncertainty, the economy has been relatively benign and stable, and the industry has made good use of the opportunity. It’s got mergers and acquisitions and new branch set ups off to a fine art, reducing set up times and risk.
The report shows merchants are growing strongly. Most are growing profitably too, but could they grow faster more profitably? Are they overlooking some larger, lower cost opportunities?
The market for PVC-U windows, doors and conservatories is around £5bn, comfortably more than kitchens and bathrooms combined.
£5bn is a large market but what does that mean at company or branch level? As with everything in life the more you put in the more you get out. Customers can come in to order supply-only windows and doors for a small extension all the way up to a recent supply and fit project worth £140,000 including VAT. What can you expect? The variety is enormous. Gone are the days when builders come looking only for simple white casements. Now their customers are looking for a wide variety of styles and colours. They range from flush casements in popular anthracite grey, to vertical sliders for the older house, and simple French doors or statement composite doors, to aluminium patio sliders or bifolds. And don’t forget conservatories, from lantern roofs for extension to the modern well-insulated orangery.
Recent supply and fit orders have covered windows and doors for multiple-plot builds to multi-storey apartment blocks from all over the country, with values ranging from £65,000 (Harlow) and £99,777 (Braintree) down to £14,250 (Bournemouth), £19,118 (Penzance) and £14,194 (Sheffield) for example. It’s a fast-growing market so we’re still growing our network of partners, including Gibbs & Dandy, MKM, RGB, Buildbase, Parrs, Covers, Tippers, TBS, Kellaways, Robert Price, Blanchford, Buildit and Boys & Boyden.
Builders’ merchants’ sales of bespoke PVC-U windows, doors and conservatories to this market are surging. They’re growing fast because (a) Crystal has made it exceptionally easy for merchants to sell what was once a complicated bespoke product, (b) because it’s easy for merchants to sell a product to existing customers that they’ve been buying somewhere else. Especially when the choice, range, quality and speed of service merchants can offer is the same or better than they’ve been getting. And because (c) adding Crystal’s installation service gives merchants access to a new incremental customer opportunity by attracting builders and domestic customers who would never buy your windows, doors, or conservatories unless you installed them.
When you’re looking for your next serious opportunity, what’s not to like about the low cost, low risk, easy O road?
To access your #NextBigOpportunity call 01462 489 900, visit www.crystal-direct.co.uk or follow @CrystalDirectUK.