How to scale a trade business
Reading time: 13 minutes
Growing a business is one of the hardest things you can do. We went out and spoke to Lee Goulding and Craig Nester of Habitat Landscapes in Bedford, who've turned their duo into a team into a twelve, to proivde a case study in how to grow. They shared some of the insights they’ve picked up over the years - and some of the things to avoid...
When you’re focusing on the day to day - finishing your current job, quoting for the next one, paying off suppliers - it can sometimes be hard to think about a bigger picture.
When you’re only thinking a few jobs ahead, how can you picture where you and your business will be in a year’s time, or five, or 20 years from now? Yet plenty of tradespeople dream of growing their businesses, building a company, and reaping the rewards that can come with it.
The question is, how can you turn that dream into a reality?
Two heads can be better than one
Habitat began as the brainchild of Craig, who began his trade life as a labourer for another landscaping company, learning on the job from more experienced guys.
After a few years working outdoors, he moved into general building work, but found it didn’t suit him, so started taking on small landscaping jobs at the weekend, and putting the money from that aside to start his own business. In 2011, he was finally able to get Habitat off the ground.
“There were about two years when I was putting aside the money, and then six months in 2011 where I really started going for it - I actually used MyBuilder a lot in those early days to get work booked in and try and get myself lined up,” Craig said.
“It was me and a friend who could help out, in a tiny van just big enough to hold a mixer and a cutter. We did all the small leads, £2,000 and £3,000 jobs, but we didn’t have any overheads, weren’t near the VAT threshold, so we could price ourselves well and be competitive.
"From then on it was a couple of years of building a reputation, getting more and more leads coming to us, and ultimately, I wanted to have a second team to help cover all the work that was there.”
You know when you've come across someone good, and if you find someone that is, you should jump at the chance to work with them.
Don’t just employ them or whatever, work together, because there’s a chance there to build something better than you could on your own
That’s where Lee came in. Having previously worked in a family building firm before going it alone, he’d moved to the area and was looking for a new opportunity, when he crossed paths with Craig.
“It all fell into place,” he told us. “I don’t think either of us anticipated it would work so well - it’s always a gamble, but we found very quickly we were able to bounce ideas off each other and had similar ambitions in mind. I think we’re quite different people - Craig worries a lot more than I do - but that helps us. We’ve never really clashed. We’re still waiting for our first big argument.”
The pair admit that not every tradesperson looking to grow will be lucky enough to find a partner-in-waiting, but urge people to consider it.
Craig said: “You know when you've come across someone good, and if you find someone that is, you should jump at the chance to work with them. Don’t just employ them or whatever, work together, because there’s a chance there to build something better than you could on your own.”
Make time for the business
When the two started working together, they were both running their own crew, working under the same name, but essentially, acting as two separate businesses.
It wasn’t a situation that could last, as Lee told us: “Our communication wasn’t great to begin with. Our teams were off doing different things, so we were both doing long days on site, then having to do quotes and dealing with the books in the evening, working 16 hour days. We both had young families and we realised quickly it wasn’t sustainable, we might as well have been struggling on our own.”
The big change was Craig making the decision to take a step back from the tools to focus on the business side of things.
He said: “It was always on our radar but I don’t think either of us wanted to make that leap. But we could see how much time we were wasting doubling up everything, and how unproductive it was. We’d be on the phone at 11pm every night, just exhausted. But once I’d made that step, it freed everything up. I could get a price out for a job in an hour, that would’ve taken me a whole evening before.”
Lee added: “We were worried because it didn’t feel like something that would help us grow. It felt like a step back rather than a step up, but actually it was the complete opposite.”
“Your instinct is if somebody isn’t on the tools, they’re just sat around doing the paperwork, then you’re wasting money,” Craig said. “But the boost in productivity paid for itself. That was the step that really allowed us to grow.
"The business has scaled quite quickly in the past two years, that’s partly down to having the time on my part. I’ll be looking at progress, money to invest, all that stuff, and then sit down with Lee once a week, he’ll update me on how the jobs are going, how the staff are performing, and I’ll give back what the finances are, what opportunities have come up.
"We’ve scaled because we’ve got more structure and more goals, and because the two of us have this relationship that works together. Both sides of the business can work together in harmony.”
Invest in your staff
With Craig focused on the business side of things, even taking a business development course to help create a detailed business plan, they soon found they were able to take on more work, and quickly added a third team, with a fourth following last year.
Of course “adding another team” makes what can be a difficult process sound easy, and Lee and Craig both say that building a team is one of the trickiest parts of scaling any business.
Lee said: “One of the big things is getting the right staff. It’s not just about us, it’s about having the right guys, we wouldn’t be where we are without them. We’ve always been very particular about who we take on. We’re fortunate that people want to work for us and they enjoy working for us. A lot of our best guys have been people who have come to us looking for work.”
Craig agreed: “That’s because of our reputation, because of the systems we have in place. A landscaper can look at our business and think ‘they're on the ball, they’re productive, they do good work, everything’s branded’. It’s appealing for a client but equally appealing to a potential team member.”
When it comes to retaining good guys, Craig is clear about what works.
“The issue is, what are you paying these guys? If you want to keep someone and they’re good you have to pay them the money they want. It’s all well and good wanting to scale your business but if you’re only going to pay the bare minimum you’re never going to have that talent, never going to see them develop, see them progress, or even be enthusiastic.
"It’s something we sit down and discuss, how are guys performing, are they hitting targets. Our staff retention has been really good in recent years and it’s simply because we pay people what they’re worth and make them feel valued.
"This industry can be quite cut-throat. People will try and undercut you on pricing and look to lower their own costs, but it’s a double-edged sword, you’re not going to have the right guys, or end up doing good work.”
The issue is, what are you paying these guys? If you want to keep someone and they’re good you have to pay them the money they want
Managing staff is an ongoing process though, one that Lee deals with on a day-to-day basis.
“You’ll always have people you want to keep morale up with, especially in the depths of winter, you need to keep them fresh, keep them motivated, when they’re digging through mud for three weeks. We know we’ve got guys who’ll keep on track.
"We’re very keen on keeping the guys involved in the wider goals of the business, especially the team leaders, letting them know where the company is going and the part they can play in that. Our staff retention has been good.”
However, sometimes tough decisions have to be made:
“It’s a fine line between being overstaffed and having too few. We lost a guy last year and we saw profits improve. You lose a pair of hands but the productivity stayed the same. Staffing is the biggest cost, so if you make that saving it can be a big difference but you don’t know how it will play out - no one seems like they’re not pulling their weight, but you need to be alert to it."
Manage your cashflow
All businesses, no matter the size, have to manage their cash to ensure they can survive lean times and plan for the future.
As the business grows, there's no excuse for mismanaging your finances , as Craig told us: "When we’re looking at the bigger picture we have a chartered accountant who looks after the books and tax. It’s not particularly a strong point for Lee or I - so it’s like with anything, if you need electrics done you hire an electrician because they’re the best person for the job, when you’re looking after your finances you hire an accountant."
Clear contracts and staged payments have been a mainstay of the business since they began, a process which has become more crucial as the business, and the scale of the jobs has grown:
"How we’ve always done it since we’ve been on the small jobs is 10% on the booking, 40% before we start and remainder paid on finishing when the client is happy. All of that is agreed with the client up front, we sign a contract. Our contract now is about seven pages, it covers the payments but also lots of the other elements of the job, and helps keep the process smooth.
"As we’ve grown and taken on jobs that are bigger - £70,000 plus - it’s changed a bit and we take more staged payments throughout the job. We’ve kept the 10% deposit but then divided the remaining balance across the weeks of the job. Either way of doing it, the cashflow has been okay and we’ve always kept a healthy amount in the bank to pay for things as we go."
A visual reminder helps keep the guys on track:
"We have a whiteboard in the office with all the clients in the diary and how much they’ve paid, it’s in the computer as well but having it as a visual as well really helps to keep track and see how much money is in the bank, but isn’t really ours yet.
"We can see what is needed for suppliers, what we owe in tax, everything, so week to week we know where we stand."
Have a goal in mind
As the company has grown in terms of team members, it’s also grown in terms of turnover.
Talking about the kind of jobs they’ve taken on in relation to the economic climate, Craig said: “When we set up the business it was right at the end of the recession, it was good that we didn’t have any overheads, no VAT, could be cheaper and do the same quality work. Then we scaled up and were doing mid-ranged projects, £10,000 - 30,000, that was our mainstay, and the economy did have an effect on the decisions people made.
"Now, we tend to do bigger jobs and I’d say it’s all a bit more Brexit-proof, the range for us now is £40,000 - £100,000, and I think if you can afford to spend that much on your garden then you’re not too worried about Brexit or anything else.
“In our first year, we turned over less than £70,000 which was under the VAT threshold. 2017 was around £400,000, and this year we’re looking at over £700,000, which is a big jump up and looking at the figures, the turnover has nearly doubled, but our cost only rose by a third, so it’s a good year for us.
"The previous year we invested a lot in the business, bought machines and so on. So the figure rise is because the team is bigger, but we’re keeping things smooth and streamlined, we’re more efficient.”
When the company grew to four teams, they initially found that there weren’t enough leads coming in to keep them all busy.
Craig said: “It was funny, we felt like growing was the right thing to do but suddenly we were scrambling for work again, we had to start marketing in a way that we’d let slip before. Suddenly you’re worried about whether or not you’ve done the right thing.”
This is where the having that greater vision becomes essential:
“When you have moments like that, it would be easy to just go back to what you know, but we’re working towards something. We decided a few years ago that we had a concrete goal in mind - we’d like to have our own garden centre that we can use as a base for the landscaping business.
"Now when we take decisions, we think, will it help us get to that? And if it does, we can do it, and if it doesn’t, we leave it. It might not happen for a few years yet, but it’s good to have that goal out there to aim for.”
Having that goal means that whatever steps the pair take next, and however much they grow, it’s all done with a clear plan in mind - they’re not just scaling for scaling’s sake, they’re growing to achieve a real, shared ambition.
Having spent a day watching them work, we like their chances of doing it.