An earlier MBO in 1999 saw Lawrence and co-director Tony Berwick take over from founder Keith Bates, and the success of the business allowed borrowing to be repaid well ahead of schedule, prompting a decision about Tony's retirement plan. 'Our business plan covered 10 years but we were confident that we could achieve everything in five', says Lawrence. 'In fact, it was four and a half years.'
In that time KEB has grown from £4 million turnover to an annual £10m, and will be at £15m within five years if all goes to plan. That's impressive, but profit is paramount. 'The critical thing is the money you are making – profitability', says Lawrence. Once firms approach their operating capacity, staffing and other problems have to be addressed, and this can be an expensive business. Some window fabricators could actually improve profitability by producing less and buying-in additional frames, he asserts.
Shrewd choices
KEB has maintained profitability over a steep growth curve by making some shrewd choices. About 10 per cent of turnover comes from the trade market – a valuable source of cashflow but dependent on the customer base doing well. The majority of business is in commercial, local authority and housing association contracts. Many of these are partnering agreements – in fact, KEB has an order book of around £20m over the next nine years relating to partnering contracts.
Enviable position
To reach this enviable position, KEB has tendered to a number of local authorities and social landlords, and continues to go through this strict selection process. Manufacturing a window system that is on the approved list is a must, and with Profile 22 KEB has been able to get a foot in the door. From there, winning the contract depends on criteria such as the company's accreditations, financial position, health and safety record, employment and environmental policy, and more. Financial strength is important – KEB might spend £1/4m on a contract before receiving the first payment – but the rewards are there. Dudley, Sandwell, Wolverhampton and Wrekin are just a few of the local authorities that KEB has carried out window refurbishments for.
By focusing on the commercial market, KEB gets the most out of its 100 strong workforce and capacity, producing 1,250 window frames and 2,800 sealed units weekly, from its current freehold site in Smethwick. The company tends to avoid far away maintenance contracts, which can be costly to service.
The new build minefield
While many larger fabricators are taking a look at the new build market, KEB remains cautious. Local authorities have driven window specifications up but housebuilders have lowered it, squeezing out profit. On top of this, most housebuilders demand a supply-and-fit operation, and there's tremendous scope to slip up and incur penalties along the way.
KEB has got its strategy right, all things considered. A pure trade business is exposed to retail market factors, and the newbuild market remains a potential minefield until supply-only becomes the norm.
As the chosen window contractor in many partnering agreements, KEB's business is now the envy of many a super-fabricator.
Source
Glass Age
