The arrivals

This month, the facilities consultancy and outsourcing business will bill over £2m in fees — at least £1,993,000 more than it took in its first month's trading, at the start of 1998.

Grealish's co-founder Joe Samuels, now deputy managing director, puts the breakneck journey of the Godalming-based business from start-up to £30m turnover operation down to the clarity of its goals.

'You have to decide where you want to be,' says Samuels. 'Do you want to be a strong sole trader or do you want twenty specialist consultants? Our view was we wanted to be a £25m to £30m business with around 200 staff. We described our targets — and then we worked backwards to see what we needed to do to get there'.

Samuels was part of the in-house facilities team at BP's site in Sunbury, outsourced to Procord in 1994. Two years later Procord was bought by Johnson Controls at which point, 'I had to decide whether to commit myself to a corporate career or go out into the market myself.' Samuels had already met Grealish at BP Sunbury, where he had come in as account director for Procord. Both were convinced there was a gap in the market for an outsourcing and consultancy business targeting mid-sized corporates.

'There was a polarisation in the market between major corporates looking at global deals and "corporate PFI" and then at the bottom to mid-sized range there were providers of single services,' says Samuels.

'It seemed it was hard for someone who wanted to let between 100,000 and 200,000 sq ft to find a good facilities management provider. That was our proposition. We were very much a private sector business and we were very much a management services organisation.'

The launch team took their time looking for the right financial partners: 'We looked at individual backers, groups of business angels, venture capital houses — we basically were educating ourselves,' says Samuels. At the same time he and Grealish began writing a business plan. 'Accountancy firms and banks will provide advice on this,' says Samuels. 'We ran various models to work out how much money we needed.' Fortunately for Coflex the pre-dotcom days of 1997 were good for raising money. 'Today I would say you need £750,000 to £1m behind you,' says Samuels.

The second key task was to get the executive management team right. Bringing in non-executives with a wealth of business experience in areas outside Grealish and Samuels' core expertise was critical. Hence the three non-execs include a human resources director — a strategic resource for an outsourcing business — a former finance director and the former managing director of a major supplier to the sector.

'Our non-execs have been absolutely invaluable. You need general strong governance behind you,' says Samuels.

Coflex sidestepped the common pitfall of start-up companies — poor cashflow — by developing two sides to the business; outsourcing and change management consulting. 'The consultancy business generated £1m in the first year — the cash we needed to do the rest,' says Samuels.

'The rest' included some very bold business targets: 'We now have more than 200 staff, and by year end our turnover will be £30m. This is where our business plan said we would be four years from launch,' says Samuels. The first milestone came at the end of the first year of trading when Coflex won its first outsourcing contract with the Bank of Tokyo. 'Winning your first contract is a very important step,' says Samuels. 'We got the Bank of Tokyo contract at the end of our first year. People would normally be looking for us to have three years' audited accounts behind us. It was a key moment.'

The second year brought the company's second major deal, an outsourcing contract with Lloyds which followed from a 'small piece of appraisal work' undertaken for the City institution by the consultancy team.

Seventy staff from Lloyds joined Coflex under the deal, boosting its numbers at that stage to 115.

Shortly afterwards Equitas was signed up for an outsourcing deal followed by the NEC procurement group in summer 2000. This year has seen the flow of deals continue, with contracts with Reality, (part of Great Universal Stores), and Miller Insurance.

Thinking back over such a smooth take-off, Samuels has words of wisdom for others taking the plunge. First and foremost, sell your own ticket. 'People change what they offer,' he says. 'We didn't, we put a huge effort in to selling our own ticket.'

The personal touch
Meanwhile, take advantage of your smaller size to add that extra personal touch: 'When bidding for work with Japanese clients, we get our executive summaries translated into Japanese — little things make the difference,' says Samuels.

But above all get the management team right: 'You have to build an extremely good team. If you get a break, then success builds success.'

In-house teams, he says, have expertise in delivery processes, but they must ask themselves to what extent they have been exposed to the commercial world — to bidding, pricing and cash flow. But above all, success comes down to the; 'ambition and determination of the management team'. The rest, 'you can learn along the way.'

Common pitfalls include managing growth. 'When to let go and bring in an operations director — that is a difficult question,' says Samuels.

Another is assuming you can take customers with you. 'It's easy to imagine you will sell to people you know, but you have to know you can sell to people you don't. And never rely on taking customers with you.'

Samuels swears he doesn't work harder now than he did for other people — but admits last week he should have been on holiday. 'It's important to work smart and to get the work home balance right.' An average day is 12 to 14 hours but neither he nor his staff habitually work at weekends.

One of the lessons the team have learnt is that the fight isn't over once you get your first deal. Samuels says: 'When you reach the first one, you think the floodgates are going to open — and of course they don't. When you get two, they [potential customers] ask, why have you got only two? When you get three they ask, why have you got only three?'

In the early days, Coflex, like all start-ups, had to issue performance bonds — basically agreements that said if the company went bust or was fired because of performance failure, then the client could draw on that bond to cover the cost of re-procurement. 'Once you have one or two accounts, you no longer need it,' says Samuels.

Room for newcomers
Meanwhile Samuels and Grealish remain convinced that looking after their staff has payed dividends. 'Twenty per cent of the equity in the company is for earning by staff.

'We do this because of a real belief that it is people who create value. All our clients come through personal reference,' says Samuels who adds that the company has only lost one member of staff to a competitor.

Looking to the future, Samuels believes that there is an opportunity to double the size of the business in the next three years. He also believes there is plenty of room for newcomers. 'It's a growing market and there is lots of fresh outsourcing going on. But you have to be in tune with what people want,' says Samuels.

'You will have good days and bad days. You have to hold your nerve and stick to your targets. There are periods when it gets quite scary but everything is within your control,' he adds. 'When you've got problems you worry more, but when you get a win it is much better.'

KFM — university ties
Being part of a large university has been a distinct advantage to the directors of the newly launched Keele Facilities Management (KFM), but it has also brought its own challenges.

'The great thing about being attached to a university is that when you have taken on a contract and have to transfer staff under Tupe, there is a specialist at the university that can do it for you. With the university as our parent company we have access to personnel specialists,' explains KFM managing director Jenny Deaville.

But at the same time it has meant shaking off preconceptions some potential customers might have about a university operation new to the commercial world. As Deaville notes KFM had to differentiate itself from the university environment: 'It was about showing the world we knew what we were doing.'

In fact, the management team has already proved its commercial acumen running Keele Conference Parks — another university business — which has grown from a £600,000 to a £4m turnover business staging 600 events a year.

KFM was launched in April following the bringing together of various facilities-related functions within the university for the first time last year. It has been signed up for numerous catering, cleaning and security contracts with local firms. More recently KFM has been asked to install accommodation for a North Staffordshire health authority project.

The biggest challenge at the start says Deaville was selling the idea of integrating the various departments that now make up KFM to staff that worked there — and the idea of becoming a business operation: 'Most people have bought into it now,' says Deaville who held consultations with staff and university clients.

Not targets but stepping stones
'On the whole the people involved in moving this forward recognised the skills they had and felt this would give them the opportunity to develop,' adds KFM finance director Phil Butters.

Deaville and Butters describe their business targets at this stage as fairly 'loose'. 'We've basically analysed our organisation into a number of stepping stones,' says Butters. The first is to establish ourselves as a services player in the market — one way for us to do this is through links with construction companies. The second phase is to be recognised as a national player. We are looking, for example, at the market for facilities for community healthcare which would be provided on a design, build and operate basis.'

Adds Deaville: 'At the start of a new business you want to look at all opportunities. We are looking at whether they will fit into our portfolio.' So far KFM has turned down one contract because 'we didn't have the resources, although it was right up our street.'

Like Coflex, KFM has a team of non-executive directors who help to plug the gaps in the executive management team's experience. Appointed by the registrar of the university they include one with an estates management background, one former property director and one with expertise in the health sector — a good fit with Deaville and Butters whose areas of expertise are in marketing and finance respectively.

'Now we are looking to recruit some senior management expertise from industry — we need management expertise to overlay operational management. It's about getting the right resources at the top end.'

Asked what are the key attributes to get such a commercial operation off the ground, Deaville lists vision and drive, leadership qualities, empowering staff to deliver and a focus on training and development.

'It's about commitment. It's about really having the drive to see it through, and, when the going gets tough, to have the drive to get through that,' adds Butters. 'Knowledge and expertise you can get through recruits — if you haven't got drive then you won't do it.'