When you operate in an industry notorious for succumbing to the highs and lows of the economy, you’ve got your work cut out trying to grow your business into a major player.
That’s the challenge that faces Martin Stocks, managing director of London-based Furniture for Business (FFB). He has just gone through the process of restructuring the company into a group with two subsidiaries and is now looking to grow the business through acquisitions. If all goes according to plan this should mean reducing overheads and spreading risk, while at the same time pushing them ahead of their competitors. For the new businesses under the FFB umbrella, an exchange of equity for services, such as accounting, marketing and design, should also give them the opportunity to fulfil their own potential.
Furniture for Business was set-up in 1991 to source and provide furniture for businesses, but without being tied to a single line of products so as to offer a more comprehensive and independent service.
Having built the business up to a £9m turnover, Stocks and his co-directors wanted its future to break free from the fortunes of the economy. “Straightforward organic growth means, from time-to-time, you get caught with your pants down. When business contracted we could have been left with a big overhead. We needed to think a way around this because we had seen a number of businesses try and build themselves up followed by spectacular failure,” he says.
After mixing with his business contemporaries while attending a course at the Cranfield School of Management, it became clear to Stocks the way forward would be through joint ventures and acquisitions. It seemed a particularly relevant approach as the furniture market tended to be made up of successful sales people with their own businesses, but who often found themselves kept away from the front line because of the day-to-day responsibilities of running their company.
“We’ve got some important strengths as a business,” Stocks explains. “We’ve been an Investor in People since 1996, we have excellent accounting systems, in-house design, project management and marketing. So why not set ourselves up as a group hub and acquire businesses or set up joint ventures? That way they can be purely sales-focused operations and we’ll provide the infrastructure.”
When the idea was announced to the company it really struck a chord with one of Stocks’ senior sales people, Ken Kelley, and as a result The Furniture Practice was created, with him at the helm. Employing six people and now turning over £3m, it operates on a similar remit to its founding business, but with more of a focus on selling to architects and designers. Just as importantly, it has acted as a pilot scheme for FFB’s future restructuring plans.
But it was a downturn in business, as a result of September 11, which surprisingly provided the impetus to move ahead with Stocks’ plans. “It made us think even more about strategy. If we were to survive the peaks and troughs we needed to look at our options during a shallow period, to see how it stood up,” says Stocks. FFB advertised through their accountants, Baker Tilly, for companies interested in being acquired and, as was somewhat expected during a tough trading period, received a good response with a significant percentage seeing the offer as a potential lifeline. But the stumbling block came in convincing entrepreneurs to sell a majority control in their business for a stake in the new group, and then remain on-board. “It’s a very big thing to ask,” Stocks admits.