The recent results achieved by Connells/Countrywide are nothing short of astonishing. They were of course helped by the impact of Covid and the Stamp Duty holiday but even after allowing for this, the improvement in the underlying results of the Countrywide business are way beyond anyone’s expectations. So, how did they achieve this?
Let me start by saying that I have never worked for Connells and I have no inside insight into their management techniques. I have, however, long admired their achievements and judging by the measure of profit per branch, they have been consistently the most profitable of all the major corporate chains. It is, however, their rapid turnaround of Countrywide that has been the key to their sparkling results.
During my days as a management consultant, I spent a lot of time preparing business plans. A debate that I had with my clients many times was what their target should be for the next year. Many business owners felt strongly that if their business achieved turnover of a million pounds last year with a profit of £200,000, then the targets for next year should be a turnover of £1.1 million with a profit of £220,000. This sort of thinking often just plain wrong.
It’s like owning a Ferrari that only does a top speed of 50mph. If you sent it to the garage, would you be satisfied if it came back with its top speed increased by 10% to 55mph? Far too many owners underestimate the true potential of their businesses and time after time, when I produced a business plan that showed how the business could increase its profits by 50 per cent or even 100 per cent in a single year, they refused to believe that this was possible. Not all my clients achieved these results, of course, but enough of them did to prove that such a rapid growth is possible. So, how can it be achieved?
The first pre-requisite is strong leadership. I did consultancy work for Hamptons under several of its owners. I pitched for some training work when it was owned by Bristol & West and didn’t get the job. I then did a lot of work for its next owner, Robin Paterson. During his ownership, I witnessed an extraordinary improvement in its results largely because of his charismatic leadership and highly capable management team. His reward was to sell Hamptons for many times what he paid for it!
I did no more work for Hamptons during the period that it was owned by a private equity group but I did work for them again during the time that they were owned by EMAAR. I also did some work for them after they were bought by Countrywide. They were still a force to be reckoned with but somehow the staff that I met during this period did not seem to be quite as focused as they were in Robin Paterson’s day. I had no involvement with them during the time that the infamous Alison Platt was the CEO of Countrywide, but I can imagine what it must have been like to work there. She seemed to be the very embodiment of the CEO who had no industry experience and who lived in an ivory tower. She seemed to be obsessed with management theories and mumbo jumbo to the point where the staff at the sharp end had no idea at all of what they were supposed to be achieving.
Far too many owners underestimate the true potential of their businesses.
Whatever one thinks about Connells, one has to admire their clarity of purpose and their sharp focus on their business results. Every member of their team in every one of their branches knows exactly what is expected of them tomorrow, next week, next month and next year, and they know exactly what they must do to achieve this. Every other successful firm that I have worked for over the last thirty-five years has had the same strong leadership and clarity of purpose. Dale Norton gave it to Romans. Peter Rollings gave it to Marsh & Parsons. Patrick Ramsay gave it to Knight Frank. When this sense of purpose is lost, the results can fall off a cliff. When it is regained, the results can literally double in a year.
Don’t work too long
Most of my income these days comes from selling businesses as a broker rather than from consultancy work. I don’t have the time to do as much consultancy as I used to, but I still see the same principles at work after a business has been sold. Sadly, I have seen several examples of a badly run corporate chain buying a business from a charismatic proprietor and destroying it almost overnight. However, I have also seen many examples where the opposite is true. Many business owners carry on working for longer than they should do and when a tired owner sells to a dynamic and well-run corporate buyer, the results that they can achieve can be very rapid and truly spectacular.
My job is to get the best price for the business owner who is selling up but I do still get a thrill when I see an acquisition doing well post-completion and so I think do most of the sellers. So, there you have it. What was Connells secret recipe for turning Countrywide around? It was clear leadership from the top, a sharp focus on business results, clear targets and a capable management team. The combination of these things earned them the respect of all their staff at the sharp end. You can do this too.
Adam Walker is a management consultant and business transfer agent who has specialised in the property sector for more than forty years.