THE DORSET ECONOMY: REPORT & ACCOUNTS
What is the DNA of the Dorset economy, the companies which are of national and international significance in their market sectors, the issues which have to be addressed if they are to achieve their ambitions? What could have an impact on the ability of the business community in the county to thrive and prosper?
Enhanced have commissioned a report to be published in the spring of 2017, together with a gazetteer which will identify the financial performance of every business in Dorset which files full or medium accounts at Companies House.
Every fortnight, the latest thought-provoking interview with a director of one of the companies we are highlighting will be available here for you to download.
10th Mar 2017
Rob Hooker - Greendale Construction
"Our original mission statement hasn't changed since we started twenty-seven years ago," says Rob Hooker, managing director of Greendale Construction, and a member of the Chartered Institute of Building.
"And the reason the word quality has to be apparent at every level is that the construction process is inherently about snags and issues, which affect both profitability and the relationship with the client.
"Aiming for zero snags might be considered impossible, but everything we do is conditioned by wanting to achieve that. That is the only way you can build a business by referrals, and it is the only way you can deliver value.
"A low price cannot be good value for the clients if their builders are constantly having to come back to deal with defects."
Which means that the tender process isn't a natural ally. "I'm sure competitors who are in the same ballpark will say the same thing," muses Hooker, "but it is frustrating when contractors which don't have the same approach to health and safety for example, who say they will complete a project in eighteen weeks when you know it is going to take them twentyfour, are able to out in a lower initial price as a consequence."
Hooker, whose father was a quantity surveyor, went to college straight from school to gain his building OND and HND while he was working for a London contractor as a construction management trainee. In his early twenties he got a job with Ernest Ireland at their new office in Bournemouth where they were rebuilding the pier. Four years on, he had been promoted to site manager but after getting married decided with his wife to spend a year backpacking around the world.
On his return he joined Horton Construction, part of Leading Leisure, which collapsed in 1990. Nobody was employing site managers at the time, so with colleague Chris Kane, they decided to set up on their own. Quite literally. "The two of us were working out of the spare room in my flat," Hooker recalls.
A combination of good timing combined with previously won reputation gave Greendale Construction a good start. The administrators of a hotel who had appreciated their efforts on a project while they had been employees, asked if they would build a conference centre so they could complete the sale of the business.
"It wasn't long after we started the business that we learned that to be the master of one's own destiny is exciting," says Hooker.
"I sometimes wonder what would have happened if there hadn't been a recession and we haven't been made redundant back then. Would we have gone on to start our own business? I think I would have, but later.
"I believe if you really have an ethos as a business then it will come across at a meeting with a potential client. There is a real difference between blowing your own trumpet and having an ethos. A customer can sense whether you have a genuine interest, a passion for the work.
Every job we do has a director in charge, and that makes an impression. It's not just something we say; it's something we do.
The £5million restoration of Durlston Castle, originally built in Victorian times, to provide a visitor attraction on the Jurassic Coast world heritage site, was a game changer in terms of project size and profile. "Our work has preserved the building for the next 200 years," explains Hooker. "I can't begin to tell you how that has provided us with a real sense of doing something worthwhile." Another significant project was a conversion in Poole to create premises for Hotel du Vin.
Contributing significantly to a £16 million turnover last year was a £4.2 million contract for a student accommodation block in the centre of Southampton for a London developer. Greendale were put forward by the project quantity surveyors.
"When I looked at our growth curve, it is very shallow, but it does demonstrate that we are a sustainable business," muses Hooker. One which owns its own freehold premises, he could have added.
A challenge is the age demographic of the company, which has some fifty-five staff. "Having good staff retention can result in a significant number of employees being in their fifties," says Hooker. "It means being able to draw on fantastic experience, but a company in that position needs an influx of new younger people, and unless that is addressed, it will end up with a cliff face of an issue in front of it."
On the other hand stability has resulted in demonstrable career progression - the company's finance director, HR director, and contracts director, have all been appointed from within.
In addition to having an apprenticeship scheme (with mentoring), making an effort to link in with local schools is a longer term initiative but a must-do rather than a good-idea-to do, asserts Hooker. Because the effort can have pay-back. A fifteen-year-old from a local school came to the company for work experience, and seven years on is now one of its senior site managers. "We have three or four pupils in for a week each year," explains Hooker.
Every year the company holds an afternoon seminar at a hotel for all the staff in order to provide an up-date on the five-year plan. "If staff don't know where the company is going, how can they commit themselves to you," questions Hooker.
"Each member of staff has a yearly review with at least two directors when we go through what we have achieved, where they would like to be, how they could develop, and where improvements can be made. But we don't talk about money. That is addressed separately after our year-end, and the pay review is based on the profitability of the company."
One entire board meeting is dedicated to going through all the staff reviews. Time well spent, according to Hooker.
"As a company gets bigger, its directors have got to understand that they won't know everything anymore, that they've got to be happy to have other people running with the ball. It is the only way the business will continue to grow. Otherwise it can be all too easy to become negative, when everything appears to be a chore. A company can do without that."
What does concern Hooker is employment law, which he says needs to be adjusted to make it easier for companies such as Greendale to take people on. "I'm not talking about taking away people's rights," he asserts, "but it is a huge decision now for an SME to take someone on as a full-time employee. Businesses are always moaning about bureaucracy, but government needs to be careful it doesn't put one barrier too many in place which would mean SMS couldn't continue to blossom."
And a specific observation about infrastructure in their locale? Hooker is bemused by the fact it takes almost as long to drive from Poole to Bristol as it does to London, even though the latter is nearly twice as distant.
1st Mar 2017
Mike Borowski - Wessex Chemical Factors
"Business development often comes about from unexpected opportunity which you are in a position to take advantage of," explains Mike Borowski, founder and managing director of Wessex Chemical Factors.
"I haven't met many owner-managers who have pre-planned their business life and then that's how everything turned out. For most of us, something unexpected happens, and the penny drops."
With Borowski, when that proverbial penny drops, it stays dropped. He studied biochemistry at university and took a sales role with a chemical company, which is where he met who was to become his daughter's godfather. "He came up with the suggestion that we should start our own company, explains Borowski, "and I thought, good idea. Then he was offered a directorship so he stayed. But once I have made my mind up about something, I do it."
The name Wessex Chemical Factors is something of a misnomer. Because they produce their own brands, plus branded products for other companies, as well as supplying a small selection of products from other suppliers.
It was about a decade ago when their sub-contract product chemist had a stroke, that Borowski realised the business has grown beyond the point where it could be dependent on one person. Which is why he made the decision to set up his own factory, which has the capability of making 20,000 different products within ten days.
Regulation has meant the chemical supply sector has become, if anything, less competitive, apart from the motor trade where there are still a lot of man and van operators who will drive down prices.
What has helped Wessex Chemical Factors is their positioning as a resource which can formulate a new product to meet a particular need. A US company, for example, asked Wessex to provide an odour control product for the waste handling equipment on their cruise liners. "We came up with a bacteria mix to deal with it," recalls Borowski. "It's only an odour if it reaches your nose, so our formulation ensures that it doesn't."
Sometimes Wessex Chemical Factors will develop a formulation of their own volition. Caravan and mobile home users will use formaldehyde based products in the loo, but Blue Bio, developed by Wessex, instead works with natural bacteria to do the job and is completely non-hazardous and biodegradable. This reduces its impact on the environment and brings disposal costs down. The blue colour is as expected, but it's a food dye so it doesn't stain.
Not that the company would claim to be marketers per se. For twenty years, their teak treatment products have never been promoted, so how did they become market leaders? "Because boat owners talk to each other and word gets out," suggests Borowski. "It came about when a boat owner contacted us to say they were buying product from the USA and it was costing them a fortune without being terribly successful, and could we produce something for them instead." Today the product sells internationally through distributors.
Two of the best defined markets for Wessex are plumbing and heating contractors, and cruise ship operators. "For the owner manager, the ideal position is to have a broad range of longterm customers providing the majority of work," suggests Borowski. "That provides a degree of comfort, although that can't be allowed to become complacency.
"The ambition when I started the company was to make a living. Basically that was it. What motivates me today is that I like being out seeing customers, talking about their requirements, and coming up with answers."
In fact he once come up with an answer which couldn't have been closer to home. After pigeons targeted his convertible car parked in his driveway, Borowski developed a cleaner which also serves to improve the waterproof qualities of a canopy. Without any concession to marketing, the product is simply called ‘canopy cleaner and protector'. "It really is all about what it says on the tin," says Borowski by way of defence.
But there's no doubting the credentials of Wessex Chemical Factors as a family business. Borowski's brother worked for the business; his son looks after account management, and his daughter admin and finance; her partner is involved in sales.
"The idea is that having a management team enables everyone to have time off for holidays and I'm not having to fill all the gaps," Borowski explains. "Often the difficulty for a family business is that if the husband and wife are both working directors, the company loses to key people when they go on holiday."
There's an egalitarian approach to a pay review at the company, and the Wessex way could provide an interesting template for corporates to consider. When there is a pay rise, everyone receives the same amount. "I understand there should be a gap between senior management and someone pushing a broom around the floor, but once that differential has been established, any increase should be the same for all in absolute terms," Borowski suggests.
If a dividend is declared - and this is a policy laid down in the company's articles - then it's equally distributed between shareholders and staff. I don't think that's a bad model for a business, suggests Barowski. "For a business of our size, it's the best way to align the interests of the workforce and shareholders."
What does concern Borowski is that Dorset is contunuing to lose too many of its young people. "Only three of the people I knew at school are still living and working in the county," he says.
"A couple more have come back - to retire. Dorset is perceived as a wealthy county, but there is a significant number of people who have made their money elsewhere and then have moved down here. They haven't invested in wealth creation in Dorset, only in their property."
08 Feb 2017
Adrian Carter - Ace Office Environments
There was never any doubt in my mind that I would join the family business, says Adrian Carter, Managing Director of Ace Office Environments, one of the country’s largest one-stop independents.
"I would come in during school holidays to make the tea and sweep the floors," he recalls. "My grandfather, who started the business, said I should get outside experience first, so I did a degree in computer sciences at York, on the graduate scheme with Marconi."
He went on to join EASAMS, where for three years he was writing and specifying software for organisations such as Barclays Bank and the DSS. While he was there, Ace realised they needed to migrate from their existing system or face a bill of some magnitude. So Carter was asked by his father for some advice. "I'm sure without thinking about the implications of what he was saying, dad asked if I knew anyone who we could get to run the new system," says Carter. "That was my entry point. It meant I joined the family business with a skill set which would bring value to the company."
His position was vouchsafed at a family Christmas dinner in 1998 when grandfather announced that he would be making Adrian MD. "Mum and dad (the managing director at the time) were horrified," explains Carter. "Dad thought he'd been sacked. But it was just that grandfather had neglected to mention that he wanted him to become chairman."
Turnover rose to just under £7 million by 2007. What happened next was '2008'. Ace had made the acquisition of a small furniture business specialising in the home office, but the financial crisis resulted in sales literally drying up overnight. If that wasn't enough, by 2010 big international players had come into the market slashing prices in their bid to build turnover. "Buying turnover," says Carter by way of clarification. "At the time we lost some big accounts as a consequence."
But adversity was met with clarity of thought. "What an independent has to be good at is finding the pain points of the customer and knowing how they can help and facilitate," suggests Carter. "So for example we were pioneers in breaking down an order from a company and delivering direct to individual desktops."
The other way that Carters re-established their foothold was to diversify. Our business then was stationary and office furniture, he says. "It still is today, but in addition we provide promotional gifts, catering supplies, janitorial supplies, such as ladders, cones, hi vis jackets; then there's packaging materials and our print brokerage service. Diversification comes from identifying opportunity. In 2009 we made the conscious decision to start selling safety wear and personal protection equipment because we realised health and safety compliance was moving up the agenda for companies.
"We also realised that competitors and suppliers for that matter were happier with bulk orders but weren't so effective if a customer wanted, for example, just one jacket with the company logo on the front. So we acquired a workwear business so we could meet orders even if they were for a single item."
Carter raises a philosophical question in corporate terms. Which is how to define what is 'one'. "For the manufacturer, one is probably a pallet," he suggests. "For the wholesaler it can be a box. For the customer, a single item. At the very least that means there are intricacies in the supply chain to address, and one of the biggest challenges is that none of the software houses have got adequate resource to integrate everything, so it's rare everyone is on the same wavelength."
Up-skilling and changing, albeit with a degree of subtlety, the role of the salesperson was something else that Carter introduced. "We have to understand that when someone says they want an A4 envelope, it might mean they want one which takes an A4 letter but conventionally folded into three sections," he says.
He's also looking to put sales people back on the road: "We all thought that email marketing and communication was a wondrous solution, but really what has happened is that recipients have become good at pressing the delete key or unsubscribing. But we live in a world where pricing is dynamic, printed material isn't quick enough to reflect changes.
"So where does that leave us? My belief is we need humans for the relationship, IT for the actual transaction. And there needs to be the right balance. I'm not talking about a return to the days when a field sales person went out to take an order. I see their role is about introducing new products about talking about future requirements with the customer. Can I say that we are different just in terms of how full our catalogue is of products? Of course I can't. But I can give you an example of the sales team taking a consultative approach.
"A customer phoned to ask where they could buy a birthing ball for a pregnant member of staff for her last few weeks before maternity leave. We resourced it and delivered it. The point I am making is that our relationship was strong enough for the customer to feel they could ask, and that they knew we would be prepared to do it for them. What technology enables us to do is to meet such requests with the minimum of supply chain cost.
"Then there was a call from a customer who happens to buy their stationery elsewhere to say they were out of A3 paper halfway through a job which they had to dispatch that day and could we help them. We delivered within the hour. That's the difference. They got the job completed on time because we wanted to help, and that is something the customer will remember."
While consolidating local councils into a unitary authority has been spoken about as a viable option, Carter says he would prefer to see policy decisions relating to having joined up councils reversed. "We ought to wind the clock back and have local councils supporting local businesses again, spending money on services and products in the local economy," he maintains.
"Now councils have framework agreements and that could require a supplier to have a turn over seven times the contract value. So if local authorities have joined forces and their combined office supplies contract is worth £7million, which is about the requirement of the south-west regional framework covering all of the local councils in this part of the country, then a potential supplier will need to have sales of £49 million to be considered as a supplier. There are only three companies in the country which would qualify, and none of them are in this region.
"We resource as much as we can locally. We could lease our vehicles from a supplier elsewhere in the country and perhaps save a few pounds, but there should be a natural tendency to want to support your local economy where you do business."
16 Jan 2017
David Errington - Goadsby
How does a company with twenty-eight office locations retain the culture of the owner-managed business in one location?
According to David Errington, chief executive of Goadsby, the largest residential and commercial estate agents in Dorset, it's by enabling everyone from associate director level - there are fifty all told - to become shareholders.
With 60% of the office, retail, and industrial property market in the county, Goadsby are the twenty-second biggest services provider of their kind in the country.
Established in 1958 and formerly known as Goadsby & Harding, the firm was one of the first partnerships to incorporate (in 1984). Errington, who has been with the business since 1986 and became CEO in 2003, thinks a company structure is the most viable for an estate agency as it's easier to run in terms of decision-making and succession.
"The shareholding opportunity is motivational in the sense that it encourages performance. Our senior people feel committed," he says. "Nobody here can lose themselves behind a partnership structure without performing. At the same time, the business has managed to retain the culture of an owner-managed business." Of the twenty-eight offices, the majority are in Dorset but they have substantial footholds in Wiltshire and Hampshire. "I'm a firm believer in being able to control your environment," Errington declares, "and we can reach the furthest of our locations from head office in just over an hour."
Don't think that equates to any lack of ambition. Over the last five years, Goadsby have invested £2million on renewing their car fleet, £400,000 on computers, and are completing the refurbishment of the entire branch network at an average cost of £50,000.
They have also been building a contact centre, which will handle calls centrally. "Foxtons, the estate agency quoted on the London Stock Exchange, have as many people in their call centre as they have in branches," observes Errington. "We won't go that far but it will mean we can service customers better, particularly out of hours. We're always thinking how can we move forward with IT."
Not surprisingly, as part of their marketing armoury, Goadsby use online portals but traditional boards are still right up there, says Errington. "Our best investment is our boards," muses Errington. "The combination of boards and online means we need to spend far less than they did on printed media and advertising."
But if technology isn't too much of a challenge, Errington can't say the same about government. He's not impressed by the government's declaration that agents shouldn't be charging fees to residential tenants. "References - they can't be done for nothing. And it costs us up to £70 to do an inventory. Rents will have to go up to deal with it."
Another concern for Errington is the apprenticeship levy. Goadsby train up to fifteen apprentices at any one time, not just in estate agency, but accounting, HR, and marketing for example. The levy costs nearly £30,000 a year, money which Errington would rather be spending directly on training. "We're the biggest independent trainer of estate agents in Dorset and most firms at some stage have been poaching our staff," he complains, but not without a degree of pride. "We have to take that as a compliment."
The real problem, he says, is that there aren't enough civil servants who have business experience. "Government should use a business liaison officer throughout the process of deciding whether new legislation should be introduced. That way, some of this nonsense wouldn't get off the ground," he suggests.
Specifically to Dorset, planning is his concern. "It might help if the local authorities of Bournemouth, Christchurch, and Poole were integrated so we get a unified, efficient system across the conurbation, rather than differences based on vested interests," he argues.
Dorset is one of three counties in the south without a mile of motorway (the others are East Sussex and the Isle of Wight), so how much of an issue is the road network? "The lack of infrastructure is something the business community is concerned about, but this is outweighed by the quality of life attributes," Errington avers.
09 Jan 2017
Teresa Woolley - Bournemouth Symphony Orchestra
Each year - some one hundred and sixty three performances are attended by some 130,000 people in thirty-eight cities, towns, and villages across the south and west of the UK....
That’s the equivalent of a concert every two days, before factoring in time for the musicians of the Bournemouth Symphony Orchestra to familiarise themselves with the music, rehearse, and also undertake community programmes (for example, people living with dementia) which will touch a further 67,000 people.
Arguably, this is an organisation embedded in the community as well as the concert hall. Here’s a crossover example. Imagine you played an instrument as a child, got to a certain standard, and now have a yearning to take it up again. Now you have the chance to rehearse and perform as part of the orchestra at one of the BSO’s ‘rusty musicians’ concerts.
Broadening the corporate repertoire from the traditional one of performing symphonic works is not simply altruistic, as the BSO’s head of finance and operations Teresa Woolley points out. It couldn’t be, given that orchestras, by their very nature, weren’t designed to make money, and public funding from local government has collapsed and virtually disappeared in the last few years, with Bournemouth, Poole, Portsmouth and Dorset and Wiltshire councils being the notable exceptions. The community and education initiatives have attracted the financial support of trusts and philanthropists.
Income is about £6million a year, of which 40% comes from public funding, mostly through the Arts Council. The balance comes from ticket sales and the results of fundraising and sponsorship.
The orchestra has charitable status, and has managed to make a small surplus for the past couple of years, although as Woolley points out, there’s still an overall deficit on the books. "We have to be sure that we are delivering value for money, so we’re always looking at how we might improve systems and processes," she explains. "There’s no fat, but that isn’t the same as saying there’s no room for improvement. It’s about maximising our assets, such as having musicians playing in different sized ensembles, for example, a full symphony orchestra wouldn’t fit in a village hall.
"I’d particularly like more involvement with the NHS. Health and well-being have gone up the agenda in the past few years and we want government to realise that the arts sector could play an important role in delivering that.
"This kind of work also helps to counter any perception that classical music is somehow elitist. Part of our brief is to widen what we do, to involve schools and communities more and to try new approaches to performance. For example, a schools concert was streamed live and seen by an audience of 16,000.
"We’ve also been trialling the idea of an on-line orchestra which will allow musicians in different locations to play together. It’s early days, but it will be fascinating to see where technology allows that idea to develop."
Dorset is the only county in the south and west of England (outside of London) which is home to a resident, contracted professional symphony orchestra. And that has commercial significance. "A survey carried out in Poole - where the orchestra is based and plays a concert season - a few years ago estimated that the BSO brought £12million a year into the local economy," Woolley points out.
The decision by Chase Manhattan, now JP Morgan, to relocate their UK corporate services operation to Bournemouth was partly influenced by the presence of an internationally renowned orchestra.
Of the sixty or so full-time musicians, 53% are women, and the average age is thirty-nine. The Bournemouth Symphony Orchestra have a policy of engaging as guest conductors and soloists the next generation of talent - hence their tagline ‘the orchestra for the 21st century’.
Woolley, a management accountant, has been with the BSO since the autumn of 2015. She was previously head of finance at a housing association in the county and was FD of the Goulds department store business. She readily admits to being no musician herself. "I did play the trumpet when I was younger," she concedes, "but please don’t ask me to do it now."
16 Nov 2016
Nick Dunkerton - Glossbrook Builders
It seemed a straightforward enough question - what differentiates Glossbrook Builders? But managing director Nick Dunkerton is momentarily lost in thought...
His response is a rare example of corporate self-deprecation. "We try to be a nice company to deal with," he says. And then he provides a more fulsome explanation.
"We want to establish a relationship with the client from the very outset when we are discussing their project. If we feel their budget is too tight to achieve what they want, we let them know because we don't cut corners. And nor do we try to win a project by putting in a low price and then attempt to make up the difference with 'extras'."
"Nearly everything is on a fixed-price contract now, and we operate an open book and a cost plus basis. So if we have maintained our margin on a contract and the client wants to make a change which isn't going to affect that, why would we charge extra just because we can?
Of course Glossbrook Builders aren't the first contractors to espouse a non-confrontational approach, but as Dunkerton explains, it only works if it's an intrinsic part of the contractor's culture rather than a statement of intent hanging up in reception.
Only once has Glossbrook Builders had to take things further, and involve a third-party, which was when a customer took advantage of the non-confrontational framework by withholding £120,000. "We had to insist on arbitration, which came down on our side on every single point," recalls Dunkerton. "But it left a very sour taste. I don't know how people who do business like that sleep at night."
There's another basic tenet of a non-confrontational approach. "We treat our sub-contractors the same way as we treat out clients," says Dunkerton, " because we know they are as essential to our success as our clients are.
"We keep them busy, and pay them quickly without making any reductions for retention. There have been examples where a sub-contractor has waited for years to get their money held on retention, and where a building company has offered more work if they write off the retention money from the previous job."
Perhaps what has conditioned Glossbrook's approach is that for the first four years of their existence they were developers and not contractors at all. It was the recession in 1990 which prompted the company to search for new opportunities and to focus on building social housing.
"Most of our clients now are developers who used to build out their own schemes, but who no longer do so because of increasing regulation which is applied whether there are three or four housing units or 300," Dunkerton explains. For one house developer, Glossbrook took on their construction workers and bought their machines and lorries. "Their motivation," he says, "was that with their resource it was taking them three times as long as we would to complete a scheme."
"It has never crossed my mind to acquire a competitor, he says candidly. "We've always put the effort into nurturing and maintaining our culture, our non-confrontational approach. Growth has resulted from that rather than a strategy."
Dunkerton took over as managing director fifteen years ago when the turnover was £3 million. Today it's £20 million with an order book which will see that figure head north: usually the company can have as many as twenty sites on the go at any one time, and one particular contract, for four apartment blocks, is worth £12 million.
But at the time of his appointment, what concerned Dunkerton was the company's virtual dependence on house building. He applied his skills as a structural engineer - he re-designed the structure of Bournemouth Pier when he was working for the local authority - to gain the attention of commercial developers involved in more complex building projects.
As a consequence, most of the office buildings on the business park around Bournemouth Airport were constructed by Glossbrook. That 'coping with complexity' ethos extends to bespoke house building projects. A third house at Sandbanks, where land values are said to be the fourth highest in the world, is being built with an indoor swimming pool below sea level, which Dunkerton, with his usual understatement describes as "quite interesting." These are properties each with a build cost alone of some £2.5 million.
The company has some sixty staff, with over a third being in post for more than a decade. In the next few years, three key people will be retiring, but succession has been worked out, with Richard Fooks, currently purchasing director, eventually stepping up to become managing director when Dunkerton, who is a 20% shareholder, retires.
Meanwhile, Dunkerton has a suggestion which he believes would help the local economy. "There are too many local authorities in what is one continuous conurbation," he says. "Instead of separate councils for Bournemouth, Christchurch, and Poole, having just one would provide a more consistent, coherent approach to planning."
16 Nov 2016
Dean Fensome - Teachers Building Society
Nobody could have known at the time, but the foundation of the London Scottish Building Society in 1937 was to eventually have some significance for teachers across England and Wales as well as residents of Wessex looking to buy a home.
It was in 1966, when the National Union of Teachers, keen to help their members onto the property ladder acquired the building society in question, which by this time had but three borrowers. Today, based in Wimborne, Dorset, what is now Teachers Building Society is arguably the second youngest; only the Ecology Building Society in 1980 has been set up since.
"We are a business of two halves," explains finance director Dean Fensome. "Our raison d'etre is to help teachers own their own home - and we have savings products to fund that mission which can be bought by anyone."
For teachers read educational professionals, because the building society also provides mortgages anywhere in England and Wales to university lecturers and support staff as well.
Interestingly, 'Teachers' could also be described as the Dorset BuildingSociety, because mortgage lending is available to anyone resident in what Fensome describes as the Wessex area.
"We are part of the local community, and I feel this is a way in which we can serve it," he explains. That said, 85% of lending is with the profession.
"We are a small business in quite a crowded, banked market, which is a legacy of demutualisation," says Fensome. Where 'Teachers' have a competitive edge in the interest rate sensitive savings market is that they do not have the infrastructure costs of a branch network. And as a mutual, some of the surplus (aka profit in the world outside of mutuality) can be channelled back through the interest rate paid.
Not having a branch network provides an additional competitive advantage in terms of coping with the cost of compliance and regulation. "And by utilising the internet, it means we can grow without incurring significant additional overhead," explains Fensome.
And there is plenty of scope. In England alone there are over half a million teachers and 1.4million support staff. "Our market share is a fraction of 1%, so there is a lot of potential for us," says Fensome. "We want to be able to provide more mortgages for more teachers, to the point where we can leverage up our investment in technology to price more attractively, because we will have more scale combined with the low cost basis of operating from one office."
The flipside though is that being ranked thirty-six out of forty-four of the building societies left in the UK means that any change stretches the resource of the team. Small building societies were caught in the back draught of universal rules applied as a consequence of the financial crisis. "Compliance consumes a lot of management time and effort," muses Fensome, "regulators ability to apply proportionality is limited.
Being small means we can be flexible and adaptable, but the extra work to effect change falls on a limited number of people who have the necessary expertise.
At 'Teachers', the roles of finance director, treasurer, chief risk officer are all rolled into one. "And at a large society," explains Fensome, "the treasurer alone will have an interest rate manager, liquidity manager, and funding programme manager."
Indeed, his background is in corporate finance and bank treasury. Before taking this post, he was treasurer of the International banking division of Royal Bank of Scotland.
Mitigation is achieved by evolving to an outsource model. "In terms of IT that means moving away from capex, gaining better firewalls and cyber security, and enabling us to avoid having to find peaks and troughs," Fensome says. Which makes capacity management easier as well. "With disaster recovery we would no longer have to pay for backup premises we could move into, because technology means we would be able to work from home and all login from there.
"A business needs to be focused on developing better systems, but an inhouse IT resource tends to be stretched just dealing with the day today. Outsourcing allows us to focus on how he can add value to the business. Invest to grow is the strategy. Outsourcing has never been about cost - it to enable us to be more agile, more efficient, using technology to gain leverage by being able to better understand consumer behaviour."
And Fensome believes that is essential if Teachers Building Society, regardless of having a distinctive niche, is going to have a future. "No matter how attractive the rates we can offer, the customer is not going to want to print off a form, fill it in, and post it to us; they will just go elsewhere," he suggests. "Customers also want to check their balance on an app and we have to deliver that."
According to Fensome, teachers are having to wait until later in life to buy, and then usually when they have a partner. "We need a coherent housing strategy, not just in Dorset, but nationally," he says. "Government has been trying to manage the demand side, so that applicants can get a mortgage, but the supply side isn't working. The cause is a complex series of problems - planning, availability of skills, are just two factors. I guess if you look back, local councils used to build houses but today the private sector hasn't picked up the slack. Why should house builders change their modus operandi? They're making good profits government needs to provide incentives to ensure more houses are built.
"A free market mindset means that government does not intervene in the housing market. Their approach is to nudge interested parties to behave in the right way, but the housing shortage means that we need more radical action."
The problem with having a short term of office is that the focus of politicians is on getting re elected or back into power - and then they just kick the housing issue can down the road again.
"There needs to be a strategy to diagnose exactly the problems and to have a clear guiding policy to address them, with time-bound actions which are delivered over a five-year period."