After tasting victory on TV’s The Apprentice two years ago, entrepreneur Joseph Valente has also proved a winner at expanding his business. His Cambridge-based ImpraGas commercial contract-plumbing firm was founded in 2012 with six staff and a £400,000 annual turnover.
Today, it’s a £2.5 million-a-year domestic heating installation business with 35 staff covering large swathes of the South East and East Midlands.
Expansion only began in January 2017 and now Joseph is about to extend his empire into the West Midlands, opening a new office in Birmingham and intends to go national by 2020. What’s the secret? “Basically extensive research to understand the market and then making sure we offered a superior value proposition,” says Joseph.
Researching the market
“In January 2016 I was looking to grow the business but low margins in maintenance contracting made profitability hard to achieve. I had to change the business model.” Feedback told him switching to domestic boiler installation might be the answer, so he ran a 12-month in-house research programme using the net and speaking to wholesalers and manufacturers.
This time-intensive operation revealed that a large number of domestic boiler installations are carried out in the UK annually, with healthy margins. He adds: “I knew we could get a big slice of that market by offering a better value proposition than rivals, and the sheer volume and flow of profitable work meant we could steadily expand without major investment or borrowing.
“We discovered what competitors weren’t providing and made superior service part of our offering, making small changes to give us the edge without reinventing the wheel. For example, changing how people are contacted, offering different payment plans, ensuring customers understand how boilers work and selling quality products.”
Following a successful one-month pilot of the new service Joseph launched the new business in January 2017 and has never looked back .
Nigel Walker, Innovate UK’s Head of Innovation Lending, agrees that detailed market research is the vital first step for expansion. He says: “You need to gather insight into your target market and specifically understand which segments of that market are relevant and if they’re large enough. Commissioning professional research can be expensive, so gather as much data and information as you can by yourself.
Local enterprise partnerships can provide access to experts and sometimes funding, and it’s possible to get a research grant of up to £50,000 via the SME Instrument Fund of the EU’s Horizon 20/20 scheme.”
You also need to assess whether financial investment from banking, business angels or other sources is needed to meet associated costs of expansion, including any relevant product development.
“Given the risk, investors want a competent team on board with the knowledge, drive, passion, adaptability and resilience to deliver business objectives,” says Nigel. “Our Scaling Up: the investor perspective report* revealed that 73 per cent of investors say lack of market knowledge is a barrier to international expansion.”
He adds: “Obviously you have to ensure your value proposition benefits the customer or end user, but it must also make sense to those who are actually paying for it.”
Finally, take steps to protect your intellectual property (IP) by getting competent legal advice, to avoid having any innovation and commercial advantages stolen by rivals and to be certain you're not encroaching on someone else’s IP.
Joseph Valente’s first book, Expelled From The Classroom To Billionaire Boardroom, was published in November 2017.
Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.
* www.gov.uk/government/publications/scaling-up-the-investor-perspective (Nov 2017)