Darren Taylor (pictured), managing director of Hampshire-based kitchen studio Searle & Taylor, warns of the pitfalls of depending on a limited order book and offers his top tips to avoid putting your business in danger
I feel very sympathetic to the plight of Richard Edmondson, whose business Edmondson Interiors entered administration last month.
Along with every other retailer reader of kbbreview, we all know how challenging this industry can be and no one wants to hear of anyone’s business going under for the sake of what seemed to be a number of external forces coming together all at one time.
I also respect Mr Edmondson for wanting to buy back parts of his business so that he can build it up again. It takes guts and bravery to do that, and while he clearly blames himself for what happened, he shouldn’t be too hard on himself, in my view.
What his situation highlights is the fact that his business was for a short time entirely reliant on a client that he subsequently did not trust.
He suggested that he should have looked ‘a bit deeper’ into this client but, by the sounds of it, the customer had enough money to pay for appliances upfront, together with what seems to be a large deposit for the project. But we don’t know the cost of the entire job, so everything is relative.
But how deep should he have looked? And how, if the customer was a private individual, can they be credit-checked? It would be very hard to delve more deeply into their finances.
If the client is a business, then research is much easier to undertake. I always recommend everyone do a proper forensic check of the businesses they work with if they are acting as future suppliers.
However, this is normally reliant on Companies House (if said business is limited), so with nine months to file your accounts after the year-end it means, this information can be seriously out-of-date.
I know many of my individual clients personally, but not all of them, and certainly I don’t have access to any of their bank accounts. I am very lucky that I have never been shafted on a job, but I think that is not only a mix of luck, but also some strict rules that I use in my business that has kept that situation from happening.
- I always take a good-sized deposit of at least 40% via bank transfer or credit card. We only then deliver and start a kitchen once the balance has been fully cleared – sometimes including the installation if we are concerned.
- We have a sales contract, which is fair but does state that once the order has been processed, the client is responsible for the entire amount.
- Our business is well spread over many projects a year – we never put all our eggs into one basket no matter how great the project sounds. We prefer many smaller, but nice-sized projects, working more direct to a client rather than commercial work.
During the 25 years that I have been in business, I have advised a number of smaller independents, and unless retired, they are all still in business.
I actually believe that our industry could benefit from more KBB consultants that have previously worked as retailers, and can truly understand the challenges of running a business on the one hand, and being a creative individual on the other, while also being an all-round general judge of good character.
I wish Mr Edmondson good luck with his future endeavours.