BUILDERS LTD

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BUILDERS LTD : Case Study

Language Style: English (U.K.)

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Case study.
Sally is Company Secretary of Builders Ltd., a family owned building company with a reputation for
quality workmanship and customer service.
Sally has become quite worried recently because she has noticed an increasing
number of customer complaints about the quality of the work done. The company’s suppliers are also beginning
to moan about the pressure that Builders puts on them to get non-stock items to the work sites at very
little notice and because of the late payment of their bills. The business regularly switches suppliers to get
the best price and quickest delivery times and recently has been trying to improve its cashflow through slower
payment of invoices. The company is also under pressure because trading conditions have been extremely
difficult in the building trade for the last couple of years; the business has managed to keep going but the
owners are not happy with the profits being made. To win jobs recently it has had to slash its prices even
though inflation in the industry has hit its costs severely.

Builders was set up in 1980 by Jimmy Down and is now run by his children John, Jim and Sally. John,
the oldest, is Managing Director and Jim is Operations Manager. The company now has 55 full time staff as
well as taking on casual labour as needed for specific jobs. In the past few years as full timers have left
or retired the business has tended to use more casual staff or subcontract to keep costs down. All employees
are recruited personally by John, Jim and Sally from amongst people they know and currently include 10 members
of their wider family. When recruiting they tend to rely on what they know about the person, or what other
people have said plus a short interview with one of them to find out more about the person.

Since the children took over complete control of the business in 2009 they have started to take on bigger jobs
including building new houses in small developments in and around Oxford. This has proved a real challenge as
neither John nor Jim has much experience of planning big jobs and the financial strain has been severe as has
the stress it has put on them personally. To help get the building of these homes going the company has
borrowed funds. None of the family are particularly good at understanding the finances but Sally is concerned
about the borrowing and the cashflow problems created by these bigger building projects that take longer to
complete and sell. The company has a few houses it has been trying to sell for a while. However despite some
home building projects the bulk of the company’s work remains improvements and repairs for individual home
owners where they rely on word of mouth marketing. All of the family have been brought up to believe that if
you do a good job word will soon spread and there’s no better way to generate business; unfortunately
enquiries seem to be less frequent nowadays and the conversion rate to actual orders has been falling.

Most recently John has been keen to find ways of growing the business significantly despite the present
economic climate and financial position of the business. John has ambitions to make the business much bigger
and keeps urging the others to “think big and aim high”. John has been trying to grow the company by bidding
for some very large corporate maintenance contracts (e.g. hospitals, hotels, office blocks etc.) in the last
year not only in Oxfordshire, which is where the business has operated before, but throughout the country.
These bids have taken up lots of John’s time and energy but have been unsuccessful as the company has lost out
to much bigger organisations. It seems that these customers want some assurance of high standards other than
just a local reputation and view Botley Builders as too much of a risk, even if it did have the capacity
required and could match the prices of others. There has been some muttering within the business.
The firm is wholly owned, equally, by John, Jim and Sally; they do not take a salary from the business relying
instead on dividends paid from the profits for their personal income. Sally is worried about the
sustainability of the business; all three of them have had to support the business financially in recent years
but they now have no significant personal resources remaining.

John and Jim personally visit every job to meet the customer and give an estimate. If successful they then
share the supervision duties and keep a close personal involvement with every project. They often have 25
simultaneous jobs – keeping them running smoothly sometimes presents a problem. Generally, the company is
friendly and informal and work is undertaken in a flexible way by whoever is free at the time. Generally
everyone tends to get on well ; however there can be friction when they duplicate work or think someone else
is dealing with a task and sometimes John thinks they avoid taking difficult decisions for fear of upsetting
people. As Company Secretary, Sally, is supported by one assistant and has a contract with a small local
accountancy firm, to deal with all the company paperwork including billing customers, paying suppliers,
payroll, returns to Companies House and so on.
Next week John has a charity dinner for a local hospice. This charity was one that Jimmy supported generously
for many years because he wanted to give something back to the community. The children have continued this
support giving a donation of £10,000 a year from the company since they have been in charge. Sally,however,
is beginning to wonder whether they should be looking after the business a bit more and worry about the rest
of society a bit less at the moment.PLACE AN ORDER TODAY & GET 15% DISCOUNT (CODE GAC15)

 

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