1 Introduction

Universal Roofing Systems is a family owned and managed business specialising in the design, assembly and

installation of low maintenance PVC roofing products for domestic housing. These products include PVC fascia boards

and rainwater drainage systems. Set up in 1995 by two brothers, Matthew and Simon Black, the firm has grown year

on year, achieving almost ￡1 million sales by the year 2001. Universal’s products, or rather services, are primarily

for private house owners, though a significant amount of sales are coming from commercial house owners, mainly

local government authorities and housing associations, providing cheaper housing for rent. Universal have recently

received central government recognition and an award for their contribution to providing employment in deprived inner

city areas. In 2002 and 2003, they were the fastest growing inner city firm in their region.

Origins and competitive environment

Matthew and Simon’s decision to go into business owed a considerable amount to the experience and skills they had

gained working in their father’s local cabinet and carpentry business. At their father’s insistence, both were skilled

cabinet-makers and shared his commitment to quality workmanship and installation. Their decision to start a business

using PVC materials as opposed to wood came as an unwelcome shock to their father. However, the opportunity to

install PVC roofing boards on the house of a commercial contact provided the stimulus for them to go into business

on their own account.

In the UK there are some 25 million houses, of which 17 million are privately owned and 8 million rented. New

housing is now usually built with PVC doors and windows installed, so it is the replacement market of rotten wooden

doors and windows in existing houses that the manufacturers and installers of PVC windows and doors focus on. PVC

offers some significant advantages to the owner/occupier – it is virtually maintenance free and improves the

appearance of the house. Consequently, there is a high demand for PVC replacement doors and windows, estimated

at ￡1·5 billion in the year 2000. This has attracted some large-scale manufacturers and installers. They compete

aggressively for market share and use equally aggressive direct sales and promotion techniques to attract house

owners to their product.

Although the market for PVC windows and doors is reasonably mature, there has been no significant movement of

large companies into the installation of roofing products. Their complex design and location at the top of a house mean

that these products are much more complex and difficult to install. Economies of scale are harder to achieve and, as

a consequence, the installation of PVC roofing systems is largely in the hands of small businesses able to charge high

prices and frequently giving a poor quality service to the house owner. In a market with potential sales of ￡750 million

a year, no firm accounts for more than 3%. It was against this fragmented, but significant market that Universal

wanted to offer something distinctively different.

Operational processes

Matthew and Simon looked at the whole process of delivering a quality service in replacement PVC roofing systems.

The experience of the PVC door and window installers showed the long-term rates of growth possible through actively

promoting and selling the service. Supplies of PVC board and fittings were reasonably easy to obtain from the small

number of large UK companies extruding PVC boards in large volumes. However, the unequal bargaining power

meant that these suppliers dominated and were difficult to involve in any product development. Sales were generated

by door-to-door canvassing, followed by a visit from a company sales representative who tried to complete the sale.

Advertising in the press, radio and TV now supported this sales activity. In the early days the opportunity was taken

to sell the service at Saturday markets and, being so small, Universal could often pleasantly surprise the house owner

by offering virtually immediate installation. Matthew and Simon promoted, sold and installed the systems. One of their

key early decisions was to use a new Mercedes van with Universal’s name and logo prominently displayed, to carry

the bulky PVC materials to their customers’ houses. In one move they differentiated themselves from their low cost/low

quality competitors and got the company’s name recognised.

The skills and experience of the brothers meant that they were able to critically examine the installation process being

used by their small competitors to deliver a poor standard of service. Their eventual design incorporated innovative

roofing design and parts from Europe and a unique installation stand or frame. that provided the installer with quick,

easy and safe access to the roofs of the houses being worked on. This greatly improved the productivity of Universal’s

installation team over competitors using traditional methods. The brothers recognised that without the ability to offer

a service that could be packaged, given standard prices and procedures and made as ‘installer friendly’ as possible

they too would be limited to small scale operation and poor service. Being able to replicate a process time after time

was the key to delivering an improved service and preventing each job being seen as a ‘one-off’. In Matthew’s words,

‘Whenever the customer can have a predictable experience and you can say that this is what we are going to do, this

is the way we are going to do it and this is how much it will cost, the product/service usually goes problem free’.

Ultimately, the installers of the roofing systems determined quality. The brothers quickly built up a team of installers,

all of whom worked as sub-contractors and were not directly employed by the company. This gave the company the

flexibility to vary the number of teams according to the level of customer demand. Installation took place throughout

the year, though it could be affected by winter weather. The two man teams were given comprehensive training in

installation and customer care. Payment was by results and responsibility for correcting any installation faults rested

with the team doing the particular installation.

Sales and marketing

Marketing and promotion were recognised as key to getting the company’s name known and its reputation for a quality

installation service established. Comprehensive sales support materials were created for use by the canvassers and

sales representatives. Sales representative were able to offer significant discounts to house owners willing to make an

immediate decision to buy a Universal roofing system. In addition Universal received a significant income stream from

a finance house for roofing systems, sold on extended payment terms.

Universal offered a unique 10-year guarantee on its installations and proudly announced that over 30% of new

customers were directly recommended from existing satisfied customers. The growth of the company had led to

showrooms being set up in six large towns in the region and the business plans for 2005 and 2006 will see a further

nine showrooms opening in the region, each of which costs ￡30K. Brand awareness was reinforced by the continued

use of up-to-date Mercedes vans with the company’s logo and contact details prominently shown.

Company structure and performance

By 2005, the organisational structure of the company was in place, based on functional responsibilities. Matthew was

now Managing Director, Simon was Operations Director with responsibility for the installation teams, and Matthew’s

wife, Fiona, was Company Secretary and responsible for the administration and scheduling side of the business. Two

key appointments had facilitated Universal’s rapid growth. In 2002, Mick Hendry was appointed as Sales and

Marketing Director. Mick had 20 years of experience with direct sales in a large installer of PVC windows and doors.

Through his efforts, Universal achieved a step change in sales growth, with sales increasing from ￡1 million in 2001

to ￡3·3 million in 2002. However, the increased costs involved meant the company made a loss of some ￡250,000.

2003 saw sales increase to ￡5·4 million and a profit generated. 2004 saw further sales increase to ￡6·8 million and

a net profit of about ￡400K. Matthew recognised the increasing pressure on his own time and an inability to control

the financial side of the business. 2003 saw Harry Potts appointed as Finance Director and put in much needed

financial and management information systems.

Future growth and development

By 2005 Universal had seen 10 years of significant growth and was facing some interesting decisions as to how that

growth was to be sustained. Firstly, there was the opportunity to move from a largely regional operation into being a

national company. Indeed, the company’s vision statement expressed the desire to become ‘the most respected roofing

company in Britain’, based on a ‘no surprises’ philosophy that house owners all around the country could trust.

Economic factors encouraging growth looked fairly promising with a growing economy, stable interest rates and house

owners finding it fairly easy to raise additional funding necessary to pay for home improvements. Secondly, there was

a real opportunity to develop their share of the commercial housing market. The government had committed itself to

a significant improvement in the standard of housing provided to people renting from local authorities and housing

associations. Despite the appointment of a Commercial Manager to concentrate on sales into this specialist market,

Universal had real difficulty in committing sufficient resources into exploiting this opportunity. In 2002 commercial

sales represented over 11% of total sales, but currently commercial sales were around 5% of the total sales. Such

were the overall growth predictions, however, that to maintain this share of sales would need commercial sales to

more than double over the 2005–7 period. Without the necessary commitment of resources, particularly people, this

target was unlikely to be realised. Universal’s products also need to be improved and this largely depended on its

ability to get into partnerships with its large PVC suppliers. There were some encouraging signs in this direction, but

Universal’s reliance on PVC opened it to future challenges from installers using more environmentally friendly

materials.

Above all, however, the rate of projected growth would place considerable pressures on the senior management team’s

ability to manage the process. The move towards becoming a national installer was already prompting thoughts about

creating a regional level of management. Finally, such had been the firm’s growth record that its inability to meet thebudgeted sales targets in the first quarter of 2005 was causing real concern for Matthew and Simon.