The continued trend towards outsourcing is expected to ensure future growth opportunities for Facilities Management companies; those with bundled services and integrated solutions, in particular, showing the strongest growth potential. However, increased price competition can be expected to restrict a stronger value development with clients adopting a “more for less” attitude.

In the public sector, spending cuts will afford further opportunities through the new Crown Commercial Service (CCS) next generation FM framework although price competition is expected to remain intense. We believe however, that there is a changing culture among several public-sector bodies towards contracting out services.

CCS and related central government bodies will continue to benchmark essential services and will aim to increase the rate of commoditisation and standardisation of essential public services. Providers will be increasingly bidding for private sector opportunities. Competition will further intensify, especially in the £500k – £5m a year revenue projects.

In this series of articles we will address three key questions

Does your Facilities Management (FM) business have growth clarity?

How do you stand out in the FM market in 2018-19 and beyond?

Is your FM Company built to succeed?

We will address these issues using Baachu’s 3Ps model

Does your FM business have growth clarity?

To answer this question let’s use the first of Baachu’s 3Ps – Perception

Review your purpose closely and ask common sense questions

• Why are you in the FM business?
• What are your competitive advantages and USPs?
• Are you building sustainable capabilities?
• Are you aware of market trends, especially the decreasing profitability in the FM business?

It is very important to have good data and accurate perceptions about the market. The FM market increased by £10.7bn to £117bn in 2017, from a fairly static 2012 value of £106.3bn but is expected to be £129 billion by the year 2019. You must continuously track the trends and the issues related to FM industry. This will lead you to a good understanding on how to differentiate yourself in a crowded market.

Like any industry, growth in the FM business takes two formats – top line and bottom line growth.

A company’s bottom line is its net income, or the “bottom” figure on a company’s income statement. It is a company’s income after all expenses have been deducted from revenues. These expenses include interest charges paid on loans, general and administrative costs and income taxes. A company’s bottom line can also be referred to as net earnings or net profits.

The top line refers to a company’s gross sales or revenues. Therefore, when people comment on a company’s “top line growth”, they are making reference to an increase in gross sales or revenues. Both these figures are useful in determining the financial strength of a company, but they are not interchangeable.

Bottom line describes how efficient a company is with its spending and operating costs and how effectively it has been controlling total costs. Top line, on the other hand, only indicates how effective a company is at generating sales and does not take into consideration operating efficiencies which could have a dramatic impact on the bottom line.

As the saying goes turnover is vanity, profit is sanity but cash is reality! Just chasing revenue and not focusing on profitability or cash leads disaster.

Many business leaders focus on a year on year top line growth of some 10%. The average margin is less than 5% while some companies struggle to make 1% or 2 % margin. There are some providers who target a top line growth and go for 0% margin.

Many businesses in the FM sector focus on top line growth, resulting in 7 CEO changes among Top 10 support services companies in the year 2017. As we have seen with Carillion and few larger outsourcing companies, all it takes is few failing contracts and the entire business collapses.

However, this is not to say that a company cannot experience both top-line and bottom-line growth at the same time. It takes strong leadership and a value driven culture to achieve top line growth and bottom line efficiencies at the same time.

Baachu recommends balanced growth (sustainable top line and bottom line growth)!

As FM opportunities continue to grow rapidly and competition intensifies, you need to build strong knowledge partnerships that can help you build upon your strengths to capture market share. Baachu’s expertise in FM will give you the insight and advice needed to achieve growth clarity for your vision going forward.

You can benefit from talking to the FM experts, so get in touch with us by emailing baskar@baachu.com today.

Please subscribe to Baachu’s newsletter to receive news and updates on FM growth and strategy.

This is the next in our three series articles on FM growth strategy. In the previous article, we describe how Baachu’s 3Ps model can be used to examine whether your business has focus and clarity using the Perception parameter.

Here in this article, we will show you how we can use Baachu’s 3Ps models’s Position parameter to turn our vision outside of your company to examine its Position in the FM market.

How to stand out in the FM market in 2018-19?

To answer this question, we will use the 2nd P of the Baachu 3P’s framework – Position.

• Are your assumptions around current growth and future growth markets, and the opportunities within your core sectors still valid?
• Have you positioned your services based on market data against your own capabilities?

The Baachu team estimates sizeable upcoming opportunities in the UK public sector FM market over the next three years, with upwards of 800 contracts over £9 bn expected to be floated for rebids by 2020.

At this point, providers should be actively looking at ways to build the right contacts, capabilities, partnerships and differentiators to be well placed in the re-shaped FM landscape. Collaborative capabilities, localised supply chain, innovation and social value generation will be the key competitive propositions to be successful in the coming years.

Let’s look in more detail into how contacts and partnerships can be further developed further through networking.

Networking has always been a vital part of any business but never more so than today. This is because industries and markets are evolving and changing so quickly. Therefore a business cannot afford to be static. The good news is there has never been so many opportunities for networking, whatever be your business needs.

Networking opportunities include physical meetings organised by industry experts, presentations and trade shows. Today it’s easy to schedule face-to-face meet-ups in your city that are relevant to your interest using search portals such as Meetup.com. Often, if you don’t make it to the physical event, presentations and panels are live-streamed though sites like Facebook and YouTube, with live chat feature available too. In the internet age, there are of course many meetups, symposiums and Webinars taking place entirely online, where participants connect live through text, voice and video. 

Be sure to subscribe to the Baachu newsletter to be informed on notable upcoming meet-ups to attend.

Two other factors mentioned above are Capabilities and Differentiators.

In the past, FM professionals showcased experience rather than qualifications. BIFM’s Pay and Prospects Survey released in July 2016 showed a shifting trend in that an increasing number of employers will only consider candidates with a higher level of qualifications to underpin practical experienced gained. With changes to traditional working contracts and more flexible work arrangements, clients are also requesting further evidence of benchmarked transferable skills at all levels of the FM profession.

With techniques such as lifelong learning, investing in people, and mentoring, you can differentiate your company from others by showing enhanced skills, experience and qualifications.  Another way to differentiate yourself from your competitors is through using the latest technology, which we will discuss this in a companion article.

If you are a company which will deliver premium services, you will not compromise on quality but your prices will be higher and you must be very selective about the projects you will commit to. These advantages may be obtained organically or by acquisition. An alternative mode for delivery of operations is to ensure self-delivery of the majority of your services.

Overall you need to have clarity on

• Are you a single service provider or a bundle service provider? Are you a regional player or a national player?
• Are you going to self-deliver everything yourself or you will subcontract? If you are subcontracting, then do you know about the preferred supply chain?
• Your identity – are you a TFM company or Hard FM company? Clearly define your standard operating model! What are the sectors you operate in and why?

To summarize, it’s important to know your own companies position on the map of the FM world. When you understand this, it will allow you to effectively build up your network, your strengths and capabilities, and allow you to develop your company using the latest skills and technological opportunities.

If you need advice on your FM Company’s position, make sure you email baskar@baachu.com today.