Josh @ The KBB Collective: right guys, welcome to the podcast. This week's guest is Michael Cowell, who I've known for a very long time. one of the very initial consultants that we worked with back in the day. who opened my eyes to a world of knowledge inside the KBB industry that I didn't even know existed and set me down a path of self-learning and improvement to get the business to where I wanted it to, and I suppose ultimately led me to starting this education business that we have now. So, Mike, welcome. thank you for taking the

Michael: Thank you.

Josh @ The KBB Collective: time. so we very originally got in touch because my dad had met you on the cabinet vision stand. At one of the K V B exhibitions. and at the time you were with Tom Howley and you were sort of COO running operations there, and Cabinet Vision played a big a big part of that. Yeah. Okay.

Michael: Yeah, correct. I'd very kindly offer to go down and help them on the stand for a day. I met loads of people.

Josh @ The KBB Collective: Okay, so so he came back with your number, I got in touch with you. you had obviously seen that business through a massive growth journey. And we're gonna get into what you're doing today, but you wanna give me a bit of a background on on how you ended up there, and a bit more about your growth journey in that business.

Michael: Yeah, so I started working with Tom. in fact I've known Tom since I was that big. And my dad fitted kitchens for Tom when Tom had a previous career at Magnet selling kitchens for Magnet. So I've known Tom since I was like twelve, thirteen, fourteen. And when Tom was setting up his initial business, I was just starting at uni and he asked me what I like to come and join and get involved because he knew he needed some technical expertise in the business, he needed some IT expertise. Bear in mind this is the days of Windows XP. There's no iPhones. You know, that's how old I am now. so things were a little bit more simpler. We started off with one showroom, literally one kitchen showroom, an office in a basement that you couldn't stand up in. And we worked really hard on the business and made every mistake possible, with probably the simplest description I give to most people. you know, we did four or five years by ourselves, so the 2006 to 2011. We opened three showrooms. We had one in Altringham, one in Ulter the Edge, one in Isha. And we we succeeded in lots of ways and failed in others. And we had fantastic product, we had fantastic showrooms, we were very good at making, we were very good at the technical side of things, but we were a little bit poor at finance and marketing. And through one thing and another, we ended up with a sort of buyout in 2010, 2011 from the Neville Johnson group, as it were then. And sort of moved the business under their umbrella and then went from sort of growth to growth after that. We opened two to three showrooms a year from 2011 to 2016. So I had a very short, sharp education on various things from some as a team there. we scaled the business really successfully and really profitably in that period, with you know a few core guiding principles behind that. we opened a training school. so to train all the people we had to recruit through that period. And when I left the business in twenty sixteen, twenty seventeen, you know, we were turning turning about twenty, twenty odd million, making a very decent decent e bit dollar every year on that with happy investors and a decent investor exit. So, you know, it could have gone it could have gone a different way. It it could have been, you know, another disaster in the the K V B industry. But we, you know, we persevered, we worked hard, we were good at what we did and had some great opportunities.

Josh @ The KBB Collective: Okay, amazing. So let's talk about you said that there were a few core principles of growth. let's

Michael: Mm.

Josh @ The KBB Collective: let's talk about what those were in the in the tamali business.

Michael: Yeah, so I suppose one of the key core principles that we had initially ourselves was we had a very clearly defined product. We knew what our product was, we knew what it wasn't, and we sort of set off all that on what we would and wouldn't do. And that's sort of before the Neville Johnson's buyout days. We had a clearly defined, you know, we're at the bespoke end of the market. Everything's made so made we're made in house, we're not buying furniture in from From third parties, but we we had a very clear identification of what that was, and we built our software tools around that, cabinet vision being a key part of that. So number one, our furniture, our look, our designs were fairly consistent. I think number two, key guiding principle for us there, once we got involved with the the sort of buyout team was we tracked our marketing very effectively. We measured lead intake, we tracked conversion rates, we tracked conversion rates. her showroom for sales designer and that allowed us to support the team where you know things weren't quite enough as they meant to. It allowed us to leave the superstars to do what they were doing and allowed us to know where to invest in marketing. so, you know, that sort of marketing tracking side of stuff was was key. I think the third thing we did was once we got some scale behind us was we tracked issues. So we had a very decent performance system internally. We would track where remedials were occurring, we would track where fitting was falling down when where it wasn't working, we would track where drawing errors had occurred. So we could go back and then correct that issue, whether it was a training issue, whether it was a product library issue, whether it was a a salesperson issue or a showroom issue, whatever it might be. You

Josh @ The KBB Collective: Yeah.

Michael: and there's loads of different things that came out of doing that over the the course of three or four years that we adapted with the product. and then the the sort of fourthing. Fourth and fifth thing sort went went together. Was we we really scaled down the product range in terms of the products that we offer to people. And we trained our salespeople on those products quite specifically, and trained them on how to help clients and make decisions on picking products. Because one of the one of the key fundamental principles we found in the early days was it's fine when you've got three designers and you're selling from these five brands, you'll get some consistency. But when you've got 13 designers and they each have their own preferences, their own likes, I let this thing, I let that tap, I let this extra actor, the clients laugh for this oven and I think it's okay. You just end up with problem mistake, problem mistake, problem mistake, and there's there's no consistency. And it's not that we were trying to make the product worse for clients, in actual fact we made the product better for clients because every single item that we sold and had in our product library was there for a reason. And you know that that journey was or that particular decision was led, shall I say, from that performance management system, tracking where mistakes were occurring. Number one. But also two, I I I'd I'd gone through a sort of a postgraduate education process at the time and my my MBA thesis at the time was all around the psychology of decision making. And that drove an awful lot of the things I was trying to push through that doesn't sit the time. So As as a rough number, I think we scaled back our appliance accessory and handle this from about ten or twelve thousand items to about a thousand items. So we cut ninety percent of products because we just didn't need to sell them. And we

Josh @ The KBB Collective: Mm-hmm.

Michael: went we went from having, I think at one point we we we we had about thirty thousand pounds worth of appliances sinks and taps in our warehouse that were cancelled, returned, not wanted, incorrect, didn't fit. Within about a year of sort of implementing that, we we had a third of that number. We we we still had issues, but that number had dropped significantly. fitting became quicker, drawing became quicker, sales training became quicker. and it sort of became an underpinning item around everything we did. And as I say, we then trained on top of that. We we we implemented a training school. So I literally had a a classroom upstairs above our offices in in Traffic Park. And three or four times a year we'd have a new intake of salespeople. We'd bring them in for two weeks of dedicated training and we had a training course. You know, very fundamental key principles we'd teach them about our product, teach them about how we'd like them to sell, teach them about the tools that we would use so that when everyone left, they were a Tom Howley sales designer. yeah, core principles.

Josh @ The KBB Collective: Amazing. Okay, so we've got five core principles there. I want to dig into each of those. let's start at the beginning, which is the defined product. So I get a lot of my coaching students who are asking me, you know, they want to sort of build their brand, they don't know how to do it. And when I look at the market and I look at the bigger names in the market, so Tom Howley, Duvall, Neptune, Humphrey Munkson in terms of a brand, they all have very specific handwriting. And very specific design principles, let's call it, that make them instantly recognizable, right? I know I'm looking at a Humphrey

Michael: Mm-hmm.

Josh @ The KBB Collective: Munson kitchen because they have one or four stains and it's always an in-frame shaker kitchen and that is their kitchen. Same with Duvall, okay? I suppose the only business, and correct me if you think I'm wrong, the only business that maybe has not done that and is still a success in terms of the size and the footprint is Roundhouse. Probably the only one who will design supermodern kitchens. traditional kitchens and a bit of everything and yet they're still, you know, big. So that's the exception rather than the rule. So talk to

Michael: Mm. Mm-hmm.

Josh @ The KBB Collective: me about early on how that shaped the way that you rolled out growth and in terms of what you were willing to do, not willing to do, and where did that all come from?

Michael: Yeah, I think a lot a lot of it was driven by what we could put within our cabinet vision tool to a certain extent. You know, we kinda used to count off on our fingers with products. if if we can draw it

Josh @ The KBB Collective: So you rever so you reverse engineered, sorry, you reverse engineered from what was feasible, what was easier to make, what was gonna make operationally your life easier, you would then back that into how you'd make it or what you'd make, what you'd offer.

Michael: Yeah. I I th if you go right back to day daughter to the early days, like me and Tom were sat in a showroom, we would make the designs that people came in and asked us to make because we was we were the small outlier. We we were driven by the market.

Josh @ The KBB Collective: Yeah, yeah, yeah.

Michael: We we Tom will so if if Tom was here, he'd sort of half agree and half kick me for saying it, but there was nothing massively innovative or new that we brought to the table there in terms of what we were doing with kitchens. We just simplified what we saw the market doing. There was a New England in frame looking kitchen, there was a traditional, you know. divine looking kitchen with the canter scobbles. There was an in frame kitchen with curved pilasters and ends on it. And they they sort of drove drive drove the first three looks of kitchen that we did. There was something then in frame with a slab door with a slightly more contemporary look. So they were the sort of four, you know, initial

Josh @ The KBB Collective: And and so I asked, are though were those kitchens that you had done that they were requested by other clients and you're like, We've done this before and this seems to be like what, you know, if we these four designs or these four ranges, let's call it, are what we've made before, what we photograph, what we can then show as, you know, a Tom Howley product, yeah?

Michael: Yeah, we we'd we'd we'd make these kitchens, we'd go and photograph them. You know, I remember sitting in a marketing meeting with the board early on and the the joke was do we have any non cream kitchens we can go and photograph? 'Cause there was just a general look at the time. There was a cr the the the the cream hand painted kitchen with cups and knobs on it or with oak knobs and it had a chimney breast and that was the kind of look that we were doing. And to a certain extent those looks have changed a bit, but they're still kind of the same. You know, they're the same basic fundamental principles, colours have changed, handles have changed. Yeah.

Josh @ The KBB Collective: Yeah, I mean I it's timeless. It's timeless, yeah.

Michael: Yeah. And very early on we we were core in frame. That's what we did. We only did in frame. We were butt hinges. We didn't do concealed hinges because y you open up a a slightly more painful set of manufacturing issues if you do different types of hinges. We only did dovetail drawers. and we we only did certain finishes internally and and and sort of stained finishes for draw boxes. So very early on we sort of had this furniture look, which was we've got these four different styles and we've got these different finishes available and there's different handles available, there's different paint colours available, and that that's forming our core product range. And I I remember when we joined with the Neville Johnson team, that was a little bit alien to them because they used to work off a system of cabinets. We have a library of cabinets. And we sort of had it had a cabinet library, but we also did custom versions of cabinets within that library as long as it was within those locks. Because we were quite we were very heavily bespoke at the time with what we did. So you could spot a Tom Howley kitchen And you certainly can these days, like you say, you you all the brands you've named there, if you were to open a magazine or an Instagram page and look at a picture of one of those kitchens, you'd spot whose it was straight away because you just know. they've got their own distinct looks. the difficulty with that is it's fine if you've got three or four people, but the minute you bring a new designer into the business and another new designer and another new designer, they all want to do their own style of kitchen because designers are naturally quite creative. And There's an awful lot of designers out there who used to run their own business or used to head up designing somewhere else. And you're dealing with ego quite a bit, which is very difficult to do. So when you bring in f f

Josh @ The KBB Collective: Yeah. If you

Michael: five designers and try and say, I want you to design a Tommy Aldi kitchen and they don't want to, they want to design their own thing, that's quite a tricky thing to

Josh @ The KBB Collective: Yeah, if you go from a place where you are, as you said, like one or two man band and you'll design anything and everything and that's sort of the the culture of the business because you want to win work and you're like, well I can't really afford to not do what they're telling me. And then a and then you realise you are supply constrained, not demand constrained anymore. So you're like, actually I'm gonna hand pick the jobs that I do do and now I only do this. unless you rationalise and make it very clear this is what we do, this is all we do, and in s in for us for example. We had that same problem. So we didn't have like a a library to start with of what we would make. And we were hiring all these designers from all these different backgrounds. And the only way around it was that we had sort of a the design director who was who was my dad who would look at every design and be like, That is not right because of XYZ. Don't do it like this, do it like this instead. But that is a very manual process. And to your point, when you're nineteen, twenty showrooms and you've got, I don't know, forty, fifty sales designers, you can't do that. And so having the system in place that sort of clips their wings a bit is is what you need as the business grows.

Michael: Yeah, the the breaking point for us was around four or five showrooms. As I say, we we had three. We'd opened two more. We took new people in. Four or five showrooms, I remember it quite clearly. So the two thousand and twelve, that was breaking point for me. That was quite difficult. early growth stage of business, push, push from investors to to drive turnover up, yet error after error after mistake after mistake creeping through. And how do we deal with that and how do we we sort of action that? And You know, it's very difficult as well when you've got five showrooms and you've then got ten designers and you're not sat next to any of them because they're in different parts of the country. All you've got is a phone. There's no teams back then, there's no screen sharing tools that work that easily. So you're trying to deal with stuff on email and this kind of thing, it's it's it's quite tricky. So what we did there is we used this the software tools, things like Cabinet Vision, to very specifically control what those designers could and couldn't do.

Josh @ The KBB Collective: Yeah, and if you're a retailer, obviously you if you're buying German kitchens, you have a again, a rationalised catalogue of what you can and can't do.

Michael: Yep. Yep.

Josh @ The KBB Collective: but interesting s because we work with a lot of manufacturers as well, and a lot of those problems that you're referring to are problems because they're reinventing the wheel every single time. And when you're a bespoke manufacturer and you will do anything, you end up you end up basically doing something different every single time, which means that you never get the benefit of learning how to do one thing really

Michael: Yeah.

Josh @ The KBB Collective: well.

Michael: Yeah. Yeah.

Josh @ The KBB Collective: And and in this in manufacturing it's death by a thousand cuts, as you said, which we'll get onto with the tracking issues part, but but that's a interesting. So how has the defined product or or or look, let's call it that core principle, guided the the sort of the design ethos Andrew Ryan, your your current business?

Michael: So it's interesting. So we do the opposite at Andrew Ryan. Despite despite despite what I'm talking about there. Andrew Ryan's a fundament it's a fundamentally similar but fundamentally different business to what we did at at Tom Ioli there. So it I'm talking about the sort of five principles that we used to work with there. At Andrew Ryan, we've kind of honed that into three very simple principles, which is people, product and process. And we kind of start with process here. We have a very clear process on how we work. We meet with a client, we take a brief. We take that brief and we do a design. We present that design, we take an order, we take that order, we refine it, we sign it off. They work, whether it's an in-frame contemporary kitchen, whether it's a traditional kitchen, whether it's a stainless steel kitchen, whether it's a hand paint, those core those those process steps work exactly, yeah. And then

Josh @ The KBB Collective: Yeah, the the process is the same. Yeah. Okay.

Michael: we've in we've invested in people. I have a different set of people here at Andrew Ryan than we had in the Tomhaoli business. In the Tomaioli business, I had a drawing office that was all graduate. There was, you know, 20 people in there who had a combined 10 years experience between them in some cases because it was a very new team. Because that that was the investment level that we were at. In Andrew Ryan here, I have a drawing team here of five people who probably have 60 years, so 70 years combined experience between them. So the ability to do anything unique, weird and wonderful is a typical day for us here. Not an issue. I have huge confidence and huge ability to be able to tackle that. So we're a slightly different business. If Tom Howley was working at the top end of the market, we do that type of product here, but we also pick off the Uber luxurious high end interior designer, high end new build, high end architecture build products where they do want something that is right at the cutting edge. And our process allows us to do that. And we've got the right people to follow our process to then output that product. But we've we've very clearly thought about that within our business model and we've you know, we've a price point that's attached to that, we've a process that works with that. we do a mixture of stuff here, we still do some work for development projects for developers, we still do some standard let's I'd say call standard everyday kitchens for clients. We're about a third, a third, a third, a third of what we do is the Uber high end stuff. And, you know, you're into billionaire client territory. A third of what we do is nice high end residential and a third would be developers doing five to ten, five to fifteen luxury build projects. And we're we're we're organized around working in that way. as you said before though, it's death by a thousand foot sometimes because you're developing something as a one off for that job and you might never make it again. So you've got to make sure you get that first one right. But when you do get it right, you've got the opportunity to constantly then bring that back into your next project or the next project or the next project. So it's it's it's a more interesting day to day environment now from a design point of view than it was at Tom Howling.

Josh @ The KBB Collective: Yeah. I can see how that would be the case. Okay, cool. So let's talk about the marketing, and tracking.

Michael: Yeah.

Josh @ The KBB Collective: So you you wouldn't be astounded, but you know, a lot of guys that come to me, they they think the first thing they need to fix is is their marketing and I'll say to them, Okay, well what are you doing at the moment? And they Well a bit of this, bit of that, a bit of that I said, Okay, you know, what's your cost per lead on which platform? Dunno. where are these coming from? Dunno. And there is a massive problem with attribution. And not just

Michael: Mm-hmm.

Josh @ The KBB Collective: obviously in this industry, but that that is a is a global small business problem. where they don't really know where it's coming from. And if you don't know where it's coming from, then you can't really pinpoint what to do more of. when you were in the Tom Howley business, we're going back what ten, fifteen years, that there was a very different period of time where marketing was concerned and you did ma massive amounts of stuff in magazines. I I assume spent a lot of money on SEO and there were different it was a different platform then. That's like how you how you got big, you know, changed. DeVol made it on Instagram, Humphrey Munson was all on Instagram, then the video era came. So w how have you taken that principle of marketing effectiveness and how have you used that today?

Michael: So again, the principles are the same, but maybe the mediums are slightly different, shall we say? You know, go back then, it was magazine based. And and you'll laugh, but to tell a small story, means Tom used to sit in our showroom going back fifteen, seventeen, eighteen years, and we'd have the beautiful kitchens magazine and the homes and gardens magazine, and you'd open it up and Mark Wilkinson would be the double page spread on the inside front cover. And we'd sit there and go, geez, that's that'll be us one day, we'll do that. That we'll we'll have our pitching in there. Three years later, we were in every magazine, every every inside double page spread, every back front cover. We invested huge amounts of money in that there. and as I s as I said, the the Tom Howley success was very much driven by that print media era. But we tracked it, we tracked how many leads we would get, we tracked what the converge rate and those leads was, and we we given the size that we were at, we tracked a f a few different variables. We tracked conversion from inquiry to lead, we tracked conversion from lead to order, and then we tracked overall conversion, inquiry to order. And we tracked that on. on mass and we also tracked it on an individual basis for different designers so that we could pinpoint where, you know, where someone was maybe stronger, where someone was weaker, where someone needed more support. and we we've how we done how do we do these days with that? Well, we've not invested as much in organic social media as other businesses. We've invested more in PPC ads than other businesses because we're we're just not necessarily the best business at doing the organic stuff. It suits some businesses, that's their natural go to they're very good at it and they can best time and effort into that. We track our PPC spend and have a cost billied from that. and we've tracked that sort of religiously for the last eight, nine years at Andrew Ryan. We've seen trends and changes in that, but it it works for us and that's a mixture of Meta and mixture of Google P P C. What's changing for us, I think, in the

Josh @ The KBB Collective: Okay. So you've got

Michael: last sorry, go on.

Josh @ The KBB Collective: No, so s you've got a paid acquisition system effectively. Is what you're saying. Yeah.

Michael: Yeah, yeah, yeah. Yeah. We we've always had that paid acquisition system, but we've always had within the Andrew Ryan business a a very big referral pipeline. You know, the core business, the the parent business, if you like, originally based in Ireland, it's been around for fifty years, fifty-two years. So they've always had a huge referral element to to what comes through there. And we get an awful lot of that now through in the UK as well. So I'd say the last two to three years. we've invested an awful lot more in those long term relationships. So rather than hoping that all the leads are going to come from new virgin inquiries, we've got longstanding established relationships with different builders, different interior designers, different architects, where we we know we will achieve a certain number of leads from each of them throughout the year. And we invest a lot of time in looking after them and making sure that they're dealt with, you know, with with a with a silver bow on top, because that's a huge amount of our our turnover. And yeah, the it's I think there's a real mix for us at the minute. I I wouldn't like to throw a number at it without looking it up, but you're somewhere fifty, fifty, sixty, forty between what comes through from paid marketing and what comes through from referral marketing.

Josh @ The KBB Collective: So it's interesting because again, you're talking about these systems that you had in place and not necessarily even systems, but data really is at the core of what you're saying. and that's in all aspects of the business. And as a scaling business, that information, that data was so important when it came to decision making. And when you're a small business, these guys that come to me, they're doing half a million a year, seven fifty K a year, million a year in turnover, they there is no data, there is no visibility, there is no There's no information on which decisions are being made, it's all gut feel, right? And so

Michael: Yeah, yeah.

Josh @ The KBB Collective: we're teaching these guys, okay, this is how you track numbers, these are the numbers that you should be paying attention to, this is why it's important, and teaching them these metrics, it's insane to see when they start to understand, like that's how you make decisions, like it's black and white. It's not all, you know, do

Michael: Yeah, yeah.

Josh @ The KBB Collective: I how do I feel about that? It's black and white. which is which is just so funny and

Michael: Yeah, yeah. D data data driven decision making is is the core fundamental behind a lot of it. most definitely.

Josh @ The KBB Collective: Yeah. Yeah. So I think that that is is one thing that I'm proud of that we're bringing to the industry is like finally getting people to understand numbers and pay attention to them. And you don't have to be an accountant, you don't have to be a rocket scientist. You know, we're talking very straightforward percentages and numbers. And if you can understand those, you sort of understand where the business is going. and speaking about numbers, one of the numbers that you introduced me to that again we teach to all of our students, is the order book value number. And Again, this is like ev you know, we're working with thirty five independents now. Not a single person knew what that was before we brought it up. So do you wanna do you

Michael: Yes, yes.

Josh @ The KBB Collective: wanna just talk me through that, how you calculate it, why it's important.

Michael: Yeah, so order book value. So for me, order book value is the the total retail value of every order that we have on our system that is a committed order, something that someone has paid a deposit for that we've not yet delivered. So it's the value of kitchens, the value of products not yet delivered. And from that, if you know what your annual turnover should be, you know what percentage of your annual turnover your order book is. If you're trying to turn over a million a year and you've got seven hundred thousand in your order book, you have a seventy percent order book. fairly straightforward. I was introduced that principle by Keith, who was the finance director at at the Neville Jones Group when we were brought out of there. It's not something I'd ever really considered, you know, prior to sort of fifteen years ago. And it very quickly became obvious that, yeah, this is a massive driving force behind what we do. We can we can invest in marketing, we can get the sales, we can get the orders, we can open showrooms. But if we don't ship enough, we don't have a very you know, we're not gonna turn the profit that we need to, we're not gonna get the operational side of the business working. And what was very interesting for us was that We were looking at the order book and I remember Keith having this conversation. They were looking for a 65 to 75% order book. That's what Keith projected. That's what we he thought we would need because I think that's what the Nibel Johnson business had. Again, similar business but not the same. We ended up with a 95% to 105-110% order book in the Tom Howley business because kitchens take longer to get from concept to drawing board to making to delivering to fitting, and there's more opportunity for delays. We just realized that that order book needed to be even bigger so that we could have enough in that order book to drive what we were expecting to ship year on year.

Josh @ The KBB Collective: So that is informing decision making from a capacity point of view and a supply point of view effectively and how to balance supply and demand. So let's just say the sweet spot is fifty percent, at any one time you're basically half halfway through the year in terms of turnover. If you were at ninety five, a hundred percent, basically what that says is you're not making it quick enough. because or you don't have the capacity to get through it quick enough.

Michael: I think it depends on your the product. Hang on. I've actually got yeah, I'm not turning my headphones off have I. Yeah, sorry, yeah. I

Josh @ The KBB Collective: Yeah yeah. Okay.

Michael: think it depends on the type of product that you're shipping to clients. We if we only had a fifty percent order book here, that wouldn't be enough. Because there's there's so many options for delay. We we here like to carry a seventy, eighty to hundred percent order book in Andrew Ryan. And in the Tommy Howley days we used to carry an eighty ninety to one hundred percent order book is where we like to be.

Josh @ The KBB Collective: But a hundred percent order book is effectively your entire year's turnover is already committed at any one point.

Michael: Yeah, but the reality is it's not always gonna shift in the next twelve months because with some of these Yeah. Yeah. Yeah.

Josh @ The KBB Collective: Yeah, yeah, yeah, of course. Yeah, you've got long term projects, of course, yeah.

Michael: So you you you might you might look ahead and say, Well, the next twelve months are planned out. I know looking at our order book here, there are projects in our order book that won't ship for eighteen months, fourteen months, fifteen months, and there'll be projects in there

Josh @ The KBB Collective: Mm-hmm.

Michael: that tell me they're gonna ship in ten months and they won't because they'll be delayed,

Josh @ The KBB Collective: Yeah, of course.

Michael: the doors will be delayed, the windows will be delayed, the floor won't be down, they'll get rained off, planning permission, etcetera, et

Josh @ The KBB Collective: Mm-hmm.

Michael: cetera. So It depends on the type of work you do. If you're doing more refurbishment work, if you're, you know, more middle market or upper middle market,

Josh @ The KBB Collective: In and out.

Michael: they turn over really quickly, we turn them in three or four months. If it's a an extension, yeah, six to twelve. If it's a new build, you can flip a coin 'cause it can be

Josh @ The KBB Collective: Yeah yeah.

Michael: it can i I've I've got clients here we're

Josh @ The KBB Collective: Yeah.

Michael: talking to. I've been I I'm I think I'll be invited to their weddings and their baptisms 'cause I've been talking to them for two or three years now. So they

Josh @ The KBB Collective: You're part of their life now. Whether they like it or not.

Michael: yeah, they go they go on a while. They go on while. Yeah, yeah. Joint therapy sessions is what we have now. So

Josh @ The KBB Collective: How how on that point, how do you deal with delays as a manufacturer? Because again, it's a question that comes up all the time. you're a manufacturer, you've got, you know, you let's just say you're fully committed for for August, and then all of a sudden things are delayed and you've got nothing to fit in August, and you've got fitters twiddling their thumbs. How does the Andrew Ryan business, how do you guys deal with delays that inevitably happen in this in this industry?

Michael: Hmm. we could do a whole podcast on that one. I think that's that's

Josh @ The KBB Collective: I like that. Okay, cool. I'll give you my answer. I'll give you my answer and you and you tell me whether you like it. So as

Michael: Please do, yeah.

Josh @ The KBB Collective: a manufacturing business as a manufacturing business, you you need some certainty to be able to plan forward production, and that certainty is not gonna come in the installation date date because that's too up in the air. So what we do in our process that we teach is that you get the clients to have a signed off fitting date. So let's just say they sign off fitting date is going to be mid December. That's when they want the kitchen installed. Okay. And depending on the style of kitchen and whatever it is, how long it's going to take in production, it's let's just say it's an in-frame kitchen, that's 12 weeks from signing off, saying I'm happy with this, going to manufacture and installation. Okay. So they've signed off that fitting date, and that con that contract effectively says that if this date changes for anything out of me, the manufacturer's control, i.e., it's your fault that the date moves or your builder's fault. A, the balance payment is due regardless. Okay. And B, we have the option to be able to charge you storage. Now we never actually ever charge anyone storage. but the point of that was your manufacturing slot effectively was set in stone. So it didn't actually matter when the fitting schedule was, and you can balance that w using subcontractors and you know, flex up and down. The point was that your manufacturing was always set in stone and that was never gonna change. So as long as we had

Michael: Yeah.

Josh @ The KBB Collective: the sign off. And and that was going into manufacture. It doesn't matter whether a week after it goes into manufacture that client pushes out three months, it's being made and it's sitting on the floor. And then you

Michael: Yeah.

Josh @ The KBB Collective: know, A, I'm getting the money for it and so I'm not out of pocket and B the manufacturing is running smoothly.

Michael: Yeah. No, a hundred I wouldn't disagree with with any of that. And that to be honest, that sounds like a conversation that you and I had many, many years ago when we were first chatting about some of this stuff. They were they were the sort of the you know, some of the key principles we had at Tom Owen is how to deal with that operational side of what you do. Get it signed off one hundred percent, get it made. You know, that operational side is a number of small steps that break you know, combine into one big one. How do we deal with that here? It's it's slightly more difficult for us because we've got a lot more clients who are in that sort of very top end where, yeah, first off, let's plan, let's get really good visibility on where they're going to be. But we often find that we might plan something in for a certain date, but every three, four, five weeks when we talk to them we'll visit it, it's moving back, it's moving back, it's moving back, it's moving back. So your first issue there is you might think, you know, today's August, or nearly August, end of July, August twenty twenty six, you might think that your October, November, December schedule is full. I look at mine now, it would be full, October, November, December. But I could

Josh @ The KBB Collective: Mm. Yeah.

Michael: go out and see four sites next week and it will be empty because those those jobs will have moved back and there's nothing I can do about that. it it it it leads into a wider sort of way of managing that, which is you know, have a decent lead pool, have a decent inquiry pool, have a decent order book. Because if some of those jobs move, what do you instantly do? You instantly look for the other jobs that might have more optionality on fitting, can we pull them forward? We then goes to the lead order book. If there's leads in there who we were maybe slightly tight on price and budget for, but they could react quickly, it's an opportunity to bring them onto the order book with some discount because it's going to fill that slot. So being able to take a macro view by having a number of people involved in that planning side of your business is key. Because if you just make that decision in isolation, you may be doing yourself a disservice. You've got to look at the the project as a whole. It's a bit like running air dynamic pricing. I can offer that slot at a cheaper rate because it's empty, because I need to fill it with something.

Josh @ The KBB Collective: Yeah.

Michael: We we don't tend to have that

Josh @ The KBB Collective: Yeah.

Michael: with the order book size we've got, but I know plenty of other people in in a similar sort of sphere of this business who who do have that issue. that's one way of sort of planning it. Once it stands off, we we've also got quite a complicated technical drawing process and then manufacturing process. We'll split them up. We'll have some jobs drawn two or three weeks before they're needed and they'll be sat there waiting to go to production. if you put stuff in production that's not ready to be delivered, you need to have space to store it if you're a manufacturer. Storage space is expensive. you know, storing one kitchen's fine, storing ten kitchens not so fine. And that's when things get lost, things get damaged, things go missing, things has to be remade, your immediate costs go up. So if you're gonna get into that that bracket of I'm gonna make and store, make sure your making and storing is set up properly and you know where stuff is and it's labeled properly and it's wrapped properly and it doesn't get damaged. If you move it five times in your warehouse, you will damage it in some way. So storing's a tricky one. and fitting, you know, fitting's a tricky one. again we could we could have a a longer podcast just on fitting in itself in the market, I think. we're quite fortunate We are pictures.

Josh @ The KBB Collective: lost your mic. you're back. Sorry, say that again.

Michael: Sorry. From trouble. Yeah, the the majority of our Are you there?

Josh @ The KBB Collective: Okay. Yeah, yeah, I go ahead.

Michael: let me just make sure my headphones are on so it works. sorry, technical issues. Are there? Yeah. There we are.

Josh @ The KBB Collective: Yeah,

Michael: Yeah, we're we're quite fortunate because the majority of our fitting resources in house, it's employed fitters. So we you know, we're able to be very flexible with where they go and what they do. But the downside of that is if we've got two weeks where suddenly nothing is going out, we've got that resource that we've got to still pay for and and get things done with. So planning is quite tricky when you've you've got fitters set up like that. a lot of businesses are subcontracting fitting. Which is, you know, if you're fit to work from multiple different people, it's not the end of the world. You can book them in for a slot and you can cancel that slot or move that slot and they can find work within their network if they have a gap. It's not easy. In answer to your question, it's not easy to to to plan delays and storage and stuff like that. and asking clients to pay delivery balances if it's going to sit in a warehouse for three months, it might aid your cash flow, but it might not suit them. They might not want to do it. You can ha as you say, you can have it and offer to charge some storage. But it doesn't sit comfortably with a lot of people when you do that. So

Josh @ The KBB Collective: Yeah, it's more about having the optionality to be able to do it if you need to, right? So it's it's another like, well, this is what the contract says and again, we never actually charged people for it. It was more you need to know that you you need to tell us the date 'cause we what you wouldn't you wouldn't go in and order a a a Porsche and they say when do you want it? you go, Don't know mate. Just you know I'll let you know.

Michael: Yeah. Yeah. The the the payment terms is probably yeah, the payment terms is probably the the more crucial ones I have around that. You know, not exposing your business to someone else's loss is is the key area with that there. You want to have enough of a deposit to support what you're buying and what you're making. You want to have enough of a deposit so that if that client suddenly doesn't take delivery, you're not out of pocket and exposing your business and the rest of your clients as a whole to their loss. that's that's

Josh @ The KBB Collective: How do you how are your payment terms at the moment? How do you set it up?

Michael: yeah, so we typically take an initial booking deposit from clients, that's anywhere from five to ten thousand pounds for a project that releases designs, that books them a slot on our schedule. again, i that can sound like a big deposit depending on the area of the market you're in. A typical kid kitchen project for us can be anything from seventy, seventy-five up to a hundred and fifty K. So there's there's a big, big bandwidth in there for that. At sign off for a project, we take anywhere between sixty and seventy-five percent of the project value. Depends on what percentage of it are made off of appliances. all those appliances are bought in and stored. all the material for manufacturers is is bought in and and allocate everything's cut and made. So on the day that we start making that kitchen, we've used a huge amount of that 'cause we've caught and, you know, started making material. It's all on a factory floor. and then the remainder is taken as a delivery balance when it gets to site. And We're we're pretty you know, there's a bit of flexibility in some projects for that, but we're we're pretty strict and standard with those terms across the board.

Josh @ The KBB Collective: So let's say it's something like, depending on the average project, it's something like ten percent deposit, sixty percent sign off and thirty percent on delivery, something like that. Ten seventy ten sixty thirty, yeah? Okay,

Michael: Yep. Yeah, yeah.

Josh @ The KBB Collective: yeah. For manufacturing business that makes sense. I mean again, I would urge e anyone that's listening, look at your payment terms and how it's affecting your cash flow because the amount of people that just don't even think about that, they just the payment terms are the payment terms to them without really giving it much

Michael: Yeah,

Josh @ The KBB Collective: thought.

Michael: yeah.

Josh @ The KBB Collective: I had a c had a client with an Italian supplier when jobs were delayed and she wasn't getting paid the balance from their customer and she had to pay for the kitchens up front, she was effectively financing her customer's delay out of pocket. And I said to her and then we looked at it together and we did the back of the envelope math and I'm like, Look, you're doing one kitchen a month at the moment, that's fine. The minute you get to three and four, it's game over. Like you you don't you caught on how you don't have the cash flow to be able to support that. So it's really, really important to look at at how that's affecting the business. all right, let's touch on the consumer psychology stuff because it was one of the most interesting things that we spoke about very, very early on when we first met, and I was just like in a this is a whole new world for me. because the reason this is important for me to be able to share is that the amount of manufacturers that we speak to when we work with, they are of the opinion, well, I can offer any colour and any this and any of that And they think that that is a selling tool, but

Michael: Mm-hmm.

Josh @ The KBB Collective: retail psychology says otherwise. So do you wanna do wanna tell me why that's not right?

Michael: Yeah, a hundred percent. So aga again, y the the f the background I had on this, I I studied this quite extensively as as part of my MBA and sort of did my thesis on some of this. So there's tons of literature out there if you want to go digging into the professional side of this as to how to help people make decisions. y you know, i i i it's i i interesting, if you remember when you'll remember when the first iPhone came out, you went to the Apple store and you had a choice of A 32 gig, a 64 gig, or 128 gig. And it was the same phone. And it was really easy to pick because you just got to pick something. If you go buy an iPhone now, I have to say, and I'm quite techie, I want to buy a new phone in the week. It's quite confusing. Which one do I get? Which size do I get? Which memory do I get? What colour do I get? What's this

Josh @ The KBB Collective: Mm.

Michael: SE? What they've made it more confusing. Again, they think they're offering lots of choice, but it's quite a complex process. Pitching design fundamentally for a lot of people has always been even worse than that. As you say, you can have whatever colour you want, you can have whatever handle you want, you can have whatever oven you want. For me in itself, that isn't actually doing a design service. That is just order taking from someone. And I'm quite brutal with our designers here with that. If a customer comes in and you say to them, tell what oven you want, you've failed. You don't belong here. I think you should go and work somewhere else. Because our job here is to guide clients through that decision making process. We're supposed to be the the Netflix, if you like, of helping that design process. Take a brief and offer them a very, very core, refined set of looks, designs, principles, products they want to buy. What we did the Tommy Holiday is we sort of looked at this and said, Well, let let's do a few very key I use the word principle again, let's do a few very key principles here. Number one, let's make decisions going in easy order. Let's give them an easy choice first. Because if you ask someone to pick which colour they want, that can be quite complicated. They might not know, it's a bit difficult. So let's ask them which dishwasher they want first. Let's make the easy choice the first one. Because the minute you make someone pick an easy choice, in their brain, in their head, Suddenly they've gone, I've made a choice, a decision, they feel happy, they get a little small release of endorsements. And it's yes, I've made a choice, I've made a decision. And dishwashers are easy because it's more than likely going to be a fully integrated one. And it's either going to be the Siemens one at one price point or maybe the Melee one at another price point. It's two choices. And unless they're an absolutely anal client and they want to get into, you know, lighting and cloaky drawers and all the bits and pieces, they're usually not. It's going to be an easy decision. Done. I've made a choice. If you start with paint colours, they're going to get confused, they're going to get upset, and it's going to become Easier to choose not to choose. This was the phrase we used to use in our training. The human brain is wired to avoid pain. If making that choice is painful, I will pick the way out, which is it's easier to choose not to choose. And I I see it here now still with some clients. We we we still get clients, you know, finding certain decisions difficult. So you've got to remove that possibility of it being easier to choose, not to choose. So start with an easy choice, number one. Break your decisions into categories. You know, don't Tell them they've got 35 things to decide. We're just gonna today we're just or for now we're just gonna sort out your appliances. Let's get that core bit done first. And appliances are usually a good one to start with because they drive everything else. Which dishwasher are we having? Which colour Kwukatap are we having? Which sink are we having? Is it gonna be this big one or the small one? Is it white or stainless steel? And instantly you're breaking these decisions into small categories. So start with an easy choice. Break your choices into categories. And never offer more than three. maybe four options if you can help it to help them make a choice. And that's it in a nutshell, really. That's what we did with most of this stuff. Don't offer them the Nef book or the melee book, because no one no one needs that. And even now to this, even now

Josh @ The KBB Collective: Agreed.

Michael: they just don't. E even now to this day, I still do this. And I remember talking to you about this in a very nice restaurant in Manchester over a number of genotonics about this a few years ago. even now to this day I still do this thing. If I've got Client and I'm meeting with them, I will print off the paper from the website. I'll print off the picture of the two different ovens I want them to consider. And I'll print off the picture of the two different sinks that I think are useful for them to consider. And I'll have them laid out on the island in the showroom. And guess what? They just look at them and go, I want that one. And that's it. The decision's made. You might not get every decision. This isn't some black magic or black art. You know, if there's ten decisions there, you might not get all ten, but you'll get eight of them. I guarantee you'll get eight. And to Yeah.

Josh @ The KBB Collective: Yeah, yeah, yeah. I think the dishwasher's a really good one, right? Because again, i a nine nine times out of ten, a dishwasher's a dishwasher and it's probably gonna come down to price. And if they're not as price sensitive, they want the Mila one because it's, you know, guarantee and whatever.

Michael: Exactly. Yeah. Yeah. It's try so brand is what they're picking it on. But straight away, you know, job done. You don't need to get them to make them decisions on that first meeting either. That's the that's the second meeting. That's a s a you know, a sign off meeting. That's how we're gonna drive all them decisions. That first meeting is about me as a brand and a business, as a concept. Do you want to work with me? We don't need to get you to decide everything. So, you know, the first meeting is a decision is do you like me? Do you like our product? Do you like our brand? Would you like me to look after your kitchen? Don't worry about the colour and the handle a hundred percent now. We'll get to that. If you know what you want, fantastic. But let's just decide on the first that sign off meeting. You shouldn't be doing too much of that work if they're not committed to you as a client.

Josh @ The KBB Collective: Yeah, I mean, yeah, or you should had have a lot of that information already at the sign of the meeting, it should wait all be all ready to go, right? How how much of that

Michael: Yeah. Yeah. You should you should you should you should know what's already decided.

Josh @ The KBB Collective: how much of that let's call it the briefing meeting or the discovery meeting, that first one where you're getting them to make these micro commitments, you

Michael: Yes.

Josh @ The KBB Collective: know, and make them release them endorphins and feel positive about the situation, how much of that was scripted and sort of implemented via training and it's the same every time? Obviously this these sales designers they need to understand how people are using the space and they want to sort of dig deeper. How much of

Michael: Yeah.

Josh @ The KBB Collective: that was scripted and t and taught?

Michael: We literally gave sales designers a checklist for that, you know, and yeah, I if you if you can't fill in ninety percent of that checklist at the end of that meeting, you've not really done that meeting properly was the the sort of script. Over over the years now, I think I I was adding this up the other week. I think I've worked with, trained, worked alongside something like fifty five, sixty different sales designers over the years now, you know, in between all the different ones we recruited at Tom Howley and and such and what have you over the years. Everyone's a bit different. Everyone try do their own thing. And the more you can standardize that process, the easier it the easier it is. and yeah, a a checklist. I'm a big fan of checklists. it doesn't need to be that you're taking a prescription from someone in the meeting. You know, there's nothing wrong in that meeting, safe to client, right? Let me just double check. Have I got everything? Have we discussed coffee machines? Did we talk about extraction? Have we talked, you know, we didn't cover this bit, let's just chat about that for a second. the clients will bear off in all sorts of directions. It's very difficult to sometimes script those meetings ABC. But having that checklist there so that you know you can refer back to it, I think is really useful. And one of the things I'm always very keen on with with client meetings is you know the meet and greet, the coffee, the say hello, the chat, and then say some right, just before we get started, I just want to just want to let you know this is what I'm going to try and get out of you today. This is my agenda for today. This is this is, you know, I'm not trying to be too professional, don't worry. But this is what I'm trying to get out of today's meeting. If we've succeeded, we'll get 90% of this. Is that okay? Great. And they know what they're getting into then. And at the end of it, let's just refer back what have we achieved? What have we done? What have we got? Fantastic. I've got this and this and this and this. And you know, one of the things we find, I come back to the presenting options. I'm digressing slightly, but one of the things we often find from our brief meetings, discovery meetings with clients these days, certainly the higher up the spend level you go, the more options there are for people. We will very often present clients with two designs. Because if you present them with one design, and I use this phrase at least once a week here, if I present a client with one design, they have one option, which is yes or no. If I present them with two designs, they've suddenly got a different option, which is option A or option B and no often does them.

Josh @ The KBB Collective: Which one? Yeah.

Michael: Option B doesn't really come into it. And the most expensive thing we've done with that client is give them our time. So if I'm going to give them two or three hours of brief meeting and I'm going to give, you know, three or four hours, five hours of design work in between, and another two or three hours for a presentation meeting. To add an extra design option into that is not a huge amount of time. Not if your systems are working properly and design tools are good.

Josh @ The KBB Collective: Do you go the whole way, full three D renders, the whole lot, or you're saying like an alternative floor plan? you do the whole thing?

Michael: Yep. Yep. Yep. Nope. it it varies. Sometimes it'll just be a a floor plan. It's like we just just thought we'd test the water with this, just thought I'd, you know, this came out of our design session. I just thought I'd show you this and get a feel for it. Sometimes it'll be a full on two different versions. Now it might not be anything groundbreaking. It might be this one's got a chimney breast, this one's got a canopy. It might be this one's got

Josh @ The KBB Collective: Right, right, right.

Michael: an island with L shaped seating, this one's got an island with back seating. And it's usually driven by the things that come out of that discovery meeting, the things that the clients were unsure about, the things that they were thinking of. And it shows that you've listened to the client. It shows that you've fucked on board what they were saying and and you've you've you've heard about their lifestyle and what's important to them. And again, doesn't need to be decision they decide on at that presentation meeting. They're just deciding whether they want to work with you because you're an expert.

Josh @ The KBB Collective: Have you got any indication of what that does to conversion rate?

Michael: Yeah, it's massively I am.

Josh @ The KBB Collective: really? There you go. Inside

Michael: Yeah. Yeah. I the the present

Josh @ The KBB Collective: tip.

Michael: Yeah, the the presentation numbers that we we do here are much lower than I'd I'd have done at some power in terms quantity. and that they're much lower quantity numbers because the order value is high. But I can tell you without a shadow of a doubt that the if I look through our list of orders, clients who've placed orders with us, I can go through and point to quite a few of them where it's like we did two options for that, we did two options for that, we did three options for that one, we We did one option at the initial presentation, we did two options at the second presentation. It's again and again and again and again that we see that. And I I just think where in this in this sort of market at the minute, clients are looking for a far more relationship-based approach. They're looking to work with a professional. They want to work with someone who knows their stuff. And if you're going to engage with a professional kitchen design company who's going to put some designs together for you, I think it it warrants that level of work sometimes. I think you should be presenting that kind of stuff to people because if you've just got the The ego that says, Well, I've designed one and that's all you need. You know, that doesn't work. Everyone's lifestyle is different. You've got to you've got to go to where the clients are and what they're looking for. So two two two designs, two options. It could be something simple. Because we render stuff sometimes. It could actually just be as simple as two different paint color options, two different colour schemes. You know, we've presented this kitchen in a in a

Josh @ The KBB Collective: Yeah, yeah, yeah. It's still another option, isn't it?

Michael: yeah, it's still another option. And you know, a lot of people don't often just look past that. image that render and and you know look into the detail it's just wow there's two different options and two different colours one's in Farron Ball Hague blue and the other one's in, you know, or white. I didn't think it looked so different, et cetera, et cetera. So yeah, very, very hot tip. Something that we've never talked about before, you and I actually

Josh @ The KBB Collective: No, not at all. Okay, I love that. That's that's it's novel, it's new and I think people get some some value out of that. well listen, I'm gonna gonna gonna wrap up. I really appreciate your time, thank you very much, and

Michael: You're very welcome.

Josh @ The KBB Collective: I will see you in person on the on the twenty first of September for the community event. Thank you for your time.

Michael: Very much look forward to it. I'll see you then. Look after yourself.

Josh @ The KBB Collective: hold on Mike. I'm gonna stop the recording.