We do everything by the book, even if it costs us money in the short-term
Matt Storey had entrepreneurship in his blood. He started out, aged just 12, selling sweets on his father’s market stall. His keen eye for an opportunity – and a prudent focus on cash flow - has seen him build multiple businesses, culminating today in Storey Homes, a housebuilder with turnover of almost £180m. Matt tells Smith & Williamson’s Hall of Fame how he did it.
Although Matt was helping his father out at 12, his life as an entrepreneur started even before then, buying old bikes from a scrapyard, repairing them and selling them on. He faced some early constraints: there was school, for a start, the fact he was too young to drive, and his customers often asked to see his parents.
At first, he paid his big brother to drive the van but by 17 he had left school, built a number of market stalls, had his driving licence, plus a 7.5 tonnes lorry.
His brother Mark had been running stalls as well and the pair soon realised the power of collective bargaining, getting better deals from the wholesalers when they worked together. But it was hard work – they were up at 4am and often wouldn’t get back until 8pm. They wanted to find a way to make money but without the same level of work.
The key, as they saw it, was to become wholesalers, selling on stock to the market traders. Within a month, they had smashed their previous revenues and margin. Within a handful of years, they had achieved turnover of £5m.
Nevertheless, they were still working all hours, without much time to enjoy their wealth. Matt says: “We never used to spend our profits. All the money was ploughed back into the business, so we had big cash reserves.” This allowed the pair to exploit the next big opportunity they spotted: “The people we used to buy from were known as ‘jobbers’- middle men, effectively. These were the guys working nine to five and driving nice cars. We were thinking, let’s try and be like them. We bought a bigger warehouse and brought in one of the ‘jobbers’ to help us. We paid him a big salary, and while our turnover remained the same, we doubled our profits. He introduced us to the manufacturers and gave us respectability.”
Matt admits these were tough times. They were going behind the backs of the other jobbers, who promptly cut off their supply. If they hadn’t had cash reserves, they would have struggled.
This was to be a common theme. For example, later on, as the business grew, the group agreed an irrevocable letter of credit, signing a bond agreeing to pay for the stock when delivered, not realising that they would have to pay even if the stock wasn’t delivered. They only got half the stock, which left them with a £250,000 hole. It was a big knock to the business but didn’t prove fatal because of its cash reserves.
Matt says: “We never took external funding and it took a long time to get to where we got to. With all our warehouses, we got funding against the buildings but we weren’t educated about that sort of thing, so we just built up cash to buy things. If you want it, you earn the money to pay for it. We made loads of mistakes. It was good to make them at the levels we made them, rather than when we became bigger.” The success of the business soon saw the brothers feature in The Sunday Times Under-30 Rich list in 2008.
The property side of the business started in 2003. “We had been living in pretty ordinary homes and we both wanted nice houses,” Matt says. “I bought a Victorian property that needed some renovation and Mark built a house from scratch. We thought, this is quite interesting, let’s try and make a business from it. We started to buy sites, with the aim of getting planning to turn it into residential housing and then sell it onto housebuilders.”
The recession hit and could have been a disaster – the brothers had been borrowing 50% of the land value from the bank to develop it. They had a number of sites with planning and no one wanted to buy them. Banks were asking for their money back. However, they reasoned that they had good sites in good locations, so they would become housebuilders. Storey Homes launched and has grown to its current turnover of £10m. He has a land bank of 110 units with planning, 203 awaiting decisions and 1,200 units going through the planning process.
The secret of the brothers’ success? Matt says: “We have always done things right. We have never been about a quick buck. It’s about doing it properly [and] we have always run things well. We believe that you have to be honest and build up trust. We do everything by the book, even if it costs us money in the short-term. On the food business, the manufacturers know we’ll do it properly – look after their brand. We demand a good deal, but we’ll be good customers, we’ll pay invoices on time and people can be reassured they’re dealing with good people.”
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