The aim of most family-run businesses is to stand the test of time, a goal that influences strategy and tends to take the long-term view over short-term gains. Entrepreneur spoke to Kim Pratley and his sons, Andrew and Charles, about growing a business without compromising on quality or price.
IN BOTH B2B and B2C circles, Pratley is a household name. Pratley Putty and Pratley Steel can be found in most home workshops and garages, while cable junction boxes tend to be called ‘Pratley Boxes’ in the electrical world — even if they aren’t Pratley-made.
Building a brand that has cornered the market in many respects is a good foundation for future success, but it does not guarantee it. Sustainable growth takes an ingrained value system that the entire organisation believes and follows, strong cash flow, continuous innovation, an unwavering focus on quality and sacrificing short-term gains for long-term aims.
Pratley has been on a steady growth trajectory over the past 70 years. Many companies reach maturity and stagnate. Pratley has done the opposite. All growth periods are followed by consolidation, but despite numerous challenges and tough market conditions, the line continues to move up.
Here are five key areas that Kim, Andrew and Charles are focusing on to maintain that growth, now and for the future.
1 R&D AS THE CORE, NOT A SMALL SIDE DIVISION
“Research and development has always been our core, and as a result of that, diversification,” explains Kim Pratley, CEO of the business. “We launched with our electrical division in 1948, followed by the adhesives division.” Before their first product of that division, Pratley Putty, was used by NASA on the moon, it was originally developed to stick electrical terminals into an electrical junction box and insulate them. “Once it was developed though, we realised that we could productise it outside the electrical sector for the consumer market, and our adhesives division was born.”
Developing new products is in Pratley’s DNA. The company aims to release at least three or four new products into the market each year and is continually looking for new and better ways to do things. “We have to grow somewhere,” says Andrew Pratley, Pratley Group IT Manager and General Manager of Select Hairdressing Supplies. “We need to be simultaneously growing our markets and our product ranges, and that means we need to find better and more cost-effective ways of doing things.”
There is a school of thought that says a smaller, tighter product range keeps costs down and the business focused. In many ways Pratley has done the opposite, with its electrical division offering more than 3 000 products, many of which are patented and based on proprietary technology.
“Like most things in business, our product range follows the 80/20 principle,” agrees Kim. “20% of our product range is responsible for 80% of our revenue. Logic would say why have the rest then? Unfortunately, because of the way the market operates, customers expect us to also provide the niche products that don’t sell well but are occasionally needed. If we chopped off the 80%, we would lose a lot of the customers who make up the 20%, but are responsible for 80% of our revenue.
“It’s a perception — a customer who buys all their products from Pratley expects to be able to get everything from us. If they need to go to a competitor to get a special fitting, they might move all their business.”
That said, there are cost and complexity implications when carrying such a large product range, which means the management team needs to be hyper-focused on the details. “We’re currently looking at rationalising our product range. Products become obsolete and if you’re too focused on new products without paying attention to the entire range you can end up carrying old stock or manufacturing unnecessary items,” says Charles, Engineering Manager: Group Technical Services.
“Our customer base appreciates that we’ve become a problem solver in the market — they come to us with a need, for example, a stainless-steel cable gland for the food industry, and we will design and manufacture it. It must be viable for us as well, but on the whole, because we do everything in-house, we can add value as real problem solvers and as a one-stop shop,” adds Andrew.
Customers want quality, their lives simplified, and good service — exactly what Pratley aims to offer.
R&D’s role in creating diversification for the business has also mitigated Pratley’s risks.
“Rubber brushes inside a flame-proof cable gland is what keeps people alive — if they fail, people die. If there’s an explosion inside the apparatus and it gets out and ignites the atmosphere, people die. The technology that goes behind that rubber is polymer technology; adhesives are also based on polymer science. We can bring the same expertise from the one side of our business into the others,” explains Kim.
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