With economic recovery expected to be driven by small business growth, the Forum of Private Business is seeking stories from thriving firms as part of its Get Britain Trading campaign in order to pass on the secrets of success to other entrepreneurs.
What’s your company called and who is behind it (including yourself)? What sector(s) do you operate in?
Our company is called FreshStart Living. I am the CEO and our CFO is Scott Beaton. We are a property development company specialising transforming empty properties into high quality affordable accommodation.
What is your turnover, employee numbers etc compared to previous years (to give a idea about your growth)?
We began in 2009 and what started as just 5 members of staff in a business park has grown and we now provide employment for over 200 people at our HQ and on site at our developments. We have grown substantially in this time, our end of year report for July 2012 shows that in our first full year trading as a group, turnover was £9.7 million. Profits before tax are expected to be £4 million. We have £15 million in total assets and have acquired seven new developments with a GDV of £60 million. To top this off we are a debt-free company.
What is your start-up story? How did you seize the opportunity you saw and what barriers did you have to overcome?
FreshStart Living was formed after the property market collapse in 2009. The market conditions meant that many property developers went bust and we were able to purchase stalled sites and derelict buildings at very good prices from banks and liquidators. We saw a gap in the market for affordable, sensible properties and transformed these developments cost effectively and were able to pass those savings on to final purchasers which tends to be buy-to let investors looking for secure yet high yields.
One of the barriers we faced at the start, and still do to some extent, was gaining access to the developments in the first place. Because we were developing one and two bed apartments in Manchester for £65,000-£75,000 whilst other developers were offering similar properties for double that price, it was thought that our properties would destabilise the market. It was nonsense really, properties are only worth a certain amount and the overvaluations were what caused the market to collapse, if anything we were brining stability and sanity to the market.
What products or services to you provide? What problem does your company solve? What is your USP?
We specialise in good quality, affordable, residual value properties. We started with residential properties and the naturally moved in to the massive student accommodation market in 2011. Our USP is definitely our affordability, there is a considerable lack of affordable property on the market and FreshStart Living solve that problem. The majority of our properties are purchased by buy-to-let investors and we manage the properties for them and can offer them rental guarantees for up to ten years. This really appeals to people who want to take advantage of the returns and safety that property offers but are short on time to manage their own investments. This process is also favoured by many overseas investors and we get a lot of interest from all over the world from people wanting to tap in to the UK market.
What is your attitude towards your competitors? Thoughts on market research etc?
Overvaluation of property was one of the main factors contributing to the collapse of the property market in 2008. Property developers had over designed apartments and charged more than the property was actually worth.
Then when property prices started to fall, homeowners, investors and landlords found themselves in negative equity and faced getting their properties repossessed. Yet every day we deal with investors who still continue to overpay for their properties which not just affects their yields but affects the safety of their investment in the long term.
Some developers and investment companies entice investors in with high guaranteed net yields for just one or two years. They bump up the prices of the investment and then pay these yields out of the investors own money but then what happens after the two years is up? It’s going to be near impossible for these investors to achieve the 10% net yields. There are two things that need to happen here, investors need to stop and think about their longevity of their investments but more importantly there needs to be more regulations and scrutiny of the prices and deals that some developers and investment companies offer.
Any thoughts on the future of your company (growth plans, new areas of business etc) and your industry?
There will always be a demand for affordable property and because of this FreshStart Living will continue to grow. We have contracted revenue for the year to 31 July 2013 in excess of £16 million and we have development pipeline of £120 million. Within the investment industry, student property is currently the most popular asset class and I think this will continue to be the case going forward thanks to the low entry level costs, high demand and yields that can be achieved.
What main secrets of success do you think entrepreneurs more generally need to know?
Never be complacent. You may have the best business idea in the world at the minute but the minute you sit back and relax, that’s when something comes along and trips you up. Remember, no matter how well you are doing something, you can always do it better.
What are the most important things to remember when starting and running a company?
I firmly believe that the more you put in to life, the more you get out of it. That means that, if I do something, I always want to do it as well as I possibly can. The same applies to running a company, put all of your effort in and show total dedication and you’ll reap the rewards eventually.
Any advice for the Government? What policies would help?
They are plenty of properties out there that FreshStart Living would love to develop in to affordable property but the majority are owned by the local authorities who have no plans to release them and are just a blot on the landscape. We could turn these in to great properties and it would be a real boost to local economies, so I think both central and local Government need to focus on improving their synergy with private developers.
