Nigel Jones, Managing Director of Devon-based kitchen manufacturer, System Six Kitchens*, recently found himself in the position of having to upscale the business and production model. System Six Kitchens have been active for over forty years, growing from a firm with under 10 employees to 70 staff members, serving over fifty retail outlets and brand lines such as Exeter Kitchen Store and Quantum. But over the past couple of years, demand has grown beyond the capabilities of their resources and equipment.
"Kitchens have become fashionable," Nigel comments. "They've turned into high quality 'evolving' items. Everything moves faster, urging us to adapt our production line and our marketing approach. Our kitchens need new features every year. we used to plan our new product brochure every two to three years, but the marketing team now has to revamp them every 12 months."
So, what next?
What Nigel needed was newer, quicker machinery. His existing machines were incurring expensive repair bills and creating downtime that was negatively impacting production and supply. To this end his broker, Tim Burling of Minstrel Finance, understood that an Asset Finance solution would be needed to procure the two extra woodworking machines needed to meet the demands of his larger client base.
Turning to Aldermore, System Six Kitchens were able to acquire a VAT deferral with a seven-year term, giving more than enough time to maximise cash flow, allow for an investment in raw materials and pay off the VAT at a profit.
Tim Burling was showing great enthusiasm about his decision to contact Aldermore for his client's Asset Finance solution. "I have known Nigel for fifteen years. My job as a broker is to understand what my customer wants and act on his behalf when I talk to Aldermore to evaluate what the best solutions are for his business. Cash flow for System Six Kitchens, as for any business is key to and one of Aldermore's bigger strengths is their flexibility. Not many funders would have offered Nigel solutions such as a seven years term with VAT refunds on their new machines worth £320k. They really understood what my client needed and have been fantastic all along."
System Six Kitchens are now the largest bespoke kitchen manufacturer in the South West, able to serve not only their surrounding area, but also the entirety of the West Country and beyond, including clients in Bristol, Oxford and London.
With the acquisition of equipment secured and the need to outsource any production removed, Nigel looks forward to upcoming challenges and the road ahead.
"One of our up-coming challenges now will be to get hold of the space that's available around us that would safeguard the business growth for the next two to five years. We also had to make some really hard decisions this year such as turning a partner away. But that's not necessarily a bad thing. Our new status gives us the opportunity to be more selective. We can now look at improving our margins, maximising workload and profit. We are proud to be a local business and to support the British economy. System Six Kitchens have been manufacturing premium quality kitchens for more than 40 years. The British industry suffered from a bad reputation but I can say today that our country has caught up with the market leader, Germany."
With a total annual turnover of £8m and 28% profit growth in 2017, System Six Kitchens show that business growth is challenging, but achievable with the right strategy, partners and finance solutions.
But it's not all about size. Nigel's advice for burgeoning businesses is, "Keep it small and take it all. You can get big and make no extra money. There is an optimum in every industry where you get the mix right and feel comfortable."
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