by Real Business - Thursday, 30th August 2007

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It's hard to imagine a more derided and written-off group of sectors than estate agency, contract cleaning, second-hand cars, burglar alarms and textiles. But over the next few pages, we meet a bunch of pioneer British entrepreneurs who are changing the face of these industries. Their secret? Doing things differently... and doing things better.

If you are starting up a new business, received wisdom has it that you should look for growth markets such as IT or leisure. Whatever you do, give old, low-tech, oversupplied and fragmented markets a miss.

While it is probably true that it is easier to make money out of an undifferentiated new market that's growing at 30 per cent per year, the lesson from our five companies is that there is no industry so grubby, so old-fashioned or so low-margin that there isn't room for someone to come along and do it better.

Apart from the fact that all five are successful in ropey markets, there is one thing that all our business people have in common: belief in quality. They haven't come along and tried to compete on price or size. Each entrepreneur puts their success down to an obsessive focus on quality.

It's not rocket science. And none of them are rocket scientists. They're just bright, hard-working people who have looked carefully at their industries and identified their shortcomings - and what to do to mend them.

Significantly every one of them had years of experience in their chosen industry. A close knowledge of their customers meant they could understand how they were being let down.

So rather than introverted cost-cutting to increase margins, they all focused outside their organisations to give their markets what they wanted. In every case this involved increasing costs by investing in plant, property or people. In so doing they have produced better products and are able to charge more for them.

Textile weavers C & J Antich & Sons ignored the wisdom which said that Britain can't compete with the Far East because of higher labour costs; it went ahead and invested millions of pounds in a state-of-the-art factory. Prestige Cleaners hand-picks its workers and actually volunteered to pay them 20 per cent over the market rate. Remax Estate Agents focuses on training for its employees in an industry that usually sees such as idea as a waste of time. It prides itself on recruiting the best negotiators in the marketplace.

There is a strong ethical dimension to the approach adopted by many of the companies. Trevor Smith of Prestige Cleaners found it distasteful that the cleaning industry pays its employees appalling wages and still manages to short-change its customers. Remax and Maxcar both want to change the culture of sloppy, often negligent, service in property and cars - the two most important purchases most of us will ever make.

But the thing that underpins everything else - the obsession with quality, the investment, the customer focus - is vision. Every one of our entrepreneurs had a powerful vision of how it would be possible to do these things better.

It's all obvious, simple stuff. But, as the philosopher said, the simple things are often the hardest.

Maxcar

Business sector?
The used car market which, you may be flabbergasted to learn, is worth £26bn a year, making it the fourth-largest retail sector in the UK.

Reputation of the sector?
Best summed up in two words: Arthur Daley. Small businesses operating on open-air lots, which may or may not still be there when you come back to complain two days later. Aggressive sales techniques. No fixed prices other than what the salesman thinks he can extract from you. Car only serviced, if you are lucky, after you have bought it. The last great cottage industry.

What are you doing that's so different?
Everything. Maxcar wants to be a mainstream retail brand just like Tesco or Marks and Spencer. It is planning a chain of huge stores - "superlots" occupying nearly two acres - most of them under-cover. There is a cafe in each store, prices are fixed, salesmen are not on commission, touch-screen displays allow you to inspect the inventory.

Each of the 500 cars on display is cleaned and serviced before being displayed. Each carries an AA warranty. "We want to take the anxiety out of buying a second-hand car by creating a relaxing, trustworthy environment," says Maxcar marketing director John Douglas.

The scale of Maxcar's ambition is jaw-dropping. The first store can display 450 cars. Maxcar aims to turn stock 12 times a year - that is, to sell around 5,000 cars a year from one site at an average of £8,000 per car. That would give a turnover of £40m from one showroom with margins of around 15 per cent. It plans to have four sites by the end of next year. If the format works, the sky's the limit.

What was your inspiration?
As former marketing director of the AA, Douglas is all too familiar with the seamy world of second-hand car sales. "Anyone can see that second-hand cars is just a crap sector. We did a lot of market research which showed how unhappy consumers are with the current provision. The concept comes down to making shopping for used cars just like shopping for anything else," he says.

Show us your medals
Maxcar only opened for business on March 1, 1998. But the idea feels right. And despite coming from a standing start and being completely unheard of, it hitting a stock turnover figure of between eight and nine (target 12) pretty early. "If people are buying on price, they won't come to us. But the evidence is that enough people want and are prepared to pay for quality and reassurance," says Douglas.

Remax

Business sector?
Estate agency - an industry worth £1.9bn last year.

Reputation of the sector?
Tim Not-So-Nice-But-Dim. My neighbour sacked his nanny recently because he was worried that she couldn't keep up with the intellectual development of his four-year-old. A week later she got a job as an estate agent.

It's not that they are dishonest, although there is an element of that. More unprofessional, incompetent, opportunistic, poorly managed and lacking empathy. The industry is also highly fragmented - there are 12,000 different estate agent offices in the UK, with no strong brands.

What are you doing that's so different?
The heart of the Remax proposition is the quality of its negotiators. Unlike most estate agents where the negotiators are at the bottom of the corporate structure, at Remax they are the focal point.

"It's strange that when house purchase is the largest and most important purchase in most people's lives, the staff servicing them should be by and large untrained amateurs," observes Gregory Carros, managing director of Remax UK.

As in any industry, 80 per cent of business is done by 20 per cent of the people. Remax, which is a franchise operation (allowing for management economies), goes into a new area, assesses the optimal size of its office and sets about recruiting the best negotiators in the neighbourhood. Offices tend to be large with ten to 15 staff compared to the UK average of three.

They are then allowed to keep 80 per cent of any commissions they earn - although they have no basic pay. (Interestingly, this is the opposite to the approach taken at Maxcar where sales people are not paid on commission.) "We only take on the best and they earn two or three times the industry average," says Carros.

The franchisee also receives extensive training and support from Remax. The upshot is premium service with higher than average costs, but far higher than average sales.

What was your inspiration?
Remax was founded in Canada in 1973. The market there was very similar to the UK today: fragmented and dominated by financial companies. "Property is an intensely personal business and most people don't understand that. The opportunity came from that perception," says Carros.

Show us your medals
Remax launched in the UK in May 1998. It's planning to open 20 outlets. In the US and Canada, arguably the hardest property markets in the world, it is number one with a 36 per cent share of the market. In South Africa, it is number two after only a couple of years in operation.

C & J Antich & sons

Business sector?
Textiles

Reputation of the sector?
Satanic mills in decline. In the popular imagination, the British textile industry peaked 100 years ago when tubercular women gave birth at their looms. Since then it has been in steady decline as the British fabric industry has been torn apart by competition from the Far East, where tubercular women pay employers to give birth at their looms.

The truth is a little more complex. The UK gained a lead by starting first. Then the rest of the world caught up. We were overtaken because of the reluctance of UK entrepreneurs to reinvest in the industry.

What are you doing that's so different?
Everything. Founder Chris Antich has created an astonishingly successful business by operating at the very top end of the textiles market, using the very latest and best technology, and with an almost pathological focus on quality and service.

The business was built on its couture division which produces very short runs - as little as 60 metres of cloth at a time - for names such as Givenchy, Lanvin, Lauren and Armani. But it also has mid-market and bulk operations.

It can switch from one to the other because of investment in the very latest technology which is versatile enough to produce all sorts of cloth. In contrast to the image of textiles as old-fashioned and labour-intensive, the futuristic, purpose-built factory is entirely computerised and air-conditioned.

"If there is a machine we need and it has to be the best on the market, we just go out and buy it and make it pay later. Right from the start I decided that everything, from the brochure to our products, had to be the very best," says Antich.

Despite high gearing and the need for volume to keep the expensive machines busy, the company has no sales force. "Everyone in the company is selling," says Antich. The bulk of volume comes from repeat purchase.

What was your inspiration?
After years in the industry as a designer, then in production management, Antich landed a job with Taylor and Lodge which, he reckons, is one of the best textile companies in the world. It was the quality of this employer that opened his eyes to what could be done.

Show us your medals
Just look around the Huddersfield factory. The company has just been awarded Investors in People. The indicator that Antich values most is that his expensive machines are running 24 hours a day, seven days a week. The company physically couldn't produce any more than it does. 1998 profits were £400,000 on a turnover of £3.5m.

Prestige Cleaners

Business sectorCleaning and maintenance services - the third-largest industry in the UK, probably worth £3bn a year.

Reputation of the sector?
Mrs Mopp - hair in curlers, fag in mouth - smearing every surface a disease-ridden cloth. Lately the image has become that of an industry staffed by disaffected immigrants, paid a pittance to do the job badly. Cleaning was, and still is in many areas, an oversupplied, high-volume, low-quality, low-margin business, driven entirely by price.

What are you doing that's so different?
Just about everything. Trevor Smith has reversed every industry assumption. He offers a quality product at a higher price.His first innovation was to start hand-picking the best staff.

"I realised that taking on anybody, paying them pitifully and then firing them if they didn't work out, wasn't the way to get good results. So I started interviewing people in their homes. It means you get a good idea of what they are really like and who they really are," says Smith.

He then started paying them better - £3 an hour as opposed to the going rate of £2.50 - and introduced motivation schemes, such as employee of the month and employee of the year.

Smith takes pride in only using the best-quality cleaning materials, even going so far as making special buying trips to the US to acquire new, improved polishes. This enables him to provide high-quality cleaning services for only a 20 per cent higher price. "Many companies, especially retailers and US corporations where cleaning standards are much higher, are happy to pay a bit more for a job that is properly done," he explains.

What was your inspiration?
It wasn't so much inspiration as a constitutional inability to run a shoddy outfit providing a shoddy service. "I could see all around me that people were charging too little to do the job properly. It would be a quick once-over with a dirty mop and that was it. I didn't like doing half a job and kidding the client. It didn't sit right," says Smith.

"I started off as a window cleaner where the same used to happen. It made me wonder if there was way of doing the job properly. There was, so in 1984 I branched out on my own."

Show us your medals
In 1997 Prestige was awarded Investors In People. It also picked up the Thames Valley Business Of The Year Training Award. It has won the Mars and Berkshire Environmental Award for Excellence. "Many firms just pour their phosphate-based cleaners down the drain. We take pains to use environmentally-sound products," says Smith.

Prestige has a good blue-chip client list, including House of Fraser and NatWest. 1998 turnover was £5.5m a year and the company employs over 1,600 people.

masco security

Business sector?
Electronic security - that's burglar alarms to you and me - a £1bn-a-year industry.

Reputation of the sector?
The recession of the early seventies spawned a crime wave shattering the utopian peace and quiet of suburban Britain. Burglar alarms became the way to protect your premises. Tales of cowboys selling empty boxes abounded.

The worst offenders were chased out of town some years ago. Those remaining divide into a premier league of half a dozen giants and a Vauxhall Conference of thousands of two-bloke operations hand-wiring gadgets of variable quality in small sheds. There are very, very few firms between the two extremes.

What are you doing that's so different?
Spotting gaps in the market. Masco has made a career out of identifying unexploited opportunities ever since it started business in 1980. This has helped it become the only company in the industry to make the leap from local to nationwide operation, competing with the big multinationals such as Chubb.

Its first success was in recognising that keys for security systems brought problems, especially for commercial customers. "They were expensive to issue and can easily be duplicated," explains managing director Paul Statham. Masco's solution was to find a control panel with a key pad, instead of a lock which meant that codes could easily be changed.

Brewers Courage ordered hundreds which made Masco realise that there was a relatively unexploited but extremely profitable niche in large blue-chip retail companies.

In 1993, it built its own alarm receiving centre, one of only 20 in the country. This month it launched the first fully approved alarm package using direct selling.

What was your inspiration?
Early on Statham realised that customer service levels in the industry weren't as sharp as they could be. "The big order we got from Courage early on was almost entirely because of the package we provided and the back-up. We realised that it would be quite possible to grow the business into a fully national company and become a major player. That has been what has motivated us," he says.

Show us your medals.
"We started in 1980. Within two years, turnover was £1m. We stalled for a while, but now we are about seventh largest in the industry with a turnover of £5m a year (1998) and we aim to double that in five years."

Contacts
Alex Benady is a business journalist. alex@benadynet.demon.co.uk

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