In 2003, Patrick Harbour (left) and Nathan Jones (right) quit their jobs with BaxterStorey to start a business of their own. They tell Janie Stamford how they set up on their own and why the principles on which the business was founded has been key to their success
Was it a tough decision to give up the regular salaries and break out on your own?
NJ We plunged our home lives into financial chaos and lived off our savings for probably two years. I left BaxterStorey a few months ahead of Patrick so I spent my evenings writing a business plan to present to investment firm Coutts and Company. Our strategy was two-fold: to achieve 1% of the marketplace in our first 10 years - so that being £4.5b we wanted to grow to £45m; and to do it while being very selective over the types of organisations we wanted to do business with. The ones that share our values and passion and aren't interested in the cheapest a plate of food could be done for.
PH It was a very tough time but we didn't want to poach something that we'd worked on at a previous company. We wanted to win on the merit of Harbour & Jones, and that's what we did. In the first year, we turned down opportunities because our aim was to be the best in our field and not the biggest in the market. In the long term, that has paid off because now we're finding that clients are approaching us.
Was it hard to turn down potential business?
PH It's a very brave move when you're earning diddly-squat. But when we present to someone who tells us they don't have time to offer drinks before saying how much they want to cut off the costs and that they don't really care what the staff think about it, we know we're never going to work with them. If he leaves that impression with us, how would he treat our staff in that building?
Do you still consider Harbour & Jones to be a boutique caterer?
NJ When we were Caterer and Hotelkeeper‘s Adopted Business back in 2006, we called ourselves the boutique caterer but I wouldn't say we are any more, only because people have stolen that label. We used to think of ourselves as the Hotel du Vin of the catering sector - each one being very different but with the same underlying quality and feel - and I think that you can sense that in any one of our sites.
We won't be all things to all people but we have a fantastic turnover for the ratio of contracts that we have. If you compare us to some similar sized companies, they've probably got two or three times as many contracts or sites, but we're able to grow our business because our average contract value is in excess of £500,000, which I think is almost twice what the industry average is.
PH For us, no two clients are the same. We don't go in and say "there's the manual, that's what you get with Harbour & Jones". We tell them our values and these are non-negotiable. How we adapt that to suit a site is how we work with the client. That's as true today as it was then.
What was your strategy when you set up the business?
NJ For the first three years we wanted to concentrate on good-quality business and industry (B&I) sites - a box we ticked. Years four to seven, we wanted to look at the commercial conference and banqueting (C&B) and the concessions markets, and we did that. Coming out of year seven we wanted to grow an events and party business to support the C&B arm as well as the B&I arm to give them a platform to work additional hours. Recently we invested £300,000 in a state-of-the-art central production kitchen in Park Royal. The business growth plan went very much as we hoped, and now we've got a very solid foundation in each of those three areas the business can grow.
PH We didn't come up with those three business strands out of nowhere. We felt B&I was the easiest sector to get into for a new starter because the risk is relatively low - but so are your earnings. We started in that market because it also gave us an opportunity to get three years of audited accounts and cash-flow recognised in the banks.
Our first concessions project was St Paul's Cathedral and I think the reason we won is we spent weeks studying the profile before building a completely new offer. We weren't offering the best financial deal but we said we would grow the business and the reputation of the service. Within two years we had doubled the turnover and according to the Association of Visitor Attractions we've increased the seed value of customer service by 30%.
Are you on target to reach your financial goals?
NJ I think we will achieve the £45m within the 10 years and we can see that easily doubling in the 10 years after, but to do that with as few contracts as possible will be an achievement. We don't have any more than 10 contracts per operations director. If you look at the geography of our business we've got about 40 contracts across just under 50 sites. The majority are highly concentrated in Canary Wharf, the City and the West End but we've also got sites in Scotland, Bath and Bristol.
PH We don't go to sites just because they want us; there has to be a link to our core business in London. BaxterStorey had the Institute of Physics printing and publishing site in Bristol. We ran the Institute's events and conferencing in London. Both of us had the opportunity to tender for both sites - and we won. It's not a numbers game; it's about relationships and working hard at it. We've been very successful, but things never work quite as you'd like. Ideally we'd open a new site every two months, whereas we had three open in July.
Has your resolve to choose the right type of clients ever wavered during the turbulent economic conditions of recent years?
PH No, I can say that categorically. We had a saleswoman who is no longer with the business that wanted to take us into certain markets because they would be easy to sell into. But it's important that we stick to our guns, because we're attracting a lot of talent to Harbour & Jones as a result. If we start going into markets in which the focus is on different issues, such as cost constraints, H&J people won't want to work with us. It's not being elitist or snooty; it's not what we want to do. We offer value for money to our clients who share our values.
NJ We've always managed our cash-flow and reinvested into the business, which means some of our competitors are making a lot more profit but we don't have to worry about bank managers and servicing loans. One of our biggest challenges of late has been late payments. Clients are keeping hold of their money, but I think that's a common trend because cash-flow is king in business.
What prompted you to open the Hoops Inn pub in collaboration with the Henry Moore Foundation?
PH They'd heard about St Paul's, been in to see it and approached us. It's a really exciting opportunity. It was a failing pub, with your classic chintzy, sticky carpet, ghastly food and a reputation to match. We worked with the Henry Moore Foundation to refurbish it and create a dining experience for the locals and the visitors to the foundation. We're developing a plan to bring more events business into the foundation site to complement the investment they made in the Hoops. It made it into the Good Food Guide after being open for just nine months.
How would you describe the dynamic between you?
NJ I would say we're like a pint of very good real ale and a glass of vintage Champagne. Or chalk and cheese. Clients love the spark between us because we're incredibly passionate.
PH Opposites attract and we each have a different skill base but ultimately Nathan and I agree a lot more than people might think. Honesty is critical to a successful partnership. When we're asked in a pitch how much of our fee we're prepared to risk if we don't perform, I always say all of it. Nathan is having kittens at this point.
But if you've done something wrong then you should pay a price for that. I tell clients that this is the spirit of being successful and if we're successful they'll want to pay our fee. If one month we cock up, we'll be the first to put our hands up and say don't pay us.
How do you build a team of like-minded people?
NJ It starts with the recruitment. We've done some fun things in the past, such as speed date recruitment for our frontline roles. We invite people to come to our open days and they'll be asked questions like ‘if you were a biscuit, which would you be and why?" We're looking for a bubbly personality and communication skills. If they can sell the idea that being a chocolate bourbon is the best thing in the world, then they can sell coffee to our customers.
PH We did some profiling work at a recent management away day at Pennyhill Park hotel and we found that among all the passion and enthusiasm was that roughly speaking, we've got four completely different profiles. That balance of personalities and skill bases is what will sustain our growth. We've created a family of people who share the same values because Nathan and I can't be everywhere. It's not Harbour, it's not Jones. If people can buy into our values then our company can grow on it. It's our backbone.
HARBOUR & JONES - NEED TO KNOW
Turnover £18.5m for 2010 (£26m expected for 2011, £35m expected for 2012)
Recent contract wins
â- Building Design Partnership, annual turnover £400,000, three-year deal (won from BaxterStorey)
â- Aviva Investments, annual turnover £1m, three-year deal (won from Avenance)
â- Aegis Media, annual turnover £500,000, rolling agreement (previously self-operated)
â- Global Radio, annual turnover £750,000, three-year deal (previously self-operated)
â- Bishop's Palace, Wells, annual turnover £650,000 projected to grow to £1m over next three years (previously self-operated)
â- IOP Publishing, annual turnover £200,000, four-year deal (BaxterStorey operated contract in previous premises)
â- Leading British fashion house