Taking on the country

Taking on the country

Kevin Hollinrake has just taken his York-based estate agency through a merger that now gives it a national presence. Could this be the time for him to re-enter politics? Peter Baber finds out.

Kevin Hollinrake is managing director of Hunters, the York-based estate agency chain. In the past he has also stood as a Conservative parliamentary candidate for a Yorkshire constituency.

But if you think this should make him a tub-thumping Eurosceptic who is convinced that government is not a true supporter of business, think again. For one thing, he has every hope for the future of Britain, if the next generation of business people is anything to go by.

“A lot of people in their 20s who are working for me now are way more mature than I was at that age,” he says.

“I have a lad who at the age of 19 is regularly speaking to people at board level. He is talking mainly about sales, obviously, but you have got to have some technical competence to talk to people with authority, and he certainly has that.”

He is modest enough to say that this contrasts very favourably with how he behaved when he was first starting out in business, having dropped out of what was then Sheffield Polytechnic to run a series of market stalls with a friend.

“I reckon I have missed making a million at least three or four times in my career,” he sighs.

The first time came shortly after the privatisation of BT in the 1980s. He was offered the chance to start selling telephones imported from the USA which retailed at £5 – quite a bargain, when the standard BT phone at the time cost £20. “I should have set up a shop and started selling them,” he says, “but I was just a kid at 21.”

Another missed opportunity came shortly afterwards, when he was introduced to the whole concept of mobile phones. He says he was put off the idea of selling them, because at the time mobile phones were so unwieldy they had to carried around in a suitcase.

Their £300 retail price also put him off, but he admits now that, had he taken them on, who knows what it might have led to? “I already had a buyer for the first one,” he says. “I could have bought one and sold it on. But I lacked self-discipline. I thought I was doing okay, selling lots of standard phones, and that was it.”

He is, fortunately, doing all right for himself now. Hunters’ turnover this year stands at £7m, up from £4m at the height of the recession in 2008. That’s quite an achievement when, he points out, the housing market has effectively stood still for the past four years.

“In a normal year there are about 1.2 million transactions in the UK,” he says. “But for the past four years the total has stood at around 600,000.”

What’s more, Hunters has just completed the takeover of the Bairstow Eves franchise, one of the biggest names in the estate agency sector. The takeover hasn’t been problem-free, but he is very happy about where it has left his business.

“We now have a network of 107 branches going up and down the country, with half of those in the south where we weren’t really represented at all before,” he says.

“It would have taken us decades to get to that level. We are now the biggest estate agency franchise in the UK, and the sixth biggest estate agency brand in UK. We want to be the biggest within three to four years.”

Some performance indeed. But the other way Hollinrake is not like your archetypal free market-loving entrepreneur is that he does not believe current employment law, which gives rights to new employees after just six months, is holding back business at all.

“I keep hearing about how we should make it easier to sack people,” he says, “but we have never had a problem moving people on if they are not right. If you have good HR people and a good HR lawyer - not just someone you only use when you get problems – then you shouldn’t have any issue. I certainly have never been to a tribunal yet. When you think about it, nobody goes to work to do a bad job.”

Getting the right people, he says, is the key to getting business right. But while such a process can be time-consuming, he has little time for people who claim they cannot fill vacancies. All you have to do, he says, is make sure you have a good bank of potential people who you have already checked out before the vacancy even arises.

“I see people all the time without there being the prospect of any job,” he says. “If a good CV comes across my desk I want to see that person. “I interview all the time without interviewing. Everyone you meet is a potential interview.”

And to prove the point, he shows me a list of what looks like over 50 potential candidates he already has stored on his smartphone – stored, I notice, in note form, rather than as contacts that he might accidentally ring.

“A lot of people come to us from that route,” he says, “and that is how you get the best people, because you are not just fishing in a pool of what a recruitment agency has got that day.” As for how he chooses the right people, one quality in particular he looks for is their willingness and ability to knuckle down, as long as there is also some fun along the way.

That, he says, is what drove him when he set up Hunters in 1992 after nearly a decade of working for other agencies. “I am essentially a lazy person,” he says, “and it is only when you discover that there is no easy way to make money that you start working really hard. When we started this business, we got up earlier, stayed later, and chased every single lead down.”

When Hunters was founded it didn’t initially look the most promising of starts. For one thing, although Hollinrake says he had always intended to set up an agency on his own, his most recent experience within the estate agency sector had involved getting fired from a leading nationwide chain.

His immediate manager, miffed about some comments he had made about the restructuring it was then going through, had found out that he was still co-owner of a video shop business in York. Having any other business interests outside the agency was strictly against company policy.

Fortunately he had made friends on his first day as an estate agent with John Waterhouse, who also had many years’ experience, and it wasn’t long before they decided the time was now right to branch out on their own. But that decision wasn’t great for another reason.

Hunters opened in March 1992. And just six months later, Black Wednesday saw sterling exit from the European Exchange Rate Mechanism (ERM) and interest rates shoot up, virtually overnight well into double figures.

Not a great time to start trying to persuade people to buy a house. “We had negotiated an overdraft of £30,000 with the banks,” he says, “and by the end of September that had got to £66,000, and they did return a couple of cheques to our key suppliers, such as the Yorkshire Post and the York Evening Press. We were totally on a knife edge. But we were determined to get through it. I believe that in life 10% is about what happens to you, and 90% is about what you do about it. So we sold a couple of houses to keep ourselves going.”

Fortunately by early 1993 things began to pick up. “I had started recording in the back of my diary how many sales we had done,” he says.

“To begin with it was usually one or two per week. But suddenly I remember John saying we had 11. By 1994 things had improved sufficiently for us to open our second office. We were then on a growth path that was really exciting. We had 14 to 15 really good years, which is twice the length of the normal property cycle.”

In fact by the time the next recession hit, the company had expanded to have 10 branches it managed itself, and from 2005 it had started a franchise business that within three years was 15 branches strong. Looking back, Hollinrake says he wished he had realised that they were good times, because he would have relaxed and enjoyed them more. Because when the crunch came in 2008, it hit hard.

“We probably thought we were on a gravy train that would never end,” he says, “or end in a different way with a gradual slowdown. But it was simply wham!” He says the decisions the company had made in the months running up to the crash, such as spending £500,000 on a new department selling mortgages or £3m on a new head office (which has now been rented out), did not help.

He and Waterhouse were also still paying off his brother, who had opened the second office for them but had left the business in 2004. As a result, they had to take drastic action. A headcount of 220 had to be cut down to 60 virtually overnight.

“It was a very difficult time, seeing people almost as they were on a conveyor belt,” he says. And even then the rumours kept circulating. “We even had the BBC ringing, saying: ‘Have you gone into receivership?’” he says.

“That kind of rumour really pervades your organisation, because they don’t ring you, they ring the office.” Other agencies were already stitching up prepack deals, but that was something Hollinrake was determined that Hunters would not do. “You only have one reputation with your suppliers and your staff, and I could never have looked at them in the face again if we had done that,” he says.

Instead he behaved exactly as he had done in 1992. “We kept on and said: ‘We are going to get through this,’” he says. “We didn’t have anyone leave us voluntarily because they were worried about their job.”

Now, further away from the worst of it, he can see that one development that helped the company was his decision in 2008 to start offering franchises based on territory, rather than offices.

This certainly proved attractive to franchisees, not least because the start-up costs were around £30,000, compared with overheads of around £120,000 involved in setting up an office. One of the first people to take up such an offer was a manager the company was having to make redundant.

“He now has net earnings of around £160,000 to £170,000, about six times what he would have earned as a manager,” says Hollinrake.

It was the wish to extend this growing franchise network that persuaded him to make a bid for the Bairstow Eves franchise, which he heard was potentially for sale, during a corporate day at the races. It was a risky move. No such franchise takeover had been attempted before.

“The only comparable deal was when Halifax closed down its estate agency and it became Reeds Rains or YourMove,” he says.

But in that situation the Halifax name completely disappeared. Bairstow Eves, on the other hand, is still a functioning brand name thanks to the branches that former franchise owner Countrywide still operates directly.

Many of the franchisees were none too chuffed about being taken over by a north of England-based agency few of them had heard of. Some 50 of them, out of a total of 86, went to court to try to stop the deal.

Although they did not win, as a result of the court action Hunters did renegotiate the deal with Countrywide to extend the deadline for when the change of name had to take place.

“There were some things we found out through the legal process that we hadn’t been totally clear about when we bought the franchise,” says Hollinrake.

“Next time I would do a bit more due diligence. But we have now rebranded just over 50 of the franchises.”

All that means the agency is now in a healthy position to benefit from what he believes may be an upturn in the market next year – in volume, if not in value.

“The important thing is seeing the housing market bottoming out in the US,” he says. “All the problems in the UK originated in the USA, so if things turn around there, there is a good chance they will here.”

Will a better performing business entice him to enter politics again? It might do. Having been selected for the Dewsbury seat in July 2007, Hollinrake had to give it up again in October 2008, when the pressure of trying to maintain the business got too much, and then had to watch his successor Simon Reevell win the seat in the 2010 election.

“The mistake I made last time was that I hadn’t sufficiently stepped back from this business to make a good run at it,” he says.

“There is a problem in UK politics generally that it is logistically virtually impossible for someone who has experience of running a business or any other outside interest such as being a doctor to combine those two roles.”

If we are to have as our political leaders people who really can teach the country a thing or two about weathering storms, the powers that be should take heed.