Patterson & Rigby File: Penetrating A Niche Market
With an award-winning concept developed over six years, SUMO Managing Director Colin Carnachan reveals the company's future expansion plans to the FDS Southern team
Gordon Patterson: What was the original inspiration behind SUMO?
Colin Carnachan: In 1998 co-Director Mike Bushell and I identified the market need for an underground utility detection service due to the fact that the construction industry had moved to the use of non-metallic pipes, which could not be found using traditional detection techniques.
GP: How did you go about providing a solution to this market need?
CC: At the time Mike worked for PipeHawk PLC (now a major shareholder), which had developed a ground penetrating radar system that could detect any type of buried utility, and we spent the next four years fine-tuning the technology and creating SUMO's operating systems.
Gary Rigby: What is the size of SUMO's market in the UK?
CC: Because there was no existing market, we estimated it at £4 million in 1998. It is now running to at least £20 million and we anticipate that it will grow into a £100 million plus market sector in the next decade. I would personally anticipate that in the not too distant future construction companies will not be allowed to dig up the roads without an underground utilities survey being done in advance.
GR: When did you launch the SUMO franchise?
CC: We piloted in 2002 and launched the first independent franchise in 2003.
GP: Who is a typical client?
CC: Any organisation which digs a hole in the ground or needs to find a clear area. The client base typically consists of major construction companies, utility companies, road contractors and district councils, although we also do work for large home builders, conservatory companies and small contractors.
GR: Do you have a proven marketing strategy for this defined market?
CC: Absolutely. Quite apart from traditional advertising and PR activities, we purchase a live construction project database of every contract awarded in the UK. From our Head Office we market direct to these contacts and our central marketing team employs a combination of direct mailing, e-mails and direct sales techniques to win the business.
GR: So, in effect, you undertake the primary marketing for the franchisee?
CC: That's correct. However, our franchisees are expected to assist with marketing and local presentations and maintain good customer relationships with the client base in their territory.
GP: How is the business performing?
CC: Repeat business rates are running in excess of 80 per cent. New customer referrals are in excess of 50 per cent. Our quote book runs in excess of £750,000 at any one time. We win over 90 per cent of all quotes issued where the contract is awarded and, as a result, our turnover is doubling year on year.
GP: Is your technical system unique?
CC: Yes, both the radar system and the operating system used by SUMO is exclusive to SUMO.
GR: How many franchisees do you have in the UK?
CC: We have a policy only to recruit franchisees in line with the turnover growth. We currently have 14 franchised outlets throughout the UK, with a planned expansion of at least six in 2006.
GP: I understand you provide a good support structure to your franchisees?
CC: The SUMO franchise is unusual in as much as we provide as many centralised services as possible. This extends to marketing, contract negotiation, invoicing, credit control and dealing with administration issues such as accounting records, PAYE and VAT. This high level of back office support enables our franchisees to focus their time on earning money and enjoying a good quality of life.
GP: Are there good potential earnings for the franchisee in SUMO?
CC: After all costs are deducted, franchisees typically enjoy a net profit before tax of around 40 per cent. Therefore, with a turnover of £100,000, the franchisee profit would equate to some £40,000.
GR: Are there any target areas you are looking to recruit into?
CC: As our business expands, we need more franchisees across the UK. Currently however, we have specific needs in the North East, East Midlands, London Area and the South West.
GR: Where do you hope to be in five years' time with this business?
CC: We are the largest provider and the leading brand in the provision of underground utilities detection services in the UK. Within the next five years we expect to capitalise on this and so become the dominant force in the UK marketplace. At that point, we will take the business overseas.
GP: I understand that you recently won an award?
CC: Yes, it was part of the British Franchisor of the Year Awards 2006. Our particular achievement was the 'Daily Express Brand Builder Award'.
GP: For a relatively new franchise it is quite an accolade. How did you achieve this?
CC: In effect the SUMO concept has been developed over a six year period and I think that the judges were suitably impressed with the fact that we had created a completely new market sector, developed a high profile blue chip customer base and established SUMO as the industry expert in its field.