After building his company from the ground up, Stan Mitchell continues to feed his vision for greater facilities management worldwide, starting with improving Masdar's efficiency.
Investing himself in a dream
I'm not into property as speculation. I tend to get in where I can see a purpose as well as an investment. I have three properties in Scotland and bought in Spain about 15 years ago. I'm currently reviewing a number of locations in Egypt and Cyprus. If you can buy, this is the time to do it. I don't have bags of capital because my company is self-financed; most of my capital is in the business, although I am now looking for investment partners to assist with our expansion. As a general rule, I don't like banks.
People who live by the investment sword sometimes get their hands cut. I don't wish any ill, but that's the choice they made. Everyone says a balanced portfolio is important. My company, Key Facilities Management, is the longest established management business in the UK - we started in 1990 - and the UK has been at the forefront of establishing facilities management (FM) as a professional discipline. FM is a multidisciplinary field primarily devoted to the maintenance and care of large commercial or institutional buildings.
Money for me is a means to an end. It isn't terribly important to me - it's what you do with it that counts. I'll get much more satisfaction by helping people and that philosophy filters through to my company. Bonuses are paid to everyone, not just directors. We went through a rocky patch a few years ago, and I told staff they wouldn't get a raise in the next two years, and if they wanted to go, I'd help. Nobody left. Today we have 70 staff. I get more out of the people side of the business than the accounting side. I spend my money on my family and three grandchildren.
I am also investing in the development of my business in a manner that will build a sustainable platform for those younger than me who are involved to develop it when it is time to hand over. I grew the business organically (by expanding sales or operations and financing it through our own profits), which slowed everything down. But we believe now is the right time to bring in partners to accelerate things. We're working as the FM consultant for Masdar alongside the design team, under the control of Foster & Partners.
The first phase is due to start this year and I will be living in Dubai to see it through. We are planning to open our Abu Dhabi office in the next couple of months, and currently investing heavily to take the business international. Our initial focus is within the MENA region. Our business ethos is quality, not quantity. We're not chasing every opportunity in the Gulf, but want clients that appreciate the real value of FM. The enlightened developer has us at the table from day one.
Cost is dependent upon the standards of services required and can be measured in many different ways (per sq metre, total cost, per head of occupancy). Cost will also vary dependent upon the scope of services provided. Therefore, there is no standard answer. In part this is the reason that many developments in the UAE have problems with service charges, as what has been done to date is that they have simply taken estimates from other developers and applied a similar rate.
Therefore, if the area, services and standards that are to be applied are different, then such an approach simply does not work. People think FM connects when you hand the building over, but that's completely wrong. If you look at the life of any project, FM accounts for 80 per cent of the total cost. With the best will in the world, architects and engineering consultants don't run buildings - we're the ones that have to protect the asset and minimise service charges to end users. The value comes if you can holistically manage the total support activities. The team at Masdar had the vision and the understanding; we're getting it right, and having the opportunity to work as part of the design team with Foster & Partners and others.
As the industry has evolved, we saw about five years ago that the time was right to move out and develop the business internationally. We've just restructured the company under the Key Facilities Management International holding company and have Key Facilities Management MENA within it. We have a three-year agenda to spread ourselves across the region. Effectively, we're franchising to a regional and local level. We're involved in various workshops and conferences worldwide improving the awareness of FM and the value that it offers.
Partnerships in new businesses with close friends seldom seem to work. Many people that I've met in business over 20 years all have "best will in the world stories" that came to grief. If you're going to do it with close friend, have the exit documentation done up front. Having said that, my wife has been my finance director from the beginning, and that's worked. I'm the spender and she's the one saving for a rainy day. We are saving for a moderate standard of living in retirement and to give my grandchildren the best possible start in life.
FM in some countries represents 1.5 per cent of GDP and over 2 per cent employment, so it's a significant industry. For the business we're in, it's a tremendous opportunity - especially in the current economic climate. Our core business is everyone else's non-core business. Overheads are the second biggest cost to any business after salaries, so anything I can save, it's straight onto the bottom line. I've never walked into a company without making at least 15 per cent savings.
We have a specialist LED lighting business involved in the design and manufacture of this new type of lighting, which offers considerable energy savings and reduced operating costs. The international business, however, is all about protecting the brand while realising the opportunities with our partners locally around the region. The Middle East has some fantastic buildings, but some of them don't have FM in there - and they'll pay the price. There's no magic wand or short cuts; you must convince the client, demonstrate the savings over the medium to long term and spread the knowledge.
After establishing the business in Scotland, where I am from, I helped establish the British Institute for Facilities Management and became national chairman. I subsequently became involved in developing FM in Europe and helped develop the first European standards in FM. I next became the founding chairman of the Global Facilities Management Association, which serves as an umbrella for national associations worldwide.
In the UAE, the legal structure inhibits a member-centric association from emerging. We are having ongoing discussions to try and assist. We may end up having to configure it through a trade association, but the rules of Global FM state that to be a member you must be a member-centric association. But we're very optimistic about this region.