Welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. Today's guest is Charlie Mullins, founder and chairman of Pimlico (formerly Pimlico Plumbers).
We talk about how to build a customer base in the early days and how IR35 will change.
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- The entrepreneur and former dragon Rachel Elnaugh
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- The Apprentice 2005 entrepreneur and candidate Tim Campbell
- Timo Boldt, CEO of Gousto
- Jackie Fast, entrepreneur and The Apprentice 2018 nominee
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- Investment fund manager Nicola Horlick
- Supermodel became an entrepreneur, Caprice
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Would you rather read Charlie Mullins' podcast interview?
Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I am your hostess, Anna Jordan.
Today we have Charlie Mullins, businessman and founder of Pimlico Plumbers, now known as Pimlico.
After completing his training as a plumber, Charlie founded Pimlico Plumbers in 1979. He started with a used van and a bag full of tools and gradually built the business. Pimlico had sales of £ 1 million in 1994 and currently has sales of over £ 50 million. In 2015, Charlie was awarded the UK's first OBE for plumbing.
Earlier this year, his son Scott took over the role of chief executive while Charlie took over the role of chairman.
Anna: Hello Charlie.
Charlie: Hello Anna. Thank you for having us with you. I was looking forward to it and I am very excited, thank you.
Anna: Great stuff. How are you today?
Charlie: Very good. I'm in Marbella, Spain at the moment and we have a little business out here – also dealing with Pimlico – and yes, life is good.
I'll get back to the very beginning of the business in a moment, and many of our small business owners are in the early stages of their own. And I'm sure they would like to know how you built your customer base in the early days, especially without tools like social media.
Charlie: Yeah, I thought back then, in 1979 I finished my apprenticeship and worked as a freelancer and then started working in the Pimlico area. I've started getting repeat work and that is hands down the quality of service regardless of what service you provide. This will turn you into customers and keep you busy. I have to say that I was a pretty good plumber and provided the service I requested.
It starts with word of mouth and then other people will refer you to other customers. I quickly learned that the art of retaining your customers is the art and I believe I have worked on that basis and you visit those customers regularly and that would keep growing. I quickly learned that it's about keeping a customer who gets you through. First and foremost, you will get a customer base, and then you will be guided through difficult times like recessions or lack of work.
As business has evolved we now at Pimlico have a policy once you are a Pimlico customer. We assume that you are a lifelong Pimlico customer. I would tell anyone starting out that loyalty is the way to build a great customer base.
What is the secret to keeping the customer?
Charlie: Quality of service. Service quality can mean many things: show up on time, dress properly for the job, identify yourself, be very transparent, make people aware of your tariffs before you start, do the job, clean up after you. And I generally think just your kind of behavior at someone's home or for a client, be as professional as possible. That could be whether you are in their house or have a business on the internet or if you have some kind of business or whatever you have. Undoubtedly, the way forward is quality of service, whether it's a product, something you fix, something you sell, it's all about quality of service.
Anna: I think part of the reason you got successful was because cowboy plumbers had a certain reputation back then and you wanted to stand out from the crowd.
Charlie: Yeah, well, I got the idea again that when I first started Pimlico I thought I was doing something smart, I just thought it was sensible things. I know common sense isn't that common.
I wrote down a list of all things – or not all things, but about 20 things I've heard over the years about customers being dissatisfied with a plumber. You can do this in any company you work for. Find out what is bothering customers and do just the opposite. Customers used to be very unhappy about a plumber not showing up on time, not finishing the job, making a mess, not clearing up trash that wasn't transparent, and apologizing for why they weren't a job, so I thought I was just finished the opposite.
In business, I also learned to be honest. If you don't get there because you are late or late or can't make it, be honest with the customer. Stop making excuses about "I broke my arm" or "My van is broken". I've learned that customers don't want excuses. You want results.
I understand that funding is vital to running a business, especially as you are trying to grow. I know when you tried to expand Pimlico Plumbers in 1990 you asked the bank for help but unfortunately they refused you. Can you dwell a little on what happened there and how you got over it?
Charlie: Yes, business was good in 1990. And I wanted to buy another building to run, a bigger one. Basically I went to the bank and they and they loaned me the money to buy this property – it was about a quarter of a million pounds, that was December 1990. Everything was going great. They lend me the money and then, around April, the recession suddenly started, maybe I wasn't so aware of it. The recession sets in and then the bank basically falls. I had trouble with startups and debts and didn't bother about them.
They came down to re-evaluate the property to see if I could get more money for it and keep things going. They actually went the other way and told me it's not worth a quarter of a million pounds now – that's worth £ 50,000. So I had ripped everything out to renovate when we were about to move in, and suddenly it was a piece of land that wasn't ready.
Basically I tried to get an overdraft and keep things going, or even a loan, but they got none of it. If anything, they just went the other way. They said, "Look, we want our money back."
And I know people think they can't make you do it, but I borrowed it from another piece of property I owned. And they said they were going to auction that property and I would get £ 45,000 for it. Well I didn't do that. I ended up selling it for £ 90,000. The money was loaned to me with the property I had, and they told me to sell it and give them the money I get for it. Well I didn't listen to them. Well, I don't like banks anyway, they're crooks in suits – they'll lend you an umbrella as long as it's not raining.
Anna: I think people underestimate the power of banks, especially in situations like this.
Charlie: Well, you mustn't get into a situation where the banks are running your business and telling you what you can and can't do. And they were difficult with me, so I said to myself, "I have to get rid of you guys." So we kept working, selling a few little things, making a lot of changes in the business, and getting rid of the bank.
I changed banks, I'm not sure how good banks are with businesses these days. All I know is that I've been with this bank since around 1991/92. I never met my bank manager. I will never. There's just no point now – I can't work with them. They just left me with bad taste as far as I'm concerned. Now all I have to do is make money in the bank and take it out.
Halfway through the business, you've decided to stop just looking at other services like air conditioning, carpentry, and commercial heating services. What challenges did you face when changing Pimlico's business model?
Charlie: Yeah, it wasn't too difficult because what I found was that we had plumbers and engineers sending them to jobs and then the clients had a carpenter and needed an electrician, or they had wall damage and needed a plasterer. I just found it so difficult to refer people because not everyone works on the policies we work on or the way we work.
And again I have to say that it is just common sense and very professional. But there are so many bad craftsmen out there – I am not suggesting that it is all over because there are some great craftsmen out there. Due to the fact that they kept asking for people and I couldn't recommend anyone, we started to find our own people. We started to employ a carpenter, a builder, a plasterer.
If you go to a job and the customer is happy with you and all of a sudden you have to send a carpenter or other handyman, they are even happier with you because it is just going well. And they know what to expect. If we run it on the same terms as we did, and it just evolved from there, we have roofers, air conditioning, electricians, carpenters, painters, tilers. Yeah, all in all I think so.
Was there any change in the legislation or anything to do with it that you had to deal with in order to hire different types of craftsmen?
Charlie: Well we have a set of rules for everyone, so everyone follows our guidelines. Regardless of the requirements for electrical, gas or roofing work, there is only one formality. The most important thing is that you have your rules and regulations drawn up and that you comply with all of them.
If it's a successful model, why do you need to change anything? They just follow the same pattern. And until today, about 40 years later, it's the same.
We are currently seeing a lot of small businesses actually changing their own business model; B. availing more of their service online or offering a take-away service at home, something like that. How has Pimlico adapted to the changing conditions surrounding COVID-19? Since it's not just a central office, you also go into people's homes. I can imagine that there is more to be done in this regard.
Charlie: Well you are right, the world has changed and business has changed. And again, you need to improve the quality of your service to the people. And immediately we prepared all our craftsmen to go to people's homes with all the requirements: gloves, shoe covers, disinfectants, sinks in their vans, masks. We got them all set right, we did the same for our office too: social distancing, temperature machines that we have there, all the things you need to run a decent business.
And I don't think it's a big deal when you think about it. It's just a few things you've set up. Unfortunately, a lot of people make it too complicated with business matters. We didn't stop during the epidemic, we didn't stop, and we won't stop. We were allowed to keep working and were important workers, but we just made sure it was a safe work environment.
From the customer's point of view, we would approach them and say that you can just leave the technology the door open, you don't have to be in the same room. He comes in, does the job, leaves, closes the door, then obviously you pay by credit card. And that went down very well with customers.
That is not so much the case now. People seem to be getting a little bit more used to the situation, the virus is out there, but some people are very careful. And we do what we have to, and it's welcome.
How are the rules and guidelines you give employees applied to contractors?
Charlie: You see, engineers are self-employed. Some of them have been with me for 30 years, 10 years, five years, 20 years. There are some differences in terms of vacation, sick pay, but when it comes to working under the roof or working on rules and regulations, it doesn't matter whether you are self-employed or employed. The guidelines are the same. You show up, you do the job, you do what we want you to do, and that's it. Okay, we had a few issues, but it's not a big deal.
Another potential difficulty that we will face in the future is that we will have to make changes to IR35 in April. I understand that there has been some confusion (for Pimlico) in the past about the status of the contractors and their rights. I wonder how exactly the way you work will change with these changes.
Charlie: Yeah, look, it won't change the way we work. What changes is the contract for this engineer. If it says he's not self-employed then the choice is PAYE or he basically has to go somewhere else.
But I'll say again, I don't think it's a big deal. Unfortunately, if they do not become self-employed, they will not earn that much, they will not be able to claim that much tax deduction. But there are pluses: you get vacation pay, illness and can apply for an unjustified dismissal.
But our policy is not necessarily like that, we don't try to get rid of people, we want to keep our engineers. We went to the Supreme Court where one of the engineers obviously had a heart attack but there was a little bit more in there, I don't know why he had a heart attack that wasn't related to work and he was self employed for seven years. And suddenly he wanted to take advantage of a job. And we knew that was wrong.
But we went to the high court and various other courts and it took about eight years, and the end result, the supreme court came to the conclusion that he should be an employee, but no big deal – we changed their contracts – the Tax People are happy with it, our accountants are happy with it, and we are happy with it. When there are major challenges all you have to do is try to challenge them, which will work for everyone.
Contractors have already been hit pretty hard by COVID. And I can imagine that employers who are less willing to pay higher taxes and contributions may also get less work from their existing clients. How do these changes affect the employee-contractor balance that you currently have?
Charlie: Well it will affect the balance. If you can't be self-employed, you have to be PAYE. But I don't think we will reduce their numbers. I think we can go about it accordingly and work on something that everyone is happy with. I don't think it's a big deal, but in the same vein it just changes. And if we have to do that, then so do we.
There is a massive demand for skilled workers who can ask for good money. I think if you pay good money, are a good company and take care of your employees and keep them busy all year round, people will want to work for you.
The last question I want to ask is, as mentioned in the intro, that your son Scott has taken over the management. And Pimlico is a family business because its children, your grandchildren, are also heavily involved in the business. How do you set this line between work and family for our audience, which has their own family business, and keep them separate?
Charlie: This is a tough question, and I'll probably say that working with your family doesn't work for everyone. And if so, it works great, and if it doesn't, then of course it is terrible. How do you keep it separate I just think that at work obviously no family issues arise or that you are too busy with family things.
And of course when you are outside of work you will get into some family work, but I think it's nice to keep them separate as much as possible. I haven't really planned anything, but when we work and as much as we are family, I don't feel like it's the big part of it. In other words, they do the job, they like to do it, we are happy with them.
I know talking about it with a family member is difficult, but when you do say this, most family members will understand how you work and they will follow the guidelines. But of course there will be hiccups.
I think we have about 12 or 13 family members there and all I can say is great because I think we all drink from the same teapot. And it seems to be working. But yes, that was our difficult task. I am now with my fourth wife!
I'm just kidding. It can be difficult, but I think the pluses outweigh the minuses. Look, you can't run a business whether it's your family or just other people working for you without the ups and downs. Any business will have many sleepless nights, there will be many struggling for money, but once you get it up and running there is no business like your own business.
Anna: Of course – I think that's why so many people choose it.
Charlie: Yeah, that's right, and a lot of people who want to start their own business have been playing around with the idea for years and playing around with it. They say, "I don't know when is the best time and Christmas is coming and winter is coming" and it comes every year and then it says, "This is bad and the banks don't lend out loans and interest rates" and they ask me when is the best time to start your own business?
The best time to start your own business is when it suits you. You have to get up there and just let it happen, that's the point. All that talking doesn't make you a busy business where actual action is taken and you just have to get started. You have traveled 10,000 miles and that starts with the first step. You need to take this first step in business. It just develops.
I didn't want to run the largest independent plumbing or service company in the UK, just become a plumber. And once I got the bug a little bit from asking and you can hire someone, it goes from there. I tell this to anyone starting out or even if you are just a small business, the ways to be successful, of course, the quality of the service. I will always say this is number one. And number two is hiring people, be they friends, family, or people you don't know but who are believed to have to hire people to grow your business since they are not a person. It's a team affair and your business is only as good as the people who work for you.
Anna: Well I think this is an ideal place to wrap up so I'll leave it there. Thank you for getting on the podcast, Charlie.
Charlie: That was good and if anyone wants to visit the website at pimlicoplumbers.com there are some parts there.
As Charlie said, you can learn more about him at pimlicoplumbers.com. You can also visit small business.co.uk for articles on building your customer base and running a family business. Make sure to like us on Small Business Experts on Facebook and follow us on Twitter @smallbusinessuk, all in lower case. See you next time, thanks for listening.