newark & sherwood homes
The organisation owns and manages over 5,500 homes
Mantes were engaged by Newark & Sherwood Homes (NSH); a medium sized housing association based in the East Midlands. The organisation owns and manages over 5,500 homes, the majority of which are rented to elderly and/or vulnerable people on low incomes. The association service and maintain their properties using a mix of their own in-house team (Direct Labour Organisation, DLO) and carefully selected third-party specialist contractors.
The housing association have an excellent reputation both for their quality of workmanship and the sensitive way in which their employees serve and support their customers. They recognised that within the region in which they operate, there are many elderly and/or vulnerable owner-occupiers that struggle to find contractors that they trust. In many cases it is family members that choose home maintenance contracts as they hope to find peace of mind through the arrangements chosen for their loved ones.
New social venture;
the diversification of a social housing provider
Deep dive into all aspects of new venture creation and integrated operating model within existing organisation
Complex considerations around commercial risk including regulatory supervision of the
Financial Conduct Authority
Mantes were instructed by Newark & Sherwood Homes to research and design a business plan for a proposed new venture for the provision of home maintenance, servicing and contract works. The initial scope of the instruction was very detailed and considerations ranged from an assessment of market size, drivetime and demographics; to the formulation of services, prices and operating model; through to the financial model, target margins and cash flow; right the way through to integrating the new service with the existing IT, procurement and contractor management systems.
The project included a deep-dive investigation into competitors and operating models across the industry. NSH aspired to offer a range of maintenance and service contracts charged to the client on a fixed monthly direct debit basis. Such products are popular across the industry as they offer peace of mind to customers that might otherwise face significant service and repair costs on large household systems in the event of an unforeseen incident.
Providing a home maintenance service for a fixed monthly fee introduces a great deal of unpredictability to the business model. Many factors can cause household systems to fail and it is possible that a disproportionate number of customers could face issues within a short period of time; if for example, there is a spate of bad weather across the region. Furthermore, as a not-for-profit organisation, NSH needed a business model that manages risks and profitability very carefully; making a trading loss could have catastrophic financial and legal implications.
Carefully managing commercial risk is a cornerstone principle for similar businesses operating within the sector. Due to the unpredictability of incidents occurring, monthly subscription services are regarded to be an insurance product and service providers therefore fall within the regulatory supervision of the Financial Conduct Authority (FCA).
Mantes looked in depth at multiple business models using different company structures to manage commercial risk, FCA regulation, governance and commercial conflicts of interest. Mantes also identified some possible joint venture partners to perform different aspects of a group-structure model and to enable NSH to outsource some of the most complex aspects of the business (such as an FCA compliant insurance arrangement).
The project was well received and Newark & Sherwood Homes have recruited a full-time member of staff to take proposals further.
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