Penny Hydraulics Winners at the Family Business of the Year Awards 2016
The Family Business of the Year Awards were created to celebrate the UK family business sector, to recognise the diversity of family firms across the country and to celebrate the contribution that they make.
The organisers, Family Business United, continue to be a leading resource for the sector, championing the cause and sharing best practice. These awards seek to showcase the best of British family firms, culminating in an awards reception at the Mayfair Hotel in London. This year the awards night took place on 2nd June and Penny Hydraulics were delighted to be awarded Family Business of the Year for the Midlands.
The judges were particularly interested in what makes the company different, the core values, the way the business is governed, philanthropic activities and what marketing strategies the company uses.
With regards to the company’s values, Penny Hydraulics has a core value of commitment to innovation and this is demonstrated by a significant and on-going investment in Inventor CAD & stress analysis software & the appointment of high calibre mechanical engineering graduates. Many of the firms market leading products have come about due to a customer experiencing a specific load handling problem. Through innovation, a product has been designed to meet their needs and it is through innovation that the company continues to grow, develop and enhance the product ranges.
As a family business & SME, customer service is also a fundamental value. Employees aim to provide timely, responsive & proactive service which exceeds customers’ expectations at every stage of their interaction with the firm.Excellence, quality & professionalism are values that go hand in hand. Always doing what has been agreed and striving for excellence and quality in everything is a value that runs deep through the business and which starts at the top. The four company Directors are thoroughly immersed in the industries in which the business operates. Each has their own specialty and much business development is achieved by face to face meetings with customers and building open relationships. In order to gain the trust and specialist knowledge that customers rely on, management have to have a view into the future in terms of engineering developments, legislation and sector best practice. Being active members of trade bodies including Association of Lorry Loader Manufacturers and Importers (ALLMI) and The Society of Motor Manufacturers & Traders (SMMT), links with the Health and Safety Executive and attending industry seminars all helps to give the company a unique insight to enable excellence to be delivered to the customer base, helping them to maintain their competitive advantage.
It is not only the Penny family that has multiple family members working for the company, there are several families working alongside one another which adds values of trust, care and co-operation. These family values become adopted by all in the company forming a group that helps to support itself both at work, in their personal lives and in the local community.
In terms of governance, decisions about Penny Hydraulics and the people who work within it are always made for the long-term good of the company. This means that the best person for the job is employed and it may not always be a family member. The Board of Directors is 50/50 family to non-family members and share ownership is kept to people working in the business to prevent profits being taken out of the business by parties not contributing towards it. The company policies have proved very successful and continue with the third generation coming up through the management structure. A key point made in the submission for the award is that shareholders are considered to be custodians and not owners.
To discuss what sets the company apart from other businesses, MD, Robin Penny refers to the past as he comments “business founder John Penny Senior was a great all-round engineer who saw no boundaries to what was achievable. His lack of formal training meant that he was not constrained by rulebook but he relied heavily on experience. He was an eccentric character building boats, cars and aero-planes in his spare time.”
It is clear that this experience and enthusiasm was passed down to his three sons who then backed this up with formal training as Robin continues “this practical ability and can do attitude with a no boundaries approach still runs through the company today and I believe sets us apart from many other businesses who are simply able to offer off-the-shelf products.”
Financial strengths also set the company apart. Unlike many other companies, Penny Hydraulics has always been run prudently and has grown steadily through decades of hard work. The benefits of this now, are that the company has no loans or overdrafts, owns all of its premises, owns all company fleet vehicles and owns all its own plant & equipment. In this day and age, this is quite rare, puts Penny Hydraulics in a strong financial position and sets the company apart from many other businesses who rely heavily on credit to run their businesses.
The firms’ board of directors often use the quote “turnover is vanity, profit is sanity, cash is reality”. They are always looking to improve margins and increase profit. This is done by various means and most recently the firm have looked at overheads and carefully invested in a better trained workforce and various “green” technologies to cut energy consumption. The company has saved 30% off the heating bill, purchased a new compressor, LED lights, solar panels, installed more efficient computers and screens, and implemented waste controls, solvent recycling & driver training. It is thanks to this constant monitoring and adjusting that the profit has historically been very healthy and projections continue to be excellent.
Being a member of the Trade Bodies, Penny Hydraulics have an excellent insight into potential risks to the business in the future. These may be changes in legislation, the economic climate or even trends that may affect key customers. What makes the company special is that they have the experience and expertise to face up to such problems and form a strategy to overcome them. Given the nature of our business, this is often design led and leads to new products or even new business divisions being created. Diversity is therefore a key strategy which sets Penny Hydraulics apart from the competition, having 8 business divisions has certainly facilitated the company growth and stability. A good example of this is that during the recession there was a vast reduction in the number of commercial vehicles being manufactured which saw a downturn in the need for vehicle mounted lifting equipment. Vehicle mounted cranes and loading platforms had always been the core business and therefore this could have potentially been catastrophic for them. At the same time during the recession, the company saw a definite rise in the goods lift division as there was a trend for business owners to expand and develop their existing premises rather than undertake the larger investment to move premises at a time of major financial uncertainty. This meant in a lot of cases that business owners were having a mezzanine floor installed in their buildings for extra storage or work space which then meant there was a requirement for a lift to move goods to and from this area. The goods lift division is now a key growth area.
A further example of how Penny Hydraulics has used diversity to their advantage is the downturn of the coal mining industry in the UK resulting in a fall in sales of hydraulic roof supports & other mining products and the subsequent expansion into mechanical handling for the nuclear power industry resulting in the ”Penny Nuclear” division being setup.
With regards to marketing, Penny Hydraulics have always and will continue to use its family identity in advertising and marketing. Third generation family member, Jess Penny comments “larger businesses have the advantage that they can dominate markets with low prices, large product ranges and mass marketing, but we have the edge when it comes to quality, service and exclusivity and we push this message wherever and whenever possible.” The company consider their family status to be a hugely important part of their marketing strategy and believe that promoting the company as a family brand is beneficial to both growth and reputation. Jess comments “marketing Penny Hydraulics as a family business gives a competitive advantage by helping to boost trust, contribute to social responsibility, reinforces the perception of quality and put customers at the heart of the business as well as improving our corporate reputation.”
It is commonly said that people buy from people, therefore it is natural to want to know the real people behind a business rather than dealing with a faceless company. Jess continues “we are lucky enough to have a very interesting company history and customers are often interested in the story of our business and the people within it.” The company take every opportunity to stress the benefits to their customers of buying from a family run business. In Penny Hydraulics case, they are able to provide 'bespoke' goods and services to order which sets the firm apart from a lot of the larger competition. The company also re-in force community ties wherever possible, letting customers know that they are supporting the local community and being environmentally-friendly.
Customer service is a vital selling point for a family business according to Jess who explains “this is based on the notion that if you buy from somebody who you trust, you feel you can call them they will action the request straight away.” Penny Hydraulics work very closely with their customers striving to offer a friendly face, be trustworthy, flexible and approachable. Exceptional customer service is at the forefront of everything they do.
Penny Hydraulics plays a huge part within the larger community particularly in relation to education. The promotion of engineering as a brilliant and exciting career starts at an early age with school visits from primary and secondary schools, most recently Deer Park Primary School, Chesterfield. Five work experience placements are offered per year and typically it is the pupils from the village school, Heritage, Clowne that take these placements. Penny Hydraulics MD, Robin Penny has been the Chair of Governors at the local school for over 10 years and sits on the Industrial Advisory Board at Sheffield Hallam University. For almost a decade, Penny Hydraulics has been heavily involved with Sheffield Hallam University as part of their Knowledge Transfer Partnership Scheme. This has enabled them to offer valuable industry experience to engineers with little or no practical experience and recruit high calibre graduates to run well-defined projects within the company.
All employees are encouraged to improve their skills with externally accredited qualifications which improves employee retention and helps with product quality and development. The company has already recruited additional members of staff over the past financial year boosting employment for the local community, this figure includes 2 new apprentices. The firm are currently recruiting again for a further two positions. The average length of service for Penny Hydraulics employees remains at 15 + years.
The success of the company to date has been achieved through decades of hard work from a committed workforce led by two generations of the Penny family. An understanding of the market, the competition and the customers’ needs have been fundamental in the firm achieving this success. Penny Hydraulics has a wealth of knowledge, experience, drive and the willingness to achieve. Following a record year in 2015, by the end of 2016 the company are currently looking to exceed the target of over 10% growth with a turnover of over £7M.
Work is currently underway developing the premises with a new warehousing facility to allow increased levels of stock, a new production facility to allow increased turnover of products and new office facility with room to expand the Design Team and improve customer perception, all forming part of this development. The firm are currently having a big push to up-skill the workforce and also re-engineer some of the key product lines. Marketing efforts have been increased, particularly in relation to a new e-commerce site to drive sales. Penny Hydraulics are incredibly proud to have three generations of the Penny family involved in the business and all of these developments are helping to grow the company. The Board recognizes the experience and talent within the organisation and are making sure this is passed onto future generations both within the workforce and the family.
The award win was a real coup for the company, as Jess Penny explains “We believe that family run businesses have the edge when it comes to quality, service and exclusivity. The awards were an excellent opportunity to get together with like-minded family businesses, sharing our thoughts and experiences. Winning the award for our region was the icing on the cake. It is a great accolade for us and one that really recognizes all the effort that everyone here puts into the company to make it so special.”