Greg Silvester of Natural Insulation Northland sat down with us to chat about business challenges and a vehicle fleet that won’t stop growing.
Thirteen years ago Greg Silvester bought a business – the Whangarei and Far North regions of a growing insulation network with licensed branches throughout New Zealand. Not long afterwards his master licensee went into liquidation. It was a bit of a rough time, recalls Greg.
“Luckily we’d worked hard to establish ourselves as a standalone business so it actually worked quite well for us in retrospect. When I bought the business we got existing structures and processes, systems, brand awareness, and an established relationship with EECA [the Energy Efficiency Conservation Authority]. We had all the benefit of a licensee setup but didn’t have to pay the license fees over time. So we basically just took over the business and ran with it.”
Natural Insulation Northland Ltd is based in Whangarei and covers a big area from Whangaparoa all the way up to Cape Reinga. Over the 13 years he’s owned the company, Greg has developed very good relationships with most of the top builders in Northland.
Insulated from payment problems
Because they have such a good customer base and only deal with reputable builders doing quality work, Greg says they don’t experience the type of payment problems that are often reported in the media.
“We tend to work very hard with the top builders rather than skirting around the edge with the lesser-quality builders. So our customers are really, really good people and really reputable businesses that we deal with.”
The Natural Insulation Northland story
Greg recalls that when he came into the building industry and started Natural Insulation Northland, there was very little option for builders outside of the mainstream product.
“Pink Batts was pretty much 80% of the marketplace, but there’s a lot of other products that were equally as good and possibly better in certain situations. So when we started Natural Insulation, we based our service offering on providing options for our customers.
“We made it easy for them to not only have different products installed, but options for increasing the thermal efficiency of the house by upgrading the RVs of the products that were specified. If they had low-grade products specified, we would give them pricing options to upgrade that.”
A weird part of the construction industry
With most things in a new house build, spending more doesn’t usually give a lot more functionality. A $50 bathroom mixer tap dispenses water just as efficiently as a fancy $808 one. But Greg says insulation is different…
“Insulation is a funny part of the construction industry because it’s the only part of the new build process where spending more money can dramatically affect the long-term quality of the house. Power is never going to be any cheaper than what it is today, so the better the insulation, the better the house’s thermal efficiency.”
Competition and differentiation
Greg reports 5-6 competitors in his region, and although the other companies are smaller than Natural Insulation Northland Ltd, Greg welcomes the competition because it keeps him on his toes.
One of the things that differentiates his company from his competitors is the depth of insulation range offered. Natural Insulation Northland Ltd is one of the only companies that hasn’t hung its hat on a single product.
Whereas one-trick-ponies will always find a way to justify the one product they sell, Greg says they can supply whatever their customers want and are totally unbiased in what they recommend. In fact, they carry 6 different brands spanning 3 different types of insulation – fibreglass, polyester, and a wool/polyester blend.
“We’re more about finding the right fit between the product and the house. So not all products fit every situation. It’s about finding the right product that suits the budget, the type of house they’re building and the type of construction they’re running with as well.”
Another differentiating factor that sets Natural Insulation Northland apart is the quality of their installs…
“We specialise in a lot of high-end architectural housing and that’s where the attention to detail comes to the forefront.”
The vehicle fleet that won’t stop growing
With a growing business comes a growing fleet of vehicles. Greg started off with two utes, one for his sales rep and one for himself, and two vans for the installers. The company owned them outright and financed them with hire purchase agreements.
Bottleneck #1
A few years down the track they began to run into hurdles that became bottlenecks in the company’s growth. The biggest bottleneck was repairs and maintenance, with the vehicles being off the road so often that it was impacting their ability to service customers on time.
Greg realised they were, “spending a lot of money on R&M on our vehicles because they were just simply too old.”
Bottleneck #2
The second bottleneck was money. Capital to be precise. Greg says:
“We didn’t want to have our capital tied up, all our borrowing and potential tied up, by having hire purchase agreements.”
The lease solution
Greg was introduced to Driveline through a friend and before long had decided to finance his new vehicles with leases rather than hire purchase agreements.
“Changing to a lease through Driveline certainly helped us as a growing business. Having operating leases which sat on the other side of the ledger helped us with our ever-expanding business. Our working capital wasn’t tied up in vehicles and hire purchase agreements.”
This enabled Greg to invest the capital that would have gone into buying vehicles into growing the business instead.
How 4 became 9
Apart from the high R&M, the vans became quite restrictive because they weren’t big enough for the volume of insulation they needed to haul around, so the company started leasing vans through Driveline. Their first foray into leased vans was three LDV vans.
That worked so well that they were eventually replaced them with five Renault Master long wheelbase high tops. They don’t have to haul much weight, but what they do haul takes up a lot of room, so Driveline recommended the FWD model that has a lower floor level and therefore bigger volumetric cargo area.
“Driveline encouraged us to look at the Renaults. They said, These vehicles are very good value and they’re a great design for your business, which they were.
“We could fit in an entire house load of insulation. For an average 250 square metre house we could fit all the insulation for all the ceilings and walls into one van.”
As well as the five Renault Master vans, Natural Insulation Northland still runs two utes and has two cars as well, a total of nine vehicles. But there’s more on the way…
More fleet growth on the horizon
Due to industry changes Greg is planning for further expansion of his fleet size.
“Our industry’s changed somewhat and they’ve increased the RV requirements into the walls. We now need two vans to go to site instead of one. So we’re probably going to be giving Driveline a bit more business pretty soon to increase our vehicle stock.”
Not fixated on one
Greg likes that Driveline’s business model is very similar to his, in that they don’t have any particular bias towards any one make or type of vehicle.
“They’re people that care about their customers. Their business model is very similar to ours. They’re not fixated on one product or one vehicle or one brand. They’re happy to talk to you about anything that you think you need, not being afraid to give you their advice.
“They’re not afraid to say, Hey Greg, I think you’re making the wrong decision here and I think we need to look a little bit harder at what you’re doing. And that to me is important. They’re not telling me what I want to hear, they’re telling me what I need to hear.”
Thinking outside the box
“I think the team at Driveline think outside the box. They’re willing to look at different options. While they might not think that suitable for that customer, they entertain the idea just to see if it works. So for me, it’s the absolute up-front honesty of their business, and their ability to offer us options. That really works for me.”
And with that we let Greg get back to his busy job servicing loyal customers in the Far North.
Get in touch to learn more about leasing with Driveline…Find out how to move on from spending your precious capital on self-financing your vehicle fleet and free up that capital to grow your business instead…
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