Matthew Swing

Matthew Swing & Partners epitomizes the independent high street estate agency, striving to weather the market downturn. Here, its founder tells Clare Bettelley how he is delaying his expansion plans until the market shows signs of recovery.

Matthew Swing is one of thousands of independent high street estate agents in the throes of adopting their business models, to survive the market downturn.

Other than staffing, there are few costs Swing can reduce within his Whitton, South West- London based agency, Matthew Swing & Partners.

And even when found, it is uncertain how long these budget adjustments must remain in place, given the seemingly infinite nature of the current market downturn.

Cost cutting

Swing aims to slash over £50,000 off his cost base this year, to offset his decline in income resulting from the current market downturn. His costs totalled £187,000 last year, which he hopes to reduce to around £130,000 by the end of 2008. This should not be too hard a task for Swing who, by his own admission, has ploughed excessive amounts of cash to his business – including a “mad” advertising spend - since launching the business in 2006.

He says: “There was probably not a lot of change out of £100,000 to start the business. “It was stupid. I decided to get a six foot poster at the [train] station, which is costing £3,000 a year for two years.” But, as the adage goes, hindsight is a wonderful thing, and who could have predicted the current market downturn two years ago? Not even the most respected of market economists foresaw the liquidity crisis, so Swing can perhaps be forgiven for being somewhat over-zealous with his start up spending spree.

Ironically, the fact that Swing stumped up 100% of the start up fund from his own pocket – it comprised equity from the sale of his and his partner’s properties – probably hindered the launch, in so much as that Swing would probably have been more risk averse had he been indebted to the bank.

Nevertheless, Swing has clearly learnt his lesson and believes he can open a second office for around £50,000, based on the same business model – residential sales and lettings. This, he says, is because he has already created and established his brand. His brand awareness campaign included relationship building with all the local schools and clubs, which he says he contacted ahead of the office opening, and subsequently signing sponsorship deals, which included having his company logo on, for example, the childrens’ sports kits. He says: “Last year I spent £25,000 on local sponsorship – this year, it won’t even be one third of that.” Swing explains that he plans to retain his strategy of creating a presence in less affluent areas, which is likely to next include neighbouring Feltham when he opens his second branch. He says: “I want five branches over the next three to four years, assuming the market comes back. “I’m not frightened of the market downturn – you can either sit and whinge about it or get on and find different ways to make your money.”

Swing is opting for the latter in the interim period, while he awaits to expand his empire. Support staff Swing entered the lettings market in January, to help bolster his income. He estimates the business is generating him an extra £7,000 worth of income a month, hence his decision to recruit a lettings negotiator to support his lettings manager. The lettings team sits alongside Swing’s sales team, which comprises two negotiators.

His parents also lend a hand – his mum is responsible for the firm’s administration while his dad, a car salesman, helps out with viewings on the weekend.

But Swing explains that family support is not as advantageous as it seems – a point well highlighted when, mid-interview, he bellows at his mum to take an incoming phone call. He says: “I wouldn’t recommend getting your family involved in your business – you just find yourselves talking to eachother like parent and son.” Swing says his fixed costs are approximately £10,000 a month, of which £6,000 accounts for salaries. He says: “By taking out one member of staff you immediately save around £30,000, for salary, PAYE and a car. “But I’m not keen to go down the route and even if I was, it’s sod’s law that the market would pick up again.” He adds: “Given that our fixed costs are just under £4,000 a month without staff, we will survive.” Waiting game Swing thinks the current property market is suffering from a Mexican stand-off between buyers and sellers. He says: “Both are playing the waiting game. Buyers are convinced that the market hasn’t yet hit rock bottom and sellers just don’t know.”

Swing’s sales have certainly fallen. He sold just two properties during the first three weeks of April. This compares with six sales just two months earlier in February, which generated £41,0000 of income, up from £32,000 for the same time last year. Thus, in addition to reviewing his cost base, Swing says he has spent a lot of time over the last few months making regular contact with the vendors of his existing instructions. He says: “You’ve got to keep communications going, and weekly – it puts you in a better position to be able to go back to vendors and explain that they’ve got to take, say, 20% off their asking price.” Swing says vendors have in fact been forced to slash up to 7% off their asking prices since January – he recalls one client who was forced to cut their original asking price from £499,950 to £475,000. But Swing believes that insisting on a reduction in asking prices is crucial. “You have to look at your stock - if it’s not shifting, you’ve got to get the prices down. “The whole market needs to be priced correctly. If we agents took prices down, it would get the market going again.”

Full circle

Last year was Matthew Swing & Partners’ first full year in business. Swing launched the agency in 2006, 17 years after his entry into the estate agency market. Ironically, he occupies the same office he started in as a negotiator in, when he started his career with Mann & Co. His intimate knowledge of his birth town convinced him that it was the right place to start his business.

Swing joined Countrywide subsidiary Mann & Co in 1991 after a stint at Blackhorse, the finance subsidiary of Lloyds TSB, which he joined straight from school. He had passed all three of the Financial Planning Certificate exams required to become a financial adviser, but disliked the bureaucracy involved in financial services, hence his switch to estate agency. He says: “I could do a lot more selling without worrying about paperwork.” It was Countrywide’s training programme and its career development, which attracted Swing to Mann & Co, which perhaps explains why his tenure with the business lasted 11 years, rather than the two years he had originally planned. He says: “They were extremely good to me. I was a top performer and promoted to area manager after just two years.”

But he admits he found the job easy. He says: “I don’t think it’s rocket science. “I think those with problems with their business over-complicate things for themselves.” Swing spent a year as a negotiator at the Whitton office, where he claims to have boosted its previous year’s sales by £180,000, to just under £250,000 – an achievement he proclaims as impressive, given the town’s mere 6,000 chimney pots. Swing was then appointed to his first managerial role at Mann & Co’s Feltham office where he claims to have made £70,000 in commissions from residential sales in his first year and £250,000 in his second year, at a time when local house prices were around £80,000. He claims that Feltham was one of Countrywide’s most profitable offices – something he attributes as much to the strength of its financial services business as he does to himself.

But it was during this time that Swing tried to leave, to set up his own business. He says: “They offered me a better package and an area manager role to stay, which involved managing eight offices in North London and Hertfordshire, but I hated that. “With hindsight, I was a bit too young and judged everyone by my own standards, which was tough as there was so much dross there.” After two years, Swing ran Mann & Co’s Staines office. He says: “But then I lost interest – I just got bored going in and turning around branches.” Swing then worked for Gascoigne-Pees before launching Matthew Swing & Partners.

Full steam ahead

Swing’s current plan is to do more of the same – strengthen client relationships further and keep costs at a minimum while motivating his staff. He says: “It is a grind coming in. It’s not enjoyable. Buyers are holding guns to your head. “It’s not the same as in the 1990s, when you knew when the market had bottomed out and that prices couldn’t get any lower. Because of the US crisis, we don’t have that luxury of knowing.”

But one thing that Swing knows is that he has the local knowledge to rival even the toughest of competitors. He just has to hope that it’s enough to help him survive the year ahead at least.

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