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Stephen Shaylor, chief executive of Midlands-based contractor Shaylor Group, is the first to admit the market is tough in the region.

But he is confident the company鈥檚 strategy of diversifying away from pure construction to other revenue streams will secure increased turnover and profit in 2012.

The financial year to 31 March 2011 was a hard one for the contractor - revenue dropped 20% from 拢56m in 2010 to 拢45尘, while pre-tax profit plummeted by half from 拢1.2m to 拢600,000.

锘緼 lot of independent contractors have fallen by the wayside but that provides more opportunities

Stephen Shaylor

But Shaylor, who has headed the firm since 1998, says turnover and profit are on course to return to 2010 levels in this financial year thanks to Shaylor Group鈥檚 diversification strategy.

He restructured the business two years ago to split it into four separate divisions, after launching the company鈥檚 repair and maintenance business.

Apart from the construction division, which accounts for 40-50% of turnover, the special projects, interiors and repair and maintenance divisions are all on course to grow this year.

The special projects division - which delivers quick turnaround projects and round the clock working - is set to grow by 50% this year. The interiors business is also set to grow by 20%.

Shaylor said: 鈥淲e are recession proofing by growing different parts of the business. We recognised there would be less capital work around two years ago [and restructured accordingly].鈥�

Despite Shaylor鈥檚 bullish projections for this year, the group will still fall short of peak performance - in the financial year to 31 March 2009, Shaylor turned over 拢61m and made a pre-tax profit of 拢2.6m.

Shaylor admits the market in the Midlands has suffered a lot during the recession and points to cut-throat competition driving down margins.

He also says large national contractors looking for smaller projects in the region have also increased competition.

Shaylor said: 鈥淭wo to three years ago the large national contractors were not interested in jobs under 拢10m [but they are now].鈥�

But he claims the growing failures of SMEs - including local rival Linfords, which went into administration in the autumn with the loss of 200 jobs - conversely provides opportunities for Shaylor.

He said: 鈥淎 lot of independent contractors have fallen by the wayside but that provides more opportunities in the independent arena.鈥�

The profile of the contractor鈥檚 work has also changed - 70% of the firm鈥檚 work was in public sector two years ago, compared with 50% today.

But Shaylor warns against writing off the public sector - 鈥淭hey still spend an awful lot.鈥�

The contractor is particularly targeting growth in energy, transport and independent schools, Shaylor says.

A QS by training, Shaylor spent seven years at contractor Bullock Construction before joining the firm.

The business was founded by his father in 1968 and he believes the company鈥檚 family-run ethos sets it apart.

鈥淲e feel a commitment to the employees and concentrate on relationships and honesty. There are a lot of national players out there but we have got something to offer.

鈥淚 don鈥檛 want this business to be the cheapest business. It鈥檚 about being competitive, but the construction journey should be a pleasurable one.鈥�