The leaders of rapid-growth businesses share the lessons they learnt during their extraordinary RISE, from conquering niche markets to choosing that perfect moment to take off.
Prepare early to scale later
A “serial entrepreneur”, Richard White, founder and CEO of logistics-software company WiseTech Global, decided in 1994 to focus on one thing and “do it really, really well and make it as big as it could be. I didn’t realise this was a $14 trillion industry annually.” White says his views were narrow when he started; he assumed, for example, that he’d stay in Sydney. (WiseTech Global’s software is now used in 130 countries.) “It became obvious there was something much bigger, using a set of well-defined steps,” says one of Australia’s newest billionaires. “I vividly remember rewriting and expanding the company’s vision statement twice before giving up because we kept overtaking the statements. I had difficulty imagining how far and how fast we’d grow.”
Barb de Corti, CEO of Enjo Australia, spent six months in the garage of her Perth home working out how to market her microfibre cleaning tools that use only water. She didn’t consider expansion then but by sticking with a precise method – direct selling, in-home demonstrations and no packaging – her business exploded; 25 years later, it has a turnover of about $100 million annually. “You need a strategy,” says de Corti, “to know where you’re going and to be brave.”
Just when orders started to flow, David Freeman, founder and CEO of beverage company H2coco, learnt an early lesson in forward planning. In 2011, a typhoon wiped out his suppliers in the Philippines. “It affected our supplies for months. We had no stock,” he says. His advice? “Don’t put all your eggs in one basket and be prepared for the unexpected.” Today, H2coco sells in nine countries, including the United States. “Now I use multiple suppliers.”
Proceed with caution
Freeman learnt a valuable lesson from Jack Welch, former CEO of General Electric. “In his book, Winning, Welch talks about ‘growing broke’. You can grow so fast that you can’t keep up and can grow broke. We almost went there. We just ordered, ordered, ordered and couldn’t keep up with demand. We weren’t making our cash flow effectively and it got scary. I was borrowing money from my mum and friends, paying high interest on credit cards to get through.” But Freeman stayed the course. Last financial year, H2coco had net revenue of $22 million.
Shannon Brooks, CEO of Laservision, a world leader in creating and staging special events, says his biggest mistake was “trying to capture too much of the market too quickly. Often that can dilute your offering.” So the creative-display company, which was launched in 1987, started knocking back clients. “Our business is a self-generating marketing machine,” he says. “We had to pass on a lot of opportunities where we didn’t think the project had the right ingredients for being truly spectacular. Concentrating on specifics and being very selective about your clients is the way to build a sustainable business.” Laservision’s net worth in 2017-2018 was over $20 million.
Amanda O’Brien, CEO of transport and logistics company Xtreme Freight, believes the smart grow slowly. “It’s important not to try to rush from small to big because there are lots of steps between $1 million and $5 million, $10 million to $20 million.” That said, she adds, “you should have a plan to sustain what you have but also a plan to grow. If you’re not in the business of growth then you should sell.”
Take risks but understand they won’t all pay off
O’Brien has taken many risks, particularly in acquisitions. “You do one then another and another. The biggest mistake I made was thinking all the acquisitions would be profitable.” One proved “an enormous mistake” that drained the business of capital and resources. “It was detrimental to the company and did affect that ‘go-get-’em’ spark. But we’d built up cash reserves.”
Freeman agrees that risks are part of any expansion plan but if a business is not working, “find out why, make changes then walk away if it’s still not working”. Brooks always made sure his cash flow was healthy. “For first-time clients, we were very strict on our payment terms,” he says. “Once a successful relationship was established we were more flexible and accommodating.”
In de Corti’s first three years of business, which turned no profit, she had to sell her house and car. “I came close to failing, not being able to pay the phone bills,” she says. “I learnt to hustle and use part payments.”
Do what you do best when diversifying
De Corti has moved into a sustainable skincare range, Santé. Freeman intends to keep expanding his portfolio within the beverage business. In 2017, he launched the world’s first pure watermelon water, H2melon, and last month H2nana – yes, banana water. “People said to me, ‘Are you mad?’ when I launched H2coco,” he points out. Diversifying “is called innovation but you can only take on as much as you can manage at the same time”.
Go international (but perhaps not global)
Some small brands that have expanded successfully overseas include Cotton On, fitness label Lorna Jane and stationery retailers Kikki.K and Smiggle. But offshore losers far outnumber the winners – many underestimate the complexity of setting up in a foreign culture. Even Andrew Bassat, co-founder and CEO of online employment portal Seek, who took a lot of advice from Austrade, says there are limits. He wants to expand Seek but only in markets that have already proven successful for it. “We’ve got such good geographical spread across Australia, New Zealand, Latin America, China and South-East Asia we don’t need to be in other markets.”
Expansion means a restructure, not just new hires
As Laservision grew, talent acquisition became a major issue, says Brooks. “Greater structure was put around the business with key personnel given a greater range of responsibilities and accountability. Senior roles were created to oversee the various departments and multiple projects. Policies and procedures were reviewed so they could be rolled out to the newly established branch offices, providing a commonality across all entities.”
Brooks’ company, which never reuses its staging material, has more than doubled its staff in the past two years to meet international demand. “It was a challenge,” says Brooks. “Some businesses might be too regimented and afraid of change but we learnt we needn’t be afraid of that change, to be flexible and dynamic enough to change the business process to make the most of opportunities.”
For Richard White there was “no big bang improvement”. He made significant changes slowly over 10 years, including externalising WiseTech Global’s consulting division. “Being successful is as much about what you decide not to do,” he says. “I gave up about $5 million in revenue in consulting services but I dramatically increased the company’s other revenue because it enabled us to break that constraint and move forward, to do hundreds more implementations.”
Plan for greatness and what comes after
Nothing really prepares you for success, says Bassat, whose company now has a market capitalisation of an estimated $6.2 billion. “My mindset is not on how well the business goes but on the next round of challenges and opportunities. You want to think about what happens if it doesn’t work but you have to think about what happens if it does work.”
De Corti was ready for the profit she made in the third year, $50,000, but not the next few years. “I wasn’t prepared for turnover of $100 million in year six. I didn’t quite know why I got there.” She started employing more and more people “who I thought knew better than I did. I lost my connection to the product, to why I started Enjo. That was detrimental to the business.”
You are not your competition
“Understand what your competitors are doing but focus on yourself,” says Freeman. “As soon as you take the focus off your business and start worrying about what your competitors are doing – that’s when they’ll get more traction.” He looks to Steve Jobs’ explanation of why Apple was more innovative than Microsoft: while Apple’s rivals were fixated on what it was launching, Apple was searching for the next big thing.
With 700 self-employed salespeople, de Corti’s Enjo has turned over some $1 billion in 25 years and her goal is to reach 30 per cent of households in Australia. Although she doesn’t have the resources to advertise on TV “five times a night” like some cleaning and skincare brands, she appreciates her competition’s mass branding “because people will always come back to us. We have so much environmental credibility”. White quotes Andy Grove, the late former CEO and chairman of Intel: “Only the paranoid survive.”
Make every hire count
WiseTech Global has 1600 employees across 42 locations and revenue of more than $320 million. Before going worldwide, White introduced the Productivity Acceleration and Visualisation Engine, technology that automates workflow scheduling, visibility, prioritisation and measurement tools. “It’s a sophisticated answer to a problem of scale. Companies run into problems when they start shoving in lots of policies and layers of management. We work in reverse – principles, not policies. The culture is the core of the company and fixture of the system. Our teams are self-regulating.”
De Corti says that not trusting her own judgement was a big mistake. “I thought I needed to invest $200,000 in someone with a business or marketing degree to help run the company as we were expanding – good at computer programs but they don’t always understand what’s best for your company.”
Bassat, who oversees 6000 employees in 18 countries, agrees: “When you’re a small company it’s hard to attract the right people. We focused too much on getting someone quickly. Getting the wrong people caused massive pain.” Hiring is always a trial, concedes Brooks. “Getting people who understand our niche industry has been a challenge. The cost of displacing people can be detrimental to the company.”
If you share your vision with your people “they start to want to work for you,” says O’Brien, whose staff grew from two to more than 50, plus 260 subcontractors, in 11 years. “As your market strength grows, people are driven towards companies that have a sense of community, that value their employees. There are people with completely different backgrounds who I’ve trained and brought along but, wow, you should see them fly now. It’s about people wanting to achieve their dreams through your company.”