Rob Oerlemans is the Executive Officer of Lions Clubs Australia, a self-described “Good ideas organisation,” with a footprint encompassing community, environmental, medical and disaster relief initiatives.
Lions Clubs comprise an apolitical and secular organisation of 1,200 clubs nationally and an international membership of one and a half million individuals. Mr. Oerlemans gave an introduction to Lions Clubs many operating areas, and spoke about how Lions Clubs are embracing new challenges including digitisation and changing volunteering habits amongst younger generations.
Executive Officer of Lions Australia since 2006, Mr. Oerlemans has seen Lions Clubs address broad and ever-changing needs on a local, national and international level, saying “When I talk to people outside of the organisation, I say: When you think about a need in the community, you can be fairly certain there’s a Lion’s Club either nationally or locally that’s been involved in doing something about that issue.”
Lions Clubs members serve the community without a personal financial reward, which Mr. Oerlemans said fills many members with a sense of citizenship and service to county. “many Lions will give up more in their voluntary role than some people in their day to day jobs.” Mr. Oerlemans said.
Good Ideas Organisation
“People often think there’s a bit of mystery about Lions Clubs,” Mr. Oerlemans said, “at its core it’s really just a group of interested, community spirited individuals who decide to get together at their local community level and do something positive to improve it.”
Lions Club members join at a club level, and clubs join the Lions Organisation. While each club decides on its own program, there are national initiatives which bring several clubs together. “Lions join Lions Clubs and stay with Lions Clubs because they become their family. Working alongside other people brings us together and keeps us together.” Mr Oerlemans said.
Amongst staples including food drives, helping out sporting and community events, and fundraising, Mr. Oerlemans detailed several other large initiatives Lions Clubs have taken on, “We’ve got a long history in blindness prevention and sight improvement, and we find work for the most needy in the community.” Mr. Oerlemans said, “We’ve also got a long tradition of environmental projects, you go to most towns in the county and you’ll find a Lions park, those were established many years ago, but also modern Lions Clubs are getting involved in tree planting around the country and development of wetlands and local facilities.”
Efforts from Lions Clubs national initiatives include a major initiative looking to cure children’s cancer, The Australian Lions Childhood Cancer Research Foundation in partnership with the Garvan Institute is currently mapping the genome of 350 children with cancer.” Mr. Oerlemans said, “We’re also better understanding the process of the disease and looking at the sort of treatments that can work. And it’s not only about research, it’s directly helping those participating in the study.”
As Lions Clubs have no single goal, they are able to use their efforts to react quickly and effectively to needs as they arise, a quality which is particularly effective in disaster relief, “One of the great things about Lions is that when the emergency and the disaster is finished we don’t walk away. We stay there and help the people who have been affected.” Mr. Oerlemans said.
Unique Amongst Not-for-profit Organisations
Mr. Oerlemans credits the fact that Lions Clubs don’t take public money to cover their operating costs as a key factor which makes Lions Clubs unique amongst most other national and international Not-for-profit organisations, “Not only do we rely on members to give up their time, we also ask them to pay fees to support the infrastructure of the organisation and all of our running costs.”
“What that means, for example, is that when a member of the public donates ten dollars to their Lion’s Club, towards for example our kid’s cancer project, every cent of the donation goes to where it’s intended. That’s pretty important to our members.” Mr. Oerlemans said.
“One of the other really interesting points is that in some ways we’re an organisation which can be very flexible in our approach. We’re a good ideas organisation, unlike other organisations which have a longstanding mission which they keep going over the decades, a Lions Club can very quickly turn to meet and resolve a need in their community. It might be disaster relief in their community this year, next year it might be raising money for medical research, and a year after it might be out there planting trees in their community”
The Future of Lions Clubs
For Mr. Oerlemans, the future of Lions Clubs lies in adapting to changing people and social climates, and in embracing changes in technology. “We’ve changed quite dramatically and we’re continuing to change. When I started we were very much a traditional organisation, that sent letters in the mail and communicated face to face.” Mr. Oerlemans said, and whilst he notes that the organisation still conduct many important affairs in this manner, “In that time we’ve moved very quickly to emails. Every club has developed it’s own digital presence through an online website we offer to clubs. Most of our clubs are engaged in social media for communication and promotion.”
“As an international organisation we’ve just celebrated our centennial, and part of that has been about looking at how we can extend ourselves into the modern world.”
Alongside changing technology, Mr. Oerlemans suggested Lions Clubs are moving toward a more flexible approach which will encourage younger members to join. “We know we need to reach out to younger people.” Mr. Oerlemans said, “Whilst we’re probably seen as an old person’s organisation, many of our long-term members started when they were in their thirties.” He identifies that younger demographics bring with them different attitudes toward volunteering, and the organisation has willingness to adapt in order to accommodate them, saying, “Our members join a club, and they commit to being a volunteer for a long period of time and some members a lifetime. But we recognise that younger members are used to a different sort of volunteering, they like to chop and change drop into a land care activity or a tree planting activity. Or they’ll get involved with crowdfunding for a friend of theirs who is in trouble, or they get involved in an event, like volunteering for the Olympics, and then they’ll drop out again. What we need to do is work out how we can include those individuals in our organisation, which is very much an institutional organisation, and work with their needs, use their capacity, and let them go on their way to do other things. Knowing that some of those, when they reach a point of time in their lives when they can give more to a volunteering organisation, will come back to us and say they’re willing to make a deeper commitment, that’s a challenge the organisations are working through.”
More changes for Lions Clubs will come at a structural level, “The organisation has always had this idea that you serve as a leader for twelve months, we have a national board that we call the council, they’re in there for twelve months and then they move on. They move back into their club life and someone else takes on the leadership role. This helps to manage our members other commitments.” Mr. Oerlemans said, “We know that as an organisation and a legal entity it makes it difficult to get continued momentum in what we’re doing, in growth and in change. So within Australia we’re working through the concept to have an advisory board which can actually be an ongoing leadership entity to work with our elected official and keep things going in-between times.
As Lions Clubs adapt to meet new changes on both a club, national and international basis, Mr. Oerlemans is optimistic that the organisation can adapt and change, both in the scope of its output and in its structure. “We think that part of the way we will succeed and grow in the future is if we have a group that learns and develops, and can involve our elected leaders in processes of innovation, change and growth in the longer term. “Mr Oerlemans said.
Anthony Ryan is the CEO of Youngcare, a not-for-profit which has received national attention for their work in establishing and facilitating living spaces for people with disabilities between ages 18 and 65, and working toward a future where young people are given the “young lives”.
Mr. Ryan believes they deserve. We spoke to Mr. Ryan about how Youngcare are embracing the National Disability Insurance Scheme (NDIS), running their not-for-profit business like a corporate, and why on every whiteboard in their office Youngcare have written the phrase “Make ourselves redundant”.
While Mr. Ryan asserts that Youngcare was “born out of a gap that existed in the social infrastructure of Australia.” He also mentions that the company was incited by a real need, when Mr. Ryan’s friend, Dave Conry, realised first-hand the failings of the Australian disability space, while looking into care options for his wife who had been diagnosed with Multiple Sclerosis.
“During that time he found it more and more difficult to look after her and, started looking for care models, finding only nursing homes and aged care facilities. Ultimately that drove him to really start engaging government and media, to say ‘Well is this really all that’s out there to help young people who have been given a really hard journey in life?’” Mr. Ryan said.
Mr. Ryan joined Youngcare in 2016. Three close friends, also mutual friends of Dave’s, had left their own successful careers to form Youngcare thirteen years ago, and finding he admired what they were doing, Mr. Ryan felt honoured to join them. Saying, “When I was asked whether or not I would consider becoming CEO of Youngcare, it just felt like this incredibly natural progression, but it was also an incredible honour. Because I saw four of our mates, four people who had done something so well, and brought attention to the issue and led the issue nationally, I thought I could carry on their good work.”
Mr. Ryan says that Youngcare are not themselves care providers, but find their strengths in building networks, setting up stakeholders, “looking at the gaps,” in Australia’s disability space and finding real and viable solutions. They define young as between ages eighteen and sixty-five, maintaining that these are the ages in which an aged care facility is not an adequate support space for people with disabilities.
“We don’t think a person who is 45 wants to live in a nursing home.” Mr. Ryan said, “They want to live somewhere that gives them access to facilities, gives them access to pubs, shops, cafes, movies concerts, sporting venues, things such as that.” Mr. Ryan and Youngcare believe these availabilities are vital to make people feel energised by where they live, and Mr. Ryan notes statistics which have said that a young person living in an aged care facility will be visited less than three times a year. This isolation is something that no young person should be feeling, regardless of their care needs.
“I couldn’t think of anything worse,” Mr. Ryan says.
Youngcare has worked with Cox Architecture in designing fully automated spaces which also celebrate youth, independence and choice. Their work in designing spaces and designing homes “people want to live in,” has led Youngcare to become experts in other fields within the disability space. Mr. Ryan mentions that their previous work has enabled them to expand with other services including Youngcare Connect, a free support line to inform people trying to navigate themselves through the disability space. “We have people who man the phone and assist them in how they navigate through the best care, residential options, even other people they can connect with.” Mr. Ryan says.
As Youngcare establishes themselves as knowledgeable thought leaders within the disability space, individuals, families and other not-for-profit companies have come to them for information. Youngcare are happy to share their information. An attitude which has established them as an impactful and innovative organisation, and has resonated with many media bodies.
Youngcare has the motto “Make Ourselves Redundant” written on each of the whiteboards in their office, and Mr. Ryan says this attitude instils a sense of personal responsibility. “That’s what drives us.” Mr. Ryan says, “We don’t want to be feeding ourselves into a role. We all know, that if we’re successful in what we do, in ten years’ time there will be no need for Youngcare.”
Mr. Ryan credits the way Youngcare has engaged with media bodies to tell the stories they believe aren’t being told, saying, “We’ve been able to tell the story very well, and people in Australia get surprised by that. They get angered that people on their watch are getting treated in such a negative way.” He suggests that the company’s mission to make themselves redundant has resonated with media agencies and corporations, who feel a responsibility to use their role in helping Youngcare achieve their goal.
“It almost becomes infectious, this energy around us. We have had movie stars, rock stars supporting us because we communicate well with them. We let them feel impassioned with our idea, but we also say to them, our success will mean the death of our organisation.” Mr. Ryan said, adding “We don’t want to grow, we just want to be loud, we want to disturb, we want to solve the issue and then move on.”
Mr. Ryan lists Channel Nine as one particularly supportive media outlet, who identify with their own responsibility to Youngcare’s cause, “I walked out of Channel Nine two weeks ago, as I got into the car and drove away, I was almost numb by what they had just offered us. We went down with 12 ideas to try and build our relationship.” Mr. Ryan said, “Some of them we thought were outlandish, but at the end of the meeting not only had Channel Nine agreed to all twelve, but they actually suggested three others. They want to tell the stories of the people who need support. They want to, in some ways, create a little outrage in Australia.”
Whilst Youngcare aims to disturb and to create a sense of outrage amongst Australian people, Mr. Ryan says that they at Youngcare are not angry at the Australian Government. He is instead interested in working with the Government, and feels that the new National Disability Insurance Scheme (NDIS) is an indication that the Government is willing to proceed with positive changes within the disability space. Mr. Ryan called the NDIS a “quantum leap,” in the right direction.
The National Disability Insurance Scheme aims to move the focus of disability services away from institutions and toward the individual. This refocus on the individual treats people with disabilities as “customers, rather than numbers”, and seeks to work based on individual needs.
“A lot of organisations are going to be impacted in quite significant ways [by the NDIS],” Mr. Ryan says, “because the way they set up their structure relied on grants and Government funding, and acting as a not-for-profit rather than as a corporate-minded organisation looking after their own sustainability.”
The NDIS challenges the private sector to take part within the disability space, and as many Government and corporate bodies have little or no experience with the disability space, Youngcare’s role will be in uniting Government, developers, investors and corporations, building toward a platinum standard of care and housing.
“We believe our media presence needs to drive that sense of optimism.” Mr. Ryan said, “We will be, over the next three years, utilising our space, network, and voice to sit down with Government. We realise we’re in a privileged position where we’ve been asked our opinion, and we think our biggest space is in assisting in the SDA component of the NDIS.”
The SDA is a Specialist Disability Accommodation package available to close to fifty percent of young people with high care needs. The package incentivises developers and investors to build for people who possess an SDA package, and Youngcare is able to bring their experience into the equation.
As Youngcare further intertwine their expertise with Government, corporations, individuals and carers within the disability space, the company are steadily working toward their end goal of young lives for young people, and a world which doesn’t need Youngcare. “One of the things which drives me every day as I get out of bed is that we can be part of solving a social issue that has always been part of the Australian fabric.” Mr. Ryan says, “We’ve got this window of time where we can solve this together, and to be part of that is something absolutely special.”
Director of Australasian Body Corporate Management Chaz Burdett spoke to The Australian Business Executive about the growth, change, and competitive edge in the strata management industry.
Now in its 32nd year, Australasian Body Corporate Management manage over four hundred complexes throughout Queensland and New South Wales, with unprecedented annual growth in excess of 25%.
How did you come to be involved with the industry?
Presently I am partner and managing director of Australasian Body Corporate Management, overseeing the operation of the Brisbane and Gold Coast offices. I have been involved in the Body Corporate/Strata industry and property services industry since 1996. Prior to join Body Corporate/Strata management I was involved in commercial investment sales and leasing, employed with Colliers International and later joined Jones Lang LaSalle when I relocated to Brisbane in 2007. Both rolls involved facilitating the sales and leasing of regional and major shopping centres, office buildings and various commercial facilities and sites throughout Queensland and New South Wales. In 2007 I purchased an apartment located in New Farm, Brisbane and joined the Body Corporate Committee, taking on the Treasurer and Secretary roles. Playing an active role and undertaking major capital works to the complex, including exterior re-painting, exterior lighting upgrade and building security upgrade. Over a six-month period, working closely on these major projects and with the Body Corporate manager of our complex who was also the director of the company. This business relationship lead, to an employment offer with this particular company and this is where I commenced my career in Body Corporate management.
And this led to your involvement with Australasian Body Corporate Management?
In late 2013 a decision was made to explore opportunities in the setting up of a Body Corporate/Strata management company or purchasing an established company. It was further decided that Sydney or Brisbane would be the preferred locations given the growth rates, particularly Brisbane. Following several months of investigations an opportunity arose in Brisbane to purchase Australasian Body Corporate Management. The company held a solid foundation in the market place, had been established 28 years at the time, and employed a small team of 8 staff members. All of which appeared attractive, as we knew we could grow the portfolio to a size where we felt comfortable.
So how is your offering different from others in the space?
Now established 32 years and growing the portfolio to a comfortable size, we aim to deliver our clients the highest financial, legislative and facility management services available. We ensure client satisfaction is achieved and to continue to remain a sought after and respected organisation in the market. Within our organisation comes a diverse range of talent from industries such as building, construction, property services, finance, facilities and project management. Our team is small, however we personally know all our clients and deliver same day service. Our Brisbane office holds 10 staff members and our Gold Coast office holds 5 staff members. Both offices hold facilities to accommodate owner’s attendance during General Meetings and Committee Meetings, as some meeting attract up to 40 owners in attendance. We accommodate attendance in person, teleconference and Skype.
And where is the business headed?
Australasian Body Corporate Management operates in Brisbane, Gold Coast and Sunshine Coast and is licenced and operates in Sydney and Northern New South Wales. Presently we hold the management of over 400 complexes with growth rates exceeding 25% annually.
Would we know of any of your properties under management?
Three properties which come to mind are our Allegra development in Southport, Cathedral Place complex in Fortitude Valley, and the Merrimac Heights Estate. Allegra is a mixed-use development in the corner of Scarborough street and Nind street comprising 117 apartments over sixteen levels, including retail shops on the ground floor.
Cathedral Place is an inner city complex spanning an entire city block and comprising 550 apartments in Brisbane, and which has been registered under BUGTA and comprises a Principle Body Corporate known as the CBC, five Body Corporate schemes known as BUP’s and a commercial precinct comprising of 21 shops and first floor offices.
Finally, Merrimac Heights Estate is a secure gated complex of 150 townhouses, two tennis courts, two swimming pools and ten areas of landscaped grounds.
From an industry standpoint, what changes are taking place in the sector?
Following the announcement of the New South Wales new Strata Schemes Management Act 2015 which came into effect from 30 November 2016, several changes include; The Annual General Meeting, Committee Meetings, Finance, Legal, Insurance, By-laws, Repairs and Maintenance and Strata Management Agreements. Some examples of these changes include:
Notices of the Annual General Meeting must be provided to Lot owners and tenants at least 7 days’ notice prior to the Annual General Meeting. A vote can be held to determine when the owners can hold their Annual General Meeting during the financial year. Should a quorum not be achieved after 30 minutes of the notified commencement time of the Annual General Meeting the Chairperson may adjourn the meeting or may declare those present achieve a quorum and commence the meeting accordingly. Voting on matters may be conducted by secret ballot, however under certain requirements only. Owners in large schemes may receive the Minutes of a General Meeting within 14 days, however only if requested. A maximum of one proxy per person for schemes under 20 Lots and for schemes greater than 20 Lots a person cannot hold proxies for more than 5% of the total number of Lots in the scheme. One co-owner of the same Lot may be elected to the Committee only. A sole owner of a Lot may not nominate more than one person to the Committee unless they own more than one Lot. An explanatory note of not more than 300 words is required when requesting a motion to be placed on a general meeting agenda. Motions must be included on debt recovery management, annual fire safety assessments, known commissions and training services, as well as an estimate of any commissions to be received during the financial period. Owners may requisition motions upon a General Meeting, whether their levies are paid in full or an amount is outstanding.
The Sinking Fund has been renamed Capital Works Fund. Auditing of financial year end statements is compulsory and must be carried out prior to the Annual General Meeting and the distribution of the agenda documents to Lot owners, for schemes greater than 100 Lots and or with an annual budget of more than $250,000. For a scheme greater than 100 Lots, when preparing annual financial budget, a specific amount for each item of expenditure is required and any variances to the 10-year capital works plan must include a reason for the variance. The capital works plan is to be used in budget preparation and should be followed as close as possible. The financial budget will include contributions raised, income received and all known expenditures.
So what are the most important issues facing the strata industry?
A Body Corporate/Strata complex may see a variance in occupancy ‘resident owners or tenants’. Complexes that hold a high tenancy ratio, generally see a low attendance rate during General Meetings. These factors greatly impact the decision-making process and therefore decisions may take longer to determine than normal. The importance of owners participating in the voting process is paramount. Whether owners attend meetings in person or by voting paper, the importance of their vote is valuable.
What are the business lessons you’ve learned?
We recognise that Body Corporate/Strata management is a service based industry therefore our team is committed to working together to ensure all service levels are reached and reviewed where necessary. Ensuring these service levels are achieved is of the upmost importance as our business growth is dependent upon this. The majority of our business growth is received by a referral from an existing client which is a direct result from our service levels. Our team continues to stand by our motto “Our Knowledge is your Body Corporate” to ensure our retention and growth rates are achieved. Furthermore, educating owners of their responsibilities when owning a property within a complex is valuable. Therefore, providing owners of the By-laws that govern the complex ensures all residents are aware of who is responsible and the provisions pertaining to certain aspects of community living.
What misconceptions about the industry do you have to deal with?
Misconceptions in the industry may vary, however a common misconception is that some owners believe their levy contributions paid, all go to the management company, which is not the case. The levy contribution owners pay, is a payment towards all expenses the complex will incur or save during its financial year. The administrative fee paid to the Body Corporate manager is only a small portion of the levy contribution owners pay and it is as small as 5% of the total contribution.
Are there particular issues strata owners should better educate themselves on?
Owners need to be aware of various issues pertaining to their complex and to better educate themselves. Particularly in By-laws, Enforcement of By-laws & Obligations of a Body Corporate and Committee members. Our office regularly distributes information factsheets pertaining to these obligations which include; What is a Committee, What is the role of a Body Corporate Manager, What is the role of a Chairperson, Secretary, Treasurer and Ordinary Member of the Committee & How does a person nominate for Committee positions. Furthermore, matters pertaining to By-law enforcement are included which cover topics such as; What are By-laws and the responsibility of the Body Corporates to enforce its By-laws. Australasian Body Corporate Management finds owners are receptive to receiving these information factsheets which in turn assist owners, property managers and their tenants to better understand who is responsible for what in a complex, therefore directing their enquiries to the correct person.
Operationally, how is Australasian Body Corporate Management different from other providers who work in this space?
Firstly, from a management perspective we emphasis the importance of ensuring our staff are treated with respect. We feel that ‘happy staff equals happy clients’ therefore we ensure each member of our team is provided adequate support in their role to ensure they are not overloaded and able to provide the required service levels our clients require and expect.
Our role is to assist the Committee in administering all Secretarial and Treasurer roles. Under the direction of the Committee, our office assists in the preparation and distribution of all Agendas and Minutes. To ensure effective meetings are conducted, clear communication between our office and the Committee is held in the lead up to any meeting. Draft Minutes are circulated to the Secretary within 7 days or sooner after the meeting for review and approval, prior to distribution. All action items from the meeting are clearly identified upon the Minutes of the meeting and detail who is responsible for what. Our office can assist with these tasks within a timely manner.
Furthermore, our office will assist the Committee, particularly the Secretary in all communication to owners and residents when required and implement any legislative requirements. Given our experience in the creation of By-laws, our office can value add to your existing By-laws if or when needed to help uphold the integrity of the complex.
We pride ourselves in financial management. Our financial controller assists the Treasurer during the financial year to ensure the financial expenditure falls in line with the approved annual budget items and if not, those notations are recorded for transparency to owners. Our financial controller will provide a monthly status report exclusively available to the Committee detailing all payments drawn, payments received, bank account balance, bank statements, financial statements and roll changes.
The Committee may require a review of its operational services. At Australasian Body Corporate Management our office can assist the Committee to obtain alternate options from service providers ensuring the complex is maximising its position. Operational services may include; security services, fire safety services, insurance services, electricity services, gas services, internet services, grounds & garden services, pool services, lift services, cleaning services, remedial repairs and ongoing general maintenance.
Australasian Body Corporate Management can confidently administer all communication to and from all service providers to ensure all owners receive the best possible outcomes. Furthermore, between our office and our legal team we hold a 100% success rate in debt recovery relating to overdue levies including metered energy.
Many of our complexes have saved 50% of their secretarial fees in the first 12 months after appointing Australasian Body Corporate Management.
Australasian Body Corporate Management holds a longstanding reputation in Body Corporate Management. When it comes time to recommend external service providers we prefer to recommend Body Corporate Brokers for their ability to obtain competitive insurance renewals, and their assistance during insurable events.
Formed of a host of subsidiary companies that cover the full spectrum of building industry services, including the award winning Burbank Homes, the Burbank Group of Companies is reimagining the format of a home and property group.
The group’s Managing Director, Jarrod Sanfilippo, talks about the diversification that interlinks the companies and the continuing expansion that has seen the group continue to go from strength to strength.
All in the Family
“It was a business started by my father,” Mr Sanfilippo says. “Everything we do is linked through to property or built form assets, in one way or another.”
The group consists of companies that deal with the land needed for building, trade firms that help build properties, storage firms helping people store items when work is underway and a finance business that helps customers pay for their homes.
“My father was an accountant, and his step-brother was an electrician. Obviously, the major two sides of building are the sales, marketing, accounting side of the business, and then there’s the trade, supplier base. So, together they formed Burbank Homes, to start with.”
This first company, a firm that has since grown to become one of Australia’s leading builders, began as a modest weekend project. Years of hard work helped it develop in size and stature, and from there the Burbank Group of Companies grew with it.
“They ended up deciding to make it a business,” Mr Sanfilippo explains. “It started from just one display home in the nearby suburbs to their home, and it’s now grown to spread right across Victoria.” Mr Sanfilippo’s uncle left the business nearly a decade ago.
Burbank Homes started a slow but steady migration across the country, and has since moved into New South Wales and South Australia over the last five years.
Mr Sanfilippo and his father spent some time running the company together, with the former concentrating on developing the group into other states in Australia, while the latter focused on the group’s land development company.
“That allowed us to both grow together,” Mr Sanfilippo says, “having a separate focus but also interlinked, because obviously working as father-son, but also the two crucial parts of the group.”
With the intention of not only helping grow Burbank Homes, but also of creating a business that could develop in its own right, the company started selling land off to other builders and customers. This developed into offering a full service in property development.
“The two trades required for certificates in the building process are plumbing and electrical. So, to control that process and to understand it, it was decided to start plumbing and electrical businesses which now carry out all of our work, plus have their own clientele outside of Burbank Homes.”
As well as undertaking all work for the group, these companies are mandated to work outside of the company structure. It is important that all businesses within the group stand alone, and not rely solely on another part of the group for trade.
A key part of the group is National Pacific Finance, a privately-owned company that acts as a brokering service for the group’s customers to buy Burbank homes, as well as anything else they might want to finance.
“We created National Pacific Finance to not only help customers obtain loans,” Mr Sanfilippo continues, “but also provide us with the avenue to be able to understand more about our customers. And, the group just continued to grow organically.”
The size and diversity of the group has meant it has been able to acquire many smaller companies over the years, and is now made up of a long list of firms working across several different industries.
“The Burbank Group is our parent brand, which has all the other companies underneath. So it includes Storage Box, National Pacific Properties, Dynamic Technology Solutions, Vault Plumbing, National Pacific Finance, Beacon Building Services, Digital Minds Software Solutions, Urbanedge Homes and Eight Homes—all those companies which are in the group, but we also have Burbank Homes.”
The group itself is made up of eleven companies, one of which is Burbank, which is further split into several smaller companies that work across the different territories and the three different areas of the building process.
Following the passing of his father last year, Mr Sanfilippo has now taken over the reins of the business. In the past half-decade, the transformation from Victoria-based company to one of national renown has been quite astounding.
“It was really off the back of a very strong business in Victoria,” he explains. “Expanding into Queensland first, we’ve always done it slowly but carefully. We grew naturally, not just going out and expanding at a big rate. It was just one step at a time really.”
The solid base of Burbank Homes and National Pacific Properties, the two major Victoria-based firms, helped the group significantly. It was able to lean on these resources from a corporate perspective, while simultaneously expanding with General Managers in each state.
“Each state start-up was all going very differently. Queensland started by myself going up and searching for office space and display locations, and then starting the construction off that and recruiting someone to be on the ground for me.”
The start-up in South Australia came out of the purchase of Japanese home builder Sekisui House, owners of residential developers AVJennings. As a result, Sekisui House decided to pull out of contract housing in NSW, which likewise left an opening for Burbank to move into.
“There was an instant team, an instant book of work and a process in place already. So NSW and SA were closely linked in terms of us taking over another business that was already operating.”
The size of the operation moving into South Australia worked as a perfect small-size test case, allowing the group to work out its management methods and carry them over on a larger scale into the business in New South Wales.
But although this kind of acquisition was beneficial for effecting a quick and smooth start-up in these regions, it did not come without challenges of its own, most specifically the lack of brand awareness in new territories.
“At first,” Mr Sanfilippo says, “nobody knew us, and a lot of the challenge was, when they opened the doors in Queensland, or NSW, or SA, the reaction often was ‘who’s Burbank’? The name was not known or trusted, so there was a lot of work to educate the customers.”
This meant the group had to invest a lot of time in ensuring potential customers in new territories understood the history and values of the brand, to send the message that it wasn’t just an inexperienced start-up.
“Off the back of us expanding interstate, a lot of the way we market is how we have been building for thirty years. The fact that we have that stability of history and growth and also have the group structure behind us which we can all lean on, helps us grow.”
Other USPs for the group include the offer of an extended warranty on its homes, which other places do not provide. Burbank homes are guaranteed for fifteen months rather than the industry standard of three months.
“That’s our point of difference,” Mr Sanfilippo says, “is fixed costs, so there’s no surprises. We’ll lock that total price in with no more variation. We also offer a thirty year structural guarantee and a fifteen month maintenance pledge and we’ve been building for nearly thirty-five years.”
In addition, the company is one of very few able to offer experience and knowledge in the three key areas of residential construction, these being detached homes, townhouse developments and apartment buildings.
Mr Sanfilippo can’t name another organisation in the country that offers all three of these areas of expertise, and therefore cites this as being the group’s biggest selling point. But the group’s diversification also has a big effect on how it gains custom.
“When you become a player in a certain industry, you understand that industry well enough, and there are a lot of trends and information that you learn, so you can put those together and paint a more solid picture on how to strategize each company moving forward.”
Owning a finance business, for example, allows the group to see what is happening with banks and at the financial level, and to use this information to influence things happening at the level of the build. The same can be said for other parts of the group.
“We can see what’s happening in land, when land’s coming up, what the strategies are with government proposals or regulations, how fast things are selling, pricing intel, and how that links in with building a residential dwelling.”
By following and recognising trends over time, the group can see how they correlate and use the information to better inform every part of its business, to make the business smarter, both collectively and at the individual level.
“For example, if sales start to slow down in land, it follows about 6-12 months later in the building arm, because they need the land first and then they need to start building on it. Things like that we need to monitor and be more aware of.”
This gives the group a significant advantage over its competitors, as it can often put Burbank significantly further ahead in a building process than those who don’t have such close ties to other areas of the industry.
“To grow across the Eastern Seaboard over five years has taken a lot of focus and time and strategy from the management group, so that’s definitely a key milestone. Queensland was five years ago, SA was two and a half and NSW was one year ago.”
Within this time, the group is proud to have become a shareholder in Urbanedge Homes, a high-end architectural firm in Victoria with over a decade of experience building premium service and luxury new homes.
“All of our expansion meant we are one of Australia’s top ten home-dwelling construction businesses,” Mr Sanfilippo explains, “which was [another] big milestone for us.”
Another of the group’s key achievements comes in the form of software development company Digital Minds Solutions, a company started and operated in India, and created for a very specific role in the day-to-day running of the group.
“Digital Minds was created because for all group subsidiaries to efficiently linked in with each other, our IT-based requirements are high. Digital Minds is responsible for all of our software development within the group, helping us streamline our digital environment and improve efficiencies.”
Because of the high volume of digital expertise available in India, the group came up with the idea of developing and building a company capable of handling all the group’s IT requirements, rather than outsourcing to a firm in the same area.
“Whether that’s support, whether that’s website creation, whether that’s computer-generated imagery. For example, if we’re to build an apartment building or townhouses, they create the renders of lifelike computerised images for our marketing material.”
All of these extras help the group get ahead in an industry that, like all others, experiences several issues that need to be overcome by those working within it. Mr Sanfilippo believes most of these issues are arising from the problem of housing affordability.
“The prices are rising massively across the industry, from the price of land through to the homes. So, overall a house and land package, or land and dwelling that they’re buying separately, are costing more and more.”
Much of this rising cost is fuelled by the strength of the economy, although in the last two years there has been a significant increase in the number of active building sites across the industry, putting huge pressure on the trades needed to keep the industry moving.
“Whether that be drafting, estimating, or whether that be bricklayers or carpenters, there is really a need for greater training in that space, because all builders are short on trades that can meet the demand. Supply and demand is becoming very critical.”
Another issue in Victoria is related to the costs of building and the amount of time it takes for a project to get started. When a home is sold now, on many occasions the land cannot be titled for another 12-18 months.
“If we sell a home today, it doesn’t get to site on average for 10-12 months. So you’re selling at today’s price, but the price rises that happen with trades and regulation changes—it really squeezes your margin by the time you go to build it.”
Mr Sanfilippo admits this is a huge challenge for the industry in general, with single firms unable to control the timings from sale to the start of building, meaning many of them are looking for regulations to change for protection.
In the long term, the group intends to bring land and development projects into the other states, moving across the other companies in the group to replicate the model that has been so successful in Victoria.
“Our goal is really to replicate the Group businesses we have in Victoria into the other states,” Mr Sanfilippo concludes, discussing the group’s future plans.
“We do have our Dynamic Technology Solutions, Vault Plumbing and Beacon Building Services in some states other than Victoria,” he continues. “But over time, we want to expand to have a whole Burbank Group presence in other states.”
Brent Barnes is the CEO of LBT innovations (ASX: LBT), an artificial intelligence company which has made its mark as a designer of ground breaking advanced automated technologies for microbiology laboratories.
Brent Barnes’ career in technology began at the Sydney-based global headquarters of Cochlear, tasked with moving the company’s paper-based configuration and document management processes to an electronic-based system over a period of two and a half years. His time in Sydney led to an opportunity to relocate to the North American head office of Cochlear in Denver, Colorado. His list of diverse responsibilities moved to include running technical service operations and logistic functions, start a manufacturing subsidiary and also run sales.
“A company like Cochlear exposed me to an extensive range of skills and opportunities, not only from an internal product development perspective, but also from a field and operations-based perspective, in being responsible for revenue and having access to live in certain countries,” Mr Barnes says.
After four years in the US, Mr Barnes moved back to Australia in 2011, remaining with Cochlear, he took on a role as the Director Asia Growth Markets and Operations in Asia-Pacific. His main role was to expand into new markets and grow sales and revenue growth in a diverse range of countries predominately in South East Asia as well as Pakistan and Sri Lanka.
“It’s really interesting looking at the different markets that exist in Asia, I had a really varied range of responsibilities which included going to countries such as Myanmar, which required establishing medical disciplines such as Audiology that didn’t exist, yet was required to market and sell cochlear implants into the country.”
As his skills strengthened and diversified, Mr Barnes was headhunted to become the CEO of LBT Innovations. The company was moving into a transitional phase toward commercialisation on a global scale. Knowing Mr Barnes would have the necessary skills and experience to not only help market their newest product, APAS, to global markets, however also establish a company strategy for future growth.
“It’s important to have someone with some background who understands the regulatory environment and the quality processes required for product development. More importantly, I had the experience with global markets and ability to navigate the sales process and commercialisation of distributors and direct sales teams. It also helped being successful in revenue generation.” Mr Barnes says.
LBT Innovations are an artificial intelligence company distinct in their field for having technology which is patent protected and FDA cleared. They made their first impression in 2009 with an invention which would later become MicroStreak, a technology for automated culture-plate streaking and inoculation which obtained the largest share in its market within just five years of global sales.
“During the past 11 years, we have brought two products to the market. The first is automating the inoculation in the streaking of the specimen on agar plates. Rather than a human needing to put the specimen onto an agar plate, we developed an instrument that did it automatically, and provided some automation with respect to that first step. That product was launched in 2009 and resolved between 2009 and 2015.” Mr Barnes says.
In parallel with their first product, LBT began work on the Automated Plate Assessment System, known by its acronym, APAS. APAS is an artificial intelligence technology that reads and interprets colony growth on an agar plate following incubation. “After incubation, the agar plate comes out. Rather than a scientist or a microbiologist needing to handle it, we’ve developed the technology that is able to automate that process.”
“The technology itself is quite unique, we have developed a portfolio of patents where we have global coverage on our core technology. We have some patents around the imaging apparatus that are unique to our own technology, and we have used artificial intelligence specifically to train our algorithms to interpret the colony growth on the agar plate. We have entered into a 50/50 joint venture and created the company Clever Culture Systems (CCS) who are the legal manufacturer of APAS products and responsible for bringing the product to market globally.”
The superiority of their technology was demonstrated in a recent FDA clearance announcement on October 10th of 2016 following a clinical trial consisting of 10,000 patients. 7,500 patients from the US and 2,500 patients from Australia took part in the global multi-centre study. The clinical trial and data were submitted to the FDA in December 2015 and the clearance was obtained to approve a “de novo” submission. “The ‘de novo’ necessarily indicated that there is no predicate device or no other similar technology that has received clearance for its intended application and use within the United States. Receiving that clearance in October last year was a really significant milestone.”
“The market, both from a capitalisation share price perspective and also from a microbiology perspective really saw this as a validation to the clients that it absolutely works. We worked collaboratively across a ten month period, and having gone through that process satisfied the FDA that the achievement of the output of the technology was successful.”
The FDA clearance was a great milestone for LBT Innovations, but the company was still twelve months away from having a product available for sales. The span between the FDA announcement and their marketable product caused major fluctuations in their stock value, and Mr Barnes described their stock market fluctuations as a “double-edged sword,” as their share price spiked significantly over a short period, signalling day trading, and created uncertainty in the investor’s minds as to what the company was doing.
“The positive part around all of this is that we ended up more than doubling the value of the company.” Mr Barnes says, noting that, since the FDA clearance, the company’s market cap peaked at ~$100 million, although has stabilised over the subsequent 12 months into “normal levels” of around $40 million.
The first APAS to go into a laboratory was in St. Vincent’s Hospital in Melbourne, “This is the first APAS Independence instrument in a laboratory for clinical evaluation. Over the last 12 months we’ve been running an accelerated engineering schedule where we’ve had an instrument at trade shows which has been working, but it’s been a demonstration instrument at trade shows in an exhibition centre. St Vincent’s is the first time that the instrument has been installed into a laboratory, and they have successfully completed an independent evaluation of their APAS Independence instrument. The evaluation being the first in situ installation of the instrument globally.”
“Placement in St Vincent’s Hospital, a highly regarded centre of excellence, enabled the evaluation of the instrument’s performance within a diagnostic pathology laboratory in an end user style setting with pathology scientists using the APAS Independence instrument over a six- week period.” Mr Barnes says, “The evaluation included over 3000 urine samples which were automatically read and interpreted, and the instrument was successful in triaging the negative plates, allowing microbiologists to focus on positive plates only. The APAS Independence will deliver efficiency savings in the reading and interpretation of urine cultures because all of the negative plates are removed from the workflow, allowing skilled scientific staff to focus on positive samples. In addition, the APAS Independence facilitated significant upstream efficiencies in specimen processing, which we did not expect.
“The evaluation provides further validation that the foundational technology works, and the instrument does deliver efficiencies in a laboratory.”
Expanding their technologies
LBT Innovations have established their technologies in microbiology, but Mr Barnes and the company do not intend to limit themselves to a singular field. Looking out toward humans and human blood samples as well as applications in agriculture, the company is working to extend the training of their algorithms into other specimen types. “We’ve done the work with respect to the algorithms for urine, but there are other specimen types that we will still need to train to further expand its clinical use. So, blood, MRSA, sputum, wounds, swabs are all examples of specimens that we will need to further develop as part of our portfolio of what we call analysis modules, which we can provide to the market.”
“When joint venture company CCS release this instrument next year for sales, we expect to cover the majority of specimens and the majority of volumes. We want to make sure that we’re covering around 60 – 70% of all specimens that go through this culture plate workflow. We’ll then look to further expand the other specimen types.”
Another upcoming groundbreaking technology in its prototype stage is in woundview. The technology implements LBT’s FDA cleared artificial intelligence platform to look at chronic wounds and automatically calculate the surface area of the wound using a 3D camera alongside algorithms which identify tissue constituents and tissue types on the wound. “The focus is within the clinical microbiology segment, however woundview demonstrates that our platform technology can be applied more broadly.” Mr Barnes Says.
“A microbiologist will typically do between 40 to 60 reads per hour. The APAS Independence will be able to process 200 plates per hour. That’s at least three times faster than a human. This efficiency gain for the lab allows the scientists or microbiologists to focus on all the value-added activities that you really need them to be working on.”
“Globally there are around 27,000 pathology labs, however, based on market segmentation the addressable market size for labs to purchase an instrument is around 13,000 labs.” Says Mr Barnes, “Our return on investment calculations indicate the payback on a lab processing 400 plates per day is a little over three years. So we are focusing on those labs who process more than 400 plates per day. When labs get up to 800 plates per day, the return on investment is between one and a half and two years based on primarily headcount savings alone.”
As these technologies make their way to the market, LBT have stated that the product would be available worldwide through international distributors. “Our joint venture company CCS plan on selling the instrument through distributors in the global market. LBT has been appointed the distributor for the Australian market, and the Australian market is very representative of other global markets. Going direct here makes a lot of sense.”
Clever Culture Systems have made plans to develop comprehensive training tools which will train distributors based on customer feedback.
“We expect Europe to be in the first half of next year, and the US to be in the second half of the next calendar year, 2018. We expect to commence our first European centre of excellence evaluation, similar to what was done at St Vincent’s in the first quarter of 2018 calendar year.”
APAS Independence will be available in Australian markets by January 2018, following the St. Vincent’s evaluation. LBT Innovations is actively talking to other labs in the region in order to line up the next location to receive the instrument from the beginning of next year. Their product will be sold at a one-off cost of USD$300,000 and an annual software licence (SAAS) fee of around USD$30,000.
Mr Barnes intends to expand the capabilities and applications of LBT’s platform technology through opportunities to partner, merge and acquire other companies. Amongst these opportunities is their partnership with Chinese company Autobio, “We’ve been working with this company in China called Autobio, they have a market cap of around $4 billion and are listed on the Shanghai Stock Exchange. They are the largest culture plate manufacturer in China and they operate within the microbiology space.” Mr Barnes said, “We have transferred the patents of our founding technology, MicroStreak, over to them, and they will look to redevelop the instrument and bring it to market in China. They have taken a $2 million strategic placement in LBT to own around 4% of the company. Having a technology partner sitting on our share registry as a top shareholder is really positive and there is absolutely opportunity where we can cooperate and co-develop products.”
Mr Barnes’ effect and vision as CEO of LBT Innovations is to handle both the expansion of their company into world markets and development of their products in tandem. In his time as CEO he has focused on how he can bring the broad skills and understandings he has developed throughout his career into the new field of artificial intelligence. His role as the CEO is now to create an inflection point which builds on their past success and looks to build new opportunities for their groundbreaking APAS technology across global markets.
“What we are doing to scale up the company is really focused around building core capability and expanding the application of our platform AI technology, which builds on what we’ve achieved over the last 11 years. We’re also looking to really develop this platform technology, and that is through the employment of new resources to transition to insource capability rather than outsource to expensive engineering companies. I’ve built some real bench-strength in our organisation over the past 15 months and we are bringing science and technology together.”
Queensland-based property developer Oxmar Properties is committed to developing land into attractive and well-planned residential estates, with allotments for family living available at reasonable prices. The company boasts nearly three decades of experience as a property developer, striving to find Queensland landscapes that will offer dream lifestyles.
Company Director, Phil Murphy, is the driving force behind the business, and spoke to The Australian Business Executive about what the company means to him.
“I was a jockey as a kid going through school,” Mr Murphy says, “[in order] to get enough money to do law at university. I actually rode 100 winners before I turned 17, most of them in the bush. I had my first ride in a race when I was 13.” After suffering an accident in a track gallop, Mr Murphy damaged his spine and was in a plaster cast for five months. Because of this, he only passed three subjects during his senior, and never got the chance to do law. This meant he had to work even harder to earn a living. “At 21 I had five jobs. I was at BCC, Brisbane City Council, as a clerk. I was working selling furniture on a Saturday morning, I was riding horses trackwork. I was training two race horses [and] I was pouring beer at the Hamilton pub four nights a week.” Mr. Murphy’s strong work ethic hasn’t diminished over time, and there is little doubt he is fiercely dedicated to his job. This is made all the more impressive by his admission that at a very young age he experienced significant financial troubles.
“Years and years ago I started bookmaking as well, and then I started punting. I went through a quarter of a million dollars in six months in 1977, and I had to declare myself bankrupt. I came out of bankruptcy and had to plead to get a job as a car salesman.”
As a condition of getting this job, Mr Murphy promised that he would work for free for a month, in the hope of beating the sales record of 20 cars. He achieved this by working every night and every weekend for a month, and as a result was given the job full time. Mr. Murphy insists that only this kind of hard work can produce success, and that nothing in life just falls into your lap. He went on to spend several years working in auto sales, before deciding it was time to change direction.
“I had a Toyota/Mercedes Benz dealership in Bundaberg, sold it and came back to Brisbane. My brothers had been developing land and I thought that was a good way to go. I wasn’t certain what I was going to do, so I thought I’d have a crack at developing land.”
Over the following years, Mr Murphy single-handedly contacted more than 2,000 land owners within 15km of the Brisbane GPO, sending letters, knocking on doors and making phone calls in order to pursue his new venture.
“I finished up acquiring a site at Cashmere, which was my first big development. It was 115 acreage lots, half with town water. I also acquired a site at Wellington Point, which was less than 30 lots. Most of them had views of Stradbroke Island and were close to the ocean.”
In following this new career path, Mr Murphy attended an auction one day where he ran into an old friend, Peter Bettson. Mr Murphy had purchased vehicles previously from Mr Bettson’s firm, Brisbane Motor Auctions.
“I hadn’t seen him for a couple of years,” he says. “As a business relationship, it was a friendly relationship. We got talking over the next few months, and eventually he said: ‘can you show me some of the stuff you’re doing?’”
Over the coming months, the two men drove around viewing properties that Mr Murphy had been working on, having already had meetings with surveyors, engineers, councils and consultants, getting a feel for whether the properties would be suitable for development.
“The shotgun approach that I had in contacting so many people led me to some properties that had various impediments that could not be overcome through an approval process, such as lots of trees and wrong zonings.”
As time went by, Mr Murphy identified the properties that he felt had value, weeding out those with too many issues. By taking these properties to consultants and speaking with councils, he was learning the ropes of his new career.
“Peter Bettson spent lots of time driving around with me. In a matter of months, we became close friends. He sold Brisbane Motor Auctions and we realised that each of us could stand on our own two feet. One day he said to me, out of the blue: ‘do you want a partner?’”
Mr Murphy accepted straight away, and the partnership was sealed with a handshake. After some discussion, the company name was decided upon, a combination of the two streets the men lived on: Oxlade Drive and Marlene Street. Oxmar Properties was born.
“In that time we had built up about ten projects together, that we’d bought in two names. We never had a partnership agreement signed, we never had a joint venture agreement signed. We never had anything at all that represented any legal obligations.”
When Mr Bettson took the decision to leave the company for personal reasons, the two men agreed upon an amicable split of their assets and went their separate ways. Mr Murphy tells of how they have remained the very best and dearest of friends, catching up weekly.
“Since that time,” Mr Murphy says, “Oxmar has grown bigger and bigger. So much so that I’ve probably got more than 25 land projects, some with townhouses, ready for sale now, and currently at the moment we’ve got eight projects live, selling land.”
Mr Murphy is perfectly aware of the benefits people experience by locating to Queensland, particularly South East Queensland. He is a genuine advocate of the area, describing it as offering a wonderful lifestyle and true value to its inhabitants.
“There’s a buzz in Queensland that won’t die,” he says. “The culture is a spirit that the State of Origin [rugby league] team shows year in, year out. That’s the lifestyle of Queensland through and through. Determination and persistence to achieve and get positive results.”
Mr Murphy takes this spirit with him into his business, describing his office and his team as being like his home and family. He has always been of the opinion that you are only as good as the people you surround yourself with.
“No one human being can be what they are, when they’re successful, without surrounding himself or herself with good people, particularly having a loving family.”
He goes on to make a particular note of his wonderful wife Diane who has been by his side since 1978 while adding “at the moment there’s an election coming up, and some are promoting family. I think that’s what Queensland is. I believe Queensland is family.”
Oxmar is also in the habit of forming long term relationships with the people involved in the company, both staff and consultants. Some of the team have been on board for 20 years or more, and Mr Murphy greatly values this sincerity and longevity of commitment.
“We believe we’ve got wonderful consultants around us,” he says. “Such as engineers, surveyors, planners, landscape architects, contractors. We’ve managed to stick solid with a lot of those people from day one.”
Oxmar Properties is currently selling blocks of land in several projects across Queensland, including 1,200 lots at Narangba Heights, Narangba, about 500 lots at Griffin Crest, Griffin, and 200 lots at Bridgeman Hilltop, Bridgeman Downs. All three land estates have sales teams on site.
“My son has been with me for twenty years, he manages Griffin Crest, plus Murrumba Castle, which is at Murrumba Downs. The Narangba Heights estate is managed by Cam Haag, who also has been with me on and off for about twenty years.”
In addition, Oxmar Properties has on the books a seaside development at Burrum Heads, called On the Beach, a 1km beach frontage estate which consists in total of over 700 lots and 170 villas.
“Bridgeman Hilltop is a couple of hundred lots. It’s the seventh development I’ve done in Bridgeman Downs. I’ve lived in that suburb for more than 15 years, and my office is at nearby Aspley. I work five minutes from home, and ten minutes from most of my estates.”
Another property, the Samford Royal Estates, located in the south-eastern Brisbane village of Samford, will soon begin the last stage of development. This project consists of acreage lots with town water, with sizes up to 8,000sqm, and is located 14km from the city.
“We’re building townhouses at Carseldine, which is again five minutes from Aspley. I have another estate at Bridgeman Downs called Bridgeman Heights, which only has half a dozen blocks left.”
The Investor Market
Oxmar also has a property in Bray Park which is a little more unique, being one of the company’s only estates that operates at 50% investor and 50% owner-occupier, making it extremely affordable.
“We strive to maintain at least 80% owner-occupiers in most of our other estates. We screen very closely our buyers, which takes a lot of extra effort and time, but the effort is reflected in the calibre of the estate. It doesn’t cost a lot extra to achieve great street appeal, something you simply don’t get in investor-driven estates.”
Mr Murphy explains how many estates are dominated by rental properties, sometimes with 90% of the homes sold to the growing Sydney or Melbourne investment market. Oxmar Properties doesn’t want its estates to be so heavily investor driven.
“If you had a house out at, say, Liverpool, or in the Hills District or in Newcastle, or any place close to Sydney—you could come to Brisbane and be a lot closer to the city, and could buy two of the same thing for the same price as the one property you’ve just sold in Sydney.”
The median house price in Brisbane is currently around $550k, which provides investors with a rent return of around $450-500 a week. This is in contrast to Sydney, where the median price of around $1.15m gives a rental return of approximately $800 a week.
“So you’re getting a higher rent return for the two properties in Brisbane than you do for the one in Sydney, and the most appealing thing to the investors, particularly from Sydney and Melbourne, is they’re getting two products against one. So they’re spreading their risk.”
As a result, the company makes sure to screen all investor inquiries for its properties. Mr Murphy meets personally with any potential investors to make sure that the company requirements will be honoured and accepted.
“Our requirements are not too onerous, and they don’t make houses unaffordable, but it’s critical that when you drive through any of our estates the homes always look appealing and presentable. A huge percentage of investor estates or rental estates are not cared for anywhere near as much as estates which are occupied predominantly by owner-occupiers.”
Mr Murphy understands the need for many more people to be renting in the current climate, but insists that if people come to rent in the area in which he has estates, the aim is to have them renting in the best possible conditions.
“I’m sincerely passionate about that,” he says. “Anyone who buys land from us, and builds in our estates, receives our promise to do our utmost to protect their security for as long as possible.”
The purchase of a home and land is always one of the most significant commitments anybody will make throughout their life, so it’s critical that buyers are able to trust the company to protect their security.
In practice, this means a salesperson going through each clause in the contract with the buyer, whether they are an owner-occupier or investor, making sure that all of the specific covenant conditions Oxmar needs in order to protect people are agreed upon.
“Even as far as solar is concerned, a developer cannot prevent persons putting solar on their roof, and we wouldn’t seek to, but our covenant ensures that we try to get the solar in the best position, so its least visible as possible from the streets.”
The covenant standards are not designed to restrict buyers, but to allow the company to continue providing the best living environment available for those who buy from it. It is clear that Mr Murphy cares about every one of his buyers.
“I try and meet as many buyers as I can,” he explains. “My mobile phone number is available to every single buyer, and our office number is given to every single buyer, so that they have access to me.”
Keeping it in the Family
Away from his work life, Mr Murphy is just as active. He is at heart a family man, and speaks with great fondness about both his own family and those of his employees, who he treats with the same level of love and respect.
“We’re a very, very close-knit family set up at Oxmar,” he explains. “All my staff have young families. We celebrate each staff member’s birthday with a lunch in the boardroom, which everyone enjoys together. We all sit round the table and everyone writes little poems and tells jokes. We all enjoy these fun times.”
Members of Mr Murphy’s own family are also deeply involved with the business. His eldest son Justin has worked for him for many years, and his daughter Stacey also came on board about four years ago.
In addition to his position as director at Oxmar Properties, Mr Murphy is also heavily involved in the world of sports, owning 22% of the Brisbane Broncos rugby league team, as well as being the major sponsor of Australian World Champion boxer Jeff Horn.
“One of my hobbies is watching great jockeys compete in racing. I enjoy a red wine two or three nights a week with my dear wife, and I don’t mind the occasional Mount Gay rum with ginger beer. My life is my family and my work.”
Mr Murphy’s main pleasure is derived from his relationships with family and co-workers, and he speaks fondly of the Oxmar Christmas party, where staff bring their children along to be involved in a close family celebration.
It is an appropriate note to end on to mention another of Mr Murphy’s great passions, that being for chaplaincy. As a man of faith, he believes in the power of this service for children who go through hard times at school, often caused by drug- or alcohol-affected families.
“No-one knows the amount of children’s lives that are saved by a chaplain at schools. For kids who are going through hard times, a chappy is a shoulder to cry on, provides a caring listening ear, is available, and is a good friend or mate.”
Hard work, compassion and family are mainstays of Mr Murphy’s life. In this respect, all these things feed into Oxmar Properties, making it not just a successful business, but a business that truly cares about all the people it comes into contact with.
There is a familiar myth emerging in Canberra and in many other parts of the nation that seeks to frame small business and big business as natural enemies. It is both unhelpful and damaging; we are better served by co-operation rather than conflict.
The narrative is politically easy. For politicians and ideologues who oppose moves to enhance economic growth, it is the big end of town versus everyone else.
This David and Goliath narrative might be politically expedient but it isn’t borne out in the reality of Australia’s dynamic, trade-driven economy.
In fact, together business across the country employ 10 million of the 12 million working Australians. Around 45% of these jobs are in small enterprises with 20 or fewer employees, while the other 55% are in medium and larger businesses.
The private sector itself, that is the business community, generates 80% of Australia’s economic output.
The real story here is one of interdependence. Smaller businesses need big business and vice versa. It’s a complex ecosystem in which each member plays its part.
Some businesses are naturally smaller, catering to local niche markets while larger business that forms the backbone of industries like mining and manufacturing, serve large global markets and require large capital investments.
Small businesses that want to take advantage of major emerging export markets often need to partner with bigger companies.
Each of these businesses play to their own strengths – whether that is specialized knowledge, skills or processes. Businesses enhance their own competitiveness by sourcing the intermediate products and services they need from each other.
For this reason, where the system is not functioning as well as it might the best solutions will be collaborative and flexible – allowing individuals the capacity to find solutions that work for their specific needs.
That’s exactly what the Business Council and the Council of Small Business have done by launching the Australian Supplier Payment Code, which will see some of Australia’s largest companies committed to fair payment times for small suppliers.
Despite payment times already becoming shorter across the economy, larger businesses understood that progress needed to be faster. So, businesses came together to develop the code which provides for fair payment times but also for the flexibility needed to meet the demands of each specific business.
That means that while businesses are committed to paying correct invoices within 30 days, they are also free to come to agreed terms that work for both the organisations involved.
Signatories are also pledging to work with their suppliers to innovate and institute newer, more efficient invoicing the methods – gone are the days of the carbon paper invoice book.
This industry-led initiative is already having an impact, with over 50 companies signing, representing business revenue exceeding $370 billion. These are some of Australia’s most prominent companies including the big four banks, Qantas and Virgin Australia, BHP and Rio Tinto, just to name a few. The voluntary approach has also attracted the commitment of some local councils, providing benefits to small and large business providers alike.
Of course, there were some whose first call was for heavy-handed government regulation, but in truth, this option would have been costly, and may not even have worked.
More measured voices know that this kind of blunt intervention is fraught, all too often have unintended consequences and depriving businesses, large and small, of the flexibility they need.
There is far more to be gained by a culture of co-operation than one of compliance. Businesses have more to gain by working together to drive better outcomes, rather than being simply compelled to do the minimum.
Both the federal opposition and the Turnbull government should be commended for giving the industry led to approach the best chance at success.
This knee jerk resort to regulation is often aided by the faux David and Goliath myth, and it has led to myriad ill-conceived and, in some cases, absurd regulations.
The myth’s persistence is not only frustrating, but it has a considerably adverse impact on the development of economic and business policy in Australia.
Our nation sits adjacent to the increasingly competitive economies of Asia, and the signs for our future competitiveness are worrying.
This year was the first since 1996 that Australia was not included in the top-20 nations for competitiveness per the IMD World Competitiveness Centre. We are losing our edge to nations like Iceland.
The World Bank says that while we are still one of the easier countries for aspiring entrepreneurs to get started, we are lagging our smaller neighbors like New Zealand.
And, our tax system is far more difficult to navigate than that of other comparable nations.
Of course, where it serves a legitimate purpose and is proportionate and well targeted, regulation is sometimes necessary. But, for small and large businesses alike, ill-conceived regulation and red tape is not only stifling, it can seriously restrict their ability to take risks and grow.
The trouble with many regulations is that the hidden costs push up prices for goods and services Australians consume.
Not to mention some of these interventions which simply defy logic – why are hardware stores in Western Australia allowed to sell outdoor lights but not indoor lights before 11am?
Businesses hire workers in the expectation that they will contribute at least as much to the business as it costs to pay them. Every additional restriction or cost imposed on an enterprise – particularly a small one – limit their capacity to take that risk.
Our complex tax system and a wealth of inefficient regulation, however well-intentioned, adds to that risk.
While there has been some improvement in unemployment numbers recently, there is no question we need faster jobs growth.
To encourage that growth, we need to be careful when it comes to regulation, we must be systemic, evidence based and never create “set and forget” regulatory frameworks.
Fostering new investment and jobs growth is also reliant on the maintenance of a fair and internationally competitive tax system – one that recognizes that larger businesses generate most of Australia’s investment and jobs growth. The reality is that big businesses accounted for all net job creation in 2015-16, while small and medium businesses collectively shed more jobs than they created.
Here again, we see the David versus Goliath myth playing out in Canberra in the Senate’s reluctance to pass the government’s full Enterprise Tax Plan. This is a modest proposal to reduce the tax rate on company profits from 30 to 25 percent over the next decade.
While nobody would refuse tax cuts for small businesses, big business tax relief would make new investments in Australia more attractive to global capital markets, sucking in billions of investment dollars that would otherwise flow to other countries.
Ultimately we do not want to discourage small and medium businesses from expanding and becoming bigger businesses — a suburban cafe becomes a franchise, or a vineyard expands and exports its wines around the world.
But imposing higher tax rates on larger companies discourage smaller businesses from expanding their operations out of fear that they’ll overstep the $50 million thresholds and face a much higher tax bill. The same is true of other taxes and regulations that come into effect at various thresholds.
Business people of all stripes have rightly resisted playing the politicians’ David and Goliath game because it is ultimately self-defeating. An attack on one segment of the economy ultimately is an attack on them all.
The Business Council is committed to working with the entire business community to see issues like supplier payment times resolved efficiently and co-operatively and without unnecessary intervention. We are also loud advocates for a fairer tax system.
Most Australian’s know that a thriving business sector – small, medium and large – is the best opportunity for Australian workers.
A cottage-industry economy would leave workers unprotected from the tumult of global change. There’s no use hiding from this change, and history will not be kind to countries that fail to think big and aim high.
The opening of our economy under successive Labor and Coalition governments unleashed our country’s energy and creativity, enabling real incomes per person to grow by three-quarters over the past 30 years.
Building on this achievement will require a collective effort from all businesses, and a relentless focus from government on providing the best environment for them to succeed.
Jennifer Westacott is the CEO of the Business Council of Australia.
As Australia’s best connected and resourced Equipment Finance Broking firm, Quantum Business Finance’s market position guarantees preferential interest rates on the full range of equipment finance facilities from every major bank and specialised lender in the market.
Director David Gandolfo spoke recently with The Australian Business Executive to explain Quantum’s position as a partnership of experts in the field, valuing outcomes and delivering an incredibly high standard of finance broking.
After leaving university in the 1980s, Mr Gandolfo was drawn to asset finance after a conversation with Peter McAdam, one of the foremost brokers in Melbourne at the time. He immediately went on to get a graduate traineeship in the industry.
After a few years, Mr Gandolfo found himself doing business with Mr McAdam in his new role in the industry. By 1985 Mr McAdam had made an offer of employment, and his career in finance broking began.
Thirty years later, Mr Gandolfo has amassed vast experience in asset finance. This experience has led to his roles as President of Commercial Asset Finance Brokers of Australia (CAFBA) and the Deputy Chair for the Council of Small Business.
“I’m very community-minded,” Mr Gandolfo explains. “If there’s an improvement that you can make, if there are things that you can see that are going to benefit the industry and its members, then it’s incumbent upon you to do that.”
CAFBA was formed in 2008 as a result of Mr Gandolfo and his industry colleagues knowing they needed a national body with which to attend and influence meetings that would have a significant impact on the industry.
“At its core, [CAFBA] provides minimum membership standards to its members. We have kept commercial finance outside of consumer credit regulations, and that hasn’t been easy, because of the distinctions we constantly need to make to regulators. We are primarily dealing with businesses and business owners, and not with vulnerable consumers.”
Through its rigorous procedures, CAFBA has succeeded in professionalising the industry, removing any poor operators previously practicing, and focusing on the 80/20 rule in removing companies who weren’t up to industry standards.
The Australian asset market has, at any one time, about $100 billion in receivables, in the form of loans that are on the books of banks and finance companies. Brokers and intermediaries hold about 68% of the market. These are the people CAFBA represents.
“When I started in this business a long time ago,” Mr Gandolfo says, “I had to explain to people what it is that a broker does, because people weren’t used to the concept of dealing with an intermediary or a third party.”
Mr Gandolfo’s professional focus is on providing clients the best possible outcome on the best possible terms, and he thrives in face-to-face dealing with business owners. His strength lies in the quality of service, and this is what attracts customers to Quantum.
A-List Broking Firm
Quantum was formed ten years ago by its four directors, one of whom was David Gandolfo. At the time, Mr Gandolfo was working for another company as an Executive Director, running the equipment finance department with another Quantum co-founder, Luke Silk.
“I was expressing frustration, saying—what if we just got rid of all those people? What if we started a firm and we got the best people from here, and we got the best guy from that firm and the best people in the industry, and we just put them all under one roof.”
The idea was not to spend time recruiting trainees and people starting out in the industry, but to build a firm of experienced, A-list brokers regarded by the market as the very best at what they do. The result was Quantum Business Finance.
“Quite unashamedly,” Mr Gandolfo adds, “we are not a firm for graduates or trainees. We are certainly not a learning ground for people who are not experienced. We are a firm of highly experienced, specialist financiers.”
This basis of expertise means, unlike many asset finance brokers, Quantum has never needed to join aggregation or buying groups—schemes where a business platform is shared in terms of volume and a single accreditation with a lender covering several broking firms.
“Quantum never aggregated under anybody else, because from the beginning we wanted to be big enough to achieve that on our own. But two years ago we were approached by some regional and agribusiness broking firms who were leaving another aggregation business.
“Just like the A-list philosophy that is central to Quantum’s core,” Mr Gandolfo adds, “these were highly regarded professional firms that were a perfect philosophical and ethical fit with ourselves.”
The firms that approached the company were interested in aggregating under Quantum itself, rather than with the aggregation business previously used. Quantum agreed, meaning it became the only broking firm that also operates as an aggregator.
Quantum Business Finance now writes $450 million worth of loans annually across the whole of its aggregated business, of which about 66% is written by Quantum alone from the original broking business.
The company’s aim is to place its customers with the best lender to match specific aims. This will often take into account several different areas of finance structure to ensure needs are met, and doesn’t always equate to the bank that is offering the best interest rate.
“In addition to the best interest rate, there will be the best ingoing fee, whatever the establishment fee is, the lowest exit fee and also the terms that are offered by that bank, the approval conditions that are offered—they are quite independent of the interest rates.”
Quantum’s job then is to negotiate the best terms, and to establish whether the deal is going to have any impact on the client’s borrowing arrangements from their own bank. Larger clients tend to have a portfolio of lenders, ensuring continuity of availability of credit.
This avoids a concentration of borrowing from one bank that could have the potential for a breakdown in relationships. In this respect it is similar to investing, where a portfolio is better spread around different parties.
“If we’re going to be good at what we do,” Mr Gandolfo says, “it’s not just about knowing the mathematics and how the banking system works. It’s understanding what your client does. I have to know a lot about manufacturing, materials handling, and a whole range of different industries that my clients are involved in.”
This need is the result of a general disconnect between banks and their customers. Quite often customers don’t understand what a bank needs in order to agree to lend money, and vice-versa. This is where an experienced intermediary like Quantum is invaluable.
“Our job is to fill that gap and provide information both ways, so that the customer understands what they’re entering into and the bank is confident enough to lend them the money in the first place.”
In covering the small business market, a lot of Quantum’s lending is done for investment in capital equipment. But Mr Gandolfo is keen to stress that the company’s client base is not just made up of small businesses.
“A lot of our customers are very large businesses,” he says. “For some of our customers the average transaction size is five million dollars, for some its fifty thousand dollars. The client base is varied.”
The range of Quantum’s clients therefore takes in both public companies and semigovernment authorities. For example, Quantum has been involved in financing a fleet of street sweepers for a local council.
“Regardless of how many different facilities we arrange, and regardless of how many different loans, lines of credit, they’ve got, and regardless of how many different finance companies and banks they come from—they have one source of information for all of them.”
A large part of Quantum’s professional responsibility to its clients is to have an awareness of available facilities and products that will solve problems that the business owner is not yet aware of.
“Because that’s our job,” Mr Gandolfo says. “If you’re a manufacturer, a food producer, a farmer, finance is not your prime area of business. It’s our area of business.”
For example, if a company is in an expansion phase and must pay for stock to be able to sell in 7-14 days to customers who will pay later, there can be a problem with cash-flow. Mr Gandolfo says, the bigger a company gets, the bigger these problems can become.
“We will identify a problem like that,” he explains, “and perhaps propose debtor funding, where the invoices that you raise are paid immediately, and as soon as the customer pays that cancels itself out.”
Debtor finance will always have a small fee attached, but it provides a company with cash-flow from day one. In this respect it is preferable to an overdraft, which can quickly become a core debt rather than just short-term.
“So debtor finance, trade finance, the ability to get your stock into your factory on terms that are not being offered by the supplier of your stock—we arrange that. Most of these things we arrange for our customers that are already our clients in the asset finance space.”
Beating the Competition
The key to giving the customer what they need is in distinguishing the company from its competitors. Quantum does this by the value proposition provided to existing customers, but the company often has trouble distinguishing itself to prospective customers.
“The only way that we can win new customers,” he says, “apart from explaining to them what it is we do and being in the right place at the right time—it usually comes down to the lowest common denominator, which is simply price.”
Not only must the company therefore provide its customers with a premium service, but the service must be offered at a discounted price. Problems can arise from the fact that these two offerings are not always compatible.
“We compete directly against the banks with whom we’re introducing clients, but in order to win new customers we have to be better than, or cheaper than, whatever their existing relationship is with their own bank or broker.”
Quantum’s aim then is to win customers on price and retain them with great customer service. Most relationships will shift from price at the beginning to outcomes. Mr Gandolfo admits that this is precisely the way Quantum wants it to be.
“We’re not trying to be K-Mart,” Mr Gandolfo says, explaining the company’s approach. “We don’t offer a K-Mart service. We offer K-Mart pricing, but we offer a David Jones service.”
Some business owners will rely on their business banker instead of a broker. The average tenure for bankers is 18 months, during which time they will be responsible for a whole range of services such as overdrafts, home loans, general banking and merchant facilities.
“He or she has a very limited time to get to know literally thousands of customers,” Mr Gandolfo says, “and answer their questions about their day-to-day needs. They are sales people for a wide range of products, but their depth of knowledge is very shallow.”
By contrast, the depth of knowledge possessed by brokers like Quantum is significantly deeper. The difference is that Quantum does not sell a range of products, but is rather focused on fulfilling the commercial lending needs of the customer.
“We don’t get involved in their insurance, their home loans, their shares, their superannuation. We don’t get involved in it. We can, but we literally choose not to, because we want to be specialist and best at what it is that we do.”
Basetec Services specialises in designing chemical plants, water pipelines and desalination work, as well as oil and gas work requiring significant technical expertise. It sub-contracts out to provide these services to larger contractors.
The large projects are commonly government-listed, sometimes by private companies. Multinational firms can bid on the major civil engineering projects, anything from petroleum, oil and gas energy, as well as water and recycling plants and maintenance.
Once a large company has won the contract, they look for smaller sub-contractors to do the work.
“Smaller contractors only get given a certain area of work to handle,” explains Managing Director Charles Figallo. “So we work as what we call a Bottom Tier contractor, about four levels down [from Tier 1 companies].”
“The large companies go out on the market to find people that can do certain work on the jobs. They go to three or four companies and they look for the cheapest which is often the most vulnerable, not aware of what’s going on. They build up a trust with you.”
Main contractors are initially very supportive, praising infrastructure, technical know-how and finances. They make big promises about how much money will be involved in a project, all designed to get you to commit.
“Then they ask you to sign their thick contract full of fine print, giving them lots of rights and you very few, which you need lawyers to go through, for tens of thousands of dollars to hopefully protect you, to help you to try to understand and write up what you’re getting into. What they do is say ‘don’t worry about it, just sign it’. If you try to bargain too much, you risk losing out on the work opportunity. It’s a very fine line you have to walk and they don’t give you much time.”
“We need the work. When you’re in meetings with them to go through the work, all they talk about is how much more work and money they’re going to give you, how much they’re going to support you, everything like that, just to get your technical expertise.”
After signing the contract you start getting variation requests, and they don’t give you much time. These can change the scope of the original contract completely. Usually you get a very small deposit from the main contractor, and are expected to organise supplies and organise to complete the job.
“You start buying the materials, getting your manpower. You start spending hundreds of thousands of dollars. Then, in thirty days you’re supposed to put your first invoice in. Then in another thirty days they’re supposed to pay you.”
“What’s happening is you’re building your debts up like mad. You’ve got taxes to pay, you’ve got GST to pay, you have got a phenomenal amount of costs to cover. You have to pay them. You can’t delay them.”
“You’re not allowed to walk off the job. At that stage they’ve got all your technical know-how. You’re not even allowed to pick up your materials if you haven’t been paid. You’re not allowed to take anything off site.”
“[It’s] the small to medium-sized contractors that actually do all the technical work, all the planning for the main contractor. The main contractor leads you on until if you don’t agree to all their demands and contract variations, you get into a position where they can legally kick you off and take over the job.”
The law allows for clauses to be inserted into contracts preventing sub-contractors from stopping work if there’s a dispute, and lets main contractors and large companies take advantage of smaller companies.And this is where the law is wrong and it needs to be fixed. The main contractor is now very aware of this legal conundrum which tends to work in their favour.
“I’ve been fighting this for a long time, to protect our industry and to protect our country.”
“We need an enquiry into the way the law handles these things, allowing these powerful people to get rich by walking all over the guys who actually do all the work and just trying to make a living.”
“There are people out there committing suicide because they’ve had their whole lives ruined,” Mr Figallo says, “and their families. There are people that are basically totally ruined.”
“We’re not alone in what we’ve had to put up with, lots of people have been through what we have been through and we are lucky we are not bankrupt, we’re still going.”
These contracts put most of the risk on the sub-contractor’s shoulders.The big problem here lies in the way the law is set up to make it tough for smaller firms to fight back. Many legal people are realising the damage this is doing to small to medium enterprises and our country.
Large companies are able to manipulate the legal system so expertly that it becomes very difficult for smaller sub-contractors to receive payment due—firstly through the unfair contracts, and secondly through the legal system.
Charles Figallo is the Managing Director of Basetec Services.
Royal Institute for Deaf and Blind Children (RIDBC) is Australia’s largest non-government provider of education, therapy and cochlear implant services for children and adults with vision or hearing loss, their families, and the professionals who support them.
The range of specialist services available at RIDBC is unique in Australia and benefits thousands of people each year. Chief Executive Chris Rehn spoke with The Australian Business Executive recently to explain the aims of the organisation, to achieve the best outcomes for people of all ages with hearing or vision loss throughout Australia.
“When I first studied, I actually studied to become a registered nurse,” Mr Rehn says, “and found my way into hospital management, both public and private. In the process, I also did a business degree and an MBA, and found myself as an executive running private hospitals.”
Mr Rehn eventually left hospital work to become an accountant, which he says was an unusual choice for him. This career turn did not last particularly long, as he admits that he wasn’t particularly good at it.
“I then decided to re-enter and go into an area of health that I knew nothing about, and that took me to a very small start-up organisation called the Children’s Cochlear Implant Centre, and that’s where the cochlear implant technology was in its absolute infancy in Australia.”
This resulted in Mr Rehn becoming part of the evolution of an important service known as the Sydney Cochlear Implant Centre, considered the second largest of its type in the world, which became part of RIDBC under the new name SCIC Cochlear Implant Program in 2014.
“I had worked alongside RIDBC in my capacity running the Sydney Cochlear Implant Centre, and when the vacancy for Chief Executive came up here in 2010, I moved across with every intention of bringing my previous organisation into the fold in the years ahead.”
Mr Rehn admits that working in healthcare for so long has taught him many important lessons about how to go about running a business where the needs of patients are so great, and the outcomes so important.
“When I worked in corporate health,” he says, “I had to deliver on 70-80 KPIs on a daily basis. And what it taught me was, it gave me no freedom to design the care model which I thought was important, that would ultimately lead to the best possible patient outcomes.”
From this experience, Mr Rehn learned that a business putting its focus on superior client care can easily make a profit model work in conjunction, but a business focusing solely on profit will find it very difficult to deliver superior care alongside it.
“I’ve learned that. Obviously as a not-for-profit organisation our reason for being isn’t to make profit, but we have to be sustainable. We focus on getting it right for the client first and foremost, and make the business model stack up behind it.”
When this model is laid out in the best possible way, it can work incredibly effectively, but Mr Rehn admits it can diminish outcomes not only for clients but also for the future of the organisation itself if not.
“One of the great things about having moved from the corporate world into the not-for-profit space is, we get the ability to go into the areas and deliver care in a way that we believe is the right way. We really focus on getting it right at that client level.”
RIDBC is a growing organisation, seeing more clients and providing more services each year. The secret to this, Mr Rehn explains, is to make sure that the core services and activities offered to clients are of the very highest quality.
“The Royal Institute for Deaf and Blind Children started in 1860,” Mr Rehn tells us, “so it’s the second oldest charity in Australia. Our reason for being is to achieve the best outcomes for people with hearing and vision loss.”
In the past, the organisation was more centralised and focused particularly on education, but in recent years it has become a multidisciplinary service provider, looking after anything from education through to disability and health services.
“We operate out of eighteen sites across Australia,” Mr Rehn explains, “we’re in all states and territories, and where we’re not physically in those states or territories, we provide services remotely by leveraging technology.”
Changes in the running of the organisation since Mr Rehn’s arrival have been focused around a new strategic direction consisting of three main elements. The first of these elements is the aim to reach more people across Australia.
“We do that by building more sites and services across Australia. That could be physical shopfronts where we can provide a range of services from. We’ve also acquired, or merged in with, other organisations that perhaps are strategically evaluating their future.”
By bringing other organisations into the fold in this manner, forming lasting partnerships beneficial to all parties, RIDBC has been able to increase its footprint across the country, helping it offer a greater range of services.
“The second [element] is, we’re in the process of designing a new future at Macquarie University. We’re going to relocate our Head Office, which is at North Rocks at the moment, and the HO of SCIC Cochlear Implant Program, which is at Gladesville.”
This relocation will help RIDBC become an integral part of the Australian Hearing Hub, sharing in work done by the university and other partners, building centres of excellence in hearing and blindness and deaf-blindness.
“The third foundation of our strategic plan is really about ensuring that we’ve got a vibrant brand,” Mr Rehn says, “and that we are a sustainable organisation and we’re here for the long run. We owe it to our constituents to be around for another 157 years.”
This is one of the most important elements, as Mr Rehn notes that issues relating to hearing and vision loss are not going away. RIDBC needs to make sure it continues to build its organisation to remain relevant and meet the community need.
The organisation is currently undertaking a brand review project as a response to the general misconception that RIDBC is only involved with helping children with vision or hearing loss, a misconception that has proved hard to shake.
“Within our name there is a whole heap of challenge points. The ‘Institute’ part speaks of our earlier days, where we were an institution where children lived onsite and received services onsite, which was the way disability was dealt with in a big part of our past.”
In the modern day, the way treatment is given is completely different, with almost all programs offered by the RIDBC now being day programs, and services provided in a school environment or in a as-needed, hour by hour basis.
“‘Deaf and Blind’ speaks to the problem. We’re more about hearing and vision, and equally we look after people with low vision or some levels of hearing who wouldn’t necessarily associate themselves with being blind or deaf.”
The most significant part of the name seems to be the use of the word ‘children’. Although the organisation deals with a significant amount of young people, it also services a large number of adults, especially those with hearing loss through its cochlear implant service.
“There’s a lot that isn’t current in our name,” Mr Rehn says, “and we’ve been very carefully going through a discernment process to work out whether a re-brand’s in order. We’re also conscious of not losing our identity with existing donors and supporters.”
In terms of hearing loss, Mr Rehn says Australia should count itself amongst the luckiest countries in the world, as it has the best services, technology, good levels of private health and government support. Yet not all Australians are using the services as they should.
“The amount of Australians that need hearing devices, be it hearing aids or cochlear implants, we’re really just scratching the surface. We’re seeing something like 8-10% of the known population that could benefit from cochlear implantation actually accessing one.”
RIDBC is focused on building the infrastructure around the country to make sure the technology is accessible, working with government, private health and philanthropic support to make sure there aren’t financial impediments for people needing to access the service.
“Australia,” Mr Rehn adds, “even at 8-10%, would be one of the highest uptakes of cochlear implantation around the world. I think, for me, the job is done on hearing loss when all Australians who need this technology have had access to it and are receiving it.”
National Disability Insurance Scheme
Similarly, in the new National Disability Insurance Scheme (NDIS) landscape in the country, it is important for RIDBC not to get lost in the mix with so many new brands popping up, and not to lose its status as a historically trusted organisation.
“The NDIS is a bit of a game changer, because it invariably removes funding from organisations that provide services and [puts] that funding in the hands of people who are users of the service, so it’s really about giving a person with disability choice.”
Mr Rehn strongly supports the commitment to offering more choice to disabled people, but admits that the reality of the scheme for many not-for-profit organisations is that they are now required to compete with lots of other services in a tougher environment.
“Instead of receiving block funding from government, then going and finding clients that need service, they have to compete in an open market environment for delivery of services, and only get paid at the point where the client has elected to come with that service.”
For a large organisation like the RIDBC, government funding represents just 25% of revenue. Although it will face significant changes due to the rigmarole of the NDIS, it won’t struggle as much as many smaller organisations, some of which just cannot cope.
“We will suffer as a result of a drop in block funding,” Mr Rehn says, “and having to establish marketing activities and a lot of administration that is required to deal with the NDIS agency, it certainly puts us through administrative difficulties.”
Smaller organisations, those looking at about 4 or 5 million dollars in turnover a year, are more likely to be 80-90% block funded by the government, meaning they must find and compete for clients in an increasingly tough market.
This change has meant many smaller organisations have had to look carefully at their future, faced with a choice between going it alone in the open market, winding up the business altogether, or merging with bigger organisations in order to stay afloat.
“We’ve seen, as an industry, a lot of organisations approach us saying would we consider their service coming in under our umbrella, and we’re looking at it very carefully. We want to make sure that there’s a high quality response to people where they fit within our mission.”
The unintended consequence of the NDIS is that it is likely to limit the amount of not-for-profits able to deliver service. According to Mr Rehn, some would argue there are too many organisations out there, and that a change in funding would be good for the industry.
“We’re probably blessed,” Mr Rehn says, “as a result of good governance, and I mean that at a board level, where in our 157 years we’ve actually accumulated a fairly healthy balance sheet, and we have a very strong donor base that supports our work.”
This means that RIDBC is in a good position to take on other entities, but the truth is that when merging with other not-for-profit organisations there is a good chance they will be companies that are making a financial loss.
“Loss in the not-for-profit world is not a bad thing,” Mr Rehn explains, “if it means a bigger impact on mission. But it’s got to be sustainable. If an organisation loses money every year, it won’t be around for a long time.”
This means one of the main challenges is that some loss making organisations are looking for some kind of rescue by bigger organisations, coming to the realisation that the business model is not sustainable in the long term.
“The challenge for us is, how do you re-calibrate those services to ensure their ongoing sustainability and viability, and most importantly, a high quality of service to the constituents who are reliant on them?”
For organisations like RIDBC, one of the most important considerations in acquiring not-for-profits is that the process is done entirely on good will, meaning the alignment of cultures and missions is absolutely vital to achieving a smooth process.
“You actually have to really be a trusted partner organisation, because essentially they gift their assets to you in the hope that you will take what they have developed over many years and further their work.”
This is in stark contrast to a commercial acquisition, where payment would be made for a business before the parties go their separate ways. Trust is therefore the most important aspect of deals where a not-for-profit is being absorbed.
“It is absolutely key to get the relationships between the two organisations—the management structures, the boards—well aligned on the intent of what would be a merger. We’re doing this at the moment, with a very good organisation in Victoria.”
The organisation RIDBC is merging with has been focused on hearing services for years. Its board has been strategic in looking at the future and identifying organisations that would be suitable for a merger, a process which identified RIDBC as the best candidate.
“It requires a lot of work, a lot of trust, but at the end of the day it’s a very efficient model of how to expand services, how to bring more high-quality services to more people, and not see that market failure that would happen should an organisation decide to close up.”
One of the key strengths needed in the not-for-profit space is to have serious, high-calibre leadership, and for there to be no excuses for second class business practice merely because there is no commercial profit being made.
“It is more important that we show full accountability for the uses of our funds. It is absolutely mission critical that organisations that are not-for-profits are better than corporate in terms of their responsibility to use funds wisely and achieve sustainability.”
Mr Rehn explains that a lot of the focus for the board and senior leadership team at RIDBC is to make sure it behaves better than corporate and commercial companies, making money go far and wide and having a real impact on its mission.
“RIDBC has a very comprehensive fundraising department, and it does everything from running a rainbow lottery, through to working with corporate Australia and partnering with them, to community events like City2Surf and the Coleman Greig Challenge.”
In addition to this, the department oversees individual donors that have been generous enough to leave money to enable the organisation’s work to continue past their own lives, which is a wonderful commitment to make.
“It’s a really diverse portfolio of activities,” Mr Rehn says, “everything from direct mail to corporate Australia to individual giving. It’s amazing, the types of levels of support we receive. Today, about 50% or thereabouts of our revenue has come from the community.”
Mr Rehn admits that the dynamic is changing, and many donors are now too spoilt for choice in the amount of organisations they can donate to. RIDBC is in a positon where, as a longer serving charity, it has retained many donors over the years.
“The giving patterns of Australians [are] changing, and the newer generations are not necessarily giving in the same way as their predecessors, so we’ve had to adapt and evolve to much more peer-to-peer fundraising activities.”
These activities seek support from a friendship network, with the charity often remaining in the background. Mr Rehn believes fundraising makes the difference between a good level of service and a great level of service, and will always be part of RIDBC’s activities.
“If you looked at children with vision or hearing loss, giving them the best start to life requires a lot more activity in those formative years, and fundraising really means that we can pull out all stops and give them the services they need in the most comprehensive of ways.”
Mr Rehn admits, despite being CEO of the organisation, he has been very lucky over the years to have worked closely with clients, and to have seen first-hand the kind of life-changing work RIDBC performs on a daily basis.
“We are a very comprehensive service provider,” he says, “so we do everything from diagnostic work to running early intervention services, pre-schools. We run three schools, we run tele-practice services, we have a professional development arm.”
No matter the vision or hearing needs of an individual, RIDBC is perfectly placed to provide them, with the wherewithal to make a significant positive difference in people’s lives. One such case is that of a young girl called Olivia.
“I met Olivia when she was about three months of age, when she was diagnosed through screening as having a profound hearing loss. She was assessed for a cochlear implant, and received that as one of the youngest children in the world at eleven months of age.”
Seven years later, Olivia received a second implant, meaning she now has what is called bilateral cochlear implantation. With Australian technology and an extensive rehabilitation programme, Olivia’s hearing improved, and she developed age-appropriate speech.
“As she got into her teen years, she was diagnosed with Usher’s Syndrome, which meant that she would become legally blind, she would lose all peripheral vision and she would really struggle with things like crossing the road and mobilising herself.”
Once again, RIDBC was able to help Olivia, supporting her through its vision services to help her attend a regular school with itinerant support teachers. In 2015, she completed her HSC, achieving an ATAR of 97.5, and is now studying Arts Law at Macquarie University.
“Olivia was a very bright child, and despite the multiplicity of her disability, she applied herself very thoroughly. She had the support of a wonderful family, and we were able to journey with her at every juncture, with services from our organisation that supported her.”
Mr Rehn uses Olivia as an example to show how far the quality of service has moved on. In the 1960s, there was no expectation that children with these disabilities would have access to an education. RIDBC has been providing education to deaf children since 1860.
“Now we look at a child like Olivia,” he says, “who demonstrates that her disability has been no impediment for her reaching her potential, and that’s just terrific, and it sets the benchmark that we aim to achieve for as many of our children as possible.”
Not all children achieve this outcome, but the approach of RIDBC is to try and get the children to be the best version of themselves they can possibly be. With the support of families and the individual concerned, the organisation continues to push for this goal.
On the back of such a successful history, it is important that RIDBC’s success continues long into the future, and Mr Rehn admits that the advancements of the 21st century will be key to the organisation’s longevity.
“Technology is the real game changer,” he says. “If you look at the cochlear implant, one of the biggest challenges for a deaf child learning to speak was that it’s near impossible for them to repeat sounds they can’t hear.”
Even with high-powered hearing aids, which work like a microphone to amplify sounds to a point where those parts of the ear not damaged can still relay a message to the brain, there are some conditions that are so severe that they will never produce any level of hearing.
“No matter how much amplification you make you won’t get a decent signal to the brain in order to develop spoken communication. The cochlear implant, Australian-invented in the 70s by Professor Graeme Clark, really changed the world.”
In its early days, the cochlear implant was used primarily as a tool to help adults to lip-read. Through pioneering work at SCIC Cochlear Implant Program, they are used on children born profoundly deaf, changing the scene worldwide for perfect speech production.
“Whilst our organisation focuses on sign communication for a small cohort of children, the vast majority will be detected at birth with hearing loss, they will go through an early intervention program and receive cochlear implantation under 12 months of age.”
Children with cochlear implants are generally expected to reach age-appropriate speech and language by the time they reach school age, which is an incredible achievement and shows exactly how important the technologies are.
“On the vision loss side,” Mr Rehn says, “we don’t have a cure for vision loss. We don’t have a bionic eye in mass production at the moment, and generally speaking vison loss is usually a cortical issue as opposed to an eye issue.”
Technological changes in the vison loss field can be seen in areas such as personal navigation apps on mobile phones, and other accessible functions that come with new technology, which are changing the lives of those with sight loss.
“For instance, an iPad can be an interface between anything and anything. You can have a Bluetooth Brailler attached to an iPhone that will decode a text message and send it into braille, or it will read it to a person who has vision loss.”
Similarly, satellite navigation allows blind people to traverse cities without getting lost, a significant issue for many blind people that usually means they stick to routine and are unable to travel easily to different places.
Handheld portable devices and the technologies they provide are making a big difference in terms of accessibility. Even something like reading the newspaper can be made easy, through the online screen-reading technologies built into most media platforms nowadays.
“We have technology consultants here and one of them, Mike, he’s a person who was born completely blind—he will show you apps that tell him whether his tie matches his shirt colour, whether he’s left a light on at night before he goes to bed.”
Even something such as choosing the correct currency to pay for services has been turned into a mobile phone app, where the person can scan a note and have it read back to them what currency and denomination it is.
“This technology is making a huge difference in the lives of people with vision loss and hearing loss. Our job, increasingly, is to align the right technology with people as they journey through their educational years, and then beyond.”
Working out of rural New South Wales, Exclusively Strata is a boutique firm focused upon strata and community management services.
The company is run by Michele Hemmings, a CPA with 30 years of experience, who prides herself on being a body corporate specialist, offering flexible meetings and the best contractors engaged and arranged quickly to work onsite. Ms Hemmings spoke recently with The Australian Business Executive about her path into strata management, and the unique challenges faced in the Aussie countryside.
After 18 years working in academia, Ms Hemmings decided to take some time away from her career, for family reasons. It was during the following year that she began to get interested in working in her current field, that of strata management.
“I fell into it by chance,” she explains, “and also by choice. I was on leave from an academic post at the time, a second maternity leave, and attended an AGM of a strata property that I owned with my husband.”
At the time, members of the strata had been getting increasingly disenchanted by the standard of management they were receiving, resulting in the decision for them to try and self-manage the buildings.
“So, I go to my first ever body corporate meeting and come home as Treasurer and Secretary. That was my first strata management experience, in October of the year of 2003. Over the Christmas I thought: this is quite good, I’m enjoying this.”
Being a stay-at-home parent meant Ms Hemmings was able to achieve flexibility in taking on this new role. She admits that having children was a big change in her world, and the opportunity to take on work during leave from academia was a welcome occurrence.
“I said to my husband, I think I might study and find out what’s actually involved in this role, because I am handling other people’s money and know the significance of the fiduciary duty that’s involved. I enrolled then in the appropriate course in 2004.”
The course was the TAFE NSW Certificate IV in Property Services. Ms Hemmings studied by correspondence, completing assignments and exams for 24 units, half of which she received in credits from her previous three Accounting degrees and CPA qualification.
“I then applied to Fair Trading NSW for a licence, and after police checks I was a licensed Strata Managing Agent. In 2005 I opened up to the world and said: here I am. I knocked on a few doors, and put an ad in the paper, and the phone didn’t stop ringing thereafter.”
This was the beginning of Exclusively Strata. Despite a slow first couple of months, accompanied by some nerves about whether the business would get off the ground, by the spring of that year things were already starting to pick up.
“Every month it just became word of mouth. Fortunately, in a city like Wagga Wagga, with a population of 65-75,000 people, it didn’t take much to get around. I also visited selling agents to let them know where I was, so it grew very quickly, exponentially almost.”
Ms Hemmings admits that Wagga Wagga was not exactly underserviced in terms of strata management before she started her company, but that the services being offered were not up to standard.
“There was a disappointment that people felt with the service provided to the city,” she explains. “We had a case of a monopoly, there were two providers for several years and then one bought out the other.”
With the increased scale of just one large strata management company in the area, residents began to feel that their needs were not being met on a personal level. “Jobs weren’t getting done, owners told me,” Ms Hemmings says.
“Meetings were hurried as they were only able to be held in normal business hours [of that company]. All of those things made me think: you’ve got to go to your client, not the other way around.”
Without the constraints of regular employment, Ms Hemmings was able and willing to provide the kind of personal service people in the city were looking for. This was a big part of the reason why the business took off so rapidly.
“I wasn’t constrained in any way by the 9-5 mentality,” she goes on to explain, “and I would have meetings in the evening, Saturday mornings, lunchtime—whatever suited the new client.”
Having a background in CPA and financial reporting was particularly helpful in pushing the business forward, as it allowed Ms Hemmings to educate strata owners in how their money was being spent and what they should be expecting in return.
“If you’re a savvy investor, you want to know that the finances are accounted for with high proprietary,” she says. “The fiduciary duty I hold is key to this post when you’re looking after somebody else’s money. So, I believe that is a strength that I have.”
In addition, Ms Hemmings makes sure to provide a friendly, reliable and flexible service, going out of her way to be available to clients even at times that might seem less convenient, something almost impossible to find at the bigger firms.
“I try to capitalise on that availability, the friendliness I provide. The preparedness to sit and talk and listen, rather than have a limited time. It’s all wrapped up in providing good quality service.”
Ms Hemmings stresses there are three main areas of the business that are vital to be familiar with. These are logistics, financial management and people management, three skills all strata managers must excel at in order to get ahead.
“Logistics means that you are responsible for getting a plumber when the downpipes are leaking on a unit, making sure that gardeners are doing a good job, and you have a regular handyman to deal with any repairs and maintenance to the buildings and common property.”
Coming from an academic background, where she mainly conversed with other academics and students, this was quite a new experience for Ms Hemming, and it took some while for her to get fully to grips with this new skill.
“Learning how those contractors operate and trying to get them to the jobs on time is a bit frustrating. If you’ve got a pergola that’s collapsing and you want someone to repair it and you have to wait for a builder to be available—that’s a difficulty.”
Excellent financial management means taking care of the funds paid by strata owners into the communal account of the strata, funds which are used to pay for maintenance, bills and everything else required to keep the building or buildings running smoothly.
“That fund management is critical, that you are keeping your reconciliations every month and you’re reporting to owners on a frequent basis, every six months. Making sure that everything is spot on with those finances is critical.”
The final important element is people management, something Ms Hemmings admits is absolutely vital to being a successful strata manager, and should be considered as the predominant skill to have.
It is important to be conscious of different personalities in the strata group, especially when it comes to meetings. Despite chairing many of her own meetings, some meetings are chaired by other people with particular characteristics.
“The person who usually puts their hand up to be Chair is quite the gregarious, dominating type of person. I have schemes where the Chair likes being the Chair and runs the Annual General Meeting with little input from the strata manager.”
In most other cases, the rural strata manager is expected to chair the meeting, as many of the owners do not know how or do not wantto do it. These meetings will generally be more relaxed and casual with Ms Hemmings at the helm, while still sticking to the agenda.
“Understanding those nuances in people, and if there’s any bitterness or carryings on between people, I won’t tolerate that. People management is understanding the way people interact with others, and making sure it’s all very civil and polite—and usually it is in rural strata schemes managed by Exclusively Strata.”
Growing a Client Base
Exclusively Strata now manages 38 schemes, averaging about 8-10 units in each. The largest has 39 villas or townhouses (a new scheme of 98 apartments in six buildings is currently under construction), and the smallest is a duplex of just two. The same standard of financial management is required no matter the size.
Despite the quick growth of the firm, it is by no means an easy task to pick up clients. Ms Hemmings admits that it takes quite a few events to get to the point where a strata group is prepared to make a change in management.
“You might have one or two people who are courageous enough to enquire as to another agency being in town, when they hear that there is,” she says, “they make that enquiry, by phone call usually.”
This would be normally followed by a meeting with a group executive or a subset of owners, a small number representative of those looking for change. In this meeting, Ms Hemmings puts forward what she is able to offer.
“It’s up to them to take my presentation and sell it on to the rest of the owners. Some owners may not even live there. It’s an advantage if they do, because they can just knock oneach other’s doors and say: shall we go and meet up with this potential new strata manager?”
This makes the process of finding new clients particularly challenging. In order for a contract to be changed, the new manager needs a majority of owners to agree to it at a General Meeting, meaning the benefits must be sold across the board.
“I can’t do anything more than have that initial meeting, and if they like me, they’ll go and spread the word. Unfortunately, they have to then approach the existing strata manager and say: could you give us the names and addresses of the other owners.”
Although this request may ring alarm bells for the current manager, the manager is compelled to release this information under the strata legislation. The next step is for a motion to be placed at the General Meeting.
“It could be a timing factor. It might be another 6-7 months, whatever it is. It also depends how urgently they want to change. If they were ready to change, they might seek to hold an Extraordinary General Meeting, and call one during the year rather than wait for the annual.”
Finally, the motion is put to the entire Owners Corporation. If a majority is reached in favour, then a change in management can be made. This formal process can take several weeks or months to complete.
Strata in the Country
The largest inland city in New South Wales, Wagga Wagga is a unique place to live, located under five hours South West of Sydney by car and the same distance from Melbourne, two and a half hours from Canberra and three from the NSW and Victorian snowfields.
The city is home to a significant proportion of transient home dwellers, with Army, Navy and Air Force members all represented, as well as a large cohort of Charles Sturt University students.
“It’s a very forward-growing city,” Ms Hemmings says, “and it’s been immune, in many ways, to the recessionary years since 2007. We are quite fortunate in that regard. Building is on a high and continues to be.”
The city has been so successful in growing and developing a host of top Australian sports personalities that it has become known as the ‘City of Good Sports’. It therefore has many sporting activities, teams and clubs, which have helped shape its culture.
“We have, I believe, somewhere in the vicinity of 300-400 strata schemes in the city. I spread to Tumut and Yass, two hours on the way to Sydney, and I’m looking at getting one at Leeton, a similar distance away in the other direction.”
These smaller towns outside of Wagga Wagga have fewer properties falling into the strata category, and most don’t tend to have professional managers overseeing the schemes. It is beneficial, therefore, for Exclusively Stratato spread further than city limits.
In rural areas such as Wagga Wagga, the growing strata industry still has several issues that Ms Hemmings admits must be rectified. The most important issue is the understanding of the strata industry itself.
“There is probably less knowledge about strata by the general population here than there would be in a major city,” she says, “as in, most people here have lived on a quarter acre block in a 3- or 4-bedroom home and moving to strata is quite foreign.”
“I would say the number one issue with country strata is the limited or lack of information or knowledge about strata or community living. That change of living is a shock to some people, they don’t necessarily understand it.”
In such a rural district, there are inevitably a lot of farms that are served. Farmers are retiring and moving into the city to apartments, and this can represent a big change in the type of living they are used to.
Much of this is to do with the level of architectural consistency expected across villas or units within strata complexes, where there is little opportunity to add to the surroundings with anything that isn’t in keeping with the other properties.
Ms Hemmings tells us how she once had to ask a lovely older woman to remove her gnomes from the front gardens of a community scheme, and the woman didn’t understand why they were not allowed.
“How I counter that [lack of knowledge] is to go round and visit the Real Estate offices and give them seminars. I also talk to solicitors, because even they don’t know all the strata management intricacies. I’m the one who’s specialised in that.”
With a recent change in NSW strata legislation, the next twelve months will be an important period for firms like Exclusively Strata to educate solicitors and agents on the changes.
Even more importantly, Ms Hemmings admits that meeting with owners and educating them about the strata law changes is a primary personal goal of hers. Once the teacher, always the teacher, they say.
The second significant issue of strata management in the country is the level of expectation on the shoulders of strata managers compared with those working out of large urban areas.
As a member of a board committee within Strata Community Australia NSW (SCA), Ms Hemmings regularly attends state meetings where this difference between rural and urban strata is very noticeable.
“The expectation of owners, I think, is higher on country strata managers than it is in the city. I get the feel that it’s extremely corporate, extremely time driven [in larger cities]. We in the country are much more relaxed, and free and open with our time.”
This may sound like a positive, but the mindset of the country strata owner assumes that small jobs should be done as part of the package. Ms Hemmings doesn’t add fees every time she is called out by a client to look at an issue. This is not the case in major cities, where jobs are billed in 15-minute blocks.
“The sense is that I can easily come around to visit and check everything out, or maybe spend two hours in a meeting instead of one to one and a half hours—owners don’t think twice about the time that it takes for managers to do these tasks.”
Ms Hemmings feels an element of responsibility in taking on day-to-day tasks herself, rather than outsourcing jobs and charging the client for extras. She admits to regularly thinking like a client, considering what will be best and cheapest for them.
“I’m probably my own worst enemy in that regard, knowing that the client wouldn’t like that. I have to change my thinking and perhaps be a little bit tougher with things, and I have begun to slowly invoice for extra meetings, because it’s in my agreement.”
The level of competition in Wagga Wagga means Ms Hemmings is particularly careful about offering the best financial service, as in the end she does not want to lose clients by appearing too willing to outsource and charge extra.
“Service is service is service,” Ms Hemmings goes on to explain. “So, if it does cost me an extra two hours in a day or a week, I will wear it, because I just want to keep my clients and keep them happy.”
The third issue of rural strata is the difficulty in getting staff. Ms Hemmings admits she is ready to expand her business, but that because the industry is not well-known, and still considered specialist, interested parties are hard to come by.
“It’s a very unique, specialised component of Real Estate. But it’s also an accounting exercise, it’s a logistics management exercise, it’s a people management exercise. Strata has a wide gamut of skills involved.”
In addition, there is a noticeable lack of academic intercourse in rural strata. Ms Hemmings admits she relishes the chance to go to Sydney for NSW SCA committee meetings or conferences to have academic discussions about issues facing the industry.
“Living and working in a rural city is the best lifestyle you can have. Strata management and strata living in general is a phenomenon that’s only been around for fifty years. It’s the way of the future, and I’m excited to be involved in an industry that’s so rapidly growing.”
With sales of apartments growing, exceeding those of houses over the last decade, strata has become a wonderfully exciting industry to be involved in. Ms Hemmings loves meeting all the people involved in the industry and seeing fresh perspectives.
“From a Professor from the University or a local doctor who owns a unit to live in or rent out, to the garbage collectors and cleaners—strata has the whole spectrum of demographics of the world. It’s just a wonderful industry. I really, really enjoy it.”
Direct Uniforms is a supplier of fine quality uniforms for businesses, schools and sports clubs. The company is young and innovative, with a focus on excellence.
Its motto promises to provide customers with quality, service and price, a philosophy that guides the company in all it does. Direct Uniforms understands that every business is different, with its own unique needs, and prides itself on the ability to work with clients to find a solution that will complement and enhance their business image.
After leaving school in 1989, Direct Uniforms founder and director Peter Cipolla started his professional career in the Real Estate industry. Uniform manufacturing was in the family however, as his parents owned a business that was beginning to see significant growth.
“The family business that my parents were running grew to a very big operation,” he explains. “We were manufacturing uniforms for King Gee and a few other large companies, doing all the specials for companies like StarTrack and Energy Australia.”
When the business grew too large for his parents to run on their own, Mr Cipolla stepped in to help out. The company cut, sewed and delivered uniforms all over Australia, employing around 50 people at the time.
“It was quite a large manufacturing company in the eastern suburbs of Sydney, in Botany,” Mr Cipolla explains. “We manufactured something like 1.7 million garments a year, so it was quite significant.”
It was at this time that Mr Cipolla decided to leave Real Estate and try his hand in a new industry. After a meeting with his parents, it seemed like a good opportunity to join the family business full-time as manager.
“I thought it was quite a good thing to get myself a bit of experience in managing a company, which I did with a lot of success for approximately 28 years. But unfortunately, later on in the gig the manufacturing started to dwindle a bit in this country.”
By 2008, many of the vendors the company had been dealing with were beginning to look at offshore options. Despite trying to organise offshore opportunities for clients, Mr Cipolla couldn’t persuade them not to do it directly themselves.
The company eventually had to shut down, and Mr Cipolla’s parents retired. At this point he decided to go in a slightly different direction, moving into the nationwide distribution of uniforms, selling product that is already made and ready to ship.
“I got in with a few conglomerates overseas, and brought in a few brands that were starting to form in Australia. We have warehouses in each state, we have an online presence, where companies and people place their orders online with us on our website.”
In 2009, Direct Uniforms was born. The company now boasts around 75,000 customers, having recently relaunched its website to ship product all over Australia, to companies ranging from smaller start-ups to larger blue chip clients.
“I still had an existing client base that can’t go offshore and buy their orders,” Mr Cipolla says. “So a lot of the suppliers now that came on-board with us have massive warehousing, and we’ve become a distributor of the brand names.”
Direct Uniforms is run to a model similar to that of retailer Harvey Norman, where branded product is distributed from Perth, Sydney, Brisbane and Melbourne. One of the major brands the company sells is JB Wear.
“We can also add the logos to requirements. We have all our catalogues on our website. We hold all those items in stock, and people choose their colour, or whatever product they want. We can deck out a brand new business with many employees within ten working days.”
In comparison to the original manufacturing business, the speed and timing is now key factor in Direct Uniform’s business. The company can supply a plain garment within five working days, in any quantity, and add logos within 10-12 working days.
Like its predecessor, Direct Uniform is also a family-run business, with Mrs Cipolla looking after the accounts and handling ordering responsibilities. Since 2009 it has continued to grow, and Mr Cipolla is clear about the source of its success.
“The reason why my business has grown over the years is that I’m not attached to any one particular sector. I supply product to the education sector, I supply product to the industrial sector, I also supply product to the mining sector.”
Mr Cipallo admits that if the business was supplying to only one sector, such as mining, it would quickly find itself in a position of exposure. It is inevitable for certain sectors to go through peaks and troughs, directly impacting levels of purchase.
“I’ve got a massive spread in my business,” he says. “Not all industries go into a black hole at times, but if I were to say I’m going to specialise in mining uniforms, well I’d be closing myself to everything else.”
The Garment Industry
“We tend to always follow the US and Europe as far as styles are concerned, and we pretty much seem to get it down pat pretty well. The client is very lucky these days, because they have a major amount of choice. These choices weren’t available to them fifteen years ago.”
Despite such broadly spread business, taking in many different sectors and industries, the importance of having a good grasp of advancements in the garment and uniform industry is essential in being able to give the customer what they need.
“I have a lot of knowledge of clothing in the uniform industry,” Mr Cipolla explains, “and there’s a lot of stuff out there. What a lot of people perceive as a cheap-priced item doesn’t necessarily mean it’s an inexpensive-priced item.”
Many cheaper items can be bought for $10, but need replacing around twelve times a year. The more inexpensive option is to buy an item for $15 that will last six times as long. Mr Cipolla admits many clients need educating on this distinction.
“Dollar value is the not end-all on price cheapness. It’s the durability of something, and that’s what I pride myself on in our business. We tend to try and tell our clients to be very careful, especially when it comes to high-visibility products.”
In today’s litigious world, many people are choosing cheap high-visibility products that are not up to Australian and New Zealand safety standards. The consequences for firms making these decisions can be very severe.
“If anything was to happen, the onus is on the owner of the business that brought that product. If someone gets killed wearing a product that’s not approved or not compliant, there are dire consequences. You need people like us who know the background.”
In Australia, safety regulations are pushed to the highest limits, making it probably one of the safest working environments in the world. This is in contrast to countries like China or the Philippines where standards are particularly low.
“The innovation of high-visibility technology has over the years jumped leaps and bounds. The most important thing is that the luminousness has gotten so high in product it sometimes goes beyond the levels that the Australian and New Zealand compliances require.”
Mr Cipolla knows that safety regulations are put in place for a reason, and that it is the responsibility of business owners to adhere to them, creating a safe environment for both staff and customers.
“As a company director,” he says, “in my company I take safety as my number one priority. I have children at home, and my children expect me to turn up back from work in a safe way, and I think all employers should be the same.”
Although promotion is focused more on the Australian market than international markets, Mr Cipolla has begun to see small amounts of business starting to come in from overseas. The ubiquitous nature of an online presence helps drum up business in other countries.
“I’ve had people from the Philippines and the US come and make enquiries as well, so you always get remnants from our website. If I was to probably push it into the US and Europe, I wouldn’t be surprised if I were to get more business.”
Mr Cipolla has noted a recent trend of UK companies ordering from Direct Uniforms, mostly because the choice is more limited in Britain than in Australia. Australia boasts particularly good designers, producing plenty of different styles.
“A lot of companies these days are changing their view,” he says. “A company used to be a colour, where these days they don’t care anymore, they just want to be fashionable. They’re not running their business like a football team anymore.”
In doing this, companies understandably have a much larger scope in the kinds of uniform they can opt for. Specific colour schemes often cause significant supply issues, as things might not be so readily available.
“If a client said to me, we really need turquoise and red shirts, I’d tell them that we can do that, but we’d have to bring them for you from overseas, because there’s nothing in turquoise and red available. Our products try to appeal to mainstream business.”
The company’s speciality is in providing a wide option of colour schemes, all held in stock for the client to view and decide upon in a quick and easy way. There are some companies, however, that still insist on a particular colour scheme.
“You’ve got your McDonalds and your KFCs and stuff like that, and we can do that for the companies, but it becomes an indent situation, where they have to order a certain quantity and we supply them as a whole.”
In addition to supplying standard uniform options to a range of industries, Direct Uniform has an interest in making sure the products it stocks are both of the highest possible quality and of the highest standards of innovation.
“Our Biz Collection brand has developed a product that assists in preventing the spread of infection. It’s called Advatex. It’s been majorly used in the US and it’s starting to come into this country now. It’s something very important in the healthcare industry.”
Direct Uniforms is focused on pushing this important product into institutions such as nursing homes and hospitals across Australia. The fabric includes a silver compound treatment that uses body heat to kill off infections.
Keeping Everyone Happy
The secret to any successful business is getting the best out of employees as well as offering the very best possible professional service. Mr Cipolla is proud to make his employees a priority in terms of the day-to-day business.
“I find in my company I always want my staff to be a happy lot of people. It disappoints me a lot to see sometimes where you get managers running businesses and showing high authority on staff and in a lot of cases the morale in that business is quite low.”
Mr Cipolla believes that if you show employees respect, more often than not that respect is given back. In a lot of cases, it also equates directly to sales figures those employees are achieving for the company.
“I always find that if you keep the morale up, you’ve got to have a happy workforce,” he says. “You don’t want situations where your staff is going home in a depressed state and coming back not wanting to be there.”
This is why Mr Cipolla believes he has a successful leadership style, because he always sees smiles and happiness from his staff in the office. It can also be seen in the very low amount of absence from sickness in the company.
“Everyone is entitled to a sick day when they’re sick,” he explains, “but I find that my staff tend to be at work a lot more than others who run businesses where their staff treatment is not up to scratch.”
Mr Cipolla knows that a business thrives on the attitudes of employees and customers alike, and he is the first to admit that financial success is contingent on creating a great atmosphere in the workplace.
“I run a business that makes people feel good. The most important thing to me in a business is their first impression. A clean and well-maintained uniform can mean the difference between securing a major contract and struggling to find business.”
Most successful businesses in the mainstream marketplace have uniforms, and Mr Cipolla doesn’t regard this as coincidence. Having a uniform demonstrates discipline, consistency and professionalism, qualities that help a business grow.
“Our slogan reminds people that if you run a professional business, we can give you the professional look,” Mr Cipolla concludes, “and we think that people take pride in their business and they’ve got to take pride in the way they look.”
Francois Gouws knows just about everything there is to know about treating and delivering water on a large scale.
The corporate executive has decades of experience in the global water industry; working in locations in the United States, Africa and Australia, where today he is Managing Director of TRILITY, a major Australian water utility services provider. For more than 25 years, he has been working with the communities he serves, to deliver water to their residents and businesses alike.
“I’ve worked with every water technology that is available in the market through my career,” he says. In addition to managing TRILITY, Gouws is a leader in many industry groups and also serves on the Australian board of WaterAid, a charity that focuses on providing clean water and sanitation to some of the world’s poorest communities.
“I personally believe in giving back to the sector in which we serve,” he says about an ongoing involvement with many organisations in the utilities sector, including as president-elect of the Australian Water Association, the country’s premier industry association serving hundreds of corporate members.
“I’m tremendously proud to be able to contribute back to the sector and where I can, help move the sector forward,” Gouws says. “I’m very happy to be working in, not just the water sector, but also the infrastructure sector.”
TRILITY delivers an important contribution to the water infrastructure sector, he adds. “It’s the most dynamic and most incredible company I’ve had the privilege to work with,” he says. TRILITY operates throughout Australia and New Zealand, working with local government and utilities to build or manage water treatment, desalination and wastewater treatment plants, wastewater and bio solids management schemes and even irrigation networks.
TRILITY began operations in 1991 and started out as United Utilities Australia, which was a subsidiary of United Utilities UK, the largest listed water company in the United Kingdom. The company grew throughout Australia for many years and then experienced an ownership change in 2010, taking on primarily Japanese shareholders.
“That was a fundamental change,” Gouws says. “Before then we were a subsidiary of this massive international organisation. Then we became a standalone Australian company. That saw us go through a total restructure in order to be self-sustaining.”
From there, the company re-branded itself and began to plan toward a future of sustainable growth in the water sector. After 12 years working with leading international water companies on major projects across the globe, Gouws decided to move to Australia where he first worked in Sydney prior to joining United Utilities Australia. His international experience, which included ownership changes, saw Gouws promoted to Managing Director at TRILITY during transition to a new parent company. Today, he is the only Australian on TRILITY Group’s Board of Directors.
“We’ve got a diverse business and we’ve structured the TRILITY Group into business units,” he says. “Every business unit and the group as a whole has a number of clients.” These consist of large, publicly-owned utility companies such as Melbourne Water and Sydney Water, as well as local government entities. “Pretty much every large water utility or council-owned utility is a client in some form,” he adds.
Operating across Australia, TRILITY is a truly national company with the majority of its contracts involving rural clients. “That’s one of our strengths that we excel in—remote and rural operations,” Gouws explains. “It sees us get contracts from government, either through councils or state utilities, and these contracts range from 5 to 35 years. We then get the right [to] set up the finance for the infrastructure, construct the infrastructure and then operate it for the term.”
Though Australia has a federal government, water management is a local concern and therefore the responsibility of the state governments. Because of this, TRILITY has been strategically positioned as a diversified company with operations spread throughout the Australian states and New Zealand. It has over 300 staff in four main offices, five secondary offices, and over 40 facilities to operate and maintain and another 800 service sites. Gouws says the TRILITY team is also very agile.
“Wherever the need is, we can move people around,” he says. “We have people in every state. We deliberately run a dispersed management team—a dispersed business—in order to have relationships and to position ourselves in every state.”
This allows staff to analyse the local situation carefully and to decide which opportunities are worth pursuing. After that, a unit will typically begin gathering resources for a project. “We line up the correct technology to provide the optimum solution for what’s required,” he says. “[It’s] important to note that it’s not just a technical solution that we offer; we offer the entire whole-of-life solution. Over a 35-year period, requirements can change, supply agreements can change, industrial relations can change and the right culture is required to manage these changes seamlessly.”
Gouws says one of TRILITY’s key strengths is its ability to provide long-term solutions over the decades-long projects, not just the initial installation of the infrastructure. The company’s focus is on the science of water management and looking ahead to when equipment will need to be upgraded and replaced. “That’s how we manage to deliver optimum service over a long period in a cost-effective manner. Obviously, we do carry public and environmental health in the services we do, so [they’re] responsibilities [that] we take extremely seriously.” Thanks to this efficient approach, the company generates annual revenues of approximately $AUD150 million.
TRILITY’s workforce is broken down into four main business units, each with its own unique function that contributes to the overall Group.
First, there is Operations and Maintenance, which comprises employees operating and maintaining plants. “[We have a] dedicated and very capable team, operating our plants 24/7,” Gouws says of this business unit.
The next group is the Asset Ownership, which is responsible for the financial and administrative aspects of the business. “Wherever we have ownership of assets, we administrate that separately,” he adds.
Then there’s Design and Construction, comprising of a team of highly skilled engineers, construction and project managers that handle upgrading and construction of infrastructure at all of TRILITY’s facilities.
Finally, there is Hydramet which falls under Services. “Hydramet was one of our first strategic acquisitions after we identified a gap in the Group; so we brought in a company that specialises in disinfection solutions.” Hydramet maintains 800 of these disinfection facilities across Australia and many of them in very remote locations. The four business units together with the crucial support of TRILITY’s corporate and administrative services operate as one, making for a well-balanced and integrated approach in servicing the sector.
The most important thing about the businesses TRILITY runs is that they are complimentary and work well with each other to help TRILITY’s steady expansion. “We’re at our best when we can combine our business units,” Gouws says.
This is TRILITY’s winning strategy in a very complex sector. Every state has a different way of managing its own water resources, so the company must be diverse, agile and adaptable to accommodate a variety of different scenarios.
“It’s also a long-term sector,” Gouws says. “Aging assets; many of the networks, especially the underground systems, were constructed in the 1950s and 1960s.” He adds that this makes the water sector a rewarding yet challenging sector to work in.
In addition, “it requires massive capital investment, that then […] doesn’t see an immediate payback, and that’s a challenge that the sector constantly faces.” The water sector is further cyclical and largely influenced by drought patterns.
“When there’s a crisis you try to catch up with infrastructure, then by the time construction is finished, the drought in some cases may have passed.” Gouws goes on to explain that this cyclical nature of the sector also plays out heavily when it comes to its skilled manpower. The sector like so many others routinely expands and contracts, and during a period of contraction, it’s difficult to maintain the resources of highly seasoned professionals. We are always seeking new ways to better manage this transition so as to ensure sector knowledge is retained. However, looking towards the future, there is still much work to be done. Two of TRILITY’s target projects include refurbishing and upgrading old equipment, as well as finding new strategies for the reuse of water for agricultural and other purposes.
Australia is in fact a growing market for recycled water. “We supply several intensive farming operations across both Australia and New Zealand with specifically reused water, and we see that together with the upgrading of aging facilities as a major driver going forward,” Gouws says.
This devotion to long-term operation and maintenance isn’t the only thing that makes TRILITY a trusted company. The business has many “unique selling points.” Chief among them is their strong focus on developing staff.
“We invest heavily in our people and in developing our people,” Gouws says. “When it comes to delivering services to customers, it’s the people that matter.” Because TRILITY operates in a sector where so many technical problems can arise at inopportune times, having a team of dedicated employees who are very passionate about what they do is an invaluable asset according to Francois. It’s that positive culture and environment that truly fuels the company.
Another unique selling point is TRILITY’s commitment to technical excellence. “[We have] a culture of continuous improvement,” he says. It’s a company that is quick to analyse new ideas brought forward by its employees and implement them as soon as possible. Further, this idea of constant, never-ending improvement permeates across the entire business. TRILITY is a diverse company, which greatly benefits clients because the organisation as a whole can handle nearly every aspect of a given project and maintain what they have built over the long-term using innovative methods.
As a large company, TRILITY has been involved in many such projects, but a few of them are notable in that they illustrate the company’s ability to innovate in diverse situations. For instance, TRILITY is responsible for the “impressive treatment plant” outside of Perth that services the scheme delivering water to Kalgoorlie. It is the first privately-owned water treatment plant in Western Australia. TRILITY and its partners received numerous awards for an innovative approach. The project required over $300 million in initial investment with a contract to manage the operation for 35 years.
Another example, at the very northern tip of Australia, is a facility in Bamaga. Though TRILITY did not build the facility, the company staffed it with local and committed people to run the plant. “They are extremely dedicated employees and incredibly skilled at operating a plant in such a remote location.” The area is so remote that during the rainy season it can take days for trucks to get to the plant. However, as Gouws proudly asserts, rural areas are TRILITY’s bread and butter, and they excel at serving these kinds of locations.
TRILITY also has a large contract in the Macarthur region with Sydney Water. Also a privately owned plant on a 35-year management contract, the facility handles very large volumes of water before it is distributed by Sydney Water to its customers.
Over in Victoria, TRILITY has a bio solids facility that serves as a prime example of sustainability within the water sector. It turns waste into bio solids that then are reused as fertiliser. “We truly believe that’s the way of the future,” Gouws says.
Aside from the examples above, TRILITY runs dozens of plants in rural and remote areas. “Once we install those plants, the communities have immediate benefit—from drinking river water, to drinking world-class water,” he adds. “We consider ourselves part of the community, because we are there for the long term — we avidly believe in supporting the communities in which we serve by way of employing locally and giving back by supporting various local community activities and events”.
Getting to this point is not easy. There are many challenges that the utilities sector faces, which is why there is such a high barrier to entry and thus requires a solid and proven track record.
“You can imagine [that] to come up with a solution of what it’s going to cost to treat water over 35 years means you have got to completely design and completely negotiate a contract in order to get to the final dollar treatment cost,” he says. Even just the planning aspect can be costly, especially since it must be projected well into the future and take in to account inflation and other factors. Attempting to predict when equipment will eventually fail and need to be replaced is also a huge challenge. Anticipating how the sector might change requires a lot of experience and expertise.
However, when it comes to change TRILITY is no stranger to constant evolution, according to Gouws. “[TRILITY Group’s] shareholders will change within the next year, and that is something [that is] a big focus for us as a management team, to ensure the same level of service continues to be delivered. We have long-term obligations to clients, and [there will be] no interruption to that during ownership change.”
Mark Hughes firmly believes that the foundation of any successful company is focusing on developing excellent relationships that embrace clients, competitor-collaborators and employees.
“Only an organization that is truly aware and focused on the importance of those personal relationships and has a plan to continuously improve them can really hope to succeed,” Mr Hughes says.
Over the last few years Mark has tried to ensure that the company’s recruitment and development of staff positively promotes the importance of the soft skills, as well as ensuring it continues to deliver high quality service and advice on a technical nature. Even in the midst of the highly technical and pressurized project environments, the human element cannot be ignored.
“At SNC-Lavalin,” Mr Hughes adds, “whilst we are a world leading engineering and construction company, we are ever-more so a relationship-oriented business, not a transactional one, and we want clients to want to do business with us, and people to choose to work for us rather than competitors. As such we’ve been spending time investing in both.”
In Australia, the company is building on its ethos of a One-Company approach. For an organization globally of 40,000 people, and several thousand people in Australia working across all four of its key sectors, Oil and Gas, Infrastructure, Mining and Metals and Power, Mark is very clear that SNC-Lavalin’s business model across all sectors is firmly to deliver excellence in engineering and construction, safely and through the power of relationships.
“We are in a highly competitive market place,” he says. “It requires us to focus on our clients, collaborators, staff, and our future staff – we want to be the obvious choice for people at all stages of their careers and across all our market sectors.”
Originally from the UK and a graduate of British Railways, where he held a variety of posts within both the passenger and freight sectors, Hughes found himself in the consultancy environment for over a decade with Interfleet Technology. It was during this time in 2011 that SNC-Lavalin acquired Interfleet.
As well as leading the London business for 6 years, Mr Hughes’ consulting experience involved significant periods working for the major transport groups during intense periods of franchise bidding, latterly and most interestingly as MTR Corporation’s Bid Director for the Crossrail Franchise.
The combination of a strong rail operations, commercial understanding and leadership capability proved to be the right blend of skills for SNC-Lavalin to move Hughes to the Australian arm of SNC-Lavalin, where he is currently the Regional Director of their Infrastructure sector, heading up their Rail & Transit and Environment and Geoscience teams.
A real testament to SNC-Lavalin’s approach to relationships and collaboration is its recently awarded contract on behalf of the Commonwealth Government as the consortium lead for the rail design element of the Western Sydney Airport.
Mr Hughes says: “Whilst we were shortlisted for tender by the Department of Infrastructure & Regional Development (DIRD), we realized that we could offer a much stronger offering through collaboration with our industry peers, so we set about bringing a consortium together very quickly, developing our bid as a team, presenting as a team and ultimately succeeding as a team.
“Having the relationships already developed to be able to bring such a consortium together was in itself a fantastic achievement. Having won, SNC-Lavalin’s strength in programme and stakeholder management, systems engineering and future operations understanding made our role at the core of the project team an excellent fit as the overall integrator.”
Elsewhere under Mr Hughes, another Joint Venture is nearing its completion in Malaysia, where SNC-Lavalin have a team of 15 personnel performing the role of rail systems Independent Checking Engineers on the recently opened (Phase 1) Klang Valley line, with Phase 2 due for completion in July this year.
The Klang Valley project started in 2011, and in pursuing the company strategy for this role it had to understand the market and the need to identify and be able to work with a local partner that brought the civil capability as a complement to its systems capability. Mr Hughes emphasizes the need to understand the culture of the environment where the company is working.
“You need to be local, [but should also recognize] the strengths that you bring; in our case, [we bring] systems and integration strengths, and our partner [brings] civil design and construction strengths.”
On many occasions the partnerships are not so much about technical problems themselves, but about having a local resource and good relationships that can help to really interpret the client’s concerns. However, Hughes also recognizes the volatility of these markets, and stresses that responding to changes in the industry and moving the focus to the expanding sectors is of paramount importance.
“Right now, Infrastructure in the transport domain is described by many as in a boom time. Certainly in certain states in Australia they have a number of significant and exciting projects to point to, whether new metros, tunnels, level crossing removal, light rail schemes or freight enhancement schemes.
“SNC-Lavalin is delighted to have been involved or still involved across all these important schemes. However, it will at some point not be quite so buoyant in terms of growth and investment, and it’s my job and the job of others in my team to identify other aspects of the infrastructure marketplace that we could respond to, or indeed other sectors that SNC-Lavalin operates in where our skills can be deployed.”
Being responsible for around 100 staff in the Infrastructure business, and a further thousand or so indirectly across the other business sectors, Mr Hughes takes the responsibility of keeping SNC-Lavalin running a sustainable business model very seriously, even personally.
“You have to be looking to the future and how you can sustain the employment of those people as well as grow the business,” he says. “You have to look to the future, and I mean years not just 12 months, and navigate a path that you can describe to your staff and your business about where you will be in that future. If you can’t do that with a level of confidence, then you can’t expect your team to believe in you or your company.”
Of course that is easier said than done. Complications arise through the booms and busts of both state and the national economy that impact the industry, and especially the government politics involved. Part of Mr Hughes’ job is to try and predict these cycles and brace the business for them, but in the long run, change is the only answer.
“You have to be able to accept that eventually, either what you provide to the market will need to change, or the spending in that sector of the market will change and you have to adapt.”
In practical terms, this means that SNC-Lavalin will always have to be looking throughout their businesses for re-deployable skills that they can apply across the sectors as the landscape of the market changes. It is SNC-Lavalin’s diverse business model that allows this “recycling” of talent and expertise.
“In power, for example, we have the diversity and capability to move from nuclear on one end of the spectrum, to renewable on the other,” Mr Hughes says.
Recycling competences such as electrical or systems engineering, telecommunications, asset management and programme management between different sectors are also part and parcel of the business strategy.
This resourcefulness allows the company to run a robust and stable business even as the winds change in multiple industries. “Here in Australia, we are lucky to have all four sectors in operation, with each at varying stages of maturity and economic optimism.”
Roughly 10% of SNC’s operations are in Australia, including major oil and gas operations such as the Ichthys LNG project and Gorgon project in Western Australia, one of the world’s largest natural gas operations. Whilst the company’s Oil and Gas team is still very significant in terms of financial and operational scale, there is no denying that future work will be less about construction and more about operations and maintenance as the industry moves from a CAPEX phase into an OPEX phase.
However, the skills held within the Oil and Gas team are immense, the extensive construction expertise within this team can be deployed across any of our other three sectors. Likewise, the company’s telecommunications and security team can service across all four sectors ensuring clients receive the best solutions.
This ability for one or more sectors of the company to work synergistically to better serve the customer and make operations more efficient, especially in the fast-changing power and infrastructure industries, adds to SNC’s strength and service offering.
Currently, a large focus of the company’s efforts is on winning renewable energy projects and bringing both its expertise and capital investment into that sector. “Power and Infrastructure are growing markets for us,” Mr Hughes says.
Collaboration and the recognition that SNC-Lavalin can use the talents of a diverse range of companies comes in the form of new acquisitions as well. Four years ago the company acquired Kentz, a construction and engineering company that operates mostly in the oil and gas sector.
“[Kentz] is extraordinarily dynamic in the way that it’s done business and innovated, and [it] has very strong leadership.” This acquisition served to reaffirm SNC-Lavalin’s commitment to oil and gas, in spite of a currently difficult market and low oil prices.
Besides this spirit of cooperation, one of the things that SNC-Lavalin strives for is to be, in Mr Hughes’ words, “client-centric.” According to Mr Hughes: “We absolutely understand that you only get repeat business by doing a fantastic job and not just a good job.”
This means that SNC-Lavalin spends a lot of time and effort drawing feedback from its customers and constantly improving based on their suggestions. “We ask for regular feedback from our clients on how we did, and we don’t just take it and say, ‘thank you very much.’ The company looks at the data and analyzes it deeply in order to incorporate what they learned into future projects.”
Hughes maintains that this is integral to acquiring repeat business, and that repeat business is integral to a company’s livelihood in its industry. “Repeat business is a lot easier to win than competing through a bidding competition all the time.”
He accepts, however, that constantly bidding for projects is a normal feature of acquiring clients in the public sector, which is why the business has invested significantly in professionalizing its bid team capability in the region.
Another one of SNC-Lavalin’s primary concerns, especially in Australia, within Infrastructure due to the nature of the business, is having a highly engaged workforce in order to ensure it retains its large and talented team. Recruiting and keeping staff is a major part of the business’ focus, because attrition can not only have direct costs but can also negatively affect the staff that are left, as well as lead to inefficiency.
“Losing staff to clients is often more of a challenge than to competitors”, Mr Hughes says. “In the consulting world, as any other, this is a well-known, well-trodden problem. You put staff amongst your clients, and you want to put your best staff prominently, and every now and again either the client sees something which they want to keep for themselves, or the individual sees that that’s an organization they want to work with.”
Often, these consultants will leave for a time, only to return to SNC-Lavalin eventually. “We’re a good place to work—we want to be an excellent place to work—and we invest in our staff feedback to understand that. It is a constant battle of being able to offer the right level of reward and the right environment and interesting work.”
One of SNC-Lavalin’s greatest development benefits to its employees is allowing them the ability to work internationally, since the company has a presence in many countries. This benefits both parties, as it allows the company to send talent to where it is needed most, anywhere in the world, where it cannot find the required skills and experience available in the local market.
Though SNC-Lavalin’s Infrastructure Australian market is still relatively small in comparison to the size of its North American business, it is a growing presence, and also an important one. In spite of its size, Mr Hughes describes the market here as “mature.”
He remarks that in terms of landscape, population density, and other concerns, Australia and Canada have a lot in common, but that SNC-Lavalin has simply not had a very long presence in Australia compared to its century-old business in Canada. “We don’t want to wait a hundred years to reach the same size and scale of course” he says.
One of the factors that affects growth in the rail Infrastructure sector in Australia is the different engineering and safety standards in railways across the different states. Rail gauges differ as well as local safety and regulation requirements, not to mention the political environment and available funding.
“All states will vary, and as a result of that, it makes [planning and business forecasting] complex. It makes it complex not just for running trains, but it makes it complex for procurement of trains.” Mr Hughes suspects that these differences will continue to produce challenges well after his lifetime.
“It makes Australia a smaller market than it could be,” he says, “because many of these individual issues effectively fragment the market. That’s just not great when you are trying to attract international commitment and investment.”
SNC-Lavalin does not shy away from these challenges, however, as Mr Hughes maintains that engineering and strategic infrastructure solutions is what his company does best. “Increasingly, the recognition in our company is that complex environments as well as complex engineering and systems engineering is where we bring a lot of expertise. That’s the difficult stuff.”
One of SNC-Lavalin’s recent concerns has been integrating this infrastructure sector of their business into the other units, to help serve as part of the backbone.
“The Presidents of each of the four sectors are targeting working together in a more holistic and joined up way. Cross-selling is one thing, but Cross-delivery is the real focus – back again to sharing skills and competencies in a planned and strategic way.”
This integration may be important as the company turns towards new market demands for “big data.” As technology improves, the raw amounts of information that must be understood are overwhelming clients, and this has become an important service that consulting companies could provide.
“Our ability to work with clients to enhance their businesses is very much driven by a race to[wards] who can understand and provide more insight into the information that our clients perhaps don’t necessarily have time to sift and understand themselves.”
While there’s a “backdrop” of engineering, being able to improve system performance through data collection and understanding is a major factor. Many organizations, especially those in transport, are only starting to grapple with these challenges—and SNC-Lavalin, Mr Hughes says, is making progress, but needs to do better.
With this work on Infrastructure being aligned with the company’s client-centric approach, its service continues to grow and develop in line with the industry. “[It’s] a partnership of mindset, rather than a partnership of contract,” Mr Hughes emphasizes. The relationship-building aspect of their business will always be primary at SNC-Lavalin.
CEO of Bisalloy Steel (ASX:BIS), Greg Albert, had his start in mechanical engineering, with extensive international experience that proved valuable to Bisalloy.
“I’ve worked with three very market-leading companies: one American, one Finnish and one Swedish.” Originally working as a heavy equipment design engineer for an American company, he moved on to various metal firms overseas, before partnering with an entrepreneur and starting an Australian-based mining equipment manufacturing company.
After the sale of this enterprise, he was offered several roles by the Finnish company that acquired it, including positions in Australia and Singapore. In total, he spent roughly 10 years working in Asia before coming back to Australia and building a consulting and executive coaching firm of his own. “I did executive coaching with quite a number of iconic companies,” he remarks. He was once again recruited by the Finnish company that he had worked with in the past and asked to run their global operations out of America, and eventually out of China and Finland.
After being offered a position by a Swedish heavy equipment manufacturing company and taking on the role of global president for several years, Albert was eventually recruited by Bisalloy Steel in January 2016 to replace their retiring CEO.
When it comes to being in a leadership position, Albert’s wide experience in global roles where he managed operations in dozens of countries led him to one conclusion: Talent is primary. To be able to run the businesses as efficiently as possible, a leader must seek people who can eventually take his role. He remarks that this is true regardless of the culture one is working in, and in his experience: “Even though the countries were different, and the businesses were different, and the market was different, and the way you service customers may be different, the way you run the business was actually very, very similar.”
According to Albert, his approach is to never “hold on to power,” and to instead nurture and train those under him until they can effectively replace him. “I learned very early on that to get to where I wanted to go—which was to eventually be a global president—I had to make myself redundant in a way.” In addition, he found that no matter which region he worked in, the staff universally needed a sense of purpose and a global perspective that could be adapted to the local mindset. The needs of a company in South Carolina, he explains, are very different from those of a company in India, and so both global and local perspectives are a necessity.
Ultimately, though, “the glue that [holds] everything together [is] always the company’s values, the company’s culture.” The values that transcended all cultures were the higher, ethical ones, and Albert believes in never compromising on these. He also stresses that running a company requires a certain degree of cultural sensitivity, and even humility. “You have to have empathy and you have to have respect,” he says. “I always tried to speak the language as much as I could. I would always try to learn as much as I could.”
Emphasizing the importance to trust, Albert says that he comes from a mindset of assuming that people are interested in genuinely helping the company. “Everybody wants to go to work and do a good job; they don’t want to go to work to do a bad job.” This goodwill and trust is key according to Albert. That, along with being sensitive to the local customs and marketplace, while still being true to the universal values of the company as a whole, was one of the most important lessons that he learned working in his global positions. These insights were partly why he went into executive coaching at one point in his career, as many people saw value in his international leadership experience.
In spite of all his work around the world, he was eventually attracted back to Australia because he wanted to “re-engage with the Australian industries and key people [in Australia].” He remarks that having the chance to spend time in his native country and “be Australian again” has left him feeling refreshed and reinvigorated. While he says that working in Australia is very different from working abroad, it has been an overall good experience for him, even when having to handle challenges like stalled deals with local unions. “It’s good to be able to communicate and to work with Australians again.”
Indeed, Bisalloy is a very Australian company with a rich history. It has been in business for 37 years and was founded by a South African immigrant. Originally called Bunge Industrial Steels (the BIS in Bisalloy), it was one of the first companies in Australia to work with high-strength steel. They manufacture steel plates and at one time manufactured long products such as pipes and tubes. Eventually, they changed their name to Bisalloy and listed themselves on the ASX. Three major investors own the bulk of this stock, including Anchorage Capital.
Nowadays, Bisalloy is the only Australian company that offers these specialised grades of steel. “There isn’t anybody else in Australia that does what we do now. We’re the only manufacturer.” They are a standalone high-strength steel company, and they work with a “quench and tempered” (Q and T) method of manufacturing, which essentially means that the steel is heated, then quenched with water, and then finally tempered in a furnace to make it change its properties. Unlike integrated operations—where the steel mill and the Q and T plant are coupled together—Bisalloy is not attached to any particular steel mill, so they can choose which supplier they need at a given time.
This flexibility has allowed Bisalloy to remain efficient. “Being a standalone operation, we’re small. We’re not ‘steel mill big.’” Thanks to their small size and extreme specialisation in the niche of high-strength steel, Bisalloy has the luxury of not needing the huge amounts of staff or capital investment that larger companies require. Operations only require roughly 140 full-time employees, 80 of whom reside in Australia.
“We’re totally focused on what we do, we have a small dedicated team, [and] we’re flexible, which means that we can meet with customers, they can say, ‘we’re looking for steel with these properties,’ and we can design a new recipe, and we can test it. We don’t have to go through and ask whether the steel mill can do it, whether we need to go to a big corporate structure to ask for approval, so we’re quite agile.”
Unlike every one if its competitors, Bisalloy processes all of its specialty steel products in Australia, which is attractive to those customers wanting to use Australian made products, “For the big mining companies to buy imported steel—wear-grade steel—to keep their mines running, they would have to order that 12 months minimum in advance from overseas steel mills.” By contrast, Bisalloy has the flexibility to fulfill custom orders and to fulfill them quickly. “We can partner with the customers right here in Australia.”
In spite of their lean operations, Bisalloy makes use of an extensive network of over 100 distributor locations, and their major distributors include OneSteel Metalcentre, BlueScope Distribution, and Southern Steel Group. They also have formed joint ventures overseas: one in Indonesia, one in Thailand, and another in China.
Bisalloy is the only Quench and Temper steel company in the world to have a joint venture with a Chinese steel mill. Much of the joint venture consisted of Bisalloy’s allowing Shandong Steel to manufacture under the Bisalloy brand name, and to employ other kinds of intellectual property. Bisalloy also trained the employees on the process and the chemistry involved in their techniques. Shandong Steel, for their part, provided the labor, the steel mill, and the Q and T plant.
The joint venture with Shandong allowed Bisalloy to expand their market to this region, as well as use China as a springboard for bringing their product to other nations in Asia. This was a forward-thinking strategy in light of the number of Australian OEMs who have moved their operations to Southeast Asia. Unlike the Chinese partnership, the Indonesian and Thai joint ventures are strictly sales and distribution as the market grows in these areas. “Bisalloy has a very, very good reputation all the way up through Asia and all the way through China for a number of reasons,” Albert explains. “One is [that] we’ve been around for a long time. The other is that our JVs in those regions have been quite successful at penetrating the marketplace and getting the brand out there.”
Including these joint ventures, the company turnover is around 60 million dollars per year.
There are a number of reasons why Bisalloy’s Quench and Temper steel processes are unique, but the main advantage is that they can produce some of the strongest steel in Australia. Using their methods, they can produce steel of three different kinds: wear-resistant, structural, and armour.
The wear-grade type of steel that Bisalloy manufactures mainly goes into industrial use, especially in the mining industry. For instance, many dump truck bodies use this kind of steel. “All the wear and tear components of a mining or quarrying operation would use our steel,” Albert says. Customers are mainly seeking longevity with wear-grade steel.
With structural-grade steel, on the other hand, customers are looking for lighter and stronger steel. This grade of steel is commonly used in the transport sector, for example in truck chassis. This allows the vehicle to hold its payload, while still being light enough for efficient travel and use. For similar reasons, structural-grade steel tends to be used in tall buildings, windmills, and other structures that require high structural integrity. Strong, light steel promotes the use of innovative designs that may have been impractical otherwise.
Finally, there is the defense-grade or armour-grade steel. This is used largely for military applications, including bullet resistant ballistic-grades, explosion resistant blast grades, and specilised high strength steel grades used in applications such as submarines and naval crafts. Bisalloy is the only defense-grade steel manufacturer in Australia. “We obviously work with […] the defense contractors and defense industries in Australia, so […] we’re accredited with all of those companies. One of them is BAE Systems in Australia. We’re now also engaged with BAE Global Access Program, which is the USA BAE Systems, and we’re well advanced going through the process of being accredited to be able to supply to the USA market.”
The company’s steel also plays an important role in protecting Australian Defence Forces servicemen and women, where Bisalloy’s steels have been used for Australia’s protected Infantry Mobility Vehicle (IMF), the Bushmaster. Since 1993 Bisalloy has produced over 3500 tonnes of steel for the Bushmaster program adding to Bisalloy’s internationally recognised armour capability which began in 1988 with an order for hull plates for the local construction of two FFG 7 guided missile frigates.
Bisalloy went on to help develop HY80 steel plates in cooperation with (then) BHP Port Kembla and the Defence Science and Technology Organisation (DSTO) to a US specification that significantly outperformed the equivalent US-manufactured steel plate.
Australia’s four US-built FFG 7 frigates were subsequently retrofitted with the HY 80 plate. Bisalloy produced a total of approximately 1000 tonnes of steel for the FFG program. Bisalloy then went on to supply the Collins Class submarine program with more than 8000 tonnes of hardened steel of excellent low-temperature impact properties — also developed with BHP and the DSTO.
Governments in the US, India, the Middle East, and Asia have since qualified Bisalloy’s armour plate for use by their militaries and the company’s (military) exports now far exceed domestic orders. Bisalloy supplies to several sovereign militaries including Israel, Turkey, Thailand, Indonesia, and to various civilian and private groups in a range of countries including countries in the Middle East, such as the UAE. They have also been recently selected as the armour supplier for the Hawkei Protected Mobility Vehicle, which is a light armour patrol car built for the Australian military. “[There’s] quite a lot going on in the defense side of the business,” Albert says.
Keeping with their philosophy of niche simplicity, Bisalloy produces only flat steel. “Flat steel in steel terms is a plate,” Albert says. “It’s a certain width, a certain thickness, and a certain length. […] Like a table.” Bisalloy then passes these steel panels onto their distributors, and these distributors either have processing capabilities themselves, or they have partnerships with external companies that can work the steel into its final product. “So we just make the plate; that’s all we do,” he explains.
“Our product is actually very technical,” Albert says of the various grades of Bisalloy’s steel. “The different type of customer requires a different level of technical expertise. So if you look at defense grade, it’s about the highest level of technical expertise.” Bisalloy even manufactures steel that is used on submarines, which Albert says is about “the highest” grade of steel that can be made.
“We have some really strong technical people that have been with the company—some of them have been here for 30+ years. They’re all PhD’s—metallurgy and specialty PhD’s such as welding and high-strength steel.” Because of Bisalloy’s dedication to a single niche, they were able to assemble a dedicated and highly-motivated team of specialists that can engage intimately with the customer to identify their needs. Technical support is one of Bisalloy’s biggest strengths, and it gives them a significant advantage over their competition. “The people buying imported steel get no technical help, no technical support,” he says.
Thanks to this high employee engagement, not only are customers served and given technical support, but employees tend to be long-term and very serious about their jobs, resulting in an industry-leading safety record and over 3 years with no LTI’s. “They live and breathe Bisalloy, and I think that permeates out into results such as the LTI records.”
Looking towards the future, Bisalloy is training its focus on improving their sales and marketing strategy. “Our way to market is good and bad. Our way to market obviously is mainly through distributors, and if our distributors are not representing our product, then there’s a challenge for us,” Albert says. Bisalloy’s new strategy will involve engaging not just the distributors, but the end user as well, and focusing on their needs and their specifications first. “We need to go back out, we need to engage with the marketplace, we need to get our product re-specified—and if that means we need to grab some of these customers, bring them back down to our plant, let them see our people, let them see the product, then that’s what we’re doing.”
Bisalloy is also looking to launch a training center for fabricators, distributors, and engineers. With proper training, those in the industry should learn how to apply the product better and this will lead to more satisfied end users. In addition, Bisalloy is looking to engage with the federal and local governments in order to possibly supply for future infrastructure projects.
“This year, it’s all about looking for opportunities,” Albert says. After some time of “strengthening [their] operations,” the company is ready to engage with the market and reinvigorate it. “We need to regain the Australian marketplace. We should own this marketplace.”
Another area of focus for the company is on losing its dependence on the resource markets, which can be volatile. This will require Bisalloy to start looking beyond the mining industries for much of its customer-base.
Finally, Bisalloy has embraced international development. “There’s a big opportunity for us globally,” Albert says. “We can’t do everything. We’re a small company, so we’ve identified that we need to partner with companies.” This means solidifying their operations in Indonesia and Thailand, as well as growing their joint venture in China and forming new partnerships all over the world.
Early in his career, Peter Buttigieg, now the managing director of RMS Hospitality and the acting CEO of Aphrodite Gold (ASX: AQQ), helped bring trading into the information age by introducing computer systems to the Melbourne and Sydney stock exchange as an IT contractor.
“You remember the old chalkboards where they used to record stock prices? That was first computerized when the team I worked with replaced chalkboards with computer screens. That was really the first project I worked on.” From there, Buttigieg and his company RMS Hospitality began writing software for insurance brokers, then for caravan parks, “and that’s what really got us into the hospitality market for property management software.” Nowadays, Buttigieg is head of a successful software company and CEO of an emerging mining project for which he was an early investor.
His successes were not won overnight, however. In the early days of the computer revolution, the hospitality industry was only beginning to leverage software to streamline their processes. Buttigieg’s team first began computerizing the booking charts for caravan parks and hotels, then the receipting information for accounting purposes, and later all aspects of property management software as well. “Back then, computers weren’t even on the radar, so we spent the first ten years just trying to convince people that computers could do the job.” Because the hardware was still rather slow in the early 80’s, he found himself having to prove to prospective clients that using computer terminals would save them time in the long run.
Though Buttigieg experienced early success working with caravan parks, it proved to be too small of a market for sustainable business, and his company quickly moved on to include hotels and motels in their client base, as well as student accommodation for universities, shopping center space management for malls, and accommodations for defense bases. “From a software point of view, all these vertical markets, all pretty much did the same thing. […] They all had something to do with reserving something,” he says. Branching out into the different vertical markets was extremely important in the early days of RMS Hospitality because the Australian market for each of the individual niches was too small at the time.
Expanding a business in the 1980’s was not as simple as sending e-mails to prospective clients, and required a lot of legwork out in the field. Nearly everything had to be done in person. “Back in the early days, computers were the size of a washing machine, so setting up one onsite demonstration could take you a day and a half,” Buttigieg says. “It was a lot of hard work.” This was especially difficult due to RMS Hospitality’s target market, which included clients from all over the country, so the work required constant travel. “[Our sales team was] on the road all day, every day, knocking on doors, lugging these big boxes out of the boot, setting it all up, and showing people. That’s how we did it.”
RMS used to provide the software to their clients on physical floppy disk media. The applications had to be copied and sent through the mail, but since floppy disks were often unreliable, this created further logistical complications.
Because of these myriad physical limitations, international expansion at the time would have been difficult and RMS had to heavily rely on these vertical markets in Australia. “Really, until the Internet came around, it would have been impossible.” It was not until roughly 2005 that RMS began to expand into overseas markets. “Fast-forward into where we are today, we are now running out of the UK, the US, India, and the UAE, but primarily only in parks and hotels and motels. With these other verticals, we’re pretty much only working in Australia so far.”
RMS interfaces only with businesses and does not sell any kind of software to the public. Their competition, as a result, is not very extensive. “Our whole focus is dealing with the actual properties that provide the accommodation, so in our space competition-wise, there’s probably maybe ten to fifteen property management systems now worldwide that we’re competing with.”
A huge shift in technology that has taken place of late involves clients switching from using on-premise dedicated Windows servers to running cloud-based software. RMS is one of the few “traditional” companies that was able to port their Windows-based software into HTML5 cloud applications, rewriting their code for a completely different environment. Whereas before, RMS sold and supported the software, but the clients were responsible for the hardware that ran their servers, RMS now runs a full SaaS model, collecting a monthly fee to maintain both the software and the servers. This allows the clients to remotely access their information through a “dumb terminal” and outsource the IT aspect of their business.
Some customers, however, still use the old Windows-based system and have yet to upgrade to a cloud-based solution, so RMS finds itself supporting both systems simultaneously. Part of the challenge of upgrading has been adapting to a constantly-changing technological landscape. RMS started their migration to the cloud six years ago, implementing Microsoft Silverlight, only to realize years into development that the industry standard had trended towards HTML5. This required a complete rewrite of their front-end interface. “We have a full working version in Silverlight that we’ve had to also put in the bin to go to HTML5.”
Fortunately, because RMS still had a full working version of their software on Windows, the challenges of upgrading did not affect their profits. “Customers were still paying for a service. Whether we were delivering it via Windows or Silverlight or HTML5, thankfully we still had income coming in that was able to fund the development that we needed to do.”
This is not the only way that the changing tides of technology have affected the business. “Along with the whole cloud-based change, the whole revolution with online bookings has been the biggest game-changer,” Buttigieg explains. In recent times, online booking has come to completely dominate the market, and 85 to 90% of people now book their rooms online. “Because we’re having to manage all of these online bookings, we have a whole separate stream of servers running, just collecting these online bookings 24/7.” So in addition to property management, RMS must also handle the back end where clients make their bookings, relay availability to online travel agents, and update all of this information in real time to avoid double-bookings.
“We’re one of the few property management systems that do both,” he says of RMS’s ability to handle both the traditional booking aspects and the “channel management” aspects of a property. This allows RMS to handle bookings truly in real time, and prevents their clients from having to deal with the added complication of having a third-party channel manager. “They are 100% reliant on us,” Buttigieg says. Properties use RMS’s services in order to know who is coming and going, what rooms are available, who they need to bill, and what rooms should be cleaned.
Without these services, the 5,000 properties that use RMS would come to a standstill. Thankfully, outages at RMS are vanishingly infrequent, and are very brief even when they do happen.
Being ahead of the curve and highly stable has given RMS many opportunities over its competitors. It has allowed them to capture large clients like Quest Apartments and Discovery Parks because of the market trend towards cloud-based systems. “That opportunity wouldn’t have arisen if we weren’t fully cloud.” The early migration of RMS to new systems has allowed them to not only keep up, but to speed ahead of even well-established tech companies like Oracle when it comes to hospitality software.
Aphrodite Gold (ASX:AQQ)
Considering this vast background in tech, Buttigieg’s other major venture, Aphrodite Gold (ASX:AQQ), seems highly unusual from an outsider’s perspective. “This [Aphrodite Gold] is really an accident,” he admits. “I was a passive investor.” Just before Aphrodite Gold’s IPO, he put up roughly $100,000 of investment. “That’s all I really wanted to do with it,” he says. A few years later, however, Aphrodite Gold had spent the money that they had raised, and the company found itself having to begin fund-raising once again, so they asked Buttigieg if he would like to invest more. In addition, they approached him to be on the board of directors. Buttigieg agreed, interested in learning more about how a public company was run because of the possibility of RMS Hospitality itself going public at some point.
From Aphrodite Gold’s end, they hoped that Buttigieg could offer the board a much-needed alternative perspective. “They sort of wanted me to come on as a mediator, I suppose, to try and work out this deadlock between the CEO and the chairman. So that’s sort of how I got involved, because it was starting to get into a bit of a mess.” Eventually, the chairman was removed, and Buttigieg was abruptly voted into his position during the first board meeting.
Aphrodite Gold Limited (ASX:AQQ) originally bought the Aphrodite mine from Apex, aiming to develop the site and get it into production. While, according to Buttigieg, the mine indeed had—and still has—a lot of potential, the project was initially mired in technical problems. “There were some metallurgical issues that needed to be resolved,” he says. Because the gold was buried so deeply, the company’s strategy was to first focus on removing the top layer of overburden that covered the deposits. While this expensive process would have been profitable when gold prices were high, once the prices took a hard dive, the mine was suddenly no longer profitable.
In order to solve this problem, the company initiated massive changes in management. “We had to remove the management and put a whole new structure in place, and effectively shut the whole project down to start from scratch.” The strategy that the company then took was to cut their overhead dramatically, and sit and wait until they could decide what the best plan moving forward would be. “The operating expenses that we had for the size of the company and what we were doing were just ridiculous, and not sustainable,” he says, so the board felt compelled to cut costs above all else. Since gold is not particularly perishable, Buttigieg felt that it was a sound approach. “It’s not going to go bad,” he says, “so we could afford to shut everything down.” It wasn’t great for the share price initially—which dipped to $0.007 at one point—but it kept the company alive and out of massive debt.
After providing the cash injection, Buttigieg and his colleagues decided to look towards the expertise of a geologist to help them better understand how to extract the gold. Because the gold is refractory gold, several processes are required to extract it, including processes that create toxic byproducts that must be managed. In general, extracting refractory gold is therefore more expensive than oxide gold. The market was therefore skeptical of the mine, and stock prices remained low. However, he says, extraction “can be done at an economical price” using modern technology, and several examples of this type of extraction exist around the world.
Fortunately, the geologist helped the team to discover that there was easy-to-extract oxide gold in the top layer of soil that they had been removing. This meant that not only was the overburden removal going to pay for itself, but it was also going to be profitable enough to provide the capital for extracting the deeper refractory gold. “It’s effectively turned the whole project around,” he explains.
Now that the situation is much more profitable than previously expected, Aphrodite Gold is in the midst of interviewing for a CEO who has a mining background, to replace Buttigieg as the acting CEO and help the project move forward into production. Though Buttigieg has always been interested in gold because he sees it as a “good hedge,” he lacks in the knowledge in the technical aspects of the project. “There’s been no interest getting into the mining sector at all. Like I said, it was really an accident that I got involved, and I had to stay involved otherwise both myself and a lot of friends and family and staff would have lost their investment completely, because [the company] would have gone broke.”
The pre-feasability study concerning the site has just been finished and is due shortly. The mine is particularly promising because of the infrastructure that surrounds it. Just North of Kalgoorlie, it is close to transport and has adequate access to water and electricity. Unlike other mines near the area, which have small pockets of gold peppered throughout their sites, the Aphrodite Gold site has all of its gold concentrated in one area. In fact, he says, “we’ve got 1.4 million ounces in the ground of refractory gold. We know for sure that that gold is down there.”
“We’ve proven that the project is now viable,” Buttigieg says, so the next step before the transition from exploring to production will be finding a suitable CEO. This will factor into the company’s execution plan, which is now critically important. According to Buttigieg, since the company doesn’t have the “luxury” of shutting down operations once production begins, this step must be planned carefully. Moving forward, the company will soon begin extraction of the gold at the top layer, which will fund the extraction of the refractory gold beneath.
Considering Buttigieg’s success and the profitability of his two major ventures, one would think that he would be tempted to relax into some sort of retirement. This is not the case, however. “I definitely like to see things through to where they’re finished,” he says. “Rain, hail, or shine, I do like to see things through.”
Norco is a 121-year-old farmer-owned co-operative, with strong ties to the most popular supermarket chains in Australia.
“It’s basically the last of its kind in terms of being a dairy farmer-owned co-operative,” CEO Brett Kelly remarks. Norco and its subsidiary Norco Foods is made up of 230 members, most of whom are based in Northern New South Wales, though the company trades and sells their dairy products throughout Australia and internationally. While specialising mostly in milk and ice cream, Norco Foods also runs store locations geared towards the agricultural sector, where they sell animal feed and similar products to rural customers.
During Brett Kelly’s tenure for the last 8 years, the company has seen huge changes. “When I started, we were around a 300 million dollar business; we’re now about a 600 million dollar business.” Kelly has guided the company through several successful projects, including buying back the Norco licensed marketing rights for 5 million dollars after the company had previously sold them for 63 million dollars.
“That particular license was for the Norco brand, and under the previous owners, it was actually losing about 7-and-a-half million dollars a year. We were able to turn that around into a profitable situation within about 18 months,” Kelly says. “It enabled us to have control of our own license and brands, and what that means in a nutshell is that we can go direct to retailers and sell our own brand.” While in theory selling the licensing rights to a multi-national company was meant to grow and enhance the brand, over time the strategy stagnated and introduced many complications in Norco’s dealings with retailers. Kelly even found himself having to ask permission from the license owner to negotiate contracts with other companies. Having control over their brand again has allowed Norco to run more efficiently and approach potential partnerships directly.
From there, Norco was able to create a strong marketing strategy, one that highlighted their presence as a co-op that directs profits back to the farmers. Unlike other companies that are influenced by shareholders and the need to create profits for them, Norco has no reason to drive the price of milk down to increase their margins. Most of Norco’s profitability instead goes back to the farmers, who receive roughly 58 cents per litre of milk. On average, Norco pays the highest farmgate in Australia to its members. Though the farmgate is most important, Norco also pays dividends to the farmers every year, roughly 6% of their net profits.
Kelly sees this as an important point of difference for the company. “We’re farmer-owned. Whatever we achieve goes back to our farmers, and the consumer really resonates with that.”
Another major success that Norco has experienced under Kelly’s leadership is its relationship with the largest food retailers in Australia. “We negotiated with Coles for two years, and we were able to successfully gain the Queensland Coles generic contract. What that means is that we can’t control the retail price, but we can control what we sell for.” Because of this relationship, Norco has been able to put 3 cents per litre back into their farmgate milk price.
However, Coles is not the only company that Norco works with. “We do Aldi, Woolworths, and Coles, and a few other organizations as well, but [Coles] is the majority,” Kelly says. Norco also exports ice cream into the United States and into Japan, though much of their international effort lately has been concentrated in China.
Two years ago, Norco became the first Australian company to begin exporting fresh milk to China. “The challenge was that to export fresh milk there was a testing requirement from China. In that it requires about 8 days testing in Australia, and probably another 7 days when it got to China. So if you added that together, plus the air freight, you sort of would nearly run out of time for the life of the milk.” To solve this problem, Norco developed a system called “parallel testing,” where they send the milk to China, then simultaneously test samples in Australia and China. This cut down the time it took to export the milk to 6 or 7 days, from the farm to the retail shelf. “Our objective and strategy is to slowly, carefully build a footprint in China and in Asia for the future,” Kelly explains. This is part of a greater diversification strategy.
Thanks to all of this recent success, Kelly believes that the company is in a very strong position financially. “We’re very strong in terms of our profitability, [and] our farmgate. We have low debt. We have a very strong market position,” he says. According to Kelly, the key asset for Norco in the marketplace is that they do not have to compete on price, and that their unique selling points center around the quality of their product and the fact that they are a farmer-owned co-op. “It’s really put us into a position where no one else is.”
Currently, the major project that Norco has been pushing for is entry into the café market in Australia. Kelly considers this a huge market for dairy. “When you buy your coffee, 25% of the cup is coffee, 75% is milk,” he says. “You’ll find that the coffee is marketed in terms of its history, credibility, quality, [and] background, but there’s nothing about the milk, so what we’re doing is joining forces with the major coffee houses and uniting to put a story out there about the Norco farmer-owned co-op.” Kelly predicts that Norco’s unique structure as a co-op and its focus on high quality dairy will resonate well with coffee enthusiasts. Norco has already made good progress in this market, even in just the past several months.
Social media has played a huge part in Norco’s ability to spread the message of how the co-op works, and how it is different from other dairy producers. Kelly finds that recently consumers have been more conscious of brand names, and that they are eager to support companies that distribute profits back to the farmers. “When you go onto the Norco Facebook or you look into Norco, you can see that there’s no external shareholders; you know that whatever dollars you spend, you know exactly where it’s going,” Kelly says. “I think it’s all about the educational process of understanding who Norco is, whether it be up front with our branded milk, or as a contract packer in ice cream.”
Though its primary focus is on dairy, Norco has two different business divisions, one of which is in the agricultural sector. “We have two feed mills, one is in Lismore, one is in mid-Queensland,” Kelly says. In addition, Norco runs about thirty retail stores, which sell farming products of all kinds, and deal with both the public and Norco’s own members. “Right from the hobby farmer through to the serious, full-time, full-on farmer.”
At the moment, Norco’s footprint is largely from Cairns to Melbourne, with a strong presence in Brisbane, but they plan to expand and eventually have a national footprint. According to Kelly, the biggest obstacle to expansion is not so much a matter of logistics or competition, but a matter of profitability. “It’s really important to have a strategy that will enable you to achieve the profitability [that] you need. A lot of the time, when business is tough, people go down the price channel and as you know, anybody can sell two-dollar coins for a dollar, but at the end of the day you go broke,” Kelly explains, “so you’ve really got to come up with a strategy—a point of difference, a competitive edge—that can take you upstream, and that’s what we’re doing.”
This kind of strategy is something that makes Norco very different from other companies, Kelly says. As a co-op, they must be very conservative with their risks and take things “one step at a time,” otherwise they could be compromising the returns for their farmers. They focus instead on building solid long-term contracts with partners. “We’re quite transparent because we are a farmer-owned co-op, and most of our customers really appreciate that because they know exactly what they’re dealing with, and they know that we obviously need to make a certain amount of profit, but our main objective is our farmer-shareholders.”
Their strong presence in the market has won Norco a lot of attention among farmers, and according to Kelly there is a “long list” of farms waiting to join. Norco is careful about adding to their roster, though, as their first priority is always financial sustainability. “We lead from the front,” he says, “and what that means is that we always secure a contract or growth first before we take on new members.” The reason for this is that one of Norco’s rules is that they provide pickup and payment for milk to their farmers no matter what. This means that to be able to pay a fair price to every single one of its farmers, they must first secure lucrative contracts and ensure that a larger volume of milk will be in demand before they take on new members.
“What tends to happen traditionally with co-operatives is that they’re pretty famous for going broke,” Kelly says. Though Norco has faced challenges throughout the years, its commitment to a solid business strategy and good profitability has facilitated its continued existence since 1895. Kelly also credits Norco’s commitment to high standards as an important factor to its long-term success. “The one thing that’s been quite outstanding is the quality, reputation, and credibility of the Norco brand,” he says.
In addition, he believes that four key points have played a large part in the growth of Norco: 1. having the right people in the business, 2. keeping costs low, 3. staying focused on the customer’s needs and the company’s specific niche, 4. and having a winning strategy that will support the company’s niche position in the market place. Following these guidelines, Norco has been able to avoid the trap of competing on price in the retail market.
Kelly is no stranger to the realities of these pitfalls. He has a background in retail, having been CEO of several groups in sectors as diverse as international brand apparel, pharmaceuticals, and discount goods. He has worked with Symbion Health, Canterbury International, and Mountain Designs.
It was 8 years ago when he was approached to take on the CEO position at Norco. At the time, Norco was going through some financial difficulties. “It was what I consider a bit of a challenge—which I really enjoy—and a matter of refocusing the business,” he says. “I always saw Norco as a potentially sleeping giant, when you look at the brand, when you look [at the fact] that it’s farmer-owned, when you look at its heritage and history.”
He sees his background in retail as the asset he brought to the company, since it taught him to focus primarily on what the customer wants. “At the end of the day, the key outcome is what the consumer wants and you have to understand the consumer’s needs, and analyze that and make sure that you’re producing a product that is within that requirement.”
“I think the co-operative model can work. In our case, we’ve proven it to work, but I think that, again, requires discipline from a business point of view, and a focus on profitability.” Kelly stresses that a huge asset of the co-op is support from the Australian public, and their desire to see farmers have financially sustainable businesses.
Another factor that has been key to Norco’s success is the quality of its staff. “I’ve got an exceptional team, [an] exceptional Chief Financial Officer, and general managers for each of the divisions,” Kelly says. “They’re all very focused high achievers.”
Through this focus and teamwork, Norco continues to be an award-winning company. They recently won The Grand Dairy Award in the flavoured dairy category for their Ultimate Chocolate Milk; for the second year in a row. Industry recognition is a regular occurrence for Norco. “We win a lot of awards for the ice cream we produce for retailers,” Kelly remarks. “We’re pretty consistent with the quality, and that forms a very strong part of what the Norco brand is all about.”
Norco’s commitment to both quality products for the end user and fair prices for farmers puts them in a unique position where they are already in compliance with many currently developing reforms and new regulations. Kelly says that the government has been focusing on making sure that farmers receive fair treatment from the corporations that buy from them, but that education is still by far the most important factor.
“The more education, understanding, communication, [and] knowledge that we can give back to the farmers, so that they can make better decisions, and understand the end strategy [and] result with the consumer, the better they’re going to be.” He stresses that no business can be sustainable just focusing on production and ignoring what the consumer ultimately wants. In this sense, Norco is helping to bridge the gap between farmers and customers.
Kelly is very optimistic about where Norco is headed in spite of the challenges of their sector. “The market is quite volatile. For Norco, though, […] we’re ahead on our year-to-date net profits. We’ve been able to pay an extra—what we call a ‘step up” payment—for our farmgate this year, which is exceptional. It means that in our first quarter we performed a lot better over our budgeted profits, so we then pay part of that back to our farmers.” This, combined with low debt, a high market share, and promising development in the café market, has allowed Norco to continue thriving.
While most of Western Australia has been riding the boom-and-bust roller coaster of the mining industry, Albany continues to show remarkable stability with consistent growth in infrastructure.
“It’s a very comfortable place to live,” Mayor Dennis Wellington remarks. Having lived in Albany since childhood, the Mayor has seen the city go through an extreme transformation. “It has been an interesting ride. We’ve gone from being a somewhat sedate place, to now somewhere that we think [has] enormous potential. I just love the change.”
With a population of more than 37,000, Albany has a small town charm and an abundance of historical landmarks. At the same time, it has managed to evolve into an increasingly cosmopolitan area that supports both a growing tourism sector as well as a local bar, café, and entertainment scene. It is a city that is ripe for investment and is ready to build new infrastructure as well as take on new residents.
Thanks to its pleasantly cool weather and its access to picturesque countryside and coastline, Albany has seen an influx of retirees in particular. With a new $160 million hospital, one of the quickly expanding sectors of its economy has been medical care for these older residents. “We’ve had an increase in the health areas of our business down here—30% in the last five years,” Mayor Wellington says. “Two new aged-care homes have also been approved recently, about $60 million in development which will be completed within the next year and a half.”
Health is not the only growing sector, however, and retirees are not the only people eager to take advantage of Albany’s beautiful beaches and expanding resources. The city has experienced a 6% increase in tourism per year, with 900,000 tourists visiting Albany in 2016. A new hotel development to accommodate this growth is in the works. The 12-story hotel will be the largest in the area, as well as the closest to the water in all of Western Australia, as it sits only 50 meters from the shore of Middleton Beach, which is set to be transformed with a number of residential and commercial developments also in the immediate surroundings. “It is a place which is absolutely pristine in terms of its environment and its location. It’s well-protected, and we’d like to see a major infrastructure there where we can cater for larger groups of tourists and have a major focus of the town.”
It is one of the city’s two hotel development sites, the other sitting just south of the main street on the marina waterfront alongside a $70 million entertainment centre built in 2010. Once developed, both hotels will provide for significant growth in the tourism and business sectors. Mayor Wellington hopes that by attracting larger and larger numbers of visitors, new capital will find its way to Albany as investors seek to develop the areas around the hotels.
Albany is in the midst of building up its walkway and bike path infrastructure, in an effort to make the city more walkable—and in turn, healthier and more convenient—for both tourists and residents. “We’ve started a program where we’re using a lot of e-bikes around the place; we’re getting people back into cycling,” says Mayor Wellington.
Even the older business sectors of Albany have been seeing growth. Albany has a rich agricultural business that has always served as a major portion of the local economy. “100% of the free-range pork for Coles supermarket comes out of this region,” Mayor Wellington explains, “because it’s the best place in Australia to grow free range pork.” Wheat, sheep, canola and woodchips are also major exports of the area.
After the wild success of the Anzac Centenary Commemoration in 2014, which brought 40,000 visitors, Albany saw a dramatic increase in interest from surrounding areas and the creation of new business precincts in the city. According to the Mayor, this was the “catalyst” that pushed Albany into its current state of growth. “The [business] areas that were created were the old areas of town that had sort of been let go a little bit, and the streets and the buildings were redone; it created an environment down there where people could go to and relax and enjoy the surrounds.” The city has encouraged local restaurants and cafés to set their tables outside, and to create a more attractive outdoors atmosphere for customers so that they could admire Albany’s natural beauty.
The Anzac Centenary also provided Albany with a lot of national exposure, and led to the building of the National Anzac Centre, a monument to our Anzacs that has seen over 200,000 visitors since its opening. “It’s a display which is second to none,” Mayor Wellington remarks. “Thousands of visitors flock to the center every month, many of whom had ancestors who were part of Anzac and departed Australia through Albany’s harbour. During World War I, Albany saw 41,000 soldiers leave its shores, a third of which did not come back.”
With the rapid increase in tourism due to these developments, the Albany City Council sought to form an alliance with the nearby shires of Denmark and Plantagenet. “The fact is, as things change—I mean, things are changing all over the world—nobody, in terms of tourism, recognises [geographic] boundaries,” Said Mayor Wellington. Many tourist destinations exist across these three neighboring areas, from the vineyards of Mount Barker to the Valley of the Giants tree-top walk of Denmark to the adventure trails and whale-watching in Albany. The three towns have begun to market themselves as The Amazing South Coast after realising that their core customer base had little recognition of the area under its former name, the “Great Southern” region.
With this re-branding and more aggressive marketing, Albany hopes to raise its influx of tourists from 900,000 per year—or roughly 2.5 million visitor nights—to 3 million visitor nights by 2021. With roughly 85% of the tourist market made up of residents from other towns and cities in Western Australia, Albany also hopes to expand to overseas markets once its hotel project is up and running.
The state, for its part, has guaranteed $135 million in funding to Albany for various infrastructure projects, which the Mayor says will help catalyse the flow of even more private investment into the city. In particular, the most important infrastructure changes that will occur in Albany and its neighboring towns are road improvements. “Roads are what we live and die on around here,” he says. Perth is one of the most isolated capital cities in the world. It and the other smaller towns in Western Australia are connected by a vital network of roads and little else, and so roads are of particular economic importance. “95% of the people that come [to Albany] come here by road.”
The funding is also expected to go into sporting fields, tourism, and, importantly, industry development and investment attraction. For instance, with fairly minor improvements to their airport, Albany could begin exporting some of its crops to Asia. This is a major area of growth that the city is looking to exploit in the near future because of the relative vicinity of Asian countries and the convenience of shared time zones. Ironically, this plan to expand overseas export is within closer reach than exporting these same goods nationally because of Western Australia’s isolation. “If you had to put it on a truck and take it to the rest of Australia, we’re a long, long way from anything, but in terms of Asia, we’re not,” Mayor Wellington says. “The location of Albany makes it an ideal exit point to Asia, even more so than Queensland.”
With this growing economy also comes a need for an education workforce. As jobs become more available in Albany, the city has been establishing better education facilities. They have a regional university—University of Western Australia—with 500 students, and they hope to raise the number to 2,000 by 2025. Wanting to attract overseas students as well, Albany has been erecting student housing close to the university and shopping centers. According to Mayor Wellington, growth in the education sector will impact the city economically in several ways: For one, it will attract visiting family members of students, which will continue to fuel the tourism sector; secondly, it will help create new jobs.
“These are all things we can build on over a period of time,” he says. His intention is for Albany to become “one of the best cities to live in,” while still maintaining its character. One factor that is helping to build Albany’s future is the development of “clusters,” which are local business entities that would normally be in direct competition working together on given projects to solve problems. For instance, clusters of farmers are investing in scientific research which has helped them to grow better barley for new and innovative types of beer. Business clusters like these allow an area to gain a good reputation in certain industries, which attracts further business.
Agriculture is not the only sector in which this clustering strategy works. Albany hopes to expand its aquaculture industry thanks to the appeal of its pristine waters, and also hopes to expand its wineries. In fact, 26% of the state’s wine is already grown in the region with many well-established vineyards in Denmark and Mount Barker already producing large volumes of quality wine Mayor Wellington emphasises that a spirit of cooperation among individual businesses in these sectors is what will ultimately move the region’s economic prospects to the next level. “We’d like to see it formed together as a conglomerate, to take the whole market to a certain area, and then everyone sells out of that. Still in competition, but then in cooperation at the same time, so it’s a different way of doing business and it’s a different way of looking at things.”
According to the Mayor, these clusters are part of the long-term growth plan of Albany, but they can also offer immediate impact in the industries that are already well established in the region. “That’s why we want to start immediately in looking at the places and looking at the things that we already do well,” he says.
There have been some subtle changes to Albany’s existing infrastructure as well, in order to accommodate tourists and create more vibrancy and activity within the community. One of these efforts has been the revitalisation of the city centre, which has transformed the area from a major four-lane roadway with little room for wandering pedestrians, to a two-lane road with a low speed limit. “The center of town is not supposed to be a place for cars, it’s a place where you’re parking, where people walk around, where they go to the shops,” the Mayor says. “The traffic has slowed down to about 40 km per hour, there’s plenty of parking there, and we want to get people out of their cars, walking around the shops, and walking into the shops and spending their money.”
With a host of restaurants, shops, and cafés, the city centre has proven to be a location that is growing in popularity. It has also been an increasing source of revenue thanks to the redesigned streets that encourage people to step out of their cars. “You don’t spend too many dollars when you’re sitting in a car, but walking around you tend to do that,” explains Mayor Wellington. Albany is also moving its visitor centre from the South of the city to the centre of town and has plans to re-purpose its old town hall, built in 1888, into an art gallery.
Albany is also building up its walkway and bike path infrastructure in an effort to make the city more walkable—and in turn, healthier and more convenient—for both tourists and residents.
“We’ve started a program where we’re using a lot of e-bikes around the place; we’re getting people back into cycling,” says Mayor Wellington. In addition, Albany is in the midst of a $27 million dollar upgrade of its sports complex, which can house football, soccer, and cricket games. They also have 7 indoor basketball courts, and 7 fully-lit outdoor sports fields. On Saturdays, there can be as many as 1,400 children playing soccer and 1,200 children playing football. The city also boasts 195 basketball teams. “We need to get kids basically out of their houses and off the computer games, getting about, running around in the field and exercising more and playing sport.” Its all part of the City of Albany’s aim to provide better facilities so youth and the wider community can exercise and in turn live healthier and happier lives.
Looking towards the future, Albany hopes to grow its population to 50,000 by the year 2025. The city already has the infrastructure to handle such a population, thanks to their prior experience with tens of thousands of tourists. In other words, the groundwork has already been laid, and Albany is ready for its next major economic expansion. “We’re ready to go,” Mayor Wellington says.
Alupole Australia first began by supplying poles for street lighting, and has since acquired years of experience in handling dynamic customer demands. The company soon expanded its business to include the supply of large steel poles, and today designs and supplies telecommunication monopoles, transmission line poles and camouflaged antenna poles, along with telecommunications towers, transmission towers and substation structures in over 500 product specifications. Albert Lim has been working for Alupole since its inception, becoming 100% shareholder of the company in 2009.
“Alupole started with three guys who were interested in manufacturing aluminium poles. For many years poles for street lighting had been mainly made of steel, previously they were made of wood, then it moved over to concrete, and after concrete it moved over to steel.”
In 2003, this small group of investors were planning to move forward from steel to aluminium. The company founders were mostly working in finance, with one working in sales and one in production. What they lacked was a technical member of the team.
“When they found me,” Mr Lim says, “I fit perfectly in that position. So in 2003, we started to look into the design on my side for the aluminium poles, and that’s when we started to manufacture.”
Around 2004, one of the partners made use of a connection at a steel pole manufacturing factory in China, and invited Mr Lim to visit. He found that the factory was already employing equipment well up to standard for use in the western world.
“For example, some of the equipment, like the brake-press, was from Switzerland, and the welding machines were from Lincoln, US, so they had very good equipment. The only issue with the Chinese factory was that a lot of times they did not know what they were doing.”
This lack of knowledge meant staff were just copying other manufacturers, not exactly understanding the concept and design behind the work, merely manufacturing on the basis of duplicating the work of others.
“That’s where I found that I could put Alupole as the design entity to get projects and to do project management, and then to subcontract the manufacturing to the Chinese factory and have them become real manufacturers for us.”
From there Alupole quickly expanded, moving from aluminium poles to steel poles, which is the area Mr Lim had his core training in all the way back in 1988, when he began working with steel poles and steel towers.
“We were doing very well and having about 8 million USD turnover, until the GFC hit in October 2008. Because we were in the infrastructure business, most of the infrastructure was funded by governments and with the GFC, governments and private entities slowed down.”
This slowing down for global governments meant that the infrastructure business took a similar hit, and for six months in 2009 Alupole’s business appeared to have dried up in terms of projects and orders.
“During that time,” Mr Lim says, “the partners that I had, who invited me in, decided to call it a day and leave the company. I told them that they could do so but that they need to hand over the company to me, and that’s when I took over the company 100%, in 2009.”
In the midst of this hardship and a lack of projects, Mr Lim persisted with the business throughout the remainder of 2009, managing to land a big job in Australia which helped change the company’s fortunes.
After that, more projects started to come in, and in 2010 Mr Lim restructured the business to improve the relationship with the Chinese factory, setting up an office in China to help designers and the drafters communicate more efficiently with the factory.
“That’s where the need for having a Chinese office came about, in 2010. As a foreigner I’m not able to easily register companies in China, but I could get around that by having a company registered in Hong Kong and then setting up the office in China.”
Today, Alupole deals in the design and manufacture of what Mr Lim describes as ‘road furniture’, including steel poles and towers, which are the company’s core competency, and form the majority of its business.
“Steel poles and towers are found in many industries, including highways. So, in highways you can have a lattice type of structure that holds up the sign panels on the highway, which is the sign panel gantries, so that’s where a lattice structure is used.”
The design concept for these lattice structures is very similar to the design concept of a 300ft lattice tower that carries microwave dishes, as well as being almost the same as transmission towers that carry 220k volt power lines.
“So, with the same core competency that we have, we are able to do varied types of structures in different industries, but basically they all still come down to the same core principles that we have our expertise in.”
The company has further expertise in the design and manufacture of poles, which are also being used as road or highway furniture for street lighting, as well as very tall masts which accommodate lighting at about 30-40 metres high.
“The lights can be raised up and down with a motor at the base, and with a winch and wire ropes,” Mr Lim says. “So you can lower the set of lights down to the ground level for maintenance, and then you can activate the winches to bring it back up again.”
The company’s design expertise lies in manufacturing transmission towers, which are essentially steel angles connected by bolts. The same structural make up can be found in telecom towers.
“In substation structures, they are also the same. Smaller size, smaller angles, but basically they are just steel angles connected by bolts. So, across the board they are basically the same, it’s just that they have different users.”
Alupole’s main challenge then is to understand the needs of the different users it services, as well as the different planning processes that go into the design. But Mr Lim admits that the final core design is still the same across users.
“That’s why we concentrate on our core competency, and we look for products and industries that have the same core competency, and that’s where we can diversify. So it’s not a total diversification; we make sure we diversify within our core competency.”
The strength in Alupole as a business is that it has a variety of products, allowing the company to navigate the inevitable peaks and troughs of any industry by transferring across industries to maintain a steady flow of work.
“For example, you can have the telecommunications industry suddenly surge, but the transmission power industry may suddenly be in the doldrums. The company in that sense is able to continue to be busy, even though you have ups and downs in the different industries.”
Utilising the many diversified products and industries that Alupole works within, it is able to keep its staff employed throughout the whole year, without having to suffer the declines that may befall some industries during that time.
When it comes to lattice towers and poles, there are a lot of small details that many major consultants are not familiar with, meaning the kind of work Alupole undertakes is considered specialist and not usually handled by other engineering companies with diversified services.
“The transmission line towers usually require the tower to be tested, full scale. This means that you actually take the one-to-one scale of the tower, put it up together and load it up to the full load within the specs that have the requirement for those type of loads.”
In addition, the customer will normally ask for a destructive test to be undertaken, where the structure is pulled until it reaches 100% of the load it has been designed for, held for five minutes to check it’s still standing, and then has the load increased further until destruction.
“The reason is that the customer who is ordering hundreds of these structures wants to know how much extra strength that the towers have, so that they can do some design tweaking in their transmission line to make use of that extra strength.”
This is the key difference between Alupole and regular engineering consultants, which do not have the expertise to be able to ensure that the design is right on the spot. Sometimes a mistake will be made, and a tower will collapse before 100% loading.
“Sometimes, when they are too afraid to have it collapse, they will over-design it, and then it becomes 30% or 50% over-designed, which means that after the tower is tested until 100% load, if you try to destruct it, you have to increase the load to over 30%.”
The problem with this over-design is that a structure that is stronger by 30% adds 30% more cost into the design and manufacture, which means that the structure becomes too expensive for its use. This is where Alupole comes in.
“We are able to be so confident in our design that we ensure that the design passes 100%, but when it goes to overloading it will be between 5% to 15%. Usually we try to meet at 5-6% and the tower comes down at that point. That is very difficult to achieve.”
For tendering, this feature of the business becomes very important. Without this expertise, a company may find itself underquoting the job, meaning the final design will end up being more expensive than the original quote, resulting in a loss for the company.
Alternatively, the job may be too expensive in comparison to other tenderers which are getting closer to the design specifications required, resulting in the company losing out to its competitors on jobs and potential clients.
“That is where the expertise comes to be very important, in order to win tender projects,” Mr Lim says. “We are able to go into tenders and win them because of the core competency that we have to be able to design structures that are lean but pass the requirements.”
One of Alupole’s major recent projects was for Sarawak state in Malaysia. Alupole came up with a very lean design for the 275k volt project, introducing a completely new design, radically departing from those the state had been using for over 20 years.
“The designs that they had been using for 20 years were, at that time, based on the power consumption during that time, and what they required in that particular tender was new industrial area explosion within the state.”
This meant that the tender requirements included particularly high power, and therefore needed to include more cables. For that project then, rather than two conductors per phase, Alupole needed to provide four conductors per phase.
“That required the whole power design to be changed,” Mr Lim explains. “So, in that tender, because there was nothing to fall back on, a totally new design had to be done, and with our expertise we were able to get a very lean design for the tender.”
The company’s design turned out to be 10% cheaper than the next lowest bidder, an Indian firm. This is significant because Indian companies tend to offer extremely good design for a very low price, plus a very low-weight design.
“During the tender evaluation, the [firm] said that there’s no way that Alupole can have this lower-weight tower design. In the end we won the tender, the towers were designed in the final stages, and we could even bring the weight down by another 5-7% and still the tower passed.”
After moving into the Australian market, Alupole began to concentrate on the power industry. However, because of the mining downturn, the country’s overall income has dropped significantly, and the expansion of power has likewise slowed down.
“We want to work with the miners and the state utilities, using our expertise in order to come out with very efficient design, very optimal design, so that the overall cost that they had before can be reduced, but at the same time they are getting towers that are just as strong.”
The company has recognised from the recent South Australian blackout that there may be insufficient strength in the towers, based on old design standards and codes. As a result, there is talk about re-looking at the designs and increasing the design loads.
“Now, if you do that, you effectively have increased costs. What we at Alupole can do is to look at the increased loads, but with efficient design we may be able to maintain the same costs or minimise the increase in the cost for all the state utilities.”
In 2012 the company worked with Fortescue Metals on a project that had the initial design done by a consultant. Alupole re-looked at the design and introduced an optimised pole design, which saved significant costs for both the owner and contractor hired to install the line.
“Because of our strong collaboration with the Chinese factory, which is a very big factory, we managed to complete the production ahead of schedule, which was about one month ahead of schedule, and to have Fortescue Metal’s mine up and running earlier than expected.”
The company is currently undertaking a similar project for Dugald River Mine in Queensland, optimising the design in the same way and ensuring that the work-in-progress is already two months ahead of schedule.
“For this project the timing is very important because of the end year weather in Queensland is usually wet, and also very high winds. Which means that if they are able to complete it early they will be able to do the job before the rain and the strong winds come.”
Alupole’s optimised design and product expertise help increase productivity for many companies in many industries across Australia and the wider world, and look certain to continue doing so for many years to come.
Find out more about Alupole Australia by visiting:
This Alupole business profile has been made possible by the generous support of: Accord Logistics
To view this editorial as it appeared originally in The Australian Business Executive magazine, click here.
Sydney-based company Premium Strata is proud to offer premium strata management services, tailored to individual needs and scheme requirements, as well as providing building management services through its sister company Premium Building Management. The company’s co-directors, Leanne Habib (CEO) and Inger Brettle (COO), spoke to The Australian Business Executive recently about the rise of Premium Strata and the challenges facing the industry today.
“I am the founder of Premium Strata,” Ms Habib tells us, “back in 2007. It really came from a passion of wanting to deliver a service concept that competitors weren’t providing.”
At that time, and even to this day, many strata companies were focused on quantity rather than quality. In response, Ms Habib came up with the name Premium Strata to indicate the exceptional quality customers could expect from her service.
“Coming up with the name ‘Premium’ was all about providing that premium, high-end service. Since then, we’ve grown the business organically, based predominantly on word of mouth. Today we employ well over 20 staff, and are growing rapidly.”
Ms Habib’s career began in real estate, before she moved on to working in strata management in 2000. Seven years later she was setting up her own business in the form of Premium Strata.
“I’ve been with Premium Strata just under five years,” Ms Brettle explains. “I had been in the real estate industry since 2000. I first started in property management, and subsequently managed properties held in trusts and estates at Perpetual.” Eventually, she received a phone call from colleagues suggesting she try her hand in the strata industry.
“I met Leanne at the company where I gained my first exposure to strata management. I then moved to other strata management companies, larger organisations, and eventually joined Premium Strata five years ago, becoming a co-director three years ago.”
For Ms Habib, bringing another director on board was contingent on finding the right person for the job. She found that they complemented each other in terms of skills and objectives, especially regarding customer service.
Premium Strata’s position in the high-end of the market is due to its unique setup, giving the company an edge over many of its competitors and a significant advantage in the market. Its Diamond Service Guarantee ensures that a licensed strata manager handles all customer’s requirements, and avoids customers having to deal with different departments, which is typical in the industry.
A strata manager manages the day-to-day affairs for a strata titled or community titled scheme or building. This includes the conducting of meetings, collecting strata levies, arranging repairs and maintenance, managing a scheme’s financial affairs and insurance. A strata manager also handles issues and complaints between residents.
The sister company is Premium Building Management, which provides onsite building management services.
“Basically,” Ms Habib explains, “a building manager is somebody who is usually stationed onsite at a building and oversees the daily cleaning and maintenance services. The building manager reports any repairs needed and is the contact for any contractors performing work on common property. He or she typically works during normal business hours and reduced hours over the weekend.”
The smallest building that the company provides building management services for is 66 units, but the service is more commonly found in buildings of over 100 units. Generally, it is these type of developments that warrants the use of a building manager.
“If a building has a lot of common amenities,” Ms Habib says, “like a pool, sauna, barbeque areas, and communal gardens, then it is beneficial to have someone onsite who is pro-actively managing the use of those facilities.”
“Exclusivity also plays a part.” Ms Brettle adds. “Smaller high-end buildings with units in the higher price brackets typically also have higher service expectations, warranting the appointment of an onsite building manager.”
The building managers employed by Premium Building Management are dedicated to servicing just the one building. This is different to other companies that provide building managers on a more part-time basis, and have them look after several sites at once, floating between buildings.
“Effectively, they’re only getting a limited service,” Ms Habib says, “and it’s very hard for building managers to deliver high quality service when they’re spread across too many buildings.”
Premium Strata applies a similar concept to strata management. Its strata managers look after a smaller portfolio of buildings, which is a crucial difference, as it allows its managers more time to provide the best service for each individual client, be engaged and pro-active in avoiding issues before they escalate. It is often a difficult to quantify, long-term saving for the owners they represent. The old adage “you get what you pay for” comes to mind.
This level of high-end service is hard to find in the industry, with the quality and expertise of most companies not matching that offered by Premium Strata.
“A lot of new strata managers in the industry are being thrown in the deep-end with a very large portfolio of buildings and without proper training. There are not enough well-trained, quality managers. It is a real skills gap our industry is faced with.”
Ms Habib mentions the company’s mandatory recruitment requirement: all new managers must be fully licensed strata managers.
“Many of our competitors will hire anyone who holds the minimum qualification, the so-called certificate of registration. You obtain this certificate by completing a short course, whereas the licensing course is years of education, as well as years of on the job training.”
With the new development application requirements for councils to provide adequate housing for the boom in Sydney, Ms Brettle admits that brand new developments are becoming more and more complex to manage.
“These are not your traditional three storey apartment buildings.” she explains. “These are large, multi-level buildings that have shared facilities; buildings that are split into different segments called stratums or BMCs (Building Management Committees), or may form part of a Community Association. These are not stock standard, textbook examples.”
This means that managers require many years of experience in the industry to understand how to manage the separate entities to an appropriate standard.
“If it’s not set up and managed well,” Ms Brettle adds, “you can put these schemes into a lot of trouble, and it could be difficult and costly to rectify.”
Not only does a manager need to have an understanding of the legal side of strata, they also need to have people, negotiation, management and communication skills. All skills developed through careful mentoring, close management and nurturing over the years.
Ms Brettle adds that the latest NSW government legislation reforms are making it more complicated for strata managers to do their job. “More and more responsibility is placed onto the strata manager,” she says.
Ms Habib adds: “a lot of people burn out and as a consequence leave the industry, especially with these larger portfolios that many of our competitors are giving their strata managers to manage. It’s pretty much impossible to do your job and to do it well with such a large portfolio.”
On 30 November 2016, new strata regulation was introduced in NSW. One of the improvements in the new regulation is the restricting of proxy farming, ensuring that the use of proxies at meetings is better regulated. In the old legislation, owners were allowed to use as many proxies as they wanted.
“Under the old legislation,” Ms Habib says, “a few people could have a disproportionate influence on the voting process through the use of proxies.”
This kind of proxy usage typically happened in schemes with a significant number of non-resident owners. Investors often don’t show the same level of involvement in the running of the building and delegate their vote to others. “The new legislation has put a cap on how many proxies one person can hold.”
Another change in the legislation stipulates that tenants are now allowed to attend General Meetings. This is a major change, because previously tenants weren’t even part of the OC.
“They have no voting rights,” Ms Habib says, “they have no entitlement to address the meeting unless authorised by the meeting, but they do have an entitlement to attend a meeting of the OC.”
Another significant change is the introduction of electronic meetings, meaning people no longer need to be present and can instead join remotely. In the old legislation, the only way one could attend a meeting was in person or by proxy.
“Now, it’s opened up so you can vote by any electronic means. Especially for large schemes where in the past achieving a quorum was difficult because of investor owners being overseas or otherwise not able to attend meetings. It has the potential to change the dynamics in terms of how buildings are managed.”
Another significant change has come in the requirements for quorums, the minimum number of owners that must be present for a meeting to go ahead. At the moment the Owners Corporation has to wait 30 minutes from the start of the meeting in order to achieve a quorum. “Now, with the new legislation, it’s giving the power back to the chairperson to decide that if, after thirty minutes, they still cannot achieve a quorum, the chairperson now has the discretion to decide whether or not they proceed with the meeting.”
This typically affected larger schemes which often struggled to achieve a quorum. The OC will now be able to have just the one AGM, as opposed to having several adjourned meetings over the year.
Further industry issues addressed by the new legislation are centred on building defects, with fire defects and water penetration being the most common issues found in new developments. These are often just simple compliance issues for fire-related defects and failed membrane systems causing water penetration.
Ms Habib admits that these issues often come down to the quality of the building, and that a significant portion of new developments experience building defect issues.
“The government have recognised that this is an issue,” she explains, “and they’re making some useful changes to address this.”
Under the new legislation, which will come into effect in July 2017, when a development is lodged for construction, a 2% bond will need to be paid by the builder on the construction costs. If the work is not done to standard, the Owners Committee has some kind of financial recourse to assist with getting defects rectified.
There are many owners who feel they are not getting good value from their strata management agency. According to Ms Habib, the way Premium Strata’s pricing is set up ensures this doesn’t happen to its customers.
“Our fees are capped,” she explains, “where most of our competitors provide you a base management fee and then charge you extra for all the disbursements, referred to as schedule Bs and Cs. This means that every meeting a manager attends, every work order raised, every compliance certificate applied for, every envelope and cheque used, every email and phone call made on the owner’s behalf is charged as an extra item. This makes it difficult to get a clear upfront picture of their actual total cost for managing your building.”
“Our pricing structure is completely different. We give you one capped fee for your disbursements and one capped fee for the base management. It covers all of those items that our competitors would normally charge extra for. There are no hidden charges.”
This means the OC can carefully budget for these costs, avoiding surprises. With Premium Strata, clients can rest easy knowing that all services are included in the overall cost.
Not only are meetings unlimited under the capped disbursement fee, but this structure allows the company to be very transparent.
“On the Managing Agency Agreement,” Ms Brettle explains, “the agency needs to disclose what fee they’re going to charge the Owners Corporation. We simply list the base management fee and the capped fee.”
Many competitors will list a lower base fee, giving the owners the appearance that they are entering into a lower cost contract, but because they cannot quantify how much work will be generated in the following year, they do not really know how much they will eventually be charged.
“The other benefit of Premium Strata’s all-inclusive fee is that our staff are not spending all their time constantly trying to capture the cost of every phone call, writing of an email etc. Our managers are freed up to spend their time managing the portfolio and managing the individual schemes.”
Ms Habib says: “we don’t just simply refer issues to the committee to make a decision on. We suggest options and recommend solutions. We try and make their roles on the committee less complicated.”
A lot of strata owners feel like they don’t get this kind of expertise and service from their strata manager, but at Premium Strata, staff make it their priority to provide this service.
Some competitors have several different departments that need to be navigated by the clients depending on the specific issue being faced. This is not the case at Premium Strata.
Ms Brettle says: “Our concept is that you have one point of call, and that is your strata manager, and your strata manager is then expected to provide you with the information during that call and not refer you to various departments.”
This system is backed up by a lack of voice response (IVR) technology at the company. “This way,” Ms Brettle concludes, “when people call our office they speak to someone, not an automated service.”
In a challenging industry faced with legislative changes and customers who expect more, Premium Strata stands out by the quality of service it offers, achieved by working with a unique personal service concept and management which is proactive rather than reactive. The company works hard to earn and maintain its excellent reputation.
Find out more about Premium Strata by visiting:
This Premium Strata business profile has been made possible by the generous support of:
For those who have been watching Australia’s Shark Tank, Steve Baxter is a regular who has an eye for spotting a great idea and a tendency to really crunch the numbers before making a deal. Born in Cloncurry, a rural town in Queensland, Baxter was raised in Emerald until he joined the army as a teenager and began a career in electronics. In his early twenties, with just $11,000 of startup capital, he built his first company, Internet service provider SE Net. From there, Baxter went on to launch several businesses, including PIPE Networks, and then eventually developed the co-working community River City Labs.
One of his latest and most high-profile projects, however, has been his participation in the Australian version of Shark Tank, where he serves as a voice of experience and, at times, brutal honesty to the hopeful entrepreneurs who come knocking. “Six or seven times a day, the door opens and someone comes in and asks you for money. It’s really quite curious,” he says of filming the series. In contrast to other reality shows, Baxter maintains that Shark Tank is very simple and that what the viewers see corresponds closely with what is actually filmed. “What I would say is [that] what you see on TV is a very honest, compressed version of what we do. […] They [the producers] haven’t sensationalised it in that respect.”
The compression is necessary, however, as pitches and negotiation can go on for much longer than the fifteen or twenty minutes that are presented on TV. So much so, that Baxter sometimes grows bored, especially when entrepreneurs can’t provide basic information to him about their own businesses. “I don’t like not having my questions answered,” he says. After a certain point when things seem futile, he starts “looking at the roof and twiddling [his] thumbs.” Some of it comes down to personality as well. He adds: “If I don’t like you, then I’m not going to want to invest in you.” Having values in common is an important factor for him, which is why he has yet to invest in a company attempting to sell vegan products, for instance. “In the same way that a vegan wouldn’t want a cold-blooded, fish-killer hunter like myself, I don’t necessarily gravitate towards that.”
He also keeps an eye out for common mistakes that new entrepreneurs often make. Chief among them is the tendency to try to bring a product to market without investigating the needs of the market first. “So many people have a solution that they go out looking for a problem for,” he says. “You see it a lot with technology. Just because your Bluetooth phone can open your door, do you think people want to do it that way? The answer is no. Really what you need to find is that problem, and you need to understand the solution for it.” In Baxter’s view, starting with a solution and then trying to create a problem for it to solve is “backwards” and “very hard.” A better approach, he asserts, is to examine what problems need to be solved in the market, and then introduce various solutions that can be modified over time until they suit the market.
According to Baxter, another issue plaguing small start-ups are the many aspects of business such as marketing, sales, and accounting, which are difficult for beginners to grasp. Because of this, he stresses the importance of building a team. “Very few people are good at [everything], and that’s why teams are really good in business.”
It’s also important, he says, to know when to cut one’s losses. “I’ve got some entrepreneurs [that] I’ve invested in that I have so much respect for, but sometimes I feel like their business is like the zombies on The Walking Dead,” he says, and he finds it difficult to convince them that they have no market. However, he prefers to back investors are not too quick to give up, either, ones that “will explore every last inch, maybe even to their detriment, to be honest.”
When it comes to the need for constant growth in a startup, Baxter takes a more nuanced view, and says that growth can come in many forms. “Yes, growth’s important, but what kind of growth in the company are you measuring?” He suggests that the number of new users of your product or service is often more important than simple growth in revenue, and that many times entrepreneurs may have to purposefully pause or slow their business in order to create better infrastructure that will make for a better business in the long run.
After decades as an entrepreneur himself, Baxter has learned many lessons from his own companies. One of the major habits that he developed from this personal growth was to make hiring the right people a priority. “It doesn’t mean that everyone is going to be a world leader. They [just] have to be appropriate for the role.” He also asserts the importance of character, “I’ll take a good person with a poor idea anytime, as opposed to a poor person with a good idea,” he says. Above all, he stresses that one needs to be able to trust those with whom one works, both in the sense of being confident in their skills and also in the sense of relying on their personal fortitude as a human being.
As far as the everyday processes of working, Baxter suggests that every business should have a plan for each procedure, and that employees should have the freedom and flexibility to edit the manual when they are faced with contradictory real-world conditions. “It is about a mature approach, a systemic approach to business.” In addition, it is critical to carefully select the right employee for the right tasks, and to not promote people simply based on their desires for advancement. “The best salesperson makes the worst sales manager, for example,” he says, “[and] every salesperson wants to be a sales manager.”
He insists that it is important to be mindful of an employee’s skill-sets and to understand what drives them. Without a deep interest in the work, an employee is unlikely to produce at his highest level, and this can be one of the largest inefficiencies in a business. According to Baxter, the work itself should be the reward and other perks that the company provides should be incidental.
In spite of these strong opinions concerning the way a business itself should be, Baxter says that he notices a few personality traits that successful businesspeople have in common, though there is one major pattern that he sees time and again: the courage to make hard decisions, even when others don’t agree. “You have to be forceful at times. You don’t have to be nasty, but you may have to make some pretty unpopular decisions.” In other words, the fortitude to be brutally honest about what should be done is a critical quality.
On the complete opposite end of the spectrum, however, Baxter has noticed that sometimes new entrepreneurs succumb to somewhat dishonest puffery while trying to impress investors. While he agrees that it’s important to “play a bigger game” and to even inflate one’s own confidence in order to make the business look good, at the end of the day the numbers are what ultimately matters, and those cannot be faked. “This is why I like numbers, this is why I like facts about businesses,” he says.
For many entrepreneurs, their ultimate goal is to one day sell their company, but Baxter asserts that this is the wrong strategy to take. “Should they have a plan? Yes. Should they build a business to sell? No. They should build a good business because a good business will be very sell-able. If you concentrate on the exit, you’ve dropped the ball.”
Another common concern for new business owners is where to get capital if they cannot conceivably bootstrap the company on their own. For that, Baxter suggests meeting with other entrepreneurs in your industry as much as possible and learning how they started their own businesses. “Go out there and get connected to different industry groups. You have to network. You have to get out there and do it.”
To view this editorial as it appeared originally in The Australian Business Executive magazine, click here.