HOW WE
GOT HERE
Business wisdom from
the 2014 Smart50
Brought to you by
HOW WE GOT HERE: BUSINESS WISDOM FROM THE 2014 SMART50
Contents
Introduction
3
1. Competition
4
2. Social media
6
3. Digital innovation
7
4. Cashflow
9
5. Planning for growth
12
6. Franchising successfully
13
7. Innovation
14
Top tips from the Smart50
15
2
HOW WE GOT HERE: BUSINESS WISDOM FROM THE 2014 SMART50
Introduction
SmartCompany and Crowe Horwath recently
announced the winners of our annual
Smart50 awards, and it’s fantastic to see
such a strong list of new entrepreneurs and
business models continuing to demonstrate
the talent and prowess of Australia’s SMEs.
This year was a particularly challenging one
for the SME sector. We’ve experienced a
change in government and a slew of budget
reforms. The hand-off from the mining boom
to other areas of the economy continues.
But the Smart50 thrives with its ingenuity.
Consider videogame developer Wicked Witch
Software – 36th on the list with more than
$2.6 million in revenue – proof that Australian
businesses have taken advantage of the
app economy just as successfully as many
international players.
Equally as sharp are the Smart50’s skills in
escaping crises. Like web-marketing firm
NOW Digital – 40th on the list with more
than $2.5 million in revenue – whose clear
guidelines rocketed them to success despite
a major client declaring themselves broke.
The Smart50 awards recognise
and celebrate Australia’s fastest
growing SMEs
In this eBook you’ll discover the secrets of
the Smart50, with advice on everything from
digital innovation to cashflow. There are
stories of near-bankruptcy and examples
that demonstrate the acute business
intelligence needed to survive and thrive
in this economic environment.
These stories aren’t just good business
tips – they’re a snapshot of how Australia
continues to produce quality entrepreneurs
and businesses, and this year’s Smart50
are a force to be reckoned with.
The SmartCompany team
3
1 - COMPETITION
Stay focused, stay nimble
Working in the technology industry can be
a double-edged sword. It runs at an exciting,
rapid pace that attracts great minds and
workers – but because it moves so quickly
it can be extremely difficult to keep up with
your own strategy, let alone worry about
the competition.
Such a balancing act requires a sharp mind.
Broadband Solutions, ranked 21st on the
Smart50 with revenue of more than $9.6
million, has managed to find a way to keep on
top of things – but founders Sam Bashiry and
Brad Hughes admit it isn’t easy.
They say the key is to be constantly
innovative, which means taking risks more
often than not.
“People are often afraid of risk, but I am not.
Risk is there to be managed and when we
have a great idea, we always focus on how it
can be implemented and how we can reduce
our exposure to risks involved in its rollout.
There is always a way,” says Bashiry.
In tech, being ahead of the competition can
sometimes mean taking a gamble on tech
that isn’t tried and tested. For Broadband
Solutions, this hasn’t been a problem.
“We were one of the first business grade
VoIP suppliers in Australia, and were also
one of the first to offer hosted cloud-based
Virtual PABXs.”
As Bashiry says, being fast moving and able to
take products quickly to market is an essential
quality in tech.
“I am constantly on the lookout for new
product ideas, and looking to overseas
markets to get a feel for what is about to
happen here, and to be ready for it.”
4
1 - COMPETITION
Make every dollar count
Part of the challenge in maintaining
competition is consistent growth.
The founders of Calibre Real Estate, ranked
37th on the Smart50 with over $2.2 million
in revenue, know only too well the difficulties
involved in maintaining a steady hand against
the competition.
It is still quite a small business, and yet
Calibre has to compete with many well-known
brands. Along with typical solutions such
as social media, Alice and Justin Hagen say
what’s really helped is a strategic marketing
effort – making every dollar count.
“Without a big budget we had to be very
dollar productive. No advertising opportunity
is taken for granted. For example, our open
homes allow us to showcase our outstanding
local knowledge, we ensure we are educated
and prepared.”
And, as they both point out, simply keeping
on top of new trends in the industry is
something many businesses neglect.
“Adaptation is key: we keep our finger on
the pulse by observing trends, reacting
swiftly to changes and shifts in the market.
This safeguards our brand presence,
keeping us ahead of the competition.”
5
2 - SOCIAL MEDIA
Get friends involved
Don’t be afraid to go offline
Business strategies depend on a thought out
social effort. But too many businesses think
an online campaign means putting a few
dollars into Facebook ads and calling it a day.
A real social strategy depends on well-crafted
tactics that incorporate both offline and
online elements.
A positive social campaign won’t just
encourage people to share information
online, it will give them an incentive to capture
and share their real-life behavior as well. Just
look at the success of this year’s ice-bucket
challenge, which went viral for the charity ALS.
Online wine-selling network Vinomofo, ranked
22nd on the Smart50 with revenue of $15.2
million, saw founders Andre Eikmeier and
Justin Dry boost membership by 50,000
through a social ‘refer a friend’ campaign.
The campaign provided credit for the referrer
and the friend, but as Eikmeier reveals:
“It only works because we’ve focused
on getting our product right, and people
want to tell their friends about us.”
Successful social campaigns require an
element of emotional connection otherwise
no one will bother sharing them. Eikmeier
says an upcoming campaign will allow
customers to nominate businesses or
contacts who have done something friendly
to receive a pack of wine.
Like other successful campaigns the focus
isn’t on the product itself. And rather than
simply telling users to share the brand,
Vinomofo has created a social incentive for
conversation among willing consumers –
which means the product ends up being
shared along the way.
Health and fitness group KX Group, ranked
18th on the Smart50 with revenue of $2.9
million, was able to create its most successful
social campaign by incorporating their
networks with a massive outdoor event.
Founder Aaron Smith says the company
held an Open Day in May. All the company’s
studios participated and families were
encouraged to come along with the offer of
free samples, prizes and competitions.
While marketing of the event took place on
social media, on the day the business ran
an Instagram competition. By incorporating
social networking into an offline event, the
company was able to increase engagement
by working on a platform many of the
participants would have been using anyway,
encouraging their behavior with the bonus
of a prize.
“The results speak for themselves,” says
Smith, “in just one day combined sales
from all studios reached a total of just
under $97,000.”
Such a competition or engagement wouldn’t
have worked if KX Group had asked users
to take pictures on a network no one uses.
Instead, combining offline events with popular
networks made the campaign feel natural,
rather than overly forced – something social
networking users can spot a mile away.
6
3 - DIGITAL INNOVATION
Finalists of the 2014 Smart50 awards
Responsive rules
Due to the pace at which technology changes
and evolves, it’s no longer enough for
businesses to have a website and a Google
Places profile. SMEs need to be constantly
thinking about how consumers are looking
at them – and that includes the devices
they’re using, too.
Gambling network Punters.com.au, ranked
26th on the Smart50 with $3.1 million in
revenue, understands this well and founder
Luc Pettett says the business’s websites are
completely responsive – a must if you are
going to touch customers whether they’re
using a laptop, smartphone or tablet.
Going beyond design, however, there is a
need for SMEs to innovate in the way they set
up their tech systems. Punters.com.au has
done just that, with a system built on the tech
used in the stock market industry to handle
large amounts of traffic.
“This gives us huge capabilities to scale our
systems during traffic spikes, for example
the Melbourne Cup and AFL Grand Final,”
says Pettett.
“Last year, on just one day alone, our systems
delivered more unique visitors than the
Melbourne Cup had patrons [over 500,000
unique visitors]. Every day our systems handle
more than 16 million odds fluctuations from
every major bookmaker in Australia, showing
a user a price change in just 1 to 2 seconds.”
The lesson is clear: a website isn’t enough.
SMEs need to learn to innovate in the way
they use tech.
Winning with data
Big data is seen as a buzzword, but the world
is increasingly running on information and
small businesses need to get on top of it. The
smart ones already are.
Pet Circle, ranked 2nd on the Smart50 with
revenue of $12 million, is run by Mike Frizell,
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3 - DIGITAL INNOVATION
who says innovative uses of data plays a big
part in the business’s success.
The entire company runs on automated
processes through data analysis, allowing it
to predict with 90% probability what stock to
automatically purchase to avoid shortages.
The use of data even flows through to the
customer with the business able to display
shipping estimates in real time. Every night
the company runs a piece of software that
studies each product and the actual time it is
delivered – and that’s shared with customers.
“It’s not just a promised delivery time, but
real data on our delivery performance,
helping customers make better
decisions,” says Frizell.
“Additionally, data from customer purchases
allows us to accurately predict when a
household is due to stock up on food…
our business intelligence has helped us to
improve value.
“We can now map each customer from their
first interaction with our website and how
they have interacted since. This helps us
model pre-purchase behaviour to better
understand the decision-making process, and
as a result improve our marketing efforts,
adjusting budgets and targets to be channeland campaign-specific.”
SmartCompany Editor,
Cara Waters
Data is beginning to rule the world, and
savvy SMEs like Pet Circle are already getting
on board.
8
4 - CASHFLOW
Bruce Billson | Minister for Small Business
The importance of contracts
Cashflow is king, and small businesses know
this better than most: one slip up and you’re
sending your company to an early grave.
Daniel Visser, one of the founders of Wicked
Witch Software, ranked 36th on the Smart50
with more than $2.6 million in revenue, knows
this well. He describes how the company
delivered a major project on time and within
budget, but didn’t accurately account for
the margin. While it was enough to get by, it
wasn’t enough to compensate for the project.
Visser had to pull personal money to keep
the company from going under. But he
succeeded. He says the key lesson is to make
sure it doesn’t happen again.
“We commenced a strategic plan of income
diversification across four major pillars, and
this is working. We firmed up our cashflow
management, improved our agreements with
staff, and solidified our work contracts to
mitigate the risk as best as we could.”
Want to help your cashflow? Get contracts
in writing.
“The second major mistake we made was
that the publisher of that project verbally
promised us another project. This, however,
was not put into a contract. We kept our
entire team on for over two months waiting
for this project to come through, eating up
the entire profit from the previous project
and all our cash reserves.”
9
4 - CASHFLOW
Get your money early
There are plenty of tricks when it comes to
cashflow, although some of them are riskier
than others. For Mike Frizell, founder of Pet
Circle, the key strategy came in immediacy.
Reducing the amount of time between
invoices and receiving cash was essential.
“Specifically, we honed the business model
in such a way that customer acquisition
was cashflow positive. We chose marketing
channels that delivered immediate responses
from customers, and negotiated payment
terms with suppliers.”
Frizell also implemented an inventory
strategy. In the company’s first two years of
operations the business kept stock levels to
below five days’ sales at all times. This created
a cash-efficient structure to free up capital for
other means.
Cash is key, and reducing the amount of time
between asking for it and receiving it should
be a major goal.
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11
5 - PLANNING FOR GROWTH
This year’s Smart50 finalists are
a force to be reckoned with
Look outside your box
Grow too fast and you’ll stretch yourself too
thin. Grow too slowly and you stagnate. It’s a
delicate balancing act.
Businesses need to try and create ways of
growing that don’t impede their inner workings.
Children’s products manufacturer b.box for
kids, ranked 44th on the Smart50 with over $1
million in revenue, plans to grow by expanding
outside of Australia.
But there’s another key strategy: simply
working alongside distributors.
“We plan to encourage current
distributors to expand the product mix
they carry and work with them to increase
sales in their respective markets.”
When expanding, it’s good to think broadly –
but you might need to start with the business
relationships you already have.
Far too many businesses overlook exporting,
and this is sometimes understandable given
the rise in the dollar over the past few years.
But founders Monique Filer and Dannielle
Michaels say they will be partnering with more
distributors in Europe in order to expand.
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6 - FRANCHISING SUCCESSFULLY
Establish a training program
Australia is one of the most franchise-friendly
countries on the planet. We have a plethora
of businesses that have decided to grow
through this tried and tested method, and
that includes plenty on the Smart50.
But it’s not always easy. It requires focus and
dedication to ensure your brand stays on
message. Fitness franchise KX Group knows
this well as the company began franchising
after only two years.
“The KX Pilates Training Program is a 12-week
program that familiarises franchisees with
all aspects of the business, along with our
KX Academy Trainers program which is fully
accredited with Fitness Australia.”
The success is obvious, but it takes work to
get there. Franchising can deliver rewards
but businesses need to be diligent about
maintaining a proper training program that
keeps the brand’s message intact.
The benefits are obvious: greater brand
awareness and significant revenue growth
(from $1.2 million to $2.9 million in 12
months), but founder Aaron Smith says the
key is a substantial training program – one
that is longer than many other franchises.
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7 - INNOVATION
SmartCompany Editor,
Cara Waters
Reward new ideas
Innovation is about more than coming up
with new ideas. It’s about ensuring your
business is constantly pushing out new
products, thinking about new ways of
doing business and hiring the right people.
Innovation needs to be embedded into the
DNA of a company’s culture.
Sarah Riegelhuth and Finn Kelly – founders
of Wealth Enhancers, ranked 30th on the
Smart50 with over $1.5 million in revenue – say
the key to innovation is always ensuring staff
have an incentive to come up with ideas.
As a result, the business gives out monthly
awards for improvements. But more
importantly, innovation is built into the
company’s meeting structure.
“Each meeting has some form of problemsolving or brainstorming within it and we
continually run what we call ‘innovation
projects’ across all areas of the business that
need to be improved, or where an opportunity
has been identified.”
“At our quarterly planning days and
annual retreats we dedicate about
40% of the time to creative thinking,
brainstorming and problem-solving, and
have created a series of fun exercises we
use to achieve this.”
Many businesses can fall into the trap of
thinking innovation is all about ideas. It’s more
than that. It’s the ability to think critically.
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TOP TIPS FROM THE SMART50
Top tip 1: New payment
models can pay off
Making an aggressive entry as a startup is risky, but can work. In 2010,
Nick Grinberg adopted a “don’t pay
until results are achieved” strategy
for his company GMG Search Engine
Optimisation (ranked 25th on the
Smart50 with $1.8 million in revenue). “It
definitely put the beams on us,” he says.
Sometimes taking a risk can pay off – if
you have the right strategy.
Top tip 2: Diversify
your income
Too many businesses rely on one source
of income and end up throwing in the
towel when that plan goes awry. Jenny
Paradiso and David Hille of Suntrix
(35th on the Smart50 with $26 million
in revenue) quickly started selling solar
panels to residential, commercial and
wholesale markets. “When there’s a
dip in one market, the other helps with
cashflow,” says Paradiso.
Top tip 3: Content is king
Edward Lakman, founder of iframes
(13th on the Smart50 with $2 million in
revenue), has created an entire strategy
around reading material on his site –
something many businesses overlook.
“We’ve got quite a detailed strategy
based on understanding our audience
and where they live.” When creating
content, consider your customer and
their demographic.
Top tip 4: Be honest with staff
Be upfront with staff. Richard Haby’s
Oz Trampolines business (32nd on the
Smart50 with $2.4 million in revenue),
experiences constant seasonality and it’s
something he needs to be upfront about
when communicating with staff.
“The first step is acknowledging the
seasonality of the industry and being
able to manage your staff, which means
acknowledging it to them, too.”
Top tip 5: Begin to delegate
At a certain point, all founders need to
let go a little. Daniel Visser, founder of
Wicked Witch Software, says it was a
necessary challenge for him to trust
his staff.
“It came to breaking point about five
or six years ago when we realised
we couldn’t possibly do everything
ourselves anymore.”
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TOP TIPS FROM THE SMART50
Top tip 6: When the market
goes down, work harder
Top tip 8: Don’t take
everything personally
Robert Rowe, founder of shop-fitting
business Tu Projects (38th on the
Smart50 with over $32 million in
revenue), says during the financial crisis
the business didn’t cower, in fact it
doubled its marketing efforts.
Terry Baker and Wayne Wilkie, founders
of professional services firm MBS Services
Australia (41st on the Smart50 with $1.5
million in revenue) say thinking about lost
staff and contracts is a waste of time.
“We started manufacturing internally and
distributing our own products to keep
costs low.” During an industry downturn,
it pays to attack new strategies with
double the effort.
Top tip 7: Chase your money
When web-marketing firm NOW Digital
(40th on the Smart50 with $2.5 million
in revenue) was on the rise a major
client went broke. Founders Michael
Hill and Travis Jackson responded
with formal payment schedules and
stricter conditions.
“We learnt not to take losses personally.
We try and find a lesson in every negative
outcome, and try and turn it into positive
outcomes for the future.”
Top tip 9: Stay paranoid
For many entrepreneurs, settling into
a good rhythm is a sign of success.
But as Adam Schwab, cofounder of
DEALS.com.au (6th on the Smart50
with $138 million in revenue), explains
it’s always good to stay paranoid.
“We’re never satisfied with what we’re
doing and are always looking to do
things better.”
“It was a very expensive lesson to learn,
but now our business has a much more
formalised approach to new business
prospects, project management,
payment scheduling, and – importantly –
debt collection.”
View all of the Smart50 profiles and sign
up here to be informed of when next
year’s Award entries open.
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