Putting the ‘long’ in longevity

My Business speaks with two successful SMEs about how they begun their businesses and how they have stayed relevant for years and even generations.

The start-up

“At the end of the day, the products and services are not that different across the industry – what people look for is customer service with honesty,” explains Nigel Malcolm, the founder of vehicle fleet management company Fleetcare.

“I think one of the big things is how you perform in adversity when things do go wrong.

“We attribute our longevity to that; we’ve worked hard to keep our customers happy. And I think [you need to] add the personal touch, because … the communication mediums of today can be quite impersonal, and at the end of it we are all people, and people deal with people.”

It is this philosophy of focusing on customer service above all else that has helped Mr Malcolm take Fleetcare from a Perth-based start-up 27 years ago to its current roughly 70-strong workforce spread across the nation. “I started in WA at a time when there was no internet, no email, and WA was a bit of a cowboy state, no doubt about it,” Mr Malcolm says.

“Doing business out of Sydney and Melbourne [while] located in Perth wasn’t easy. We spent a lot of time in the initial years developing the business model so it wasn’t too obvious where we were located and trying to cater to those different businesses in different states, meeting their requirements, and that was actually quite challenging.

“Whereas today, where you are doesn’t really matter – the online situation with email and communication through the phone is so much simpler.”

Perhaps it is because of this origin that Mr Malcolm focused the company first and foremost on managing customer service, with a palpable commitment to delivering an unparalleled customer experience.

“We’ve still got customers today that we had in the first couple of years, and their expectations don’t change; they remember us and they know what it was like then, and they are very quick to point out ‘We used to do this’ or ‘We’re used to having this from you’,” he says.

“I think it’s part of what we look at as the service promise – it’s the thing that your customer comes to expect from you and likes you for, and you can’t forget that. If you want to keep those types of customers, unless you’re out there to change the world, you’ve got to keep delivering that, and that can be a challenge.”

Mr Malcolm says that technology has been instrumental in enabling Fleetcare to achieve this level of service, delivering operational efficiencies while enabling the company to grow into new areas and further enhance its customer offering. He describes telematics technology as being at the heart of his company’s future.

“We’ve got a business called Fleet Dynamics, which has this [telematics] capability, and we’re integrating that capability into the fleet management systems,” Mr Malcolm says.

“The ability that we really love is to ring a driver or contact them in the early hours of the night to say: ‘We know your battery is flat; you’re going to have to get roadside [assistance] before you leave in the morning’. We’re taking that step forward where we’re communicating to drivers about what a vehicle is doing before they even realise it themselves.

“Using that to reduce the cost but to increase the service level, and for our customers, it gives them the opportunity to have their drivers doing what they should be doing, which is sales or service or management within their own businesses. So that’s an exciting area for us and that’s an area that we’re working with a lot of our clients on, using it to streamline logbooks and fringe benefits tax, and simply knowing the environmental aspects of the vehicle.”

According to Mr Malcolm, his biggest learnings in business have been the importance of managing overheads and maintaining his resolve.

“In a start-up, you can be very successful for a short time and adversity can come along – be it economic, enemies that you don’t see coming, or perhaps even within your own business you make a mistake. If you’re watching that bottom line and those fixed overheads, that’s an important area [to manage that adversity],” he says.

“For start-ups, you need to be nimble. Sure, you need to invest, but at the same time you do need to be nimble and be ready to make a change when you need to, and if you’ve got a big anchor around your neck, that can certainly be difficult.”

He also urges all business owners to stay true to their vision.

“You started the business for a reason, and in most people the entrepreneurial spirit has come through and motivated you to do something, and you can’t lose that – that’s the bit that gave you the passion to perhaps give up your job, to put your house on the line and to go and work some absolutely crazy hours, and you’ve got to keep that alive,” Mr Malcolm says.

“As you progress through to maturity, you need really good people around you to look after those other bits: the HR side of things, the finance side of things. But that entrepreneurial spirit – keep it alive; you’ve got to keep feeding it.”

The family business

Food growers, and anyone keen on gardening, will be familiar with Richgro’s range of garden care products, which includes fertilisers, potting mixes and soil wetting agents. What you’re probably not aware of, though, is the long history of this family-owned company, which is this year celebrating a century in business.

The company’s managing director, Geoff Richards, is the third-generation head of the company, and his sons Tim and Matthew work actively alongside him.

Richgro’s history is a testament to Mr Richards’ belief that “You adapt to survive, and you’ve got to be mindful of trends”.

He recalls: “I never knew my grandfather. He died in ’45, the year before I was born. But he was an innovator in his own right; … he set up chaff cutters up in Grass Valley. He was targeting other horse owners at the time – this was before vehicles were on the road – and that’s how he started.

“He bought the school tuckshop opposite the Cannington Primary School, and then found because he had a horse and cart and he was going into the markets and buying fruits and vegetables and selling it on the way back to his base at the time, people were asking him if he had a bag of chaff or a bale of hay or something. So soon he built a store behind what was the school tuckshop at the time and they became full-blown grocers and set up a produce merchant situation.

“My dad came along and decided that that had a limited life as population grew, so he moved into stock food manufacturing. And I came in, learnt all the principles in that stock food manufacturing business and then took it into fertilisers.

“We had always sold fertilisers, and I started to formulate different fertilisers from what I read was required by different plant types, and that’s how I moved into garden products, through that fertiliser side. So each one of us has had to have an eye for possibilities and a degree of innovation.”

Today, Richgro manufactures the bulk of its products here in Australia and, save for small export volumes (primarily to New Zealand), remains committed to the Australian market. Of course, this presents particular cost pressures for the business.

“Because of the high cost of labour in Australia, we’ve had to move down that pathway of automation and efficiency – larger machinery and so on,” Mr Richards says.

“[But] I’m a great believer in Australia’s long-term viability, so long as we continue to adopt technology and we don’t continue to do things the way our grandfathers and fathers did. We have to constantly move forward.”

This innovative mindset is what Mr Richards says has enabled the company to not only continue trading since 1916, but to continue growing and diversifying both its product offering and customer base.

The challenge in driving innovation, Mr Richards points out, is weighing up the risk versus the benefit. However, he says that doing nothing at all is ultimately an even greater risk than trying something new.

Of the company’s greatest challenges, he says: “I think it’s where we didn’t quite read the rate of change right, or at times we’ve probably gone into something a bit early and we’re ahead of the market and we’ve burnt dollars on the way through. But it’s got to be a blend of things like that or you’ll never make it.

“You’ve got to have a go, and some things work and some things don’t, but it’s through experience that you tend to end up focusing on the things that you’re pretty sure about before you invest heavily in them.”

A fundamental part of this is technology. Mr Richards says that technology is a fantastic enabler in streamlining efficiencies and reducing costs – particularly for Australian producers faced with high labour and materials costs.

However, embracing technology for technology’s sake is a mistake, he points out.

“The lesson we’ve … learnt is being an early adopter of technology, but research is vital to ensure that an introduced technology is really going to benefit us,” he explains.

“I can go back to the example with automation … when we first computerised in 1976, we went and looked and made those decisions based on other people’s experience around the world. And when we put our bioenergy plant together, very much so – we looked around the world and decided these were the best components to build into a plant.

“And today we’ve been proven really correct in our decisions on the technology we chose and on the componentry we chose.”

Another key factor in Richgro’s success, Mr Richards notes, has been its continued family ownership.
While this has come with its own unique challenges – such as a long-term dispute between Mr Richards’ father and uncle – working with family has for the most part actually strengthened personal relations, as well as the productivity of the business.

“In many ways, it strengthens your resolve and influences how you interact and communicate, because families amongst themselves can’t have secrets if you’re going to work together on a daily basis,” Mr Richards says.

“You’ve got to, as individuals, analyse yourself and know your strengths and your weaknesses and be prepared to discuss that and share it. It can be very strengthening to an organisation once someone has identified their weaknesses and acknowledged it and offset it.”

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