A newly released biography offers a detailed look into the life of Jim’s Group founder Jim Penman, including his “disastrous mistakes” on his journey from a single lawnmower to heading up one of Australia’s largest franchise businesses.
Biographer Catherine Moolenschot spent 14 months interviewing Mr Penman and many of the people close to him, both personally and in his business, including family, franchisees and current and former employees.
At Mr Penman’s request, that included interviews with people known to dislike the Jim’s founder — including one who had at the time just launched legal action against him — in order to provide a balanced, “warts and all” look at his journey to date. Many were offered a contract waiving Mr Penman’s right to sue for defamation to achieve exactly that.
“Jim is a surprising person. I was quite amazed by some of the mistakes he made in the early days,” Ms Moolenschot told My Business.
“For example, that he just sat on his beanbag and read while his business ran into the ground. But where that would be the end for so many people, he changed gears and has built Australia’s largest home service franchise — and the fairest franchise in Australia.”
As the book notes, Jim’s Group today has close to 4,000 franchisees across some 52 different divisions, who collectively serve around 35,000 customers each day. As a whole, the business generates annual turnover in the vicinity of $500 million.
“I think the Jim’s franchise is a strong example of offering something so valuable people want to join,” Ms Moolenschot said.
“Franchisees can walk away at any time, they can vote out their franchisor, and they only pay a flat fee no matter how big their business grows. Compared to traditional franchise models, it sounds like business suicide — but Jim has proved the opposite.
“Jim is more… I want to say more complex, but that’s not quite right. He seems complex, but really he is just so unique in how he does things that you are constantly surprised.
“Jim is very principled — and very consistent with those principles — which is truly inspiring, but he doesn’t take other people’s feelings into account when making decisions, and I do think that has hurt many people along the way.”
My Business asked Mr Penman why he had decided to open up his business and his personal life for public viewing, and to outline his key nuggets of advice to other business owners. This is what he had to say:
The book noted the unfettered access to people who may have been critical of you. Why did you decide to open up yourself, and your business, to such a “warts and all” examination?
I wanted a credible account showing all aspects of my character, and people aren’t going to believe a one-sided account. Also, I have many flaws and weaknesses and want people to be encouraged that you don’t have to be an all-round genius to succeed.
What were your biggest learnings going from the physical labour of mowing lawns yourself to running a multi-faceted business?
The hardest thing has been choosing the right people, especially at a senior level. I have made many disastrous mistakes, even as recently as last year.
Also, I have had to try and improve my abysmal personal skills, such as in trying to encourage people and not simply shoot them down if I disagree.
What is the best piece of advice you have ever been given in business?
“If you’re going to do it like that, I might as well do it myself,” from our neighbour Mr Tapley when I was doing work for him at the age of eight. A passion for customers is central.
What made you first go down the path of franchising?
Fear, that if I didn’t, VIP would swamp me. I hadn’t a clue it would turn out so well!
How did you turn the business around from the dark days experienced in 1990–91 (when drought and recession hit simultaneously)?
Constant, constant experimentation. Never letting myself get discouraged. Being extremely frugal and watching every cent. Never losing focus or compromising on my core aims to delight customers and franchisees.
What are your thoughts on children working within their parents’ business and potentially taking ownership one day?
Good, if they’re competent and dedicated because they have an owner’s mentality. Dreadful, if they’re not.
The book outlined your experience of logging customer complaints, and how your personal definition of “complaint” varied from that of your staff. How has that discovery fundamentally changed the business and its approach to customer service?
Most people want to avoid confronting or upsetting those they have frequent contact with, in this case franchisees. My passion for service is such that I don’t mind upsetting anyone, because in the end it is great service that helps my franchisees to make great income.
Redefining complaints was vital because if you don’t measure customer service properly, you can’t improve it, and it’s been a constant crusade since then to do just that.
We now take only about one-fifth as many complaints, relative to leads, as we did when we first started measuring them properly.
Having grown the business as you have, why have you never decided to cash out and completely exit?
I absolutely love my work. What else could I do to compare with the fun and excitement of it?
Also, I don’t totally trust anyone else to look after franchisees as well as I do. There would be too many temptations to soften the system, or to cut investments or make cuts to improve short-term profits.
What Retail Food Group has done is a perfect example of this, greedy accountants squeezing the little guy to fatten the bottom line. (In early 2018, some RFG franchisees launched a class action against the group, alleging it had pushed them into “severe financial hardship”.)
Plus, my only reason for making money (beyond modest personal needs) is to run my research project, and for that a constantly rising income is a lot better than a once-off payment.
So many people nowadays say they don’t have time for exercise, but in the book, you said you find yourself being very lazy if you don’t. How do you structure your work day to incorporate your exercise routine?
I just make it a priority, usually 5km on the treadmill first thing plus farm work at the weekends. It’s actually far more important than an extra half hour at the office, because it brings energy and clarity of mind so that work is more efficient.
An hour of clear thinking is more valuable than a month of slog, and much of my best thinking is done while digging potatoes or clearing swathes (usually listening to a talking book).
The important distinction is not between work and not work, but between worthwhile and not worthwhile. Responding to my franchisees fast is worthwhile, but so is having a date with my wife or chasing my son round the living room or driving my kids to school. Not worthwhile: unnecessary meetings, doing a job someone could do better than me, micromanaging a competent manager, etc.
I’m actually fortunate because I’m so bad at doing most things, it’s easy to find someone who can do them better. Thus, I always have enough time to do the things that matter.
Finally, for anyone early in their business career, what advice would you give them?
Be passionate about customers, always putting them before short-term profits. Every day with every aspect of the business, ask yourself: how can I do this better?
The biography is called Jim’s Book: The surprising story of Jim Penman, Australia’s backyard millionaire. Published by Wiley, it is available in bookstores and retailers Australia-wide, at $29.95 (RRP).
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
Ask the Experts: Does automation stack up financially?
By Christopher Overton
Opinion: How bad do things have to get?!
By Adam Zuchetti
Business lessons from the All Blacks
By Steve Stanley