Provident Cashflow
Smart50 rank: 1
Revenue: $5.72 million
Growth: 184.43%
Founders: Matthew Nolan, 36
Based: New South Wales
Employees: 16
Industry: Finance and insurance
Website: www.providentcashflow.com.au
Winner:
HP Fastest Growth Award
Matthew Nolan, 36, spent 10 years working in Australia’s big banks saying no to lending requests from business owners. “I could see they had really good businesses but they didn’t have bricks and mortar. So I wanted to do something about it.”
He founded Sydney-based Provident Cashflow to provide cashflow finance for inventory purchasers and outsourced production costs by medium businesses that didn’t want to put real estate or stock pre-sales on the line.
Although the company is only three years old, it is this year’s winner of the Smart50 HP Fast Growth Award with 184.43% growth rate, revenue of $5.7 million (up from $3.5 million in 2006-07) and 16 employees.
“We have provided over $70 million in working capital to customers for the purchase of additional stock that they otherwise would not have been able to purchase. This has provided our average client with additional sales of $2.19 million per annum and gross profit of $1.08 million, not to mention a significant increase in their business growth rate,” says Nolan.
Nolan says that net start-up costs were $3.1 million. The most challenging part of starting the company was making sure that the company would be able to differentiate itself from the many other financial companies and products already on the market. “We also knew we only had one chance to do it,” Nolan says.
He says the company is now profitable and current growth is exceeding 330% a year. Funding comes from an external securitisation line from a large publicly listed company funded from share capital. He says that company is not exposed to the current credit crisis and has no debt. Nolan won’t reveal its name. “That is a competitive advantage. We are the only ones providing this service in Australia and we don’t want anyone to approach them to set up in competition.
“One of the advantages of being small and lacking significant legacy systems is we can change and adapt our product,” he says. “For example some clients needed more time after their select period had expired, so we added pre-approved facility extensions. Our manufacturing clients sought to fund both their inventory and outsourced production costs, such as cutting, sewing or machining, and this was recently made available to all manufacturing clients.”
Every year Nolan plans to have a new financial product on the market. “Each quarter we roll out a group of enhancements to our existing products, taking a leaf from software providers and using this in finance by rolling out Inventory Finance version 1.2, 1.3 and so on,” he says.
Expansion plans include New Zealand, and Nolan says he has established a heads of agreement for a joint venture in the US, in partnership with an innovative US finance provider.
The online strategy has been instrumental to the success. “At the time of the website launch, it was our biggest marketing expense yet, however, since then it has completely paid for itself. Consistently our clients mention they saw us or heard about us on the ‘internet’ or ‘Google’,” he says.
He says the website offers clients a chance to find out more information before making a phone call after they have already found out about the company through advertising and events. “We originally implemented an SEO and SEM campaign through Yahoo and Google, however Google proved to be the strongest performer and all SEM funds are now allocated to Google,” he says.
They also set out to make the website very different. “We noticed that banks and some other finance companies have a lot of busy activity on the front pages of their website, however from speaking to our clients and conducting some research, business finance customers are looking for information not entertainment,” he says. So the design is very simple. “We kept the company colours, logos and images consistent throughout our marketing material so that the website design flows through to our brochures and stationery – and all representations a client receives from our company look consistent.”
Nolan says that inquiry from customers is growing as alternatives to the big banks are closing or consolidating. “Banks did more than 90% of home loans by value. In February they were doing less than 60%. That means they have taken back the dominance so there have got to be more alternatives like us out there in the market.”
Nolan says he always planned to run his own business. “I struggled in banks. I didn’t want to climb the ladder. I wanted to own it. People always asked me what sort of business I was going to run and I didn’t know. But I knew I had to get certain experiences and looked for opportunities to get skills in managing people, operations and launching new products that would help when I was ready.”
He says being an entrepreneur is like being on a roller coaster without brakes. “And you don’t have the security of 20 layers and 10 accountants as you do in a big bank. But I wouldn’t trade it for quids.”
