Secrets from the winning start ups
Monday, August 23, 2010/
When we first dreamt up these Start Up Awards earlier this year, we wanted to recognise not just the fastest growing start up company, but the entrepreneurs who were really trying to do something different by creating new products or services, exploring new business models and making a difference to our community.
What we got was a fabulous group of more than 120 companies from around Australia and from a diverse range of industries.
But despite the variety of entrants, these entrepreneurs all share two common traits – their passion for their business and their willingness to do things differently.
Take Point Project Management, the Adelaide consultancy company which took the major prize for fast growth, the Crown Lager Start Something Special Award.
Founders Michael Snare and Brendan Bilston met in 1993 at the Defence Force Academy in Canberra; Snare was a senior classman, while Bilston was a junior.
The company has expanded rapidly and has built revenue to $13.4 million in just three years. Behind the firm’s success is a strong growth plan, overseen by a board of advisers and underpinned by a set of highly developed processes and systems.
“For everything that everyone does there is a documented process in terms of what they do and how they do it,” Bilston says.
Or take Chris O’Brien, founder of waste management firm Hungry Giant, who was 22 years old and working in an electronic goods store when the site of truck after truck carting away polystyrene to landfill gave him an idea.
A few years later, he had invented, built and commercialised a machine that compacts polystyrene foam with just $300 in start up capital.
His company now offers a variety of waste management solutions. But instead of charging on the volume of waste collected from a client’s workplace, the company charges companies to use its onsite recycling equipment, thus reducing processing costs and, in many cases, trips to landfill.
This allows O’Brien’s small company to compete with global waste management giants who typically drive down prices to squeeze their rivals.
These are just some of the great stories you’ll find among the award entrants. We’ve profiled the 50 fastest-growing companies here – as well as finding out about their start up stories, you’ll even find a tip from each business. You can also see a list of the up and coming start ups here.
But the awards also highlighted some broader trends which underline why our start up community will be so crucial in leading the Australian economy towards recovery:
They’ve managed the downturn brilliantly
The last few years have hardly been a great time to start a new business – just ask Jim Noort, founder of toilet hire business Viking Rentals. In the last 12 months, his key market, the Queensland construction sector, has experienced a 40% drop in activity. It would have been enough to knock any company out, but Noort focused and knuckled down.
“This was a very challenging period from which we have only recently emerged from. We survived by carefully planning a rolling 60 day cashflow forecast and reviewing it every single day. We are through that now and are starting to flourish again.”
Rental Depot founder, David Caruso, has also been hit by the property slump.
“While our cash customer base has steadily increased, our account customers have gone into freefall. The lack of activity in the building industry has affected our bottom line considerably. To exacerbate the problem, a number of our ‘better’ account customers also had administrators appointed, while still owing us considerable amounts,” Caruso says.
Despite this, he’s been able to push further into the lucrative DIY sector and has annual revenue of $523,000.
The female entrepreneur is one the rise
One of the most exciting features of the awards is the impressive number of female entrepreneurs – 30% of companies have female founders or co-founders, which mean women have a far bigger presence than on SmartCompany’s Smart50 or any of Australia’s rich lists.
In many cases these women became disgruntled with the corporate world and saw an opportunity to focus on a certain niche of their industry. Other female start up entrepreneurs, such as Fiona Gudmunson of Unique Kids, started their businesses out of the need to stay at home with children while trying to develop a satisfying and rewarding career.
The former high school music teacher developed a website based around selling children’s products and now sells using a party plan/direct selling model. Gudmunson is now able to give other mothers the opportunity to build their own business and get back into the workforce on their terms, rather than in a traditional office setting.
“It is very satisfying knowing that you can provide opportunities like this to other mothers and help them establish a career without any pressures imposed on them,” she says.
They’re not giving up their day job
One interesting trend we can see from the awards is the rise of the part-time start up entrepreneur.
There are three typical models for this. There’s the entrepreneur who starts their own business at home after hours; the entrepreneur who works part-time and uses their days off to build a new entity; and the couple who start a business while one partner continues to work.
The internet – which allows a business to be “open” 24-hours a day, regardless of whether the company founder is actually sitting at their computer – appears to have helped push the part-time trend along.
Andrew Gideon, founder of online fashion accessories business Tiesandcuffs.com.au, was still working in a corporate setting when he and his wife launched their business. One of his funniest memories is rushing home each night to see how the site had performed during the day.
Today, Tiesandcuffs.com.au is Gideon’s full-time passion and a strong business with $700,000 in annual revenue.
They’re young and ready to take over the world
The average age of the founders of the businesses that entered the SmartCompany Crown Lager Business Start Up Awards is 36, but it should be noted that there are 23 founders under the age of 30.
The dedication of these young people is impressive. Take MediaPoint founders Jason Xuereb (aged 26) and Jamie Xuereb (aged 21) who used $500 to start a business making stickers for their mates.
When the sticker machine broke down, they got a loan, bought a machine and turned their business into a printing business specialising in stickers and banners and beating competitors with one of the fastest turnaround times in the industry.
“My partner and I put a few hundred dollars each into the business and a lot of time,” Jamie says. “I was barely 18 at the time so I got the cash working in a bottle capping factory.”
Or take 25 year-old Adam Penberthy, who started Fresh Marketing because he was “sick of not being able to wear jeans, shorts and thongs to work”. All of his firm’s 10 employees are under the age of 27, and they specialise in youth marketing.
“Really zooming in on our niche and rejecting work that wasn’t in line with the market we consulted in. I found it very difficult to swallow my pride and say no to work that just wasn’t in our core interest, being youth related. However reflecting now, it’s been the best thing for our business and is the reason we are still in business now.”
They’re leveraging the outsourcing trend
There is a clear bias towards the service sector among the award entrants, with 13 of the 50 fastest growing companies from the property and business services sector and another 11 companies from outsourcing-driven sectors such as education, transport, personal services and communications.
As the economy improves and skills shortages increase, expect this trend to grow.
They’re hungry for capital
It’s the eternal story of the start up – there’s simply never enough money around. The founders of electronics accessories company E3 Style were forced to turn down orders in order to preserve cashflow, while consultant Rob Nixon funded his business on credit cards until it was profitable.
The amount of start up capital varied wildly, from as low as $300 to as much as $1 million, although most entrepreneurs start out with between $20,000 and $50,000. Not surprisingly, more than half of the entrants started their business from home to save money.
Now, we know it’s hard for banks to support start up companies with no track record, but as the great companies in the SmartCompany Crown Lager Business Start Up Awards show, all some great entrepreneurs need is a little support.