How this business went from a $2.5 million valuation to a $13.4 million sale after asking an outsider for advice
Friday, March 16, 2018/
Three years ago, podiatry business and Smart50 alumnus Dimple Care had worked out its “big, hairy, audacious goal”: it just kept falling short of reaching it.
“We were doing annual and quarterly review sessions, but one of the biggest mistakes we were making was we weren’t reviewing the business in a 360 degree fashion,” founder Damien James explains.
The business, formerly known as Aged Foot Care, employs around 60 podiatrists to provide services in aged care facilities across Australia. It had annual budget goals and a vision for the impact it wanted to make, but kept missing targets, James says.
In 2015, the business was valued at $2.5 million, and shortly afterwards James brought in business coach Rob Nankervis for help to see where the company could improve on strategy.
Nankervis employs the Gazelles method of strategic planning, which involves separating elements of a business out into the people, strategy, execution and resources.
“In terms of engaging the coach, it’s a bit like going to the doctor. I knew we had a problem, and I was happy to admit it,” James says.
Having a coach in the business helped management see that Dimple should review how it set up goals in the first place.
“For example, we had a 10 year “Big, hairy audacious goal”, but on average podiatrists only stayed seven years,” he says.
Once this was pointed out to them, management broke the big goal down into three “small” three-year targets that covered customer satisfaction, growth in services, and productivity targets for podiatrists that worked with the company.
The business also realised it needed to bring all of its departments together to discuss what was working within the business and what wasn’t, so different teams weren’t operating in total isolation.
Dimple started having regular full team meetings, as well as reviewing its staff cohort quarterly to work out what each one needed to become an “A grader”, if they weren’t already at that status.
“I think it’s easy when the whole team is there – when you do [explain your] ‘wins and losses’, it’s very informative,” he says.
Creating a business people want to buy
James says that once the business brought an external coach on board, “it was only within six months that we started to see tangible results”.
As part of the new strategy focus, the company also started having managers of each department compile monthly reports on the performance of their sector. James says the focus on tracking progress like podiatrist’s productivity became invaluable when a compelling opportunity landed on the table for a buyer.
“If you can show them [the buyer] they can go back and read the reports, it can show that you’re a really well-run company,” he says.
ASX-listed allied health and home care company Zenitas was one interested party.
Two and a half years after first reviewing its strategic approach, Dimple was able to show it held a quarter of the market share for its kind of podiatry services, and was able to easily explain its recent wins to the Zenitas team.
Zenitas purchased Dimple for $13.4 million in July 2017 – a price close to $11 million more than what the company was valued at less than three years prior.
In the 2017 financial year, Dimple’s revenue hit $11 million.
James says there were a number of elements that helped the company secure the deal, including the fact that Dimple’s chief executive, Nick Beckett, brought a wealth of experience from time in his previous role as head of tea business T2.
He also credits the leadership team for its commitment to the new strategic approach, as well as the focus on hiring quality staff.
“What really helped us is we made a commitment to hire people who were better than a role,” James says.
Reflecting that everyone “wants to build a business that people want to buy”, he’s an advocate for asking someone to help you break down the goals.
“I think I really liked having the three goals, because each year we would have a goal to get closer to those. There was always consistent feedback about where we were going, and how far along in the journey we were.”