Matt Buchel has been in the property game for years, but his current company, Tropical Lifestyle, wasn’t built the usual way – he took it over from an entrepreneur who felt he didn’t have much more to give to it.
A few years later and Tropical Lifestyle, which manufactures and builds gazebos, is turning over $7 million a year. Buchel says taking on an existing business is easier than starting from scratch, but there are still plenty of lessons to learn along the way.
So how has the business been travelling?
Everything’s going pretty well, although it’s mainly the same, we have some new product ranges and good activity going.
Get business news first
Sign up to SmartCompany’s daily newsletter
People seem to have less money right now, and the spending is tighter. They’re not spending as much as they did a year ago. They have money, but they’re just saving it up for a rainy day.
Last year your turnover was just over $6 million; can you give an update on that?
We’ve actually changed the business model slightly, and we’ll probably do a little more than $7 million, but we’ve gotten rid of some of the aspects of the business that we didn’t want, either.
How the end transaction is done with the client. We’ve just switched that up.
So you took over this company from a rundown construction business. Is that right?
It actually wasn’t a rundown construction company. It was basically a retailer/importer that had been rundown. The guy wasn’t interested in doing anything with it and had been in charge of it for 25 years and was looking to get out.
Describe that process. How did that all start?
I was just looking around for a business to buy. It was in a similar area that I had been working in with previous businesses that revolved around property and so on. I just felt like it was a good opportunity and that it could be expanded.
What was the biggest thing wrong with it?
Basically I just had to build new systems into the business.
What do you mean?
I’d been in the building industry since I was pretty much 15, and I knew the type of concept this guy was going for. I felt that I could do it properly, when it hadn’t been done well before by the owner.
He just ran it as a one-man-band, and I thought there could have been more there.
And so what did you do?
The first goal was to reduce the pricing so it was at a reasonable level, and then create a sales base around the entire product.
The guy had priced the product about $3,000 or $4,000 above what they were really worth, and he only was doing one or three a month. And of course you can only have a reasonable offer when there’s good value there.
And then what?
We just started to work on increasing sales.
This was back in the day when the government was still giving more handouts, which helped. It was more home owners looking to increase the value of their properties.
We reinvested the money we made into the company, organised an admin team, a sales team, and a few more part-time staff.
You need to build momentum when you take on a new business and introduce work into the pipeline.
Do you think this was easier or harder than starting a business from scratch? And how?
Well, you’ve already got a proven concept, so in one sense that helps. You’ve already got the basis there, instead of having to start from nothing. It’s definitely easier than starting from scratch.
What do you think was one of the biggest challenges of taking over an existing business?
We just had to get new staff used to the way I was doing things, and then get credibility from the new staff.
That took a bit of work, I just had to explain to them how I didn’t wake up one day and was just buying a business for the hell of it. The money wasn’t handed to me, and I’m doing all this for the results.
What was the hardest adjustment for them?
Doing things properly. The old owner would like to cut corners, whereas I want to go the extra mile.
Was there anything else that came up and set you back?
What didn’t come up is the better question. We had to move locations twice in six months.
Annoying neighbours in the area. We had a manufacturing base, and it was in one location. Then we had to move it, and then there were more complaints, so we had to move again just six months later.
Was that because you had increased production so much?
Yeah. We had gone from just the one-man-band in the previous business, to 12 people in a year, so there was heaps more production.
I didn’t mind doing it the first time, but I was very unimpressed the second time.
For those entrepreneurs out there who are thinking about taking over an existing business, what advice would you give them?
Make sure you’ve got a bit of cash up your sleeve in case you get into trouble. There will be stuff that runs you right to the wall, and then you just have to deal with them. Make sure you have some saved for a disaster.