Steps to building a two-man band into a $26 million consultancy
Tuesday, June 17, 2008/
Scott Keck is the founder of strategic property consultancy Charter Keck Cramer. He tells AMANDA GOME how he built a two man suburban consultancy focused on property valuations into a large consultancy with 200 employees and revenue of $26 million.
By Amanda Gome
Scott Keck is the founder of strategic property consultancy Charter Keck Cramer. He tells Amanda Gome how he built a two man suburban consultancy focused on property valuations into a large consultancy with 200 employees and revenue of $26 million.
The gregarious, engaging Keck also explains why he refuses to expand interstate and why his idea of a property investment is a backpacker’s hotel in Ecuador.
He is happy to answer your questions. Email [email protected] before end of business Friday 20 June.
Amanda Gome: You took a business from a small suburban firm of real estate agents and property valuers to a major city operation. How did you do that?
Scott Keck: In 1976, simply by good luck, we got our first sizeable commercial engagement with a large law firm. That began our expansion.
Then in 1980 the firm’s principal John Thomson decided to scale back. My former flat mate Phil Cramer joined as a partner and we decided not to just rely on reputation to build the practice. We had to get out and meet people.
We tried to make it as personal as possible. We always paid great attention to the body of our valuation reports. Then we delivered them personally and took clients through it.
We then asked for recommendations. Word-of-mouth was very important as independent valuations were rare back then.
What else did you do?
We also had lunches with clients and market briefings which were unheard of back then. We ran conferences and did mail outs. And we did reports which compared prices – we were the first to do so back then.
What was the next step?
We landed two contracts with major banks to do residential work so we had a reliable volume of work coming through. We also bought a city valuation practice, which gave us immediate access to city clients.
By the mid 1980s we had 20 staff. The city office gave us a bigger footprint and we were the largest independent valuation practice in Melbourne. During the 1990s recession, accountants, lawyers and bankers came to us for independent credible valuations
Your biggest challenge came in 1996 when revenue was $6 million and you turned the firm from a small to a medium-sized business with strong growth potential.
Yes. I went on a trip to San Francisco and saw that other firms like accountancy practices were establishing their own valuation divisions. So we decided we had to diversify our own advisory service to provide research, town planning and surveying.
That was a difficult time for you. You said at the time that a few key staff resigned, you fell behind on new technology and smaller clients felt they were not a priority. But in the long run, it proved to be the right decision?
Yes. By 2000 we had revenue of $11 million and new services were bringing in 40% of revenue. (It is now 55%). In the mid 1990s we were involved in the work before purchase of a property.
Now we are involved in every stage of the purchase. We do valuations, research, development and project management, civil engineering, quality surveying, private equity, urban economics and policy…each of those areas is backed by solid professional staff.
We left expansion a bit late. We spent too long hedging our bets and we lost some key staff, although a few have since returned. They would have stayed in the current environment.
Back in the mid 1990s, you also moved into a larger office and spent $500,000 on a fitout that included Mambo art and a café. You felt it was important to provide a young, vibrant environment to attract the best staff. Did that work?
Yes, and we have now taken a second floor at Richmond, put in a winding staircase and opened a technical and consulting centre on that floor which is full of clients.
So after you steered the company in a new direction in the late 1990s, when was the next strategic jump?
The last few years. We are now growing quickly, organically and by acquisition. In fact in the last 16 months we have added 26 people.
We bought Pinnacle Property in May. They were very big in project and development. They had 11 staff and have doubled our operations in that area. We now have $1 billion of construction under our instruction.
We are also expanding key areas of the business. We added three people to civil engineering as we heard that clients were annoyed at big companies that want big fees but do not give the value that smaller niche firms provide.
We also bought Barge & Millar Surveys. They are land surveyors and had four people.
And we’ve added three more project managers and three more quality surveyors.
You said recently you were going to step away from the business.
Well, I haven’t. People do more but I am still very busy. We have to watch carefully that as we get bigger, the quality of the personal relationship with clients doesn’t suffer. We don’t want to look back later and say we failed at that.
Is now a good time to expand?
Yes. We know it is not a mistake, although some people say it is a funny time to do so but we are not fussed by the short term wobbles. We are galvanising the firm to take advantage of the next 20 years, particularly as Melbourne catches up on infrastructure.
We have got a strong balance sheet and the firm is cashed up for future finance growth and acquisitions. Revenue last year was $21 million, for 2007-08 it is $26 million and we expect to do $30 million next year. We’ve got 200 staff now.
Will you be expanding interstate?
No. There is so much opportunity still in Melbourne. Our business is very Melbourne-centric, although a third of our corporate real estate and project and development work comes from interstate.
Also I like to be able to look in the eyes of the people who work for me and I don’t want to run a business by remote control, which is how I regard interstate expansion.
If it was ever an obstacle to servicing clients we would expand interstate, but until it looks like a potential problem, no.
What is the outlook in your view?
I think we are in for a prolonged period of what we are experiencing now. There will be the same pressure for the next 12 months. But there are opportunities in a tight market.
In the 1990s recession, valuers were pressured on occasion to provide false valuations. Are you seeing any of those signs this time around?
No. There is a lot stronger governance through the whole sector. Everyone wants to know the truth.
Lastly, do you invest in property?
No. I have my home of course, but I invest in people and my business. I have a few small properties and I have just built a backpackers hotel in Ecuador. I love it. I go and eat seafood and wear thongs and hang out. I have been there twice this year and am off again. It’s another world, and I am Ernest Hemingway.
Read more about the property outlook