Stories about business failure can be more insightful and useful than success stories. I also often find it more rewarding to read about little guys making it big than reading the annual BRW Rich 200 or Forbes list of 400 Richest Americans. The reading can indicate ideas, trends and patterns useful for projects for clients, collaborators or my own firm.
Little guys pushing on the edge can tell us more about tomorrow’s sources of wealth, while updates on rich people getting even richer can tell us more about yesterday’s sources of wealth.
So you’ll understand why I was excited when I saw Made in Australia last week at the bookshop of the Australian Institute of Management in North Sydney. It’s a little book about little guys making it big. The book was published in 2006 and is sponsored by IBM Australia and packaged by a custom publisher, The Switzer Group. It’s not a great book (it’s only the rare custom published book that is great), nor is it well written (very naff, cliches and corny lines surely won’t inspire the target readership). Despite this, Switzer has pulled together an fresh and excellent list of 16 contemporary Australian entrepreneurs. I had not heard of most of them. One of them is Christine Kininmonth (Fertile Mind), inventor of the Belly Belt (see accompanying photo).
What entrepreneurship is
The collection of 16 entrepreneurs have businesses established over a minimum of five years. Between them they have won recognition with many business awards. They are based in Perth, Brisbane, Melbourne, Launceston, Sydney and other places. They have all:
- had a hunch about something;
- executed on the hunch to grow it as an opportunity</strong>;
- created fully operational and sustainable enterprises</strong>; and
- over time, sometimes a long time, made a business “built to last“, not “built to flip” (business writer, Jim Collins, has made these expressions famous in books or articles).
What commercialisation is not
The book’s collection of stories on Australian entrepreneurs helps shed the dead skin of myths that commercialisation is just for:
- high tech things > no, it can be for low tech things;
- products > no, it can be for services or businesses;
- inventions > no, it can be about existing tools used in new ways or in new areas;
- new industries > no, it can apply in industries as old as agriculture, grazing, fishing or mining – all areas in which Australia has a long standing comparative advantage; and
- exporting things > no, it can help serve just the local or national market.
We don’t celebrate our entrepreneurs often enough, though from where I sit the trend moved in a positive direction in recent years in both print and electronic media in Australia. I want to contribute to that trend of celebrating entrepreneurship. The tall poppy syndrome has its likeable qualities in the Australian character, it can also distort and corrode ambitions and other qualities we should cherish.
What Australian entrepreneurs can teach us
Set out below is a table I prepared as an IP and business lawyer’s take on Made in Australia. I added facts drawn from research online. (The book has zero contact details for any of the businesses, not even their website addresses. Hello IBM?)
In the table below, the first column sets out the name of each entrepreneur and the affiliated business. The second column is my guess as to what might be the their basis for success from entrepreneurship, commercialisation and intellectual property perspectives. I emphasise it is pure guesswork drawing from data in the public domain. While for some I have noted “confidential information in business operations”, it is probably the case that all the enterprises have an above-average level of productivity in their business operations and systems. The legal concept of confidential information (a field of intellectual property law) is distinguishable from, but overlap with, the management concepts of know-how and intellectual capital.
The third column in the table lists facts or insights that seem to be useful for other entrepreneurs, start-ups, spin-offs and small and medium-sized business.
Entrepreneur & business
Basis for success – in entrepreneurship, commercialisation and IP law
Business hunch, opportunity, facts and insights
|John & Ros Moriarty
Balarinj Design Studio
|Developed a design business focused on a new idea – commercial application of indigenous art styles, eg on a Qantas plane. Core IP: copyright in design work.||Indigenous design services, eg the 1974 Qantas 747 painted with a Wunala (Kangaroo) Dreaming. Clients include Qantas, Bank of America, British Airways, Lendlease, Renault France, Coca Cola Atlanta, and City of Sydney and Balarinji works are held in the collections of the National Gallery of Australia, the Art Gallery of South Australia, Flinders University Art Museum, the Powerhouse Museum of Design, Sydney, and the Centre for Contemporary Graphic Art (CGGA) in Fukuoka, Japan.
|Dr Fiona Wood||The needs of burns victims inspired Dr Wood’s high technology breakthroughs, leading to patent registrations, hiring business people, and building a business exploiting C3 technology products.||Clinical Cell Culture (C3) is a publicly listed company researching “spray-on skin”. C3’s proprietary skin replacement products, include CellSpray® and ReCell®, offer new options for the treatment of burn, scars and chronic wounds. C3’s quality system was re-certified to ISO 13486 by SGS in 2005.|
|Anthony Bell||Breaking out of the “boring accountants” stereotype, Bell Partners seems to be doing some special things. No doubt it is building valuable confidential information for its professional services firm operations.||Formed in 1997, Bell Partners now has more than 50 staff and has repeat recognition through Business Review Weekly awards.|
|Jason Lea||A retailing story about building value for money, high street presence, and name recognition store by store. The Darrell Lea brand and trade mark forms core IP together with confidential information in business operations.||Opened in about 1923 as a fruit shop. In 1928, as fruit sales were slow in winter, the founders supplemented revenues making chocolates and confectionary. The family business went public in 1980s and now boasts 75 company stores, about 475 other retail outlets under licence around Australia, a strong export business and a consumer goods division. The exports are to New Zealand, Canada, the US and Britain. Entry into Indonesia failed. Jason Lea is the national chairman of Family Business Australia, a not-for-profit business support group.|
|Bob Thorn||Another retailing story. Illustrates what can be achieved by bringing economically priced products to a mass market, and putting the tools into the hands of millions of DIY users, instead of competing just for thousands of industry trades people or specialists. The core IP seems to be confidential information in business operations. Apparently it also has used annoyingly memorable television advertising.||Brisbane-based auto parts and do-it-yourself business, capitalised on the unmet demand for auto parts in the DIY market. Now employs 3,500 and has over 200 non-franchised stores in Australia and New Zealand. Compound growth in annual sales of 27 per cent over the past decade. Approaching sales of $500 million. Though founded in 1974 as a mail-order business, exponential growth took place over the last decade under Bob Thorn. Thorn retired after publication of Made in Australia. In 2004 in the National Retail Association Awards, Thorn has been awarded Australian Entrepreneur of the Year by that Association for the retail, consumer and industrial product category. In July 2004, Super Cheap listed on the Australian Stock Exchange opening with a market capitalisation of $200 million.|
|David Gaul||A combination of hands on defence experience + various IP rights in R&D + “relationship capital”, ie building relationships in Canberra where the key customers are located.||CEA is a Canberra-based defence electronics systems design company established in 1983. Its two founders are former officers of the Australian defence forces. CEA employs 200 people, strongly emphasises R&D, and has an annual turnover of $32 million and customers in Australia, US, UAE and Germany.|
|Like many other Australian originators (Speedo, Billabong, Mambo), Zimmerman took to the world something Australians know better than others – swimwear. Copyright is useful to fashion houses, but I think ultimately Zimmerman depends on its trade mark, and moreover its business relationships and operational efficiency.||The Zimmerman swimwear label was created in 1990. A third of the orders are sold overseas. There are two stores, in Sydney and Melbourne and there is distribution also through boutiques and department stores. [No website]|
|Rob Lynch||Copyright and business systems.||Lynch has a background of 30 years ago in radio. He saw the opportunity to provide Qantas with inflight audio entertainment, and he has served Qantas as a client for 30 years. The business now serves several airlines and has offices in Sydney, LA and Kuala Lumpur. The services now extend to film and television licensing (hence the LA office to source programs), video production and audio engineering as a fee for service business.|
|Andrew Bassat||SEEK increased the efficiency with which employers advertised jobs. This is comparable to what eBay and TradeMe have done with online auctions. Today registered trade marks (SEEK has several) are its core IP as well as the confidential information with which it retains its valuable know-how in its online business operations.||Launched in 1997, SEEK has achieved the impossible, redirecting “rivers of gold” job classified ads from major and long established media operators, such as Fairfax with MyCareer.com.au and News Ltd with CareerOne. Bassat says they attacked the $600 million job ad market on a hunch that run off-line it was a very inefficient market. SEEK listed in April 2005 on the Australian Stock Exchange. SEEK also operates an online training and development business in Australia and New Zealand (www.seeklearning.com.au) and a niche operation in the UK targeting Australian and New Zealand jobseekers (www.seek.co.uk). In the year ending June 2005, the company generated revenues of $70 million and EBITDA of $28.5 million, an increase of 75% and 104% respectively compared to the previous year.|
|James Stevens||The core IP today is its trade mark – Roses Only. Like SEEK, Roses Only saw its opportunity as using online media to make it more efficient for customers to order flowers. This is a simplification as Roses Only has also raised flower packaging standards and used innovation in flower advertising (ie capturing the eyeballs of mostly male readers of the financial press, eg The Australian Financial Review).||Stevens comes from a family of florists who have operated in Sydney since 1967. Today it operates with arrangements in place with 40 flower stores in Australia, New Zealand and London. Like SEEK, Roses Only began life online relatively early, going online in 1999. Roses Only made buying flowers a more predictable transaction given the vagaries of flower quality, wrapping, timely delivery and general presentation. Put another way, pay real money (currently $79) and be assured – the company’s signature product will arrive in a gift box with 12 long-stemmed roses, rose oil, pot pourri and a box of chocolates.|
|Kirsty Dunphey||Core IP is the business name, M&M Harcourts Real Estate.||This real estate agency established in Launceston, Tasmania in 2000 has grown five offices. In about 12 months after establishment, Dunphey beat a field of more than 2,500 entrants to be named Telstra Young Business Woman of the Year.|
|Julian Tertini||Making everday furniture items more affordable for an under-served market of consumers on tight budgets. There are similarities to the focus by Super Cheap Auto on the DIY market. Core IP is the business name, brand and trade mark, Fantastic Furniture.||Tertini is managing director and 43 per cent owner of Fantastic Furniture, a struggling chain he bought in 1996 and which has since grown from 12 stores to 60. This was Tertini’s second bite, having sold the Freedom furniture chain in 1991 (to Chris Corrigan and the Lang Corporation) and stayed out of the sector due to a five year non-competition sale of business contract clause. Tertini’s hunch for Freedom and Fantastic seems to have been the same – the opportunity lay in serving the budget end of the market inhabited by students, poorer families and young couples, all customers under-serviced by the major players.|
|Simon Brown||Resourceco’s profit depends on other people’s waste as well as its R&D and innovations turning waste into products. Its process applies R&D and considerable capital investment. Core IP: possibly confidential information and process know-how.||Based in South Australia, Resourceco recycles waste and boasts annual turnover of over $25 million. Brown has been at it since the mid-1990s building close relations with government, transport authorities, the CSIRO and the EPA to develop innovative construction recycling products. It has invested more than $20 million to create a facility to recycle concrete, asphalt, masonry, steel and timber into a range of quality-assured products.|
|Helping make the life of expectant mothers easier. Belly Belt has no patent, Kininmonth says the invention benefits instead from being first to market. It’s Australian registered trade mark is no. 717175 registerd from 12 September 1996.||Fertile Mind saw opportunity in maternity wear, specifically the Belly Belt invented by Kininmonth in 1996. More than 90,000 units are now sold annually, with two thirds exported to 30 countries and with the US as the main export market where it is sold at 3,000 stores. Kininmonth was inducted into the Australian Businesswomen’s Hall of Fame in 2000.|
|Steel Blue is the core product of Footwear Industries and is supported by considerable R&D and confidential information law protecting its position. Steel Blue is the subject of about seven trade marks on the Australian trade marks register. Like Clinical Cell Culture, CEA Technologies and Resourceco, Footwear Industries has grown with R&D for a premium range of products.||Perth-based Footwear Industries built its business on safety boots, specifically Steel Blue. Realising that it charged a premium price, in 1997 it began to offer a 30-day money-back comfort guarantee, a first for safety boots. It manufactures 700,000 pairs of boots a year. R&D is central to its success when so many Australian footware companies have been undercut by economical overseas products. It won a Telstra Small Business Award in 2003.|
|Andrew Shanahan||Getting to the airport is stressful, it’s great to have a reliable and economical place to leave your car and have it looked after. Core IP: business know-how and copyright and brand rights as appear at car parks, on its vans and on its website.||Established in 1997, Andrew’s is one of the three largest operators of off-site airport parking facilities, with annual revenue of $3 million from its facilities in Sydney, Melbourne and Brisbane. About 20 per cent of customers are said to opt for car detailing or additional mechanical servicing. A shuttle bus takes customers from the facility to the airport and back.|
Variety of business structures available for entrepreneurial enterprises
Before we end, here’s another key point illustrated by the above table of entrepreneurial enterprises featured in Made in Australia. It is that these ventures may be formed using business structuring law in a variety of ways, including:
- as a family business with affiliated outlets (eg Roses Only);
- as a chain of company owned stores (eg Darrell Lea Chocolates and Super Cheap Auto);
- as a vertically integrated business controlling most key business functions (eg Fantastic Furniture);
- as a production house and fee for service facility (eg Bell Partners, Stellar Inflight, Resourceco, SEEK and Andrews Airport Parking); or
- as an R&D house, outsourcing manufacturing and distributing internationally (eg Clinical Cell Culture, CEA Technologies, Zimmerman Wear, Fertile Mind and Footwear Industries).
The suitable structure depends on the circumstances. Experience shows that business structuring is one of the most important early decisions to be made to lay a foundation for success. If the structure is not right or the stakeholders are not adaptable, misunderstandings lead to dispute and then like a country in civil war it is often the beginning of the end.
Made in Australia, 2006, The Switzer Group Pty Ltd (www.switzer.com.au | +612 9327 8622). All proceeds of the book go to charity.