Business Masterclass with Ben Shipley - video transcript
Julian Simmonds - Excellent, well ladies and gentlemen our next speaker is Ben Shipley from Comscentre. Now Ben has a fantastic story to tell. In 2004 he started Comscentre out of his garage. From there he landed a big name client, Flight Centre, and since then he’s grown the business. He now has offices in Victoria, New South Wales and WA and is one of the leading providers of communication solutions for businesses of all sizes. So for those of you who are just starting up or looking to start up a business, Ben has a tremendous story to tell and some advice to impart about how you can start from the very beginning in your garage, so it was, and become one of Australia’s largest companies. So please join me in welcoming Ben.
Julian Simmonds - Thanks very much.
Ben Shipley - Good evening everybody. So with my talk, I’ve only got a single slide - well we’ve lost all the content there - to talk through, but I thought I might give you a bit of an overview of what our story was and how we grew from the garage. When we started in the garage, there was actually a stage before that and I’ve been told to tell this story. I broke up with my ex-wife two days before we - two days after we started Comscentre.
So I was downstairs in the garage and I thought, oh my God, what am I going to do? I sat back, and I can still remember looking and I had a big round desk like this and I had a phone in the corner and quite a large debt to the tax office at the time. I thought the only way to solve this problem was not to let it get me down but to go and pick up that phone, and that’s what I did.
In the first three months of Comscentre I made over 3000 cold calls and I was lucky enough, or I worked hard enough, I knew a couple of people, as I was based in Sydney at the time, who had supported me from previous lives and I won Flight Centre from the garage. That original Flight Centre contract billed over $10 million in revenue. I was always quite scared that that client would come to my office [laughter] and I avoided that for many, many years. That gave us our first impetus, our first start to Comscentre. We sort of sat back, or I sat back, and that gave me some funding to really go back and look at how I could change communications, where was communications going and what problems that I’d seen. I saw an opportunity for an Australian company to be built. I saw an opportunity to create something a little differently. I’d been very, very lucky and I’d learned some really good lessons in life from foreign companies, from Australian companies and been mentored.
I sat back and at the time our big supplier that I had the Flight Centre contract through, a company called Communico went bankrupt. I thought, oh my God, I’m going to through this again. One of the great things out of adversity I guess comes success, as the new owners of Communico that bought that bankrupt company realised they couldn’t run this big account, Flight Centre, without me. But they said they weren’t going to pay me this obscene amount of trail income and that’s a really important thing we talk about at the start of any business, what are your income sources?
Part of the lessons that I’d learned earlier in my life that you needed trail income, not dissimilar to council rates every year. You have to pay income, you want an income source that you’re going to pay every year so that you can budget for it. So when Communico went under and a company called Soul Pattinson came in, they said, we’ll renew your contract to give you all this money every month for trail income, which is the contract I had, if you go and sell our voice minutes.
But I knew there wasn’t an opportunity to sell voice minutes, I had to go back and look at what was the business problem? How could I provide value to a customer that nobody else could provide. I went and thought, okay the market’s over for providing cheap voice minutes. Just as a little bit of an aside, the concept of what we do is we provide, especially at the time, integrated voice, video and data systems so basically I’m a phone salesman. We provide telephones in people’s offices.
So I sat back and thought this new technology, which was coming out at the time, called voice-over IP or IP telephony, how could we take advantage of this new technology? I thought, there’s no way that just voice minutes are going to work. What we needed to do was bundle it. We needed to make sure we had an upfront lick, or we had some way of charging the customer upfront, and for our case that was hardware. So I would sell you guys a phone.
That meant I got a cheque from your guys when we sourced the phone, which could then start the business process off. But when I learned that you can’t provide somebody, and we talked a bit about the mining comment before, it’s very difficult to run a business when you’re just providing hardware because you don’t have the Council rates. I needed to get some rates. I needed to find some way that I was going to charge that customer every month for thereafter, both here in this local market and in other markets. That’s where the concept of managed services and that’s where the concept of providing each of the different pieces of the puzzle, so we provided the phones, we provided the lines, we provided the managed service and we provided the support.
By putting all of that together, I had a couple of things that the bank looked for. So Comscentre is a company - we’re very lucky we’ve been funded through, as I told you before I really didn’t have too much in my garage at home, so we were funded by the bank. The bank needs a couple of things when you go and talk to them for funding. One, they want to know that you’re not dominated by any single customer.
We talked a little bit a second ago when we started up the business, how do we make sure we weren’t being dominated by any single customer, was that we were providing the service, which meant that the upfront link, so we have no single customer that would represent any more than 3 per cent of our turnover. The next nearest customer to that represents less than 1 per cent of our turnover. That means that any one of my customers could go bankrupt, God forbid, and it’s been amazing we’ve been in business since 2002 and especially during 2008 we had about 10 per cent bankruptcy rates for a while there, especially in the small business part of our company.
So no business could send us broke, so if they didn’t pay the bill I wasn’t going to go broke, which meant I didn’t have to insure their bills. That was a key component to getting funding from the bank. The bank wants to know that. No matter how you’re going to get income, they want to know how you’re going to get income at the start, how you’re going to fund your initial deployment but then the bank also more importantly wants to know how you’re going to fund yourself if there’s a downturn in the economy that lasts three months, six months, 12 months. The key for that is services and providing services, not just here to the local region, providing to the external region.
I heard Lou mention before about some of the great opportunities we have selling over into Asia and we have an Asian presence in the Philippines and are just about to start an office in both China and Malaysia shortly.
The key to growing a company or key to growing a business is to look at the business opportunity that underpins it. I’ve got a next slide here, the single slide I’ve got for tonight, a really good message that I learned pretty early on. No, it’s gone. What am I going to do with my marketing guy? It’s how we made decisions through that initial part of the process and each decision as a business person. I thought - was told we’re getting some really good advice that could be every decision as a businessman needs to be made either to increase profits or reduce costs. That you could break down every single business decision into one of these areas. Either increase revenue, is this decision I’m about to make going to increase my revenue? Is this decision going to reduce my costs?
I was using this slide to sell to a whole heap of CFOs and wanted to illustrate the difference between the size of the two there. Or is it going to protect my stakeholders? I think that’s a very important third one because I think as a business person who also is a member of the community, we have an obligation not only just to our staff but to our community and to a number of other people that’re invested in us. We have a third one which I think is protect our stakeholders. But that means you can make a decision that if you’re going to upgrade your office, we’ve got a major process of upgrading our offices, why did we do that? We did that so we could increase revenue.
Our Melbourne office, when we started that particular business, was a dilapidated house that one of my partners in Melbourne had bought from his father, or got lent to him by his father, and if you got angry you could just kick the door in. Unfortunately once again we did have a customer come and visit that office. He came with the contracts and was quite a large customer, it was about $35,000 a month. He came with the contracts to hand off to us and we never saw that customer again. So the next day we made a decision to increase the revenue and we’ve got quite nice state of the art offices now.
The next decision could be to reduce your costs. You need to make, when you’re making a business decision, each decision based on one of these three things and if it’s not in these three things, the decision shouldn’t be made. When you’re sitting down with your team or with people or even with your external advisers, if you ask yourself, I’m talking about something, is it to increase my revenue, is it to reduce my costs, is it to protect my stakeholders? Really is this something we need to be talking about right now?
The other great tip I’ve learned about decision making over the years was also to make lists of each of those points, all of these competing ideas that you have, listing them down as one to ten. Low cost, low effort are the ones you should be doing first. High effort, high cost are the ones you should be doing last. If you break them up into three areas, high cost, high effort, low cost, low effort, you’ll be amazed how much clearer your decision making process becomes.
Go back to the Growing your Business Masterclass videos.