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Business ties up the market
Customising clothes and corporate gifts is proving a great career move for Jeremy Chen and Tim Molloy, who left IT jobs to run a business.
Originally retailing ties, they changed direction in January 2010 after discovering there was more demand for custom branding.
Tim and Jeremy changed their business name from Tied Up to Promotive and have since been custom branding caps, umbrellas, polo shirts, pens, luggage sets and other corporate gifts.
“We were struggling in the retail business with increasing rent, wages and decreasing number of people wearing neckties,” Jeremy says.
“The industry kind of picked us in that we had a few large corporates approach our stores asking for custom branded ties. We found these to be a lot more lucrative than waiting on shopping centre traffic to come to us.”
Promotive started branding ties, which are still its biggest seller to schools, sports clubs and companies. It then branched into branding other clothing such as shirts and polo shirts.
The business now sells to other businesses and expanded to go national and international. “Due to the traffic on our website we have also started servicing international markets,” Jeremy says.
Promotive has four local staff and 12 offshore in the Philippines. The business sells locally, nationally and internationally.
“Our customer base is very large and diversified – almost anybody from a local sporting team through to a large multinational,” Jeremy says. “Our primary focus is on the schools and corporate sectors.”
The business has a large focus on online marketing and innovative product development, which gives it an edge. But Jeremy and Tim wanted help to take it to the next level.
“Being relatively young, we had so many questions and not that many answers,” Jeremy says. “We were also really bad at the financial and planning side of the business and went about everything in a very unstructured manner.”
After finding SBMS on Google, they were matched with mentor Keven Diggens.
Keven spent 20 years learning world class marketing, sales and financial skills in multinational companies in the UK and Asia, ending up as a General Manager of a business in Australia. He then purchased his own, very small business in Melbourne and developed it into a profitable, internationally recognised leading supplier to the building industry.
SBMS is a non-government, non-profit organisation of volunteer expert mentors who give their time and experience to help small business. It is supported by Small Business Victoria, which refers clients to it.
Jeremy and Tim have had 10 sessions over two years and mentoring is continuing. The initial request was to advise on staff structure to handle expansion and to help develop a structured financial plan to measure sales and investment performance.
Keven says they first focussed on how to best specify the separate roles of the two directors and then on the structure, job descriptions and remuneration for planned new employees.
They then discussed setting up a reporting system comprising profit and loss budgets, monthly profit and loss reporting of actual versus budget and a management meeting to review progress.
“As part of this process the clients were encouraged to consider the business’s vision and how that could best be achieved,” Keven says. “This has been an ongoing process and should be in place for the start of the 2014 calendar year.”
Keven, Tim and Jeremy also discussed divesting the poorly performing retail division, branding and trademarks, websites and other matters relating to the core business.
Several meetings were spent evaluating in detail the opportunity for a new web based business with potential worldwide applications and how this might be funded.
As a result, Keven says the business going forward will be managed in a professional manner with a budget and monthly reporting systems. Profitability has improved and the business has steadily increased in size.
“They have an improved understanding of what’s needed to run the business, improved skills at working on the business, increased sales and profits, greater safeguards against losing focus,” Keven says.
Profits have increased by 30 per cent and sales by a smaller amount. While the business has fewer customers, they now spend more. All staff members have had wage increases.
The improved bottom line was made possible by focussing on profit reporting rather than turnover reporting, allowing the business to market products that were increasingly profitable.
Jeremy says by taking a broader view of the financial calendar they also identified low and high times when cash flow was expected to take a hit and when it was stronger. “This has allowed us to plan our marketing budget and grow our business,” he says.
Jeremy says the mentoring helped “massively”. Without it, he says the business would be a year or two behind where it is now.
“Financial planning, forecasting and budgeting was almost non-existent,” he says. “Since meeting Keven, he has helped us address this and focus on areas that are not performing and the reasons why.
“Indirectly there is reduced stress as we know what to expect from our numbers. There is also more stress from knowing what numbers we require.”
Keven was particularly helpful for Tim in gaining better insights into financial reporting, budgeting and forecasting.
“Previously our 'off the cuff' method was quick but left a lot to be desired as far as accuracy goes,” he says. “Five per cent here and five per cent there added up to numbers that could be up to 30-40 per cent off so it really wasn't good enough given the way we were headed.”
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