Not too long ago, Euroclad was a small business, focused on residential cladding solutions, plastering and maintenance. Now it has more than 50 staff and is working in a booming construction sector. The business is hitting every growth target set twice as fast as expected - even when they sometimes felt the numbers were unattainable.
Euroclad's co-owners Rachel Berkett and Neil Purchase talk about how they went from an S to an M on the SME scale without jeopardising success and profitability.
What does Euroclad do?
Euroclad specialises in exterior cladding systems and specialist plaster finishes. Over the last four years alone we have completed more than 30 major cladding projects in both the residential and commercial sectors, with a combined value of more than $15 million. This includes the renovation of Ryman Healthcare's Princess Alexander, Frances hodgkins and Grace Joel Retirement Villages in Napier, Dunedin and Auckland respectively.
How did you prepare for growth?
Euroclad has always had good foundations. Due to the nature of the work we are involved in, building confidence and trust is critical. Our point of difference is having strong relationships with customers, staff, subcontractors and suppliers. We have developed a positive workplace environment, and get a lot of repeat clients. But we were concerned that sometimes there was a tendency to "fly by the seat of our pants". The company was very traditional. It was run as if it was a sole trading business because that was how it had been built from the beginning. Three years ago we recognised we needed a mind shift and we needed some strong systems and processes. But because we were relatively small we needed someone to help facilitate change so we didn't burn bridges. We chose to team up with accountants and business advisors Bellingham Wallace.
What was the most pressing issue?
We needed to review the structure of the company and improve reporting lines. This included looking at the roles of the directors and their areas of focus. We set up an advisory board to provide governance so our reporting and our discussion around strategy and risk became more focused and deliberate, instead of ad hoc or even by accident.
As a small business, it's easy to base business decisions on emotion or "gutfeel". But as you grow, you need more business discipline. We documented our processes and made sure we knew exactly what our financial position was and where the growth was coming from. It helps us be clear about where we are at and where we are going, and it gives us confidence to make business decisions based on facts.
It's often a challenge for company owners to move from working "in the business" to working "on the business". How did you deal with that?
We reviewed roles within the company and shifted to each employee sticking with their core skills, instead of one or two key people in the business doing everything. Now the company outsources their marketing, and engages an external leadership development consultant. We realised we don't have to be experts in everything, we can just do what we are really, really good at.
How important was goal-setting?
At Euroclad in the past we would do a lot of talking, without a commitment to any action. Any company can set goals, for example, where we want to be in three months' time, that's the easy part. The new processes really emphasise accountability and have introduced the discipline we needed to drive action. Actually, we have found ourselves hitting every growth target we set twice as fast as we expected - even when we sometimes felt the numbers were unattainable.
Much of the early growth was around efficiencies, but now we are in a strong position to take advantage of the upturn in the market and use that to create sustainable growth. We also simplified certain aspects of the business; the plan was to get rid of complexity, as this equals waste in a business.
Succession planning - surely it's a bit early to be talking about that?
We want a company with the foundations for long term growth, so we need to look at what happens when we are no longer leading it. We want to grow the business so we aren't working ourselves to the bone for the next 20 years and then just walking away. Still, when Mike and the team at Bellingham Wallace started talking to us about our exit strategy, we were thinking "We only just got here!"
Fresh thinking from Auckland acccountants and advisors Bellingham Wallace
Bellingham Wallace Director Mike Atkinson and senior accountant Ash Clarke both believe that Euroclad is poised for continued growth and that the measures the company has put in place will future proof it - even when the construction sector cycles back down from the current boom.
By planning for internal succession, managing cash flow and putting in place critical systems and processes, Euroclad has laid a strong foundation to support its future growth. This is all managed through the structured androbust governance framework that provides the glue to keep it all together. It's all about keeping them strong and helping them grow.