Latest / Scrappy but Successful [Consultant's Personalities When No One's Watching] / 18. Why 45,000 Australian Business Owners Walk Away With Nothing with Eric Tjoeng

Transcript

18. Why 45,000 Australian Business Owners Walk Away With Nothing with Eric Tjoeng · Scrappy but Successful [Consultant's Personalities When No One's Watching]

• 0:06
  What's happening everybody? Welcome to Scrappy But Successful. It's a show where I sit down with your favorite consultants. We take the comedic route through their life, find out if they're successful today because they're sophisticated or because they're a little bit scrappy. I'm your host, Jack Tompkins, CEO of Pineapple Consulting Firm, always helping small businesses become more data-driven. Fun fact of the day, got an Aussie on, so we had to do an Australia fun fact. Australia has the longest fence in the world. It is longer than the Great Wall of China.
• 0:33
  It's over 5,600 kilometers or almost 3,500 miles for those of us in the US. It's called the Dingo Fence. It's meant to keep dingos out of the southeast region. Eric, I have no idea if you know anything about that, but that's neither here nor there. I am joined by my friend Eric Tjoeng. He's the founder of Business Growth and Exit Specialists, BGES for short. It's a boutique business advisory firm in Sydney, Australia. They help clients grow and exit successfully, but more importantly, they help them view that strategically.
• 1:11
  Good afternoon, Jack from Down Under Sydney. Thanks for inviting me to the show. That's a good question. I think the answer all depend what is your definition of scrappy yourself. I guess, most probably a combination of both, most probably on the sophisticated side, but obviously with creativity and being resourceful and all that to make business successful. Maybe there will be a bit more of the scrappy side.
• 1:58
  Very nice. Okay. We will see if the data agrees with you. I have to ask with our fun fact. Have you heard of the dingo fence before? Yes, but you know we in Australia more focus on the fluffy people like sort of koala for example. That makes sense. Everybody loves a good koala. All right, let's start from the beginning. Take me back to the beginning. Where'd you grow up? Did you have any entrepreneurs in the family?
• 2:45
  Yes, I actually grew up in Indonesia. My parents actually migrated from China. And yeah, all my family basically entrepreneurs, you know, they have been involved in small medium sized businesses in fashion and retail. My parents did so. My brothers and sisters, you know, still doing it. So basically, being born in that environment with the hustle and bustle of doing small medium-sized businesses, you know, always busy, something new, something got to be done, challenges occurring. So it's in the whole lot.
• 3:55
  In retail. Yeah. How early were you working in your family's businesses? I guess most probably, you know, 10 years onward and start helping here and there. You know, family business is all about getting together, supporting each other, being resourceful and making it work. Obviously one of the critical ingredients is reliable resources at no cost being the children like myself.
• 4:50
  I actually like any businesses. Retail is fun because obviously fast moving, very volatile. You know when I was younger, even at school age, we started to a joint venture, we actually booked a comedy show that is very popular back home in Indonesia and tried to make money out of it. Unfortunately, didn't make that much money, a small bit, otherwise I would have been doing very well by now.
• 5:36
  You know, we just basically put the show, manage that, promote it, and then, you know, we get all the cast to do the normal comedy show. 12 years old. I told my parents, got a brilliant idea. I think I'm going to make a lot of money. Can you lend me some money? He said, all right, as long as you pay me back. At the end, best is to pay them back with a little surplus, but certainly didn't make me rich. Hey, a 12 year old making money - we'll call it an investment. We'll take it.
• 6:41
  My first real job is actually when I finished my uni. I actually started with Deloitte. That actually shaped, you know, the way what I'm doing now, who I am now. And I've been working with global companies since in a management and senior executive roles. That's where my journey has been and then moved into small medium business advisory.
• 7:14
  Absolutely. I think with my first 20 years of professional career with all the blue chip companies, it totally changed the way I think about running business. For me to move down to SME - small medium sized businesses - know, take an example of my family. They are really good, work hard, they are good at certain things, just go, go, go. Virtually like 90% of the time focus on action, delivery. Where else in larger companies, their success is based on strategy, very structured. What is the game plan? How do you move from A to B? And what the financial result is going to be?
• 9:34
  Yes, small to medium size. Our range in Australia, the revenue is between 250,000 and 200 million. I have nine partners working within the team. The reality is, business is a journey. You start, you scale, make sure you're there, you increase your business value and you exit. Why I think we have been quite successful is we actually combined a whole lot. So we help businesses to understand why you want to scale, what you need to scale, to add value and be exit ready.
• 10:54
  Yes, that is one way to go about it. Why often we focus on transformation, right? So what we say is, this is your business as is. If you want to go to point B, for example, I want to improve my profit by 200% within three years. We actually tend to be more creative. We transform the business. We actually change the business model. For example, the product and service you should focus on because the demand will be there, the margin is big, and then your customer service model and the type of customer so you can manage your cash flow.
• 13:27
  That's where the power comes from. That's why I think people like you and experts like you is invaluable in terms of us helping our businesses. Because at the end, you need to have some data whether it's about the company, about the past, or the data about your competitors, the market, whatever, to make an informed analysis and decision. I guess 12 years ago, I ended up being a general manager of a 1.4 billion company - an automotive group, the sole importer and distributor for Hyundai, Audi, and Tim La Crisole in Australia.
• 15:31
  Everything is quite strategic, everything is based on data and information. When we do a marketing launch, we actually monitor the foot traffic going to dealership and also the orders. If we see the expectation is not there, we actually talk to the marketing agencies. Our marketing budget was really, really big, talking about tens of millions every year. They actually had one week to change the approach, to react. That's why I said, okay, if you do a lot of thinking, got the system and information, that's how you're going to be successful.
• 17:35
  I joined CAC Partners and became the joint CEO. I was there for 10 years. We had 60 partners in Australia and New Zealand. I focused on virtual CFO. Later on, I found out that focusing on one area of business is good. You know the numbers, you know what it means to take action. But unless you're holistic, you're only as strong as your weakest link. That's why I formed my own company that will be more effective in helping small medium sized businesses by being more holistic and practical.
• 19:39
  First client actually knocked on my door. Said, Eric, you've been working with CAC Partners. Have you ever thought about running your own business and helping people like us? He said, if you move and form your own company, I'll be your first client. He actually at that time had an IT company. And he said, look, I'm going to bring a few of our friends. Look, I'm working with Eric, he's working. Why don't you ask him to do it as well? So they encouraged me to form Business Growth and Exit Specialists in 2015.
• 20:53
  Just off and running because by then I'd been around for a while. I had seven partners joining me from day one. Yeah, I guess I believe in them all. Not after I migrated to Australia, actually came here quite early in the late 70s. My brother, he has been a brilliant entrepreneur. He always encouraged me, said, Eric, you know, go out there, be yourself, be creative. Don't follow everybody else.
• 23:26
  Most probably 20 years older than me. I'm the youngest of the family of seven. We are very productive back home. One or two is nothing. Seven is a number. Twelve is even better, even for my football team. No, it's only me. My mom always encouraged me, said go into the bigger world and have a look what is out there, learn something good and progress yourself. So for us being in Indonesia, Australia is perfect.
• 25:40
  I love study. I have six post-degree qualifications. Study to me is just like reading books, like a hobby. This is really interesting. So you're very young when you go to Australia and you go, I'm just gonna keep learning and keep learning and keep learning. You start with Deloitte, you've got this very sophisticated background. You then start your own business. You told me this really interesting statistic - 200,000 businesses exit every year in Australia, but something like 25% just leave and don't get anything for it.
• 26:15
  That's correct. More interestingly, the other 20% basically just shut down. They don't know what to do. They say it's all too hard. So the 25% they cannot sell. The other 20% say it's all too hard, I'm just shutting it down. With the Australian business landscape, 90% of them are small or micro. Now maybe 60% are solopreneurs. And if your business is making at least half a million in profit, that is saleable. But under that, the market is actually pretty tough.
• 28:49
  Yes, next 10 years. I think next 10 years is going to be my best 10 years. We already have a couple of successes in the team. So it would be by management buyout. Our team know what we are doing, and we want to maintain the legacy. We want to keep up the momentum. Our retention strategy is, you come with us, we actually have some younger generation now which is part of the succession. If you are doing well, certainly you'll be invited to be a shareholder.
• 31:17
  Yes, definitely. Our methodology is based on 12 years experience in the real world. One of our key success factors is we've been there, done there. I started businesses myself, I scaled businesses myself, I have exited businesses myself. For business exit, when people come to us, first thing we say is, do you know what is the value of your business at the moment? If you say not really, wouldn't you think it would be a good starting point? Only 10% of owners actually know their business value.
• 33:46
  A lot of them have inflated expectations. For example, if you've founded the business, your baby is always beautiful, isn't it? My business is worth a lot of money, I've been working 30 years. But when you try to be pragmatic about it, using certain methodology to value it, that is defensible as a starting point, they say, wow, okay. That's where we say, if you want to double that within three years, it's doable. We identify upfront who those people would be interested, what would they be looking for. Let's make sure they tick the boxes before they exit.
• 35:41
  Both. You know, book is good, but more static. What's exciting about podcasts is they're quite interactive. The question can be unpredictable and normally the answer you get is really the genuine answer rather than overthinking. Maybe too many business cards. A lot of them now using technology. Some people are not realistic. I try to talk to them in the practical way. If you say I'm too busy, I said no, I think it's not going to work. You need to spend money to make money. You need to spend time to be successful.
• 38:49
  No, no, no. If you speed, but you focus on the wrong thing, you can crash it faster, right? Speed, if you go in the wrong direction, you get there faster, you hit the wall faster. But strategy, that's how to make sure that your journey, you don't hit the big wall and crash and die. That's strategy. We don't focus on fancy, but we focus on a place that gives a different environment. The team or our clients say, wow, there's something different. We change place every time, we do slightly different things every time, make it more interesting.
• 40:34
  Too many. Maybe there is a better way to go about it. I have more than 3,000 unread, but they are mainly in promotion and social. All my primary always being answered because our promise to our contacts and clients is that we will respond to your email by next business day. And we are very religious about it. Our service level is second to none because we promise we'll go back to them. Even just a short email to say, yes, got it. I'll come back to you in two days.
• 41:51
  No, we are actually quite systematic about it. We have a certain structure based on performance. We do our sort of team review every six months - more focused on what is working for them, what's not working for them, what sort of training do they need. And then 12 months with performance review based on KPI. Even role-based KPIs, data-driven through and through, Eric, I love it. Give us in one sentence - what makes your business awesome? I guess it's our strategy.
• 43:11
  It sounds like there's a track record to prove the strategy. There's data to inform and build the strategy and you're doing this for yourself, you've done it for businesses big and small. I was trying to find some scrappiness but I'm going to go 100% sophisticated, Eric. I love it. Thank you. Thank you. With small medium sized business owners, I think it's good for them to think that you grow your business with intent - with exit in mind. Plan two or three years ahead at least. But the earlier you do that, the better you are going to be in terms of reaping the reward for your blood, sweat and tears in building your business as an entrepreneur.
• 44:29
  Start early, start strategically. Eric, thank you so much for coming on, man. 100% sophisticated, this was a blast. Thank you, Jack. I much appreciate it. Enjoy this podcast.