AFR Fast 100 star’s 5 tips for business success

2. A small piece of big pie is a better bet than trying to bake a new one

“A business selling something millions of people already buy is a safer bet than one that’s offering a new product or service. The Atlassians of the world get lots of media attention, and deservedly so, but there’s a good reason those companies are called unicorns.

“Most industries, particularly in Australia, are dominated by a few major players. Both the telecommunications industry in the early 1990s and the energy industry five years ago were $50- to $60-billion industries dominated by a handful of complacent organisations. By grabbing a small piece of the pie in those industries, I was able to build several substantial businesses.”

3. Find a niche, serve a segment

“Along with wanting to create something new, I’ve met aspiring entrepreneurs who are fixated on creating a billion-dollar business. In my view, they’re almost better off concentrating on creating ten $100-million businesses.

“With all my businesses, I’ve remained focused on servicing a particular segment of the market. For example, Next Business Energy provides affordable, user-friendly energy deals to small- and medium-sized businesses. It doesn’t try to service other segments, such as households or big businesses. It doesn’t aspire to be a major industry player. I’m content to have a nimble, profitable, mid-sized company with a strong corporate culture.”

4. Challenging times can be useful

“I have a telecommunications business in the UK. I’m often struck by the different mindsets of the British, who were affected by the GFC, and we Australians, who weren’t. Not many Australians under the age of 45 have experienced  what happens when an economy falters.

“At some point, probably in the next couple of years, my opinion is that the Australian economy’s run of good luck is going to end. My advice to Australians who have a business, or are planning on starting one, is to put strategies in place now to ride out a recession. Work out how, for example, your business is going to cope with an increase in bad debts and hold on to customers who are still solvent but struggling.

“It’s in challenging times that having a strong relationship with your banker also really helps. If you’ve maintained that relationship through the good times, they’ll be there for you if things get tough. NAB have been there for me.”

5. Other people might just know what they’re talking about 

“The one thing my father, who had a consultancy business, drilled into me is that if you’re going to own a business, you should own one with ongoing revenue streams. A business where you only have to sell to customers once and they keep paying you for years is likely to be a good business. I’m glad I had the good sense to listen to my dad about that.

“I wish I’d listened more closely to all the people who told me launching an energy business would be a nightmare, given how capital-intensive, complex and highly regulated the energy industry is. The last few years have been the hardest of my career. There have been several close calls.

“Things happened to turn out extremely well. But if I had my time again, well, I most likely would still have done it but perhaps with more insight. You always have to take into account the opportunity cost of starting a large business; it usually means you won’t be able to pursue any other business opportunities for at least several years.”