A new CEO at a failing business worried that his first big break might be his last. And then he got on with the seemingly impossible: cutting costs and improving service.
| Entrepreneur |
Deven Billimoria |
| Company |
Smart Salary |
| Business type |
Outsourced salary-packaging administration company |
| Founded |
2001 |
| Employees |
95 |
| Head office |
Sydney |
| Contact details |
+61 2 9299 9111 |
Key Learning Points |
|
Networking
Allow time to network - the most unexpected contacts can lead to business.
Staff wisdom
When in trouble, ask the staff what the problems are. They have a grassroots view of what needs fixing.
|
The Smart Salary Story
When Deven Billimoria was appointed CEO of Smart Salary in 2002 the company was in serious trouble. It had just come out of administration and had big cashflow problems after two consecutive years of losses. There was enough cash left to operate for six months.
Initially, Deven was overwhelmed. "I was pulling my hair out thinking, ‘I can't believe that I got my first chance to be a CEO and I'm going to be an absolute failure. I've got six months to get a major client and we've never had a major client before, so how am I going to do this?'"
Smart Salary provides an online administration service for salary packaging, enabling employees to restructure their income to include ATO-approved benefits in their gross pay. Ultimately, this reduces their net amount of tax.
The Challenge
The fledgling business was cash-strapped and urgently needed large institutional clients. But first it had to get known as a credible service provider. Deven says: "We really had no credibility, which made it very difficult."
Deven determined that service would be the key selling point for such clients. "We had to improve the quality of service, and get referrals from all our clients. We then had to go to market and tell it that our clients are saying they get fantastic service."
Finance was also a key issue. The business was losing $100,000 per month. To recover, margins had to be rigorously managed. "The hard thing is building your systems and your processes in step with the resources that the company has available, both in terms of the people and dollars."
The Solution
With no spare cash, Deven could not increase investment in the systems that would improve the quality of service for his clients. So he had to work hard to get the most out of what he already had.
This translated into an intense period of two years working 90-hour weeks and personally overseeing every part of the business. "It took a bit of TLC and back-office handle turning to make sure that the issues [didn't] present themselves to clients... Within two months, we got the service humming to the point where we could get testimonials."
He talked with his back-office staff and asked them to list the top three issues that were hurting service levels. Some were easy to fix, such as incorrect fax numbers on Smart Salary's letterhead; others were more complex, such as simplifying the language used to explain what salary packaging is. Deven made a log of which clients had received bad service. Staff were encouraged to check the log before working with a client so as to prevent any repeat errors with clients.
Networking helped spread the company's reputation. The first big client in Deven's crucial first six months came via a contact at an accounting firm. "You never know what link is going to lead you to what thing. If I hadn't known that guy ..." Deven also promoted the fact that Macquarie Bank was the company's financial backer. "Macquarie really brought us a lot of credibility."
Margins had to be tightened. There were inefficiencies in the way staff worked, with many tasks effectively being done twice. Deven had to slash staff numbers: "When we had no money and no clients, we had 35 staff. We did some house cleaning and had just 17 staff at our low point."
Deven recognised the extra stress he was placing on his staff with the rapid increase in their workloads. He was careful to keep committed staff on board, and to explain their vital role in the challenge Smart Salary was facing. He only invested in systems and staff as the client base expanded. "If you plough a whole bunch of money into systems and people [that's not economically viable] - and you can't lag behind your competitors, because you won't be able to get any bigger."
The Result
Smart Salary became Australia's second-largest salary packaging provider in 2003. It was sold in June 2006 for $38.7 million to Paxys Incorporated, a Philippines-based IT company. It was on the BRW Top 100 Fastest-Growing companies list for three consecutive years and was a recipient of the 2006 NSW Telstra Hudson business award for companies with 52-100 employees.