Many family businesses fail at the second generation. But Hardings Hardware has made itself into an award-winner.
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Entrepreneur: Bob Harding, Chairman and Chief Executive Officer
Company: Hardings Hardware Pty Ltd
Business type: Building supplies
Founded: 1958
Turnover: $54M
Head office: Victoria: Reservoir, Cranbourne and Geelong West
Contact details: +61 3 9469 7777
The Hardings Hardware Story
In many family businesses, there can be stagnation and a loss of drive as the founding entrepreneur ages or passes on the company to a second generation. But that has not happened at Hardings Hardware Pty Ltd, a family owned business that was established in the working class Melbourne suburb of Preston in 1958.
In 2001, the company won the retail category at the The Age/Dun and Bradstreet business awards. The awards are made on the basis of business performance and financial management. So how has a 44-year-old family hardware business managed to keep such a sharp edge?
The company's chairman and CEO, Bob Harding, knows the hardware retail game. At 16, he began working full-time at Hardings, for his father, Robert, the founder of the business. Bob Harding says the business his father started was not a buildings supplies category killer. "The way you could best equate it these days would be to your local milk bar - only it was related to hardware," he says.
In the early days, the business catered mainly to plumbers. But in the late 1960s and early 1970s, it began selling to the rapidly expanding market of builders. Harding says: "It was still a corner store operation and people liked dealing with us. The number of staff increased from about ten in 1968, to about 20 in 1972 when Dad left. There are now about 100 at three locations, Reservoir, Geelong West and Cranbourne."
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Key learning points:
- Recruitment - Hardings has a comprehensive staff-training program. The local TAFE college wants to use Harding's trainee program as a model because of the success it's had with retaining staff which learns from its core management team. The company believes in giving young people a start and meeting the parents of new employees.
- Managed risk - The company is financially cautious and spends time and money on planning, but it is also prepared to take a calculated risk depending on economic forecasts.
- Business plan - Hardings knows that it is a hardware business and it has stuck to its core business.
- Service - In the hardware business, relationships with customers are everything. The company makes good service a top priority throughout the company.
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Harding says the company has always been extremely conservative financially - and he believes that this is one secret of its long-term success. "We have no bank overdrafts, which we are quite proud of; we pay cash for everything; we don't hire-purchase or lease - so subsequently the money is put back into the business."
Continual re-investment in the business has kept it up-to-date. Hardings' executive group manager, Greg Skene, says its information technology has been steadily developed. The company has two full-time programmers who maintain its IT system, which uses a Unix framework.
Skene says that IT spending is strictly practical. "Our cross-referencing between what we buy in and what we send out is excellent and we are making continual improvements in that area. We are not at the real cutting edge of technology PC-wise, but we're more than adequate in what we do in regards to our customer invoices. They like to deal with us because of the accuracy of how we invoice."
The company makes 10,000 deliveries a month from the three locations using 15 trucks and a number of utilities. All vehicles have the Hardings' signage as part of a comprehensive marketing campaign.
"We regard our vehicles as moving billboards all sign written at a cost of $3,000 per vehicle, we know what signage is worth and people see us coming a mile off, it's all about retention of the name."
In 1995, Hardings began marketing 'Bob's Bargains' - selling discontinued, ex-display, shop-soiled and inexpensive products. The lines complement the brand-name lines in their showrooms.
Harding keeps a close eye on cashflow. His first task each morning is to review the value of orders placed and the value of goods received the previous day. He says: "That is important because it lets you know how much you're spending."
Harding also values his employees - and they clearly enjoy working at the company. Some staff members are the third generation of their families to work at the business. For many, Hardings has been their first and only place of employment. The executive team of four has a total of 75 years experience at Hardings Hardware.