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CHAPTER 4
Timing is everything

Having the right product or service (I'll call these the ‘product’ from here on in for simplicity) at the right time is essential when starting a business. You can have the best product in the world but if the world isn't ready for it, you'll face a high risk of failing.

If you need to educate the market you'll burn a lot of cash, and when starting a new business for the first time cash is usually a very limited commodity. If you run out, it's literally ‘game over’, both for the business and possibly for you personally as well, which can set you back a long way in life.

You might find that you're too late to the market because someone whose timing was perfect has beaten you to it. There's good and bad in that. On the bright side, they may have spent the money required to educate the market. However, they will have also taken the lead brand position, leaving you to play costly catch-up trying to position your brand over theirs. In addition, you'll have to do things better than them by further disrupting the market (see chapter 9 for everything you need to know about disruption).

Technology is a classic example. With technology you can do many incredible and wonderful things, but if the product or application you've developed doesn't solve a problem currently facing people or businesses, you're going nowhere fast. If you believe it does solve a problem, but people just don't know it yet, then you'll have to do a lot of educating, and getting the message through to the market will be expensive and must be carefully planned.

Our first family business, Regency Food Services, entered the market at a time when most takeaways, restaurants and hotels had many providers for every category of product. These included groceries, frozen foods, fresh meats, dairy, confectionery, salads, smallgoods and even packaging. We entered that market on the back of a trend we saw happening in the United States that we were also seeing signs of in the eastern states of Australia. The trend was called ‘total foodservice’. It involved a rationalisation of the industry whereby the categories were combined under large, consolidated companies, providing the convenience of a ‘one-stop’ service to the customer. Regency Food Services was the first organisation to really bring the total foodservice concept together in South Australia and was well recognised nationally, winning Australian Foodservice Distributor of the Year in 1997. This positioned us extremely well when Bidvest, the first multinational in this sector, came into the market in the late 1990s and targeted our company for acquisition, resulting in a very successful sale in 1999.

My most recent venture, ZEN Energy, is another example of being in the right place at the right time. The company entered the market in 2004 when there were very few mainstream residential solar energy providers. At that time, articles on climate change were just starting to emerge in the newspapers and our prime minister, John Howard, was introducing the first subsidies for reducing carbon emissions in the home. The solar industry was still in the realms of ‘weird science’ for most people, who didn't understand the technology.

If you've done it yourself, you'll know that researching what's involved in installing a solar energy system in your home — wondering what components to choose, who should install it and how to claim a rebate — can be confusing and time consuming. What the industry lacked at the time was a fully branded and integrated home solar energy system where the company and the components used were completely trusted. It was an opportunity to pioneer a new industry and create the leading brand in the market.

Initially, we called the company ZEN Home Energy Systems. We brought together manufacturers to produce the components under our brand and to match the high-quality components into a fully integrated system for the residential market. We kept the offering simple, going to market with four systems that powered from one-quarter to all of the average home. It was a brand that people loved and could identify with, but most importantly it took away the need to understand the technology and instead delivered it to the market with a simple choice of systems that people trusted.

Having the right product in the market at the right time resulted in the company reaching dizzying levels of growth over the first few years. While the rest of the world was going through the global financial crisis, ZEN was achieving year-on-year growth in excess of 400 per cent, winning Australian Entrepreneur of the Year in 2010 for the Cleantech sector and reaching number 4 on BRW's list of fastest growing companies in Australia.

The lesson here is that timing is critical and having the right product at the right time raises your chances of success enormously.

If you're not sure of the market timing, you need to revisit your validation model and conduct further research with your potential customers to understand whether they would buy your product, and whether they would buy it at the price you believe you could deliver it for. This might mean going back to the drawing board a number of times to get the product fit and market acceptance to a demand level that makes it viable to launch your product. You must also consider barriers to entry so that people can't easily copy what you're doing, whether this is for protection of your intellectual property or your business model in the form of a patent. This also applies to protecting your brand and logo by applying for a trademark (I'll elaborate on this in chapter 13).

Timing really was everything for SWEAT

The convergence of technology, lifestyle and fitness provided the perfect timing for a business like SWEAT to evolve. As Tobi says, ‘Everything happens in cycles’.

The fitness industry can be broken down into:

retail (gyms and personal training)
hardware (equipment)
product content
combinations of the above.

Tobi recalls:

Our timing was fortunate as there were a couple of big trends happening at the same time. Retail had gone from ‘Big Box’ expensive gyms to 24/7 moderate-service but convenience-focused gyms as the whole industry realised convenience was key. There was also the realisation that preference, variability and variety were becoming more interesting, which saw the rise of ‘pop-up’ style fitness boutiques, which also became popular.

This meant ‘specificity’ was of high value and SWEAT was hyper-specific: we were female only, largely high intensity, very targeted outcome and we knew who we were targeting.

They also knew that the internet, and more broadly ‘digital’, was becoming a thing, and they didn't have to use ‘crappy infomercials to sell dodgy DVDs’ that presented the ‘get abs in 30 days type of junk’. Tobi laughs and says, ‘I train a lot but I doubt that I could get abs in 30 days!’

They were able to develop the product/service mechanism with the new tech enablement and digitisation that was happening combined with the ability to get to market on social media, which many competitors didn't yet understand — yet their business really grew up with it.

There was also a massive attitudinal shift bubbling away in the background, with women in particular getting very tired of the aesthetic stigma that existed in the media — that training was all about having a ‘thigh gap’ or ‘being slim’ or ‘this or that’ — when what women really wanted was just to feel good and feel confident.

If you look at the intersection of all those things, there was an aggregation of opportunity in both the demand and supply aspects of the business. In Tobi's words:

We were able to build digitised supply at very low cost to get started with low barriers to entry. We were able to supply product and content in a way that hadn't been done before so we were ahead of the market. From a demand perspective we had accessed some new channels where our audience was that were still really in their infancy as far as the business models were concerned. Facebook advertising had really only just begun, videos weren't even on Instagram, messaging wasn't on Instagram — it didn't exist!

Tobi continues,

We could see it evolving and we persisted, knowing it was right for our business model. It's often difficult for founders to extract themselves out of the position they are in to see the bigger or biggest picture.

A mix of bad and good timing for Haigh's expansion

The first big growth Haigh's had was when they opened in Sydney in 2005 (their second attempt) and into the Strand Arcade. Jurlique was moving stores as it needed more space for treatment rooms and the corner site became an opportunity that Haigh's took up before it even went to market. The rent was high, and John Haigh thought his sons Simon and Alister were mad for paying so much. But that store became their highest turnover store nationally within 18 months!

Simon says, ‘We were totally underprepared for it’. Haigh's had strong brand recognition in Adelaide and Melbourne, and they had failed to predict the number of ex-Adelaide and ex-Melbourne people who had moved to Sydney and the resulting brand recognition that quickly came with that. Haigh's just wasn't geared up to produce the amount of stock that the new Sydney store was adding, and for six to eight months they were playing catch-up just to service the demand as queues at the Strand store were out the door. Capacity wise, this drove everything else within the business to grow and keep up.

Their original launch into the Sydney market was tied in with the failed launch of the Georges of Melbourne department store into Sydney. Georges was a Melbourne institution and a true Emporium, providing exclusive goods and meticulous service, before it was sold to the David Jones department store business in 1981. David Jones later tried to replicate the culture of Georges and launch the brand in Sydney, but sadly the uniqueness of the brand was lost on the Sydney market, and just didn't work under the David Jones national operational model. Haigh's, which was a key feature of the Melbourne format of the store, initially went into Sydney as part of the Georges launch and was subsequently caught up in the failure of the two Georges sites, one at Double Bay and the other on the 7th floor of the David Jones store in Elizabeth Street.

You can't always choose your timing, but it's something you need to be prepared for. As a company, Haigh's has always stayed nimble and responded to opportunities as they emerge, learning key lessons in being prepared along the way. Simon says, ‘It may not always be the best decision, but we must be able to make quick decisions when an opportunity arises’. Sydney (second time around) became the new focus, with plenty of demand — in fact, the second Sydney store, which opened two years later, was positioned only 500 metres away in the Queen Victoria Building. Haigh's now has seven stores in Sydney, one in Canberra, seven in Melbourne and seven in Adelaide.

The Canberra store was an example of being prepared. The shopping centre was a new type of centre that had a clearly defined gift area and associated experience, which is what Haigh's shops are best suited to. The centre operators approached Haigh's, and the location was seen as a perfect match for the brand. The store was designed, approved and built within two months — a record for Haigh's!

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Table of Contents for CHAPTER 4: Timing is everything

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CHAPTER 4: Timing is everything