Sunday, December 21. 2008
We came very close to buying a floor in a CBD building some ten days ago. When I say close - we confirmed with our bank that they would lend us the money, made an offer to the agent which was accepted and we provided the details of our lawyers who would handle the transaction. In financial terms, courtesy of the much lower interest rates the deal was a 'no brainer' as the loan repayment costs were around 30% less than our current rent for 30% more space. So we were surprised to get a call back from the agent saying that the seller would take $50,000 less than our already agreed offer but there was a "slight complication but that could easily be dealt with".
We walked away.
That re-opened the issue of what we will do when the one year extension on our current office space in North Sydney expires next July. We now, or more correctly at this exact point in time, actually don't need as much space as we have due to the move of our support processes to Sri Lanka - so, if everything remained the same we could reduce our current floor space rental by at least 30%.
However, depending on what we finally decide over the next few days we may, for the first time in Exetels 'life', put in place an outbound sales operation, or more correctly, several outbound sales operations to address new market sectors with new products and services in 2009. I currenty think that's highly likely so it will almost certainly turn out that we may need more rather than less floor space than we currently have which was another advantage of buying the particular CBD floor we made the offer on.
We have also been considering the NSW government's payroll tax which is an annoying expense that has only been kept 'in check' by the fact that almost half of Exetal Australia's personnel will work for the Sri Lankan company by mid 2009 but if we replace those support positions with NSW located sales personnel then the NSW payroll taxes are a quite real disincentive to employ people in this State and we have begun to consider how we could eliminate that double whammy of expensive floor space and an unnecessary additional employee cost by perhaps moving to another State for at least the sales functions.
It is really annoying, and increasingly financially irresponsible, to consider employing people in NSW if there is any viable way of doing it in another State or even in another country. However there are many other reasons why doing that very sensible thing would be highly disruptive to the ways we currently operate the business so, when everything is considered, we will almost certainly have to continue paying money to the NSW government for the privilege of operating in this State.
Depending on what we fianally decide we will move from having no outbound sales personnel to having 30 - 40 sales personnel some time in the second half of 2009. For five years we have survived and grown the Exetel business based on a web site and some 'electronic' promotions which have generated the positive (or d***head/negative) word of mouth recommendations that allow a business to grow without advertising, marketing or sales personnel. We could quite easily continue to do that and continue to grow the Exetel business at the 30% annual compound rate we have have achieved to date. We may decide to do that.
The only reason that we are considering changing that, to date, very successful 'model' is that we are really reaching the end of the efficiences we can build into the business by automation and web innovation and will now need to address our ability to buy better from our suppliers which, I believe, can now only be done by buying in larger quantities than our current growth estimates will generate.
If we buy in larger quantities we will get lower costs which, in our case, will be passed on to customers in lower prices for our various services. It is that simple.
To generate more business we will have to ADD to what we currently do and in my limited grasp of how to generate more revenue/buying power that involves doing additional things. We have never had an outbound sales operation which is something that, for much of my working life, I seemed to be able to do personally and guide other people in doing better than anyone I have ever come across or heard of. For the whole of Exetels existence to date I have been unable to use those abilities and skills with all of my time being spent on operational issues and web 'selling'.
I suppose as I've now grown so old and haven't involved myself in direct selling for so long I may well be kidding myself I can still build a sales force from the ground up as I have done for much of my commercial career - that may well prove to be true.
Our current thinking is that if we can now add 40 people to an outbound sales function of the same capabilities and success levels as we have added 40 different people to all of the other aspects of Exetel's business (who have outperformed and continue to outperform people in our competitors who hold similar positions) then we will be able to build the buying quantities we need to reduce the prices of the services we provide to our end user's by around a further 7% - 8%.
That's the current 'theory'.
So, if you know a bright young graduate who is looking for a career in sales (must be located in Sydney) and isn't afraid of very hard work then perhaps you could suggest they send me their resume?
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Word of mouth and agents like myself have presumably been your best option to this point, but I guess I can see some validity in having an advertising arm just from the customer perception point of view.
I had a funny case this week where a customer had borrowed an Exetel HSPA from me for a few days but then a month later went out and bought a $60 a month 3 year contract one through Telstra because "he wanted the security of a blue chip company." (This was just after their value tanked due to the NBN fiasco, but I kept my trap shut.)
I was duely amused when it wouldn't work on their Vista PC and even two hours they spend on BigPond support couldn't get them up and running - they called me in to get it going and it was simply a case of no one had thought to put the battery into the NextG receiver! (Their sticks take a LiIon battery, presumably because they want more power than USB will safely afford.)
Anyway, the point being that perhaps if he'd heard of Exetel through more sources than just some computer tech driving a Kingswood, he might have had greater faith in your existence.
On the other hand, almost all other people I introduce to Exetel are quite happy with it and don't require any extra prompting via tradidional media; so I'm not sure exactly how having a sales force will compare financially to what you have now. I guess you won't know for sure until you try
Has the regional advertising that you proposed had any noticeable progress or outcomes yet?
I'm glad I'm self employed - there seem so many disincentives to employing other people so I live with the limitations of what one man, his car and his answering machines can do
The business brought to Exetel via agents increases on a month by month basis. We now have the first 'Platinum' agent (revenue in excess of $25,000 per mont) and several more close to that level.
The backbone of our agent program is people ike you who work for yourself providing on site support and we value your contributions very highly - especially those agents who joined us in the early months of the program and stuck with us through a few of the more interesting times we have endured.
If we do decide to build some sales forces they will be very specifically directed to various discrete markets and 'general advertising' won't be used.
In terms of country advertising with agents - that hasn't got of the ground yet for a number of reasons but we are anxious to push it in the new year.
Well if you seriously change your mind about running sales from another State, perhaps consider my home town, Adelaide? Our payroll tax is a bit lower, it's a more laid back & affordable lifestyle, plus we're only half an hour behind NSW.
And Adelaide already hosts two other high quality ISPs (Adam and Internode).
I find it astonishing that a State can actualy tax the process of employing its citizens - high or low.
Michael Kean is right about people not wanting to go with a company they haven't heard about other than the computer guy fixing the computer. Also it may be worthwhile looking into advertising ADSL1(telatra dslam) plans on rural radio for example 2WEB which streams about 400km covering several medium sized towns who are probably unaweare of anything cheaper than telstra. Might need to setup something to fax detailed instructions on howto setup modems and the likes for rural customers as internet forums and automated phones probably would not cut it. Just some food for thought. Might be stupid.
LIBS in government over in WA. Might be worth thinking about heh. No ugly yellow number plates either. I wouldn't come to QLD where i live. Too many smart people here. I love QLD but not for it's taxes(not too bad) and government(sometimes). Wouldn't know how much cheaper it is. Can sleep at night knowing it is not going to a NSW government.
It would be great if employees could benefit when payroll tax is eliminated when a company goes under 100 employees, i.e: it can provide an incentive for employees to be more productive to stay under the 100 employees threshold.
The other approach is to simply create another shell company.
We wouldn't want to break the law or indulge in anything that could be perceived as 'shonky'.
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