John Linton 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?