by Janine Allis
We retained the services of my friend's company Wingate and once again embarked on a new learning curve — selling part of our business. The important thing for us was that we maintained real control of the business — that is, we would still control the day-to-day operations. Where our chosen PE partner came in would be to assist us in our international expansion, use their expertise at a board level and be a good supportive partner as we continued to grow Retail Zoo.
During the initial interview process we met PE companies that were ‘shockers' — some of which we wouldn't ever consider doing business with. (We felt like we would be playing with the devil.) We were then introduced to Riverside, an American company, and, after meeting all the partners in Riverside, we were quite comfortable they could meet our objectives and would be a good fit both personally and for Retail Zoo.
We started discussing a possible deal with the partners at Riverside. Selling part of my fifth child was an excruciating experience for me. However, I knew it was the right move to make on a very personal level, enabling us to take hold of opportunities that we have always dreamed of.
We still maintained a major share in the business and, more importantly, we still controlled the day-to-day running of the business. The reality of any decision is that you never know for sure how it will play out. There is always a ‘honeymoon period', when everyone is on their best behaviour. Fortunately, it turned out that our new investors are good to work with. The honeymoon period is over and Riverside are focusing on what they do best — finding new acquisitions for Retail Zoo — and leaving us to do what we do best.
Recognising one of Australia's premier brands
For Geoff Harris, the two key growth elements in the Boost business were first getting to $100 million in turnover, and then to a $10 million profit. Geoff says, ‘Both economic indicators proved that Boost had arrived as a very serious business indeed in Australia and was now on the international radar for investors.
‘After resigning from the Boost board in 2010 and selling down to a 6 per cent holding in the company to Riverside, l have a real feeling of being part of something special. A brand that is indeed one of Australia's premier brands, and one that has achieved its success with real expertise, class and verve from Janine and Jeff as the founders and main shareholders. They both deserve immense credit for their vision and business skill'.
Boost Juice is a vastly different company from when we started — as it should be. All of our executives now have shares in the business, allowing them to participate fully in the success going forward. The future is truly exciting for Retail Zoo.
Often I think how lucky we are that both Jeff and I have the business in common, as it keeps us on a similar path. Although we have different approaches and it hasn't always been easy working this closely, we have an enormous respect for each other's talents. In any and every battle, I want Jeff beside me.
A new age of Boost
In the early days of Boost, we spent our time developing the systems that created a foundation on which the business could grow. At the same time, we were hiring people and training them into the ‘Boost way'. All this takes time. If your business is only a year or two old, often people have not been with you long enough to truly add value. Mostly, I find it takes three months for people to immerse themselves into their role and a further seven months to be the best they can be. So now, looking around the office and seeing people who have been with Boost for one to fourteen years tells me the business has a great balance of experience and new up-and-comers.
The Boost team is passionate and committed to continuing to create an Australian iconic business that people want to be a part of. From our ‘rough around the edges' Boost general manager Adam, to the knowledgeable and experienced Olivia (who runs Boost's international division), all team members have the care factor and passion needed to make Boost what it is today. I love the debates that we have — all based around making Boost great. Another great example is Lealie, who runs our company stores. I love hearing how excited she gets when talking about a new team member showing signs of being a rock star or about her new venture, the Super Team, which is focused on showcasing our superstars. I love how excited and passionate she is about creating a great team that is world class.
I am very proud of the people we have within our business, and every day I am in awe of some of the innovations that are coming through to continue to keep us at the top. As I have mentioned in this book before, businesses are like a football team — you need the experienced people with the steady hand who have lived through many of the lessons of the past, such as Adam and Liv, and you need the new up-and-coming superstars such as Christian (our digital manager) and Nikki (our marketing director) to continue to push the boundaries of what we can achieve.
When you start a business, there is a start and a middle — and then you wonder, What is the end? Is there an end? Do I pass this onto my children? Do I do something else? I have started this business, risked everything and put everything into the business; how do I balance my business and my life? What do I want to do? Do I list on the share market? Get partners? How do I maximise the return? But then how can I hand over this business that I have created? You will ask yourself these questions (and millions more) during the journey, and I continue to ask them.
As I mention earlier, I have never been caught up in the percentage that I have owned of the business, rightly or wrongly. I started the business owning 25 per cent with lots of shareholders to share the risk. This ownership increased and decreased over time, with Jeff and me owning over 65 per cent at one stage. For me, the most important thing was control and I learned very early on that you can control your business when you own less than 50 per cent — it's all about the wording in your shareholders agreement.
I've come to realise through Shark Tank how many people think that the magic number is 51 per cent, but this is not the case. Many people are too concerned about parting with equity — and, in some respects, you should protect your equity — but if you get a partner who can add value, the smaller percentage you have can end up being ten times more valuable than owning the whole business.
Partnerships in business are sometimes even more valuable than cash or equity, and I learned early that having great partners on your business journey can make the journey a lot easier. (For the record, the reverse is also true. Get the wrong partners and it is a nightmare.) Our use of private equity a number of years ago has been good for us. They certainly did not assist in the operational side of the business, but I did learn huge amounts about buying and selling businesses. Every few years we will assess our approach and control of the business to ensure our arrangements are still the best for us and the business.
A rainbow of culture
As I mentioned, focusing on international markets and travelling for Boost meant I experienced all kinds of amazing cultural practices, from the boardroom to national festivals. I have honoured the practice of Ramadan during a visit to Malaysia and sat opposite a full Arab board, in traditional white flowing dishdasha, in Kuwait. On the king's birthday in Thailand I have worn traditional yellow in celebration, and acknowledged the hierarchy order when entering a room. I've even learned the simple but important ways to present your business card in different cultures.
My most memorable day-to-day experiences come from sampling local fruits as we localise the menu in each region. Each location has its own unique local fruits — some of which I'd never tasted before — and this made for some very interesting faces and amazing surprise discoveries!
A major challenge of working internationally is the language barrier and this sometimes requires interpreters, extending even to the interpretation of body language. It was interesting to discover that some gestures are not universal — and some gestures you really need to keep to yourself in particular countries if you don't want to offend people in the street! Sometimes simply being a woman in business is novel in itself. In some countries we visit, women have the same rights as me
n in the workplace. But this isn't the case everywhere and we have experienced countries where the notion of gender equality does not sit easily. Through personal experience, foreign businesswomen will be treated with great respect and courtesy but, regardless of the actual seniority of our party, there is still an assumption that the male present will naturally be the decision-maker. But I have never found this to be an obstacle for me in business — again, there is a lot to be said for the power of being underestimated!
Olivia Elsley has been with Boost since the very early days of our overseas expansion and has spent nine years translating the Boost Love Life ethos into countries all around the globe.
Adapting to local markets and opportunities
For Olivia, Boost doesn't approach master franchising in a ‘cookie cutter' way. According to Olivia, ‘The two critical factors for us are access to fresh fruit and unique local fruit, and good local manufacturing or robust reciprocal importation laws so we can ensure a quality supply of frozen yoghurt. But we understand that we need to be sympathetic to the local environment and palate. We know our brand and we know how to keep the core of our brand strong while taking advantage of the unique aspects of the local culture that set it apart from other locations. It's this flexibility that gives us a huge advantage when we're taking on a new territory and it's also led to innovations in the business that help to keep our global operation nimble and exciting.
‘For example, India was absolutely fantastic and we made up around 50 new recipes when we went there because they had so many incredible unique ingredients like turmeric and lavender, rose water and red carrot. Some of the drinks we came up with were used for a national campaign back in Australia.
‘The need to be more flexible and localised in new territories also extends to the business model in some cases. For example, in South Africa, they have been operating in petrol stations for two years and the UK has developed satellite sites in larger shopping centres because a single outlet wasn't enough to manage the sheer size of the centres. These are innovations that we have been able to learn from and begin to adopt back in Australia and in other countries. The advantage of operating on a global scale is we can test ideas in one market and then roll them out in another market when we know what works and what doesn't, so the trial and error phase only needs to happen once. Boost then becomes the sum of the value of our experience in all our marketplaces — which is hard to compete with at a local level'.
Rise of a global empire
Back in the early days of Boost, when we were running the business out of our own home and testing recipes in the kitchen, I never thought I'd be writing about how our little operation had grown into a global empire. But having grown Boost into Australia's favourite juice bar, focusing on taking the concept offshore seemed a logical next step. We now have over 370 stores operating throughout Australia and around the world, and we're operating in more countries than any other juice bar in the world. This far exceeds my wildest dreams at the start of the journey. We've seen absolutely amazing growth, with an average of two countries and 30 stores opening somewhere in the world each year for the past four years. And the journey isn't over back home either, with new stores opening in Australia every week.
You have to grow your business; it's your job as a business owner. Each year you need to grow the business and find ways to improve and be the best you can be, and growing internationally was one of the strategies that we implemented to achieve this. Our international strategy was not to look at a region and focus on it, which is what many advisors would tell you to do. Ours was a ‘master franchise' strategy, where you grant the right to a partner to grow your brand in another country. For this strategy to be successful, rather than focusing on finding the right region, you need to focus on getting the right international partner — a partner who understands the brand and what it takes to be successful. They need the right capital and the right attitude and then maybe they will succeed. Unless you have done it, no-one truly understands how hard it is to create a brand from scratch. It takes time, money and sometimes everything you have to create a brand. It has taken over ten years to get to a point where we have finally got some critical mass in some territories, but the vision to be the world's most loved and known brand will become a reality — I'm just not sure exactly when!
What I learned from my adventures
Here's what I've learned in my time so far with Retail Zoo:
Having money in the bank does not make you happier; however, it does create the financial freedom to do what you want, not what you have to do.
I look at businesses as children: in the early days, they need every part of you; as they grow and become more mature, they still need you but in different ways.
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THE GIANT LEAP
If, like with Boost, your domestic business has grown at such a pace that this country can't contain you and you're standing on the edge, staring into the great unknown of international expansion, then congratulations! You have achieved something truly amazing. Pause for a moment and celebrate your achievements. This is something we often forget to do in the crazy world that is running a business but you should always take time to appreciate how far you've come. But what if you're just starting out and part of your launch strategy is to break into a foreign market? When is the right time to launch into a new territory, how do you know your business is ready and how do you choose the right market?
Get ready to jump
Let me preface this section with the comment that every business is unique in the area of international expansion, but I think fundamentals can still be applied. The way that we have expanded overseas is by using a ‘master franchise' model. You can enter overseas markets in this and other ways as follows:
Direct entry: where you open your concept 100 per cent with your own money and you run the business as you do in your home market.
Using a distributor or licensing the product: where you appoint a business to sell and market your product in that country and they take a percentage of the sales.
Internet-based sales: where you run your business from Australia or elsewhere and you simply send your product overseas.
Master franchise: where a business pays you an upfront fee and ongoing royalty and they incur the costs of growing the business in their market, and also get the profit from their enterprise. (For example, Domino's in the Australian market is under a master franchise agreement.)
I am sure there are a dozen more ways but, however you launch overseas, there will be positives and negatives.
Following are the top five things I learned from my experiences in expanding overseas:
Arrogance leads to failure: Just because your business works in your country doesn't mean that it will be successful in another. Take Starbucks, for example. Despite the overwhelming research that identified their coffee was not for Australians (because it was too weak and the Australian market had a sophisticated coffee palate), they still could not believe that Australians didn't like Starbucks coffee. They continued to invest, without adjusting their product or approach to meet the Australian market, and it failed. Boost's menu has differences in every country and we listen to the customers in each territory and adjust. McDonald's also learned their lesson in India. McDonald's first entered the Indian market in 1996, but they took millions of dollars of losses before adjusting to a menu that Indians loved. When they first entered India, they offered a Big Mac made with lamb called the Maharaja Mac but only one vegetarian option — when, as the managing director of McDonald's India has since admitted, half their customers were vegetarian. McDonald's India now also offers a local burger, the aloo tikki burger, which features a patty of spiced potatoes and peas. I think this is helping, but they have a long way to go.
It's all about the people: Currently our model is a master franchise model, which means the master franchisee pays an upfront fee and ongoing royalty to use the brand, systems and processes, and they then grow the business using their capital in th
eir designated region. You will no doubt talk to very smart people on how to launch in each country and I am sure that some of the advice will be valuable. But all of our international wins and losses have been people based. We researched the big companies, who have multiple brands and lots of dollars and resources, but that option would have meant we became one of many, and we would have lost what makes Boost special. We tried the passionate people who simply ran out of the money required to grow a brand. At the end of the day, you need both the focus and passion from a partner who understands you and your brand and has the financial resources. So what is the strategy for growing a master franchise successfully? The answer is to find the right person and get to know them over time and, if you are happy that they have the right attitude, funds and infrastructure, you have a higher chance of success.
It's also all about relationships: As with all good business relations, communication and relationships are keys to success. We have a strong team of people dedicated to the international part of our business, and they have a solid communication system in place to ensure they communicate and work closely with our international partners. If you do not communicate with people, what they make up in their head is always ten times worse than the reality. For example, my son Riley called me to say he had some bad news he wanted to tell me when he got home. I immediately went to the worst-case scenarios: he has got a girl pregnant; he's had a serious accident; he is in trouble with the police; he has drug problem … By the time he got home, I was a mess. In the end, his bike had been stolen from school.
