Geoff did eventually buy into the business and we hired the right person to get the accounts balanced. I was thrilled to have him become a part of Boost. Geoff's buying into the business was simple; we agreed on a price, he handed me a cheque and that was it. I know lawyers are a necessary evil but if business deals could be done based on a handshake and someone's word, profit margins would certainly be a lot higher.
The handshake deal
After a short review of the numbers and many meetings later, Janine and Geoff agreed that he would invest in the company and he acquired 24 per cent equity in Boost Holdings. A handshake deal cemented the relationship and, according to Geoff, ‘this formulated a level of trust that was vital in the early, stressful days of growth. Both I and Janine were co-directors, and we wore the risk of offering personal guarantees, and took on the pressure from the banks and financiers/landlords/staff and so on. But, as the saying goes, without risk there is no reward. We both powered ahead with complete trust in one another'.
Geoff had a goal to utilise his knowledge and share it with another start-up. He then met Jeff and me and, thankfully, it was a perfect fit. Geoff quickly became my mentor; he was so generous with information and his experiences. In the coming years, we worked closely together and the direction of Boost changed in many positive ways. I spent many, many hours on the road with Geoff, looking at stores and picking his brains. We would meet at least once a month, and during these meetings I would always bring out my long list of questions about various issues that I was having at the time. Geoff is one of the good guys; he is honest, loyal and a true Aussie bloke if ever there was one. Geoff expanded my personal business knowledge dramatically.
Adding a Boost to Viva
As Boost was growing, we were always on the lookout for growth and synergies, so we had a relationship with our competitor Viva Juice. As mentioned, in 2002 we had a chat about merging but, due to unrealistic valuations, nothing eventuated. Two years on, however, we ended up concluding a deal for the purchase of the Viva Juice business. By that stage, we had over 80 stores and they had 24 stores, all owned by Viva and not franchised. They were the only real competitor we saw in the marketplace, and the owner had secured some great sites in the Melbourne and Sydney airports, which prevented us from getting into these positions.
The acquisition was a monumental learning process on all levels, because it was the first business that I had ever bought, so off I went on another massive learning curve — this time, learning all about acquiring a business. I learned the difference between a share sale and an asset sale, for example, because if we got this wrong it could cost us thousands in tax and risk exposure. Getting solid advice and working with consultants and lawyers that we trusted was critical. The legal arrangements were extraordinary, and the process was painfully long and detailed — in all, the negotiations lasted six months. In some respects, however, the process was aligned with my strength of being detail-oriented. And even though it was stressful, it was invigorating to complete.
My girl power team (Kristie, Naomi and Jacinta) came into their element through the Viva Juice acquisition. As I mentioned, in the beginning none of us really knew what to do — we were all doing it for the first time. However, we all cared enough to make sure that we got it right, which we did. The research and pulling of favours from all of our contacts ensured that we made the acquisition a success. Kristie was beside me until the final sign-off on the deal. I have now watched Kristie go from being a keen and passionate young lawyer to being a married woman with two beautiful children and her own law consulting firm, and I am so proud of what she has become.
Turning the tables on the ‘experts'
According to Janine's early lawyer Kristie, Janine's is the kind of intelligence that's ‘always refreshing to be around because it's the “raw kind” that stems from a curious mind'.
At meetings with Janine, Kristie says, ‘I enjoyed watching her level the playing field. If we met with someone with expertise in a chosen area, often the meeting would start with the “expert” (lawyer or otherwise) lecturing Janine on what this person assumed Janine did not know. The expert's assumption was often right and Janine would openly admit it, which would make this person act even bolder or sometimes more arrogant. Of course, that's when Janine would “turn the tables”. She may not have known what the expert was talking about at first but, by asking a few simple questions, she would very quickly understand the topic. And then with one swift statement she would turn the tables and leave the “expert” dumbfounded'.
On the very last day of the Viva deal, I was called into the legal office in Melbourne's CBD to finalise a number of minor points, having been told this would only take 30 minutes at most. I had been having dinner with some friends, so I remember arriving at 8 pm. The Viva owners were in the other room going through the so-called minor points. Issues started to go back and forth between the rooms, so we decided to get into one room to finalise these points. We left the boardroom at 11 am the next day. In utter disbelief, I clearly remember watching the sun come up; we had been negotiating all through the night. I do remember a couple of emotional outbursts and one walk-out, but the deal got done. Strategically, this was a great win for us; mentally it was OMG! We were already growing at a store a week, and now we'd thrown in converting an additional 24 stores and getting the Viva staff on board — it was a great lesson in change management. I remember hearing the Viva owners cracking champagne and celebrating the sale; all I could think about was what I had to do next to make this work.
A tired mess after the all-nighter, Kristie and I found a local gym where we could have a shower. Jeff met me at a cafe in the city and, I admit it, I had a bit of a meltdown to my husband that day, and may have demanded that he buy me something that ‘blinged'. After four years of growing the business and realising what was on my horizon with the additional stores to bring on board, I was beyond tired and emotional. I must have had a furious look, because Jeff went straight into a local jewellery store and indeed bought me something that ‘blinged'. The funny thing is, I am not even into jewellery; but it helped to signify another chapter in the journey.
Business Woman of the Year
As I've mentioned, franchising worked for Boost. At the start of 2004, we went out for dinner to celebrate our successes. The business was now turning over $1 million a week. And 2004 continued to be a massive year for us, with the Boost machine of training, building and marketing in overdrive. We were opening a store a week, and every day I seemed to be creating another spreadsheet for a system or process. The people who reported to me called me the ‘Task queen'. (I had discovered how to use the Task tab on Outlook and it was my saviour.) I could now effectively track the millions of moving parts that were Boost.
In 2004, we were also in ‘The Top 7 Businesses' in BRW's annual list of top 100 fastest growing businesses in the country. The hysterical thing was that same year I made the list in BRW's Young Rich list. The reason this was so funny? We had not taken a cent out of the business; every dollar made was put back into the business. For the first three years, I didn't take a salary. In year four, I did and it was $35 000. I was one of the lowest paid staff members at the time. I went shopping the day the article came out. When Jeff saw all the bags and raised an eyebrow at me, I smugly said, ‘Have you not read BRW? Apparently I can afford it!'
And this was the same year that I won the Telstra Australian Business Woman of the Year award. I was absolutely thrilled, surprised and honoured, and the award was a pivotal turning point for me. The awards ceremony was the first time in over four years that I had networked. I had sourced out businesspeople here and there for lunch and their advice, but never in a larger group. With this award came the opportunity to meet some of Australia's most amazing and inspirational women. One was Launa Inman, who was the managing director of Target Australia at the time. Her journey from South Africa to becoming one of the leading businesswomen in retail in Australia is profound. I have enormous respect for Launa
— not just as a businesswoman, but also as a friend. The other person I connected with was Judith Slocombe, who started out as a vet. She had her own pathology business that was purchased by Gribbles, and she's now the CEO of The Alannah and Madeline Foundation. What she has personally done for this foundation is quite extraordinary.
Both of these women have also won the Telstra Australian Business Woman of the Year award. They too are mothers and wives facing the similar challenge of balancing their lives with their love for business. All of us enjoy what we do. We have a passion for creating and driving forward this think tank we call business. Between the three of us, we have 15 children (Judith has the lion share with nine). Although we do not catch up as much as we would like, we meet at the national Telstra awards dinner annually and are on the end of the phone whenever needed.
Cracks in the foundation
We were hot! Revenue was pouring in. Store sales were increasing year on year by nearly 30 per cent. Obviously, all the partners were happy and making money. We seemed to be flying. That's when the cracks started appearing.
The first crack was something that I didn't even see coming. The success of the brand meant franchise opportunities were in hot demand — and our early franchise partners knew it. They were onselling their businesses, sometimes for five times more than they paid for them. We could not legally then (and nor can we today) tell people how much they could sell their businesses for. However, problems emerged because the banks were lending to the incoming Boost franchisees, helping them to cover the premium sales prices. The consequent enormous repayments were making it difficult for the new franchise partners to make a profit.
I sourced out Lesley Gillespie, one of the founders of Bakers Delight (a company that had also used franchising to expand), and she told me this was a common problem. I was a massive fan of Bakers Delight and still think they are another true Australian success story. Lesley is a down-to-earth, no-nonsense woman who right from our first meeting was warm and likeable. Bakers Delight had been around for 25 years at the time, so they had gone through many of the same issues we were now facing. She shared some of the solutions that worked for them, such as the system they used for franchisees to report their financials (she was kind enough to actually give me the spreadsheet as well as permission to use it), and how they trained their incoming franchisees.
A number of uncontrollable environmental factors also put enormous strain on the ‘new' franchisees, in addition to some of the large loans. The second crack in our success started when A Current Affair (ACA) ran a story on juice bars, attempting to show they weren't such a healthy option (which made my blood boil, because we do everything to be healthy). Remember — Boost isn't just about selling smoothies and juices. It's about offering a whole experience that ends with, ‘I feel good about myself for choosing Boost'. For example, you walk into a store, the music is playing, there are bright, fun colours, and happy people and delicious fruit are all around you. Ideally, you're served by a smiling, happy, young person, and you walk away with a great experience and a healthy, great-tasting product. Now, if we get any of these things wrong, the concept will not work.
ACA stated that juice bars were adding sugar to their juices, and that one juice or smoothie was equal to a Coke or a Big Mac. Our first reaction was that no-one in their right mind would believe the story — that we physically added sugar to our juices or that having a soft drink or a burger was equivalent health-wise to a highly nutritious juice. To our surprise, some people actually did believe it. To add to the drama, Today Tonight, the main competitor to ACA, did a story paralleling the claims about juice bars. This really got the public questioning whether Boost added sugar to our juices and smoothies, and wondering if our products were indeed as healthy as we said. I was horrified. I could not believe that people had started to doubt us. I thought if they saw how rigorously we vetted every product — if they realised how much time and effort went into taste, health and delivery — they would never believe these claims.
And then, as if this predicament wasn't bad enough, the Australian Competition and Consumer Commission (ACCC) got involved. With over 50 competitor juice bars opening their doors, some claiming all sorts of health benefits, the ACCC stated that they would be investigating all juice bars and their claims. The problem was this: Boost was the largest juice chain, so people just assumed we were the ‘juice bars' the ACCC were after. The ACCC investigation was never directed at us, because we complied with all requirements and rules; our health claims on each product are 100 per cent backed up and documented. The customers did not know this, however; they only read the headlines.
The icing on the cake (if you will) was when Bondi Council in Sydney blamed Boost for the litter on the beaches in their area. I found myself on radio station after radio station defending our honour against the ACCC and Bondi Council. Over and over, I explained that we had never and would never put sugar in our juices — and surely people were responsible for putting their own rubbish in the bin.
All of this attacked our core principle of ‘I feel good about myself for choosing Boost'. Sales went from exceeding forecast, to flat, and then to negative growth. When your business starts to go in the wrong direction, it takes everything you have to stop the slide and turn it around. The worst thing: people believed what was written about us. It was simply wrong and unjust. I was crushed. What I needed to do was ‘get over it', start to look within the business for solutions and not be a victim.
During this insane time for Boost, Jeff was amazing to have on my side. Having been in the tough, ruthless world of radio for 22 years, he had learned a thing or three and enjoys a good battle. (I think Jeff has read every war book ever published.) He is a very strategic thinker and sees the ‘big picture' quickly.
The first thing we did was hire a lawyer for advice. We believed what the networks did was misleading. We contacted both networks and worked out an agreement, and they then assisted us in getting the correct message out in the media.
The second battle was the perception of our packaging and, by extension, its environmental cost. Were the cups we used the best product for the environment? We contracted an environmental firm to compare and contrast. At the end of this report (and a dozen other reports we checked), it was conclusive at that time, that foam was indeed the best product for takeaway packaging. (Of course, new developments in packaging are always taking place and so we review our products on a yearly basis. Based on these reviews, we have now moved to a paper product for our cups, and we will continue to look at ways of creating a lighter footprint on this planet.)
The third thing we did was hire well-known nutritionist Shane Bilsborough and hop on the PR train to get our message out: ‘A smoothie or juice is always a healthy option!' Our philosophy on health is really simple; in fact, Dr John Tickell explains it the best. He says people would not have a weight or health problem if they did not worry about the latest diet fad, but instead followed the low-HI diet, or low-human-intervention diet. In other words, a diet that includes food that is as ‘close' to the tree or ground as possible, and contains little or no processed foods. Let's not kid ourselves — if you read the back of a packet, can or bottle and find a ridiculous amount of numbers and words that you cannot pronounce in the ingredients list, you know that's not low-HI food.
By implementing these strategies, we were on the road to fixing some of the root causes of the external cracks at Boost, not just bandaging them. I could finally breathe.
Checking our internal cracks
All of the solutions mentioned in the previous section were great and they worked, but our biggest success came through picking up a mirror and looking hard into it, to see where the really major problems were. We had gotten complacent, arrogant and reactive. Growing to over 100 stores in four years meant we had also started to show some cracks internally, including in our staff training and systems. Our stores were looking tired, and so was our team. We just were not attacking every part of the business — so th
at's exactly what we did.
Geoff Harris's view was that we needed to keep the business compartmentalised, which would then make people accountable for their own areas and expenses, and reward people for their successes. So that's what we did. We broke each part of Boost into simple pieces. We began to get back on our toes and think proactively, reviewing and changing how we reported, cutting $2 million in expenses, and building a strong profit centre mentality in the business. No longer was there a black pit of expenses, as we reviewed small things, such as printing double-sided and only in black and white, as well as larger areas. We renegotiated everything we could, from our auditing and accounting costs to our raw ingredient contracts. We worked harder and smarter. The business became better because we took a hard look at ourselves — rather than blaming the world for our woes.
Part of the marketing campaign to get back on track was hiring the latest hot hunk Tom Williams as our brand ambassador. New South Wales was struggling, so Jeff also came up with the ‘Week Day Sucks' campaign. We invested heavily in PR and ran tactical promotions on television, press and radio.
On the HR side, I again spoke to Lesley (from Bakers Delight). She was generous not only with her time but also with her tools, which never in my wildest dreams had I expected. During our meeting, we discussed all sorts of topics, including the challenges that she had faced growing a franchise network. Most of our discussion came back to the same thing: people. The horror stories were people-based and so were the success stories.
The Accidental Entrepreneur Page 15
