Despite tough seasons and fluctuating demand, an agricultural machinery maker in rural Victoria has doubled its turnover in five years - but success required technological and cultural change.
| Entrepreneur |
John Richards |
| Company |
GoldAcres Trading |
| Business type |
Agricultural machinery manufacturer |
| Founded |
1965 |
| Employees |
80 |
| Head office |
St Arnaud, Victoria |
| Contact details |
+61 3 5495 1166 |
Key Learning Points |
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Technology
New enterprise-management software can require a culture change in order to fully realise all its benefits.
Tradition
Is your business stuck where it started? Think about this: if you started from scratch now, where would you locate your business?
Demand
How much stock do you really need in hand? Strive towards achieving on-demand manufacturing and minimising fixed labour costs.
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The Goldacres Story
No fancy office or suit for John Richards, owner and Managing Director of the agricultural machinery maker GoldAcres Trading. When CEO Online meets John, he’s dressed in a sensible country style with an open-necked shirt and a polar fleece vest. He sits at a desk covered with papers in his office adjoining the GoldAcres front office, where staff bustle about, phones ring and the door is always open.
GoldAcres is based in the pretty country town of St Arnaud, 230kms north-west of Melbourne, where the rolling hills of the St Arnaud Range flatten out into Victoria’s wheat belt. Richards says that GoldAcres was not founded but evolved from his father’s St Arnaud business as a general merchant. At 23, Richards took over when his father died in 1965 and gradually changed the business from retail agricultural merchandising in to a specialist maker of agricultural spraying equipment.
The Challenge
How to survive the boom and bust phases of the agricultural industry. Richards says: “The big problem for us in this business is the highs and lows, the fluctuations. You can have a period here where the phones don’t ring and you’ve got a staff of eighty to feed.” And when times get busy, the problem is how to operate and expand a commercial business in a small country town where the pool of skilled labour is insufficient to meet the staffing needs of a company the size of GoldAcres.
The Solution
Richards says it is essential to know your market and develop a flexible response to its demands. For farmers, a few good falls of rain can spark a sudden rush of activity. “Supply and demand in this industry is a combination of economic, emotional and weather conditions.” If farmers are confident, they spend money on machinery. So it is essential to keep track of which agricultural sectors are confident and focus marketing efforts on them.
GoldAcres has developed strategies for understanding and responding to the vagaries of its market in innovative ways. Apart from his core employees, Richards employs casual and sub-contracted staff when demand for his products is high. This flexibility enables him to react quickly to the inevitable market swings and keeps his cost base manageable. The company is also an on-demand manufacturer, only swinging into action when orders come through.
Computer software has also helped keep the business quick and responsive to market changes. GoldAcres bought an integrated ERP (enterprise resource planning) software system - Epicor Vantage, designed by Epicor Software Corporation - in 2005 to manage all facets of the business. It cost $200,000, including implementation, and provides a complete end-to-end manufacturing system suited to the core business needs of make-to-order and mixed-mode manufacturers.
The new software system has forced changes on the business, moving it from a small private enterprise culture to a more corporate structure. Richards says: “We haven’t changed direction, but we’ve spent a lot of money trying to do what we do better and we have increased turnover.”
Finding and keeping good staff is a problem in a small town. Richards has what he calls “ a mish-mash” of incentives to attract and retain staff, ranging from company cars, computers, phones, laptops and bonuses. But it is still hard to attract staff to St Arnaud.
In February 2006, the company opened a new manufacturing plant in Ballarat, where it is easier to find skilled staff. The Richards family has lived in St Arnaud for four generations but the business has outgrown its town. “It’s just too difficult to distribute and manage a business that’s marketing all over Australia from a place as remote as St Arnaud.”
The Result
In the past five years, despite difficult farming conditions in much of Australia, the company’s turnover has doubled to $20 million. In 2005, GoldAcres won the Machine of the Year Award at the Elmore Field Days for their Prairie Advance sprayer. Increased turnover has led to better opportunities for attracting specialised staff, as has the expansion of the business to Ballarat. The business is concentrating on developing at a steady, organic growth.