Ben Trotter – ST Fab
Business Turnaround Graduate
Who is Ben Trotter?
Ben Trotter’s my name, based in Thomastown in Melbourne. The business is called S T Fab. I had the opportunity to purchase a 50% share hold in 2017. We’re primarily steel fabrication, so we do a variety of work. We do specialist engineering work for tower cranes, for Clark Cranes, MCG cranes, based in Melbourne and also companies in Sydney and Canberra. It’s not the first business I’ve owned. I’ve owned fabrication businesses prior that were larger in scale. I’ve chosen to run this business on a smaller scale as it’s a lot easier to manage staff and clients, and quality.
How Did You Find The Business?
We were half way through this project in Canberra and [Cam] asked me if I would be interested in buying a 50% share in the business that he had currently running at the time. It made sense because my boss in China at the time was looking for a fabrication shop in Melbourne because for every container that you import, there’s always an extra or an add on that you need, and you need to do locally.
Finding partners that are aligned is very, very difficult. I was very, very fortunate with Cam because we had that alignment in the goals that we wanted to achieve out of this, so he didn’t have a partner at the time and he could see that we worked very well together. We worked well as a team. We had common goals and it just made a lot of sense to combine our resources.
Negotiating The Price?
This business was quite run down. The plant and equipment was quite run down. There was a lot of lack of maintenance. There’d been lack of care. The original offer compared to the offer I made was a lot less. My offer was for 50,000 for a 50% share in the plant and equipment, it was accepted. I knew exactly what this business looked like. I knew exactly what it was capable of and I was very, very clear on what my valuation was and my offer was going to be. As far as good will goes, the businesses do have goodwill and it is worth something. It’s an established business.
It has existing systems in place, it has existing processes and while they need work and they need some improvement, you have very good employees and you have very, very good customers. You have an existing system, you have existing plant and equipment and it works, and tomorrow we walk in the door and we can generate sales.
The first thing I do is I have a good cleanup. I’m fairly particular on lean manufacturing and the lean process. Every square meter of a factory floor has a cost and has the ability to generate revenue. So as part of the process of cleaning up, we look at what is taking up production space, what is needed there and what is what we call waste. What I found with this production schedule, it lowered stress levels within the business with myself, my partner, staff, dramatically.
As far as an exit strategy for this business, we entertained selling it last year. We had a valuation of it. At this point in time, we intend to hold and to keep working. The valuations that I’ve had for this business in its current form are probably five to seven-fold what we paid for it when we entered it. We haven’t offered it for sale. We’ve had valuations in and around that.
My goals for business growth is I want to continue to develop my importing business because there’s huge opportunities here with the infrastructure boom that’s going to be happening in Melbourne. My primary motivation is business takeovers and acquisitions because there’s going to be an enormous amount of current business owners retiring in the coming years. These businesses don’t have a rock solid succession plan. A lot of businesses that are family owned, the children and the family members are not keen to take it over. If you start a business from scratch, you have to go and buy it or hire it.
The Advantages Of A Business Takeover
Taking over an existing business, the clients are there. They just ring up, they send an email, they expect their orders to be delivered the day after a new owner takes over just like the day before the new owners take over. That’s instant cashflow. That’s instant productivity. To set up a business compared to taking over a business, depending on what it is, if it’s a shop or a franchise, you might have a half a million or a million dollar fit out before you’ve even traded and raise your first dollar in revenue. And the return on investment is long and drawn out.
A takeover, generally the assets have depreciated. They’ve been depreciated a hundred percent and they are at book or scrap value. If that business was to close and those assets were to be sold, they are sold at value less the cost to get those assets to sale. So for businesses to close up, sometimes there’s just very little value and this is why vendors are very motivated, because they see the value in what they’ve got and they know if they don’t find a buyer for it, they know what they’re faced with to break up a business and sell the assets.
My Journey With DG Institute
The support in this group is second to none. I’ve witnessed it for myself. I’ve been able to achieve a lot through this group that I wouldn’t have been able to do otherwise. Running a business is very dynamic. There’s a lot of stuff at play there. You’ve got to have an element of legal mindset. You’ve got to have an accounting, finance mindset to running a business. And quite frankly, it’s probably impossible to do all of them and do them all well.
A coach comes in and guards and mentors you through the darker patches that you’re not sure of. Gives you clarity. What I’ve been able to achieve with coaches in the past in a week or two would take me five to 10 years, even if I managed to do it at all. Like Dominique has always said, “A body in motion stays in motion.” It starts to become a subconscious action. Every morning you get out of bed, you’ve got your list and you know if you don’t action it, you’re going to be held accountable for it. The most rewarding thing is when you start to get results, because it works.