Empire Builders - Pt. 2

Wednesday, March 1, 2006 - 07:59

They are leaders in business. In the second of a two-part feature, Management Today quizzes two outstanding Australian entrepreneurs on the factors behind their remarkable rise. By Cameron Cooper Jim Zavos Founder of EzyDVD As the leading man in the booming EzyDVD business, Jim Zavos admits he has at times found it hard to forfeit his starring role. Set up about six years ago to tap into the transformation of the home-movie market from videos to DVDs, Zavos says he was used to doing it all. "When we first ran the business from the back of the video store, I pretty much was 'the team'," he says. "I was the customer service officer, I would reply to people's emails, I would place the orders, pack the orders, ship them, charge credit cards and collect the money." In short, Zavos really did not believe anyone else could do the job as well as him. "In my past experience I thought I knew everything, but I didn't and I lost all my money. In business it doesn't matter what stage of your life you are at, you are always learning. I never pretend to know everything and I always acknowledge that I need help." Now with more than 400 staff in the group, Zavos says he has also learnt from early hiring mistakes - it is essential to hire specialists for all roles rather than just give the job to associates or people he knows. "It was regrettable that over a period of time I had to replace almost all of those people with professionals who had expertise in different areas," he says. "That's been a huge lesson. These days if we're looking for a marketing manager, we get someone with a marketing degree, if we need a financial controller, we look for someone with a financial background." Adelaide-based Zavos owned and operated a chain of video stores in the 1980s and '90s. His big break, however, came in 1996 as he read an article about the introduction of a new technology, the Digital Versatile Disc, or DVD. Realising the potential of this new format, he monitored international DVD markets and travelled to the United States to check retailing trends first hand. From 1999 to 2001, Zavos pioneered the introduction of DVDs into Australia courtesy of online sales through EzyDVD, but the reluctance of many customers to submit their credit card details led to the establishment of a network of bricks-and-mortar stores. Now with 42 EzyDVD franchises, the Zavos vision has been endorsed through customer demand. "I knew that CD was a format that people around the world had accepted and adopted. Knowing this, and with my background and expertise in video, I knew that being able to deliver movies on CDs that were virtually indestructible would be an instant success with the consumer." The branding of his EzyDVD franchising model has been at the core of Zavos's success. Using a combination of catalogues, billboards, print media marketing and promotional activities such as sports sponsorships, the message that the business is " Australia 's largest online DVD store" has taken hold. "At the beginning, I felt like I was wasting money spending on branding. You can literally spend a thousand dollars on intellectual property and wonder where it has gone if you don't do your branding properly. "At first I didn't see that it did me any good. However, when a new company comes and has a brand and they build trust, people begin to feel comfortable when they see it and pay it respect and loyalty." Marketing aside, Zavos says business leaders need vision (to set objectives and give the business a direction) and a strong personality (to motivate people who can help drive the business). "I'm always thinking or planning where we want the business to be 12 months down the track. So first, have a vision, and second, be able to communicate that vision with your people." Other tips are:

  1. Mistakes are okay, as long as you learn from them.
  2. Surround yourself with good people.
  3. Be enthusiastic and energetic or the business will lose its momentum.

Most importantly, Zavos urges CEOs to keep a sense of perspective. He loves EzyDVD, but the jewels in his life are his wife Kaye and their three children. Brad Sugars Action International Business Coaching Sweet business success for Brad Sugars has come on the back of a belief he formed as a child: do the work once and get paid for it forever. "It has to be fundamentally the core philosophy of running a business," says the founder of Action International Business Coaching, which operates in 19 countries and is ranked in Entrepreneur magazine as the 16th-fastest-growing franchise in the world. The concept of hourly rates is an anathema to Sugars, who first showed entrepreneurial zeal as a seven-year-old when he sold his Christmas presents to his brothers. His early lesson? Do not sell anything you cannot rent - that way you keep the present and get paid over and over again. In Sugars's business world today, business coaching franchises are his rental vehicle of choice. With about 700 offices internationally, business is booming. For Brisbane-born Sugars - who first started teaching marketing in 1993 at a business school for entrepreneurs in Hawaii - business models are crucial. "Find the gold rush and sell pans," he explains. He has owned or had an interest in more than 30 different businesses, including magazine publishing, pizza manufacturing and dog food distribution. "The strategies are relatively the same, the roll out is similar - it's just a matter of using the localised knowledge in that product or service and adding to that the management, marketing and sales." An overriding management approach has served Sugars and Action International well: bosses must lead people and manage resources. Both factors are important, but the former is crucial. According to Sugars, strong leadership calls for:

  • Decisiveness: "If a leader is wishy-washy in decision-making the team feel that."
  • Vision: "Not just that they can see the vision but they are able to communicate the vision."
  • Being a "builder of lieutenants": "The worst leaders are the ones that are super strong but set the business up for failure because no one else in the company knows what to do."

Few business leaders can verbalise the goals and direction of their organisation, Sugars contends. He adds: "If you don't give people direction they'll find their own, and usually they are at odds with yours." The selection of Action International as a business name points to the Sugars mindset - "Action" because he says many people know what to do, but the successful entrepreneurs are those who are actually doing it; and "International" because he had faith from day one that the business would go international. While Action International prospers in international markets, Sugars's ties with Australia still remain strong. In a climate of high wages, a relatively small market and the tyranny of distance, he says that many Australians overestimate the difficulty of achieving international success. "It's a wonderful training ground," he says of his home country. "Business people who are successful in Australia often underestimate where that places them in the world." The key in foreign markets is adhering to a proven business model and encouraging domestic staff to embrace that blueprint, according to Sugars. He also advises franchisors and business owners to accept the fact that staff may never have the same talent and commitment as the boss. "It's almost impossible to hire people who will do the job as well as you as the owner of the business. You have to understand that that is the case." However, employees do the job to a high level when "they are following a systematic methodology". The author of 15 business books, Sugars views a business as a tree. "It's either growing or it's dying," he says. "A company cannot stand still just as a tree cannot stand still." He believes the term "change management" warrants a review. "We should look at leading change. We need to plan our change, not manage the changes. If we can plan our changes and keep ahead rather than philosophically trying to manage what is happening to us, we should be at a far better point." "Too much change is a very bad thing for a company, and too little change is a very bad thing also." The former inevitably ends in a lack of profitability because business concepts are introduced and scrapped before they have time to truly play out, while the latter leads to stagnation. "You must allow things time so that any changes you do make do get to a point where they are in rhythm with the company." In accommodating Action International's fast growth over the past decade, Sugars says he has relied on good leadership; great people (especially the sales and marketing teams); an excellent product; and "raving fans" who do the selling. And while he is committed to business life, Sugars tries to get away from it all on the golf course. "I can be bloody average at it and go and have a lot of fun," he says.