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Being the change you seek in a complex industry is a great thing to achieve. We spoke to Terry Smith of Exclusive Tyre Distributors about how the value of education and refining your focus can build your empire.
This interview is about you and your journey in starting your own company – so prior to the company, who were you? What were you doing?
I grew up in the business. My parents started in 1955 in the tyre industry in Canberra. First in retreading and then in new tyres and retail. So, I went through all that business growing up, working after school. I guess I got the feel for the business, and it was simply all I wanted to do. I left school early at the end of year 11 and joined the business and really just enjoyed it. And of course being around cars in the ’60s and ’70s was just fantastic.
Because I didn’t have a lot of formal education, as I progressed in my twenties, I started to get interested in learning. Of course being married at 19 and having three children by 27 helped. So I actually self taught, in terms of getting sales and personal development programs and videos at that time. There were a lot of videos around. First it was attending seminars with motivational speakers then training videos, mainly real estate and car sales video training, but we just adapted it to our industry, because when I joined the tyre industry in the late ’60s there was little training provided, and any that was provided was kept within the main tyre manufacturers or their retail owned stores, but certainly none available to independent operators.
In the early ’70s, my family started retail stores in Canberra and over the next ten years or so we became the leader in that marketplace. We became the absolute standard as far as marketing and training. I would say the reason we developed a training and personal development culture in our business was because of a company I came across called Fortune International. From there, I sourced some of the motivational and sales training material. I guess it was the early lack of education that helped motivate me to seek out training materials and mentors to work with once I had developed some long-term plans and personal objectives.
What made you realise that you required that external training as an entrepreneur? A lot of entrepreneurs don’t reach out for specific education outside of what is formal. For many entrepreneurs, there are now blueprints to succeed, funnels for lead generation constantly offered across social media, but you will have to manually sort that out, right?
I think it was just to improve myself. Realising I never had an education, I always worked hard to educate myself. I was just trying to get training materials about business and the sales process, and as I came across it, I realised the edge is sharing it with the team. Eventually, I had a supplier offer to send me to the University of New England. They were running a two-week course for their customers, for the truck segment of their business. The course was all about the financial back office in the business, and how to bench market business together, profit and loss, balance sheets etc. It was amazing. We put that in place in our business and none of our competitors were doing these sorts of things, certainly not at a management level, and that really separated us from our competitors at the time. I guess the desire to try to educate myself and share it in terms of improving the business was really the key.
I always worked hard to educate myself. I was just trying to get training materials, and as I came across it, I realised the edge is sharing it with the team.
The other interesting thing looking back are some of the key strategies that became entrenched in our business and still remain, such as building quality imported brands and not having to rely on or be controlled by a manufacturer. In those early days, the manufacturers in Australia really wanted no independent retailers and no imported tyres. I remember, as my parents would really struggle to buy products from the Aussie manufacturers, so they mainly sold retreads until imported tyres started coming to Australia.
It was probably the early ’60s when my parents first started buying imported tyres and about that time, the market opened up to more and more brands, mainly from America and Japan. After understanding the business of imported products, our point of difference in our business that we started in the late 1980s became building quality brands and helping our fellow retail customers to work out how to sell the benefits. By the time I went into business, the competitors still didn’t do this well, or at all, even though the industry had become much more competitive. Our key strategy we developed was to offer territory exclusivity to our wholesale customers, which was not offered by any of our competitors.
One of the things I find interesting is understanding how hard it was to find the right people around you to help build the company – the right people to sell to you or accountants and support functions. How did you seek out the right people?
Mainly advertising, however, the key was working at how to pick people with enough abilities and motivation to do the job, and not trying to find the perfect person.
So less around your network and more around picking the right people and then training them.
Yes, and profiling people to discover their aptitudes and behavioural traits which I sourced from the Fortune training company. Then train, train, train.
I’m really fascinated by the growth and sustainability of the company and dominance within the wholesale market. But in terms of technology and how the world has changed, what do you see as helping Exclusive Tyre Distributors grow into a sustainable robust operation? Is it the service, the training, and all the soft-skills element?
The difference is when we started the wholesale business, we were in our mid-thirties. We did it when we had the opportunity to get into our own retail business, and we had the faith in the brand that we were importing, even if we couldn’t sell it at that time – in terms of any volume – but we had the faith that it was a good product, and a good company to work with. So we hung in there. And really it was that. If I think how we built that and what’s sustainable, it was two things, which is why we stay ahead of our competitors still today: marketing and training.
So, in particular, training has always been a key thing for us, as is developing people. And the second thing is the marketing. At the time, competitors didn’t market, and we were no different. We started in 1988, and by 1991, we were almost broke. After that, we figured out how to market the business and the product. A statement that probably saved us that I remember is: “a better marketing campaign always beats a better product.” It was lucky we did have a “better” product, and with the better product and a focus on marketing, we grew rapidly. Again, that was self-education through reading marketing books and desperation, trying to figure out how to survive. We have since built a business that is amongst the larger independent wholesalers in Australia.
In terms of advice for entrepreneurs, given the startup culture in Australia and the way we approach companies now, if you were starting a completely new venture, would you go for the VC money, or would you try to test it and work it out to get the revenue models in place and expand in a sustainable way to ensure you’re a major equity holder?
Well that depends. If I knew all of that now, I would probably go for the money, build the brands and the business faster. But as I was not very financially savvy, I had to learn from mistakes, and I have to say, growing that way can certainly help grow a stronger and more sustainable business long term.
Ok, that’s interesting. And in terms of helping you build the financial structure in the early days, did you ever find that you had to also do a lot of self-education in that space as well? I.e., understanding the taxes, the books etc, especially since you operate in wholesale hence having to do with a lot of international deals. Was that complicated for you?
I didn’t do training on that at all – we just employed people to handle that part of the business. My wife was really the financial brain in our business, she did that initially, and then gradually we added people as we grew.
In what is a very complex digital environment – you know, everything is so confusing, nobody knows what is what at present – what advice would you give to entrepreneurs in terms of building something from nothing?
It is interesting. My daughter is trying to get a new product and business established. My advice to her has been “narrow your focus”. She actually has five or six products now, all organic foods and creams. One of these is really taking off and getting so much interest, so I suggested to her that since everything she makes takes resources and energies, to just bring focus to that one product and get it to develop. Return to the other ideas later.
Work out if you believe you will survive, and build a plan that you believe will work. A lot of people don’t have a plan and don’t look beyond the first year.
I think often we just try and do too much to get too broad too early. It is no different from when we started our business. We were actually broadening a whole product range – two years later I realised I had to narrow it down just to focus on one segment, which was 4WD. 29 years later we have expanded into the car and SUV range with a full range of products. So, we were able to sustain it for so long with one segment.
What would your advice be about being sustainable through the tough times – when the money runs out and there is no one buying?
Probably the easiest thing to say is “hang in there”. The main thing is to work out if you believe you will survive, and build a plan that you believe will work. I think a lot of people don’t have a plan and don’t look beyond the first year.
Of course, it is hard to grow with no cash. Borrowing for a startup is not always the answer in my opinion, unless you have a compelling and incredibly desirable product from the start. If you don’t, I would advise to go slow and do it yourself, so you gain an understanding from your customers directly what they like, what they don’t, and crucially, why they will buy your products.
The main advice I can give you is to develop a strong business plan – one that can sustain you through the hard times. Without a good business plan, you’re just hoping, and hope is not only hard to sell, but doesn’t give you enough confidence to take the next step.
Check out Mickey Thompson and Cooper Tires today – exlusively through Exclusive Tyres!