Next Business Energy has topped the 2018 Australian Financial Review Fast 100 with a strategy rarely heard in the halls of power.
“Our mantra is to only serve the mid-sized business sector. So no consumer, no corporate, and if they call us we answer immediately,” said Ryan O’Hare, a telco entrepreneur who in early 2014 saw the opportunity for a “simple and quick” energy offer to appeal to busy owners of multi-site businesses. Alongside chairman David Hayes, he took it to $75.7 million turnover in 2017-18 for an impressive average annual growth of 859 per cent.
Now in its 29th year, entrants to 2018’s Fast 100 must have commenced trading before July 1, 2014, and provide four years of turnover data, with a minimum of $500,000 in the first reporting period (2014-15).
The Australian Financial Review seeks verification from external auditors or accountants if the entrant is not publicly listed – only seven of the 2018 list are on the ASX – and calculates the average annual growth rate over the four periods, which determines its ranking in the Fast 100.
Calls from medium-sized businesses might be jumped on at Next Business Energy, but get short shrift elsewhere. Lacking the sexiness of a pre-revenue start-up, the voting bloc of 2.1 million businesses turning over less than $2 million a year, or the lobbying heft of a Business Council of Australia, the mid-market companies that dominate the Fast 100 and Fast Starters list get policy outcomes like what will apply from 2021-22, when those with revenue above $50 million will pay a 5 per cent higher corporate tax rate than everyone else.
But Fast 100 founders told the Financial Review they are not interested in top-end-of-town strategies, like bunching, to minimise their looming tax burden.
“Paying tax on your profits is a wonderful problem to have,” said Catherine Ardi, whose Toowoomba-based provider of heavy machinery, Excavation Equipment, turned over $26.4 million in 2017-18 for a four-year average growth rate of 57 per cent and 50th place on the Fast 100.
“My goal is still $100 million by 2025.”
Snapshot of growth
The Fast 100 is not a definitive list of Australia’s fastest-growing companies. In 2018 it received only hundreds of entries from the pool of 150,000-odd businesses with turnover of more than $2 million, where the most ambitious tend to reside.
Next Business Energy also had the distinct advantage of commencing trading just before the July 1, 2014, cut-off that would otherwise have seen it placed in the Fast Starters list.
However the Fast 100 is a rich snapshot of where growth in the Australian economy has come from, and is going to.
For instance the mass migration of corporates from fixed, on-premises computing to consumption-based, cloud-based technology is reflected by three companies that assist that transition finishing in the top 10 – Solista, Adactin and The Missing Link.
Meanwhile the echoes of the property boom can be heard in the fourth placing for Decode, a Sydney-based property developer and constructor, eighth for the self-explanatory thinkconveyancing.com.au, and10th for Reliance, an old-fashioned real estate agent in Melbourne’s new growth corridor of the western suburbs.
Then a cashflow-challenged, credit-constrained future is hinted at by list-topper Next Business Energy, which doesn’t wait for customers to call before applying its best discount to them, by sixth-placed CASHREWARDS, a coupon and cashback site, and by ninth-placed Prospa, which lends to small businesses where banks no longer will.
More growth expected
No matter what the economy did, the founder and chief executive of second-placed Victory Serviced Offices, Dan Baxter, said his growth should continue .
“A strong market lifts all boats. Then in a downturn, sure a corporate might only keep five staff instead of 50 staff, but they still need somewhere to sit.”
A hyper-specialised future for retail, and flexible “gig economy” working conditions, were trends both presaged in another Fast 100 finalist, 33rd-placed Mountain Bikes Direct.
The e-merchant sells only parts and equipment for mountain biking, and its founders and customer service staff live across Australia and the world, “at the foothills of a lot of good mountain biking trails”, according to co-owner and marketing manager Jen Geale.
“We employ mountain-biking fanatics who get to ride in the morning, then talk gear with our customers when they’re shopping in the evening,” Ms Geale said.
“Every time we advertise a customer service vacancy, we’re inundated.”