3 tech clouds: Brennan IT
by Peter Switzer
When your company is one of only two companies to make BRW’s Fast 100 list for seven years on a trot, it certainly suggests the driver of Brennan IT knows something or two about the fast lane of business growth and how to stay there.
Dave Stevens is the founder and manager of this IT company, which pioneered selling IT services to mid-market companies.
He kicked off flogging training programs for small- and medium-sized enterprises but he soon recognised that there was a big hole in the market that no one was filling properly.
“It finally dawned on me there was a yawning gap in the mid-market,” he explains.
“There were suppliers selling software and hardware, but no one was focused on helping businesses achieve the right outcome with their IT system.
“I walked into an uncontested market and was able to come up with innovative products that met the market’s needs.”
Stevens started the business in 1997 focusing on IT services but quickly expanded into telecommunications and others areas of technology.
“Our vision from the outset was to offer the mid-market the convenience of dealing with one provider for all their technology needs,” he recalls.
And while this was all really sensible stuff, there was some whacky thinking, though it worked, which explains why a business owned by someone called Stevens named his business Brennan IT.
“Like any start-up, I wanted the business to be seen as bigger and more established than what it was,” he says. “I was only in my late 20s when I started the company and didn’t want to name it after myself, so came up with the name ‘Brennan’, to give the impression that there was someone senior, a Mr Brennan, back at the office.”
Our one-time young entrepreneur with somewhat of an identity crisis might have had doubts about his name’s pulling power, but he was certain he had the competitive advantage to grow a decent business. Prior to business kick-off, he was an IT training instructor teaching all the high-end operating system courses for companies such as Novell and Microsoft.
“It was at a time when there were only a handful of people globally who were qualified in these platforms – I think there were only about six Novell instructors in the country and 30 in the world – so our services were in high demand,” he points out.
But it’s one thing to start out with a leg-up over potential rivals and it’s another to use this to grow a successful business, so how did Stevens pull it off?
“When we first started we were essentially there at the right time with a compelling proposition which resonated well with the mid-market,” he points out. “Our growth in the early days was phenomenal – for the first five years we were doubling in size every year, and in a good year we’d increase revenue five times.”
But it was not only organic growth. In 2006 Brennan IT made its first acquisition – a Queensland-based telecommunications business, iExec. Since then, acquisitions have played a key role in the growth strategy to fast track expansion into new markets, increase scale and also bring new skills and solutions into the business.
“Since then we have made a further three acquisitions, TSA Communications, S Central and Tele IP Network Services,” Stevens says. “We like businesses that are immediately cash accretive and that have recurring revenue.
“And we’d rather spend money upfront to get long-term cost synergies.”
He maintains that the best deals don’t have large revenue streams that are one off in nature. He looks for highly contracted businesses with recurring revenue.
So far the Brennan IT growth story looked like a walk in the park but Stevens reminded me that there was a serious challenge right in the middle of his business building experience called the dot com crash.
He insists, like most rapidly growing businesses, he faced the challenges of growth and one of those was how he coped with his own development from technician in the business to the guy who had to run the show. This is one of the biggest personal struggles for most founders who want to scale up their operation.
“My role changed from being a consultant and engineer to being the manager of the business,” he says. “We also had to learn how to transfer the ‘recipe’ for the business to the next generation of people in the company, which slowed us down.
“We’d go through a growth spurt, then settle down for a while, then ramp up again.”
On the dot com challenge, he thinks his attitudes toward cash softened the crash.
“Like most IT businesses, the dot com crash was challenging,” Stevens admits. “The business survived because we acted fast and had a good handle on our finances.
“Although we didn’t really understand cash flow at the time – many businesses don’t – we took active steps to quickly get control over the situation and became very savvy about cash very fast.”
Asked how he generally managed to beat the numerous business obstacles out there that often confound many entrepreneurs and explain many bankruptcies each year, Stevens showed that he had embraced the qualities of a leader who was both on top of his entrepreneurial as well as his manager’s game.
“A key part of passing on the business’s ‘recipe’ was developing an operations manual called ‘The Brennan Way’, a document that outlines the subtleties about the way we operate, things like how many staff each manager looks after, the right attitude to have towards clients and our formula for success,” he reveals. “It is now the main document we use to train people.”
This is the same approach some of the world’s most successful franchise systems from McDonald’s to Gloria Jean’s Coffees use to ensure that the quality of their products and services are consistently on the money wherever they are operating in the world. The smart smaller businesses that get this right can minimize the problems and maximize the great results.
Great systems to manage people and processes are one crucial thing but most businesses fail because of the all too often cash flow crisis.
“From a cash flow perspective we became more disciplined about collecting accounts and negotiating for extended credit terms with suppliers,” he says. “It’s an important lesson all start ups need to learn, the importance of managing cash flow in your business.”
The innovating industry
To comprehend the Stevens success story, it is worth noting that IT and telecommunications is a great industry segment as the innovations have come thick and fast for over 20 years. If you need proof, look at the Apple story over the past 10 years but there is also a history of failed businesses that mismanaged the business bit – this is Brennan IT’s strength.
And a new opportunity has emerged recently which demonstrates how innovation drives business.
In the crazy, fast-growing world of the internet, the existing IPv4 addressing protocol was running out of IP addresses and so a new IPv6 addressing system for internet addresses was introduced very recently to progressively replace the former address system.
“The challenge is however that the two systems are incompatible, which means existing businesses running on IPv4 need to support the new system, and new businesses that have IPv6 addresses need to ensure that customers functioning on the old system can access theirs,” Stevens explains.
“Organisations therefore need to make sure that their internet operations can handle both IPv4 and IPv6 to allow access to people and devices on both systems, and to offer the best performance for those connections.”
“From our perspective, we have been helping businesses upgrade to the new system and ensure their servers are compliant with the new address system,” he says. “For many businesses, upgrades often become a decision point to review their IT platforms and we have found that many businesses, rather than run a project to upgrade their IT platforms, decide to move to a cloud based solution which reduces the need to ensure servers are up to date with the latest software.”
And then there is the ‘cloud’ – another innovation that will create more business-generating opportunities for this ‘blessed’ industry.
As you can see, the IT game can be money for jam but you have to build a rock solid business that can cope with the ups and downs of the business cycle, especially if you are a fast grower in the acquisition caper.
So what are tips from Dave Stevens for anyone who wants to join him in the fast lane of growth?
“Focus on the customer and on creating long-term relationships rather than winning quick sales,” he lectures. “It is important to recognise the lifetime value of the client relationship and not take the short-term view of having to win on every transaction.
“If you look after your customers’ needs over a 10-year period, they will ultimately also look after yours by bringing you their business.”
He supports the old but often ignored maxim of investing in good people, arguing that his staff is his biggest asset and therefore finding and retaining staff has been a critical issue for him as his business has grown.
He also reminds us to be always in control of cash flow and debtors from the outset.
On the future, Stevens shows he has learnt from his past. He thinks cloud computing has enormous promise but he believes the likes of big telco companies are portraying it as a worry-free, set and forget IT service.
“The need to manage your IT environment doesn’t stop, nor does the need to constantly examine your IT strategy,” he counsels. “Organisations who move to the cloud find that they still need specialist IT help, especially systems integration, migration and management expertise.”
As you can see the IT business has endless money making opportunities provided you have a business built to last. After 14 years, Brennan IT has that look of solidity.
Training consultant for an Apple Reseller
Being one of only two other businesses to be named in the BRW Fast 100 list 7 years running
Best piece of business advice you ever got
Understanding what drives enterprise value and shifting focus from revenues to profitably, cash flow, contracted revenues.
Luckily I haven’t taken on board any bad advice.
Most frustrating part of doing business
The time it takes to effect change. When you are a start up and in the early years of business, being agile and able to quickly effect change is a big advantage against larger players. Naturally as you grow and take on board more staff and expand into new markets you can’t just change tact overnight. You need to ensure all aspects of your operations are aligned to deliver to that change.
Favourite marketing technique
From our early days we embraced PR as a marketing tactic to build awareness for our business and solutions and strengthen our reputation in the market. Over the years we have evolved our strategy and messages to support the different phases of our business growth, however it has been a constant feature of our marketing efforts.
Business leader you most admire
If you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching.
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.
Published on: Wednesday, January 04, 2012