When Andrew Northcott was a university student, he hired himself out as a labourer to earn a bit of extra money.
A decade later, Northcott expects Labour Solutions Australia, the business he founded as a 21 year-old to turn over $100 million in the coming financial year.
“After I left Brisbane Boys College I took a gap year and went jackerooing, so I had a lot of mates from the bush, and they were all hard workers, great workers and that was a bit of a niche in the very early stages,” he says. “That got us going.”
Nonetheless, Labour Solutions Australia (LSA) started out as an “incredibly small” business in a living room in Queensland and turned over just $50,000 in its first year of operation, when it supplied casual blue collar labour to the construction and transport industries.
The business currently has annualised revenues of $65 million to $70 million and Northcott expects it to bring in $100 million in the 2014 financial year. Aside from the casual staff it hires out, it has 50 full-time internal employees and offices in every state and territory.
Soon after the business was founded it picked up a major contract with Smorgon Steel (now One Steel) which allowed the business to move out of Northcott’s living room and rent a small office.
Another turning point came in March 2007 when Ken Warriner invested in the business and became a partner. Aside from being a friend of Northcott’s family, Warriner was the founder of Kerry Packer’s farming venture, Consolidated Pastoral Company.
“The opportunity to learn from his experience and incredible business acumen was certainly something not to be passed up,” Northcott says. “At that point it gave me a very good incentive to make it work after Ken put a dollar in.”
By this stage the business was turning over around $2 million a year and the extra investment was used to professionalise it, particularly to invest in IT to become more competitive and drive down the cost of each sale, but also to allow clients to use the labour management technology to their own advantage.
The company now not only supplies blue collar workforces, but also manages them for their clients in the cotton, meat processing, construction and transport industries.
“We go in and partner with the companies and at a number of our clients we have staff physically based in their offices to manage their contingent workforce, and that’s been very successful for us,” says Northcott. “One of the things I love about this business is that you get to go in and get a really good understanding about a range of businesses and learn about how they run it and how they gain efficiencies.”
“That’s what gets me out of bed every morning.”
Northcott is also in his final year of an entrepreneurial masters program at the Massachusetts Institute of Technology in Boston. “Leading a business I’ve really got to keep improving my knowledge and keep improving myself as well,” he says.
He also finished the degree in property economics he was studying when he founded LSA.
A different type of lesson came with the onset of the recent financial crisis. Northcott could see LSA was going to face some difficulties because contingent labour is one of the first things an organisation cuts back during tough times.
“Having some good people around me I managed to see that quite early and really consolidated the business. We had a couple of start-up branch offices at that point and we closed them down and really battened down the hatches,” he says. “To experience that at a young age gave me a hell of a lot of knowledge you can’t get out of a university degree and it made me really drive the efficiencies in the business and gain an understanding of how to build and run a lean operation.”
Another challenge was managing the business’s rapid growth, to ensure it had systems in place to handle its quickly increasing volume of work. “It’s just recognising what needs to be changed before it’s too late,” says Northcott.
Northcott says not having a background in recruitment has been more of a help than a hindrance because he doesn’t have preconceived ideas on how things should be done.
Blue collar labour hire makes up about 95 per cent of LSA’s revenue, but it recently moved into white collar recruitment. Northcott plans to roll out this service to all states and territories over the next 12 to 18 months.
It also operates as a franchise, which allows recruiters to run their own business but access LSA’s systems.
Andrew Northcott’s entrepreneur tips.
- Challenge the industry norms
- Make quick but considered decisions
- Keep learning
- Use technology to gain efficiencies
- Work hard
Source: The Sydney Morning Herald