Vern Rickman

Vern Rickman is the owner and chief executive of United Group, a diversified services group that provides warranty, service and maintenance products and services to thousands of customers around Australia. The business, which turns over more than $20 million each year, also runs a unique media business selling advertising on screens placed on petrol pumps.

Rickman says the business is entering a big growth phase, with revenue expected to jump to around $50 million in the next few years. But the growth is creating a challenge for Rickman, who isn’t sure if he wants to float or sell his very family business.

Are you still regionally-based?

Oh yes absolutely. I was born in Wonthaggi, I was a country boy. Mum and Dad came from Germany back in the 50s and Dad worked in the Wonthaggi mines as a powder monkey, playing with explosives. Back in those days, one of the tricks he used to do was he used to blow a leg off a chair in the workmen’s club and if he didn’t drop the chair over, everybody in the bar would have to buy him a drink.

That’s very entrepreneurial.

I moved away from Wonthaggi for a little while and was into earth moving with Dad and basically started to branch out a little bit here and there. I invested in this company which was actually a printer and computer repair company in Frankston and what they were doing they were looking after the councils, back in the old days of dot matrix printers.

So I bought into that. I really didn’t know too much about it, but the guy was a good friend of mine. But then he decided he didn’t want to do it anymore. We’d put $50,000 in, which was a lot of money back then, and we thought well what are we going to do? So we bought him out and we sat down the wife and I and said, “Let’s just use a bit of commonsense and let’s see what we can do with it”.

So we just kept on and employed a couple of technicians and what we were doing we were really doing was service contracts and maintenance contracts. And then one particular day the wife was sort of having a bit of a whinge that she’d bought some products and she’d gone ahead and gone against the warranty and they weren’t giving her any joy at all. And she said, “We should be doing something like that.” It took my wife all of five seconds to go out there and buy 10 different things with 10 different warranties.

Just as a test?

[Laughs] Yeah, just as test. She brought all the stuff back, we looked at all the terms and conditions and we just went ahead and took out all the rubbish stuff that we felt that was not fair for an end-user and started from there.

We ended up buying the old shire offices in Archie’s Creek, which we bought for a song because it was out in the middle of nowhere, and we set up a regional call centre.

And you’ve remained a regional business ever since?

We had to make a decision sort of around 2003/2004. The biggest problem was we were growing quite well but the problem was getting local people to actually support the call centre. Every time it was bloody summer and the surf was up, you’d lose half your staff, they all wanted to go surfing. So we had a couple of very big clients and they said, “We really want to go with you and help you build your company but you can’t have a local address”. So we compromised – we kept our regional address and then we set up the call centre in Carrum Downs, which is nearly Melbourne.

We’ve now got over 4,000 small retailers that we still look after and on top of that our business grew to where we got involved with mass merchants, we got involved with wholesalers and now we look after Myer. We’ve been dealing with them for nearly three years and they’re very happy with us.

Can you tell us about PumpTV? How did you come up with that idea?

Every couple of years I usually send my oldest daughter Teagan to look at new technology. Even though I left school at 15 and I couldn’t turn a bloody computer on, I love new technology. So I sent her over there and she came back with the concept of advertisements on petrol pumps.  We had a look at it and we thought gee, it’s a great idea and there was only company at that time in America doing it.  So we built that up and that’s now in 90 sites around Australia and we’ve actually got 10 sites already set up in Tianjing, which is about 160 kilometres from Beijing and another 50 more sites going up in the next couple of months. We’re looking at doing another 400 in China.

We’ve made it so 60% of the time it’s not ads, it’s all to do with local news.

Would I be right in saying that given the price of a computer these days that the reconditioned computer business is pretty tough?

Oh, very.

Has that sort of shrunk to not much of your business?

Computers are now basically a throw away item. You look at Acer – they are a very huge company. An average computer with them is $300, an average notebook is $350. That part of the business is basically nonexistent now. And as much as we still have our warranty divisions and our warranty divisions are shrinking and it’s really about building a platform for our smaller business partners, our Mum and Dad AV and IT stores that we still support with extended warranty programs and service programs. But we’re also finding now that manufacturers are coming to us because of the new consumer laws that happened in January. That got a few manufacturers concerned and now we take on the contingent liability, we’re fully underwritten, we’re fully certified, we’ve got an AFS licence, we’ve done everything right. We’re only one of two companies who sell extended warranty programs that are actually fully AFS certified as an insurance company.

Do you get restless for the next idea? It sounds like there are a lot of different things going on within the group.

We have got so much happening in the group, but right now I’m not really too restless because we’re actually at the stage where we’ve never had this level of growth that we’re experiencing now over the last three months. We’re looking at probably conservatively doubling if not tripling our growth in the next 12 months if it all goes to plan, and right now we’ve got some really exciting new clients coming onboard.

Mainly driven through the warranty and service division?

No warranty and maintenance. When I say maintenance, we actually look after McDonald’s and Eftpos, we deal with their backend. So we’re actually doing cabling and networking as well. We actually build computers, we do specialised things and we are really a one stop shop. We do everything from a call centre down to where we’ll actually lay the tiles and do shop fit outs. We’ve got about 100 people within the group that are under full wage and about 37,000 subcontractors.

Will that growth create some challenges for you?

Yes. I’m at the stage now that I’m under pressure from my board to possibly list in the near future and it’s something that I’ve always fought against. Not because I lose control, that’s not an issue. But it will stop it being a personal, family business. I’m still trying to build it as a family business but the way things are going it’s sort of like in a year or two we’ll have no choice. Either someone’s going to come in and want to buy us out or will have to list.

Is there a bit of tension when you’ve got to build the business for a sale or an IPO when in your heart-of-hearts you probably would rather it didn’t happen?

In one way I wouldn’t want it to happen but in another way you can’t stop it from happening. When you’re passionate about something it’s very hard to stop the growth. When your staff come up with a good idea that’s going to help grow the business and help secure the business for the future, you just can’t say no.

You’ve done a number of different things, have any been big stuff ups?

A few years ago when we were sitting there and my oldest daughter and a couple of the senior managers came to me and said, “Dad, we think we could sell maintenance contracts and extended warranties from a kiosk in the middle of a shopping mall. They’ve come back and given me a budget of $70,000 or $80,000 and I thought that’s not too bad, you’ve got to dip your toe in the water. So they’ve gone ahead and got it all up and going and it ended up being a huge kiosk. I’m saying, “Gee that’s a pretty big kiosk, that’s pretty fancy,” it’s got all these bloody touch screens and all the rest of it and it looked absolutely fantastic. Then I found out the budget had blown out to $260,000.

Anyway it was there for six weeks at Fountain Gate, it sold one warranty, it absolutely bombed. I didn’t go crook at anyone, there’s no point because I was the one that signed off on it. We brought it back and it was sitting in one of the factories for a couple of years but in the end I thought stuff it, and I put it up as our front counter. As I say it’s the most expensive front counter in Australia.

So a good reminder too.

It was a good reminder that sometimes regardless of how good your product is, if it’s not presented exactly where it should be, it’s just not going to work.

You’ve tapped into a lot of sectors, what’s your sense of the economy at the moment?

To me the glass is always half full. Look, I think Australia’s probably gone through two of the harder quarters that it’s seen for awhile. I think the Government’s really done a great job at playing it down but from where we’re sitting I’m seeing our retail clients and they’re doing some of the worst figures that they’ve done for a long, long time. But it is improving, we’ve seen probably in the last six weeks that it’s starting to pick up. So I think we’ve bottomed out. I think we’ll start seeing some much better figures probably around about September.

I know you’ve kept the call centre here. That’s probably been a slightly expensive decision.

And we won’t change it. We will never take anything offshore.

Have you got people that have come through call centres into other parts of the business?

Oh yes. Normally we find that people get very complacent after two or three years so we actually move them around the five companies in our group. At any time, if any of our employees feel that they want to change, they can put in a request to go from being a call centre operator to dispatch or they can go into sales and we’ll train them. We set up training modules and if there are courses that are outside the factories, what I usually do is say that if the course cost five grand, what I’m prepared to do is pay for it upfront and if you stay here for another three years, it costs you nothing but if you leave after one year, you’ll owe me for two thirds of the course.

Is recruitment a problem?

No, not really. Normally we find people through word-of-mouth. I’ve got people’s brothers and sisters and family working, the only thing I won’t do is have husband and wife work. I find that disastrous.

Is that from personal experience?

Oh yeah the wife and I used to fight like cats and dogs. I’m very much the big picture person. If you can imagine I’m a painter with a roller, I’ll paint 90% and I won’t clean up the edges but my wife is much more meticulous.

And am I right in thinking that you are both involved in the restaurant? I could imagine that could be a thing that everyone likes to have involvement in?

We’ve got this big cellar, big sports bar and tasting room, and I am usually there as a story teller, because everyone wants to know about us when they get down there. I usually sit there and they just think that I am one of the locals, until they realise I am the owner. I am just sitting there as one of the local guys having a nice wine, a nice red.

That sounds like a very good job.

It’s a great one James.

You talk about a float or a sale, is retirement in your mind? Or a different role?

My father, until last year when he passed away, had never retired. My mother who’s 80 is still running his importing/exporting company. Retirement is definitely not in the picture but as things progress, I do see myself spending more time down at Archies. I’m hoping to build accommodation there in the next year to two, and I want to turn it into a bit of a resort.