Carpenter nails a fortune

This week’s Entrepreneur Online is Jay McAlister, who is happy to share his expertise, so grill him on advertising, fast growth, entrepreneurship, property development or any concerns you have about your own business. Email feedback@smartcompany.com.au.

This week’s Entrepreneur Online is Jay McAlister, who is happy to share his expertise, so grill him on advertising, fast growth, entrepreneurship, property development or any concerns you have about your own business.

Read to the end of this article for other readers’ questions, and his responses. Email your own questions to feedback@smartcompany.com.au.

Jay McAlister is pretty chuffed. He has just learnt his Brisbane-based umbrella company, the Imoda Group, has been shortlisted for Ernst & Young’s Entrepreneur of the Year award.

McAlister finished year 12 at Coolum High School. At 32, he now runs four companies. The two main businesses, construction company Vantage and advertising and communications company Gallery, were started in 2000. They now have combined turnover of more than $30 million.

He talks to Amanda Gome

You seem a knockabout sort of bloke. Did you always intend to set up all these companies?

No. We grew organically. I started as an apprentice carpenter and, with my business partner, built up Vantage which is a commercial construction company.

I also worked as a junior/receptionist at an ad agency and learnt the ad game before eventually starting Gallery Group with another business partner. Now Gallery includes a number of smaller companies such as Marketing Gallery, PR Gallery, Content Gallery, and through an acquisition, Kinergy Gallery.

What are the advantages of having that many businesses? Are the businesses interlinked?

Yes. They are vertically and horizontally integrated. For example, a lot of developers that we work for on construction projects use the advertising agency.

Why is your business model different?

I am a big believer in shareholders so I can have a life. I work closely with two other directors in the ad game, both in their early thirties and then we bring in people to run the individual businesses and brands. These people own part of the businesses and are incentivised with salaries and dividends.

We have used the same system in Vantage. I have key executives tied in and although they run separate brands, they run under a licence which gives them support for things like finances. They all deliver a service that is unique. What also sets us apart is we are prepared to do the boring stuff, the straight mundane ads, for example, or the tricky build jobs. We get a lot of motivation out of seeing a successful end product or campaign.

You say the key to success is choosing the right people to run your companies. How do choose the right people?

We have gone through a lot of dramas because we have grown so fast. I find people with a passion for their craft. In advertising you have to be passionate. You have to get off on the success and seeing things work for your clients. But I also look for people who aren¹t to proud and arrogant to do the s— work.

How do you run so many businesses at once?

I trust the people I employ or partner with. Sometimes you can see they are making the wrong decision and some you let go through it with maybe a quiet word in their ear.

If they make a mistake you know they’ll learn from them. I also keep close tabs on the businesses. We also have board meetings. I get weekly reports from the team and a lot are friends and we catch up socially anyway. We are all on the same page and find business fun, almost a hobby.

You also have to make yourself accessible at all times of day so any staff or team member can come to you. People want to make sure they get heard and I believe there is no such thing as a stupid idea… Everyone has a voice.

What is your weakness as a leader?

I probably set unrealistic goals. I am looking down on it all and the people in it day to day say, ‘Are you on drugs? Pull your head in, we can’t achieve that’. Everyone needs to be reminded of what’s realistic to achieve. But I have been a carpenter and a secretary so I worked from the bottom up. It is not as if I can’t relate.

Where do you need to spend more time in your business?

Getting people to work across the brands so that the PR, for example, can do more work for the construction company. We need to engage the directors of the business more wholeheartedly so we can leverage off each other. That’s my goal: to help them realise how they can leverage off each other. A couple of directors are great at it, however we certainly have a long way to go.

Your biggest lesson?

Treat banks like suppliers and don’t be scared of business debt. I tried to partner with some banks but you get a new partner (bank manager) and it’s bloody hard work all over again.

I have always operated without an overdraft. I didn’t understand debt and ran our finances without an overdraft for a long time. It was a juggle but now I have a CFO who is very skilled and she is already easing the burden.

Now we are setting up a debt facility so we can acquire other companies and help facilitate more organic growth.

Have you had failures?

Yes. I have had a few that I have closed down or moved on from. I haven¹t lost money but I have lost time on them and that’s money.

What is changing in advertising?

Straight advertising, say for TV, is waning and therefore will become even more competitive. Instead, branded content is a huge opportunity and in the next five years will be a major force. Fitting branded content into TV and the web and getting clients to see how it can fit into their budget and show how they can get a return on investment is a major challenge – and an exciting one.

How is the property industry changing? Are you seeing a lot of money pouring into industrial and commercial property?

The Queensland property market is on the up once again. I’d say all sectors would be seeing some major growth, however I am no expert and I really can only judge by our clients’ comments and their forward work books.

Should you be on the BRW Young Rich List? The criteria is people worth more than $10 million who are under 40?

Do I have $10 million cash? Absolutely not! And my properties and businesses are only worth what someone will pay at the time.

What does the future hold?

We are also looking at growing the businesses as best we can and may launch another business early next year. Everything¹s going very well so we don’t want to rush into anything just yet. We need to consolidate.

We are also currently setting up a charity to help disabled children. My mate had a child who was disabled and I want to give something back. I don¹t want to die with a lot of money and I don¹t want to give my kids a lot of money. I want them to know that they can make it themselves if they really want to. It’s important to me that they see their old man working hard, playing harder and being a bloke that is happy to lend a hand.

Readers’ questions

I am looking at starting a retail (new home) building company etc.

Having a strong background in sales and marketing, and have done property projects on the side for many years. I am working for an established builder and constantly see the market is missing the mark on many things.

Wanting to go out on my own, I am staggered by the lack of interest from small-medium builders to partnering with someone like myself to grow a new entity, new brand in the market, attacking the weaknesses of the majors.

Do you have any advice as to how to attract potential builders or avenues to source interested parties or how to make such a venture attractive for a builder to consider… apart from a normal business overview, business plan etc?

Jay responds: I am gathering by your email you are looking to take another builder’s product and badge it under you own brand? If this is the case, I think you may be going about it the hard way.

If I were in your position I would be looking to create your own plans and brand. Once you have that you then have some credibility to do some bulk deals. If you are going to be selling through displays, then I would have some sites secured so you can actually show a builder that you are serious to move forward.

You have to realise that builders are busy at the moment, and they will only put time into something that has potential to give them a return… and quickly.

Another alternative is to find a business partner with a building license and go for it between the two of you. Then you won’t be relying on a third party to deliever your product.

I hope I have answered your questions, however please feel free to come back to me if I have missed the mark.

My wife and I are contemplating the purchase of a business for which we have complementary skills, however, we have no industry experience. Have you ever found yourself presented with an opportunity to involve yourself with a business you had no experience in? If so, how did you go about evaluating the company’s potential?

Jay responds: In a nutshell, I started the building company two weeks after finishing my apprenticeship as a carpenter, and I started the ad agency after about 12 months in the industry. So I do run more on gut feel and adrenalin!

Having said that, I have a concept for a real estate agency so with no experience I thought the best way to learn the game would be to buy a real estate business. I did that for about a year to get my head around the industry and sold it (basically made $10k so wasn’t a great business).

The best advice I could give would be to look at the numbers, but also look at the potential upside through marketing, etc. If there are staff make sure they are good. I have a saying that I back people, not just a business.

Overall, I am pretty sure if you are willing to work it and think outside the square you will be fine. There is no substitute for passion.