What I learnt from Kerry Packer

Not me personally, but this is how Mark Bouris opened his speech last night at the Brisbane Convention and Exhibition Centre.  He addressed a packed room of 1,300 people there to heed his insights on generating success in business.  His speech also launches the start of his ‘mentored’ program where Mark advises small businesses on how to grow and succeed.  

Mark held that he learnt the following 10 things from his monthly meetings with Kerry Packer over the 5-year period they worked together to create Wizard Home Loans.  Each month Mark and Kerry would sit down to go over the company’s financials and results.  Kerry asked Mark the same 10 questions every month.  They then become what Mark refers to as his now ingrained “disciplines” and “business rigour”. The pair set out to grow the company by 20 times Packer’s original investment in the company.  At the sale, the company was sold to General Electrical (the biggest company in the world at that time) for more than $500 million.  

THIS IS HOW THEY DID IT: 

1. “Why are you in business”?

It is essential to keep revisiting your purpose. Your purpose determines your brand and how it is named. Mark uses Wizard as a prime example. “Wizard doesn’t sell mortgages, it makes peoples hopes and dreams a reality by providing them with a home, an extension, a granny flat or a holiday home”. With this frame of mind, it is easy, as Bouris says, to keep going in tougher times knowing “I do what I do to make peoples homes and dreams a reality”. He referred to a pizza shop owner he mentored many years ago in South Melbourne. The owner believed he was in the business of selling pizzas, but when he realised he was actually in the business of providing comfort, warmth and a family-friendly atmosphere, he was able to change his approach completely. He changed the way he dealt with clients and staff, the design of the restaurant and adjusted his marketing to suit. When the pizza shop owner started with Mark there was $14 in the owner’s bank account. Now, he regularly turns over $17,000 a week. This is what Richard Branson refers to as “notoriety with affection”. In other words, people know you instantly and associate a feeling of warmth with your brand.

2. “Are you playing defensively?”

All businesses have well-worn processes and methodologies. Although writing an operations manual doesn’t sound very thrilling it is imperative that all processes are firmly documented. This protects your IP and ensures consistency in the delivery of your product or service. A bakery would need a manual for how bread is made, cooled, packaged, sent to stores and sold to customers. A sales team would need a script for picking, delivering and making sales to customers. Any important process needs to be written down. This is even more important as the business grows and the processes need to be duplicated by more people. Also, keep in mind, should you ever ask for funding or investors, operations manuals are one of the first things asked for. As Mark would say “write that sh#t down!”. Getting the business structure right is also an obvious but often overlooked step in starting in business. Does the structure protect the assets of the business? Is there adequate insurance and is it kept up to date? Do you have a lawyer? These are important questions to consider at the inception of a business and should be reviewed regularly as the business matures.

3. “Is our product and pricing right? What problems are we solving?”

What’s happening in the market? What’s happening in your industry? Here, Bouris reminds us to make sure our product is something that the market wants, values and will buy if the price is right.

4. “Do we have the right people?”

It’s imperative that the people you hire complement your skillset and strengths. Mark is adamant that you should always “tolerate failure and experimentation, but never tolerate incompetence”. This is done by promoting a culture of experimentation while measuring performance against suitable KPIs.

5. “Can we grow?”

If you build a business around you it’s a job, not a business. Successful businesses need to be able to scale. “Growth is what we strive for no matter the size of the business currently”, says Bouris.

6. “Do we have the right funding?”

Debt is always cheaper than equity. However, no matter the funding, lenders and investors will carry out due diligence before any cash is provided. They will check your tax debts, credit rating, security, financials, management accounts and, as mentioned above, will want to see documentation and operations manuals.

7. “What are the numbers?”

Have you got a budget? What’s coming in and what’s going out? Who do you owe and who owes you? This comes down to ‘knowing the numbers’.  As the saying goes revenue is vanity, profit is sanity and cash is king.  

Bouris states that watching your cash flow is really simple; know your bank balance and be able to answer the above questions at any point in time.  Packer asked Bouris to produce a bank reconciliation each month at their meetings.  This, along with financials, provided Packer with the assurance of Wizard’s cash position.  

8. “Are we on track with our exit strategy?”

Even if you never sell or plan to sell, Bouris empathetically encourages business owners to act like they will and always start with the end in mind. What’s your end game? What’s your exit strategy? 

In the development of Wizard Home Loans Bouris and Packer knew the value they wanted to create and by when.  Working backwards they knew the value the company had to reach at years 4, 3, 2 and 1. Once they knew how they needed to track, this become their central KPI and part of the budget they tracked to.  Exiting a business can take the form of listing, selling, bringing an investor on.  Bouris reminds prospective business owners to think of a business partnership like a marriage.  

“If you knew the marriage was going to end in 5 years you would probably work a lot harder at making it work”, says Mark.  He also asks owners to think about who their end buyer may be and what would they value the most.  

9. “How are the important people in the business feeling? What are their energy levels like?”

Kerry didn’t ask this question because he cared about people’s feelings, although I’m sure he did, he asked because energy and morale are infectious in an organisation. Bouris uses physics to explain the concept, “if you take a single gram of water and times it by the speed of light, you will create something as powerful as the Hiroshima bomb”. In other words, momentum equals mass by velocity. Momentum refers is the energy levels of staff, mass is your product/service/offering and velocity is the rhythm of your business. Bouris asks us to ask ourselves, “Do you have the energy to make it happen?”.

10. “Do we expect to win?”

Are you obsessed with making it happen? Quite simply, if you believe you can succeed you will often act in a way to make sure you do succeed.  Kerry Packer always said “expect to win” and you will.  

Know why you are in business and believe in it wholeheartedly, document your processes and protect your business assets, know your product and what it is worth, have the right people in the right positions, always look for growth, get the funding right (when needed), know your numbers, always have an exit strategy, put energy and momentum behind your offering and expect to win.