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When two husband and wife teams left comfortable, well-paid jobs selling hair care products for a multinational company to start their own business doing the same, they knew it wasn’t going to be an easy road. Here’s how Gresham Cosmetics, the little Aussie battler beauty business, took on the multinationals and grew so successfully it was eventually bought by one of its international competitors.

According to John Cash, who co-founded Gresham with his wife Karen as well as Daryl and Colleen Young, the first two years after launch were the most challenging time in the business.

“It is fair to say that … our positions were neither comfortable nor well-paid,” he said.

Faced with staunch international competition, the co-founders hit the ground running by taking their Australian owned and manufactured four-product range to trade shows and doing something a little different to the multinationals.

“Most [multinationals] are based in Europe and have huge marketing budgets, so they had elaborate displays with numerous hair shows and beautiful models representing their products,” Cash said.

“We couldn’t compete with this, so we decided to style the attending hairdressers’

hair at our small stand and give them free products to take home – if they were willing to wear our T-shirts all day around the trade show. By the end we had convinced hundreds of hairdressers to be walking billboards – we looked like we were a major sponsor of the event!” he added.

This was enough to get hairdressers interested in their range, and before long 2,000 salons were supporting the Gresham range and vision – but the founders were hungry for more growth.

“As we grew, we still had a very limited marketing budget and so all available funds were spent on extra sales people to physically walk through the door of salons and tell our story. We stopped going to that trade show when we had around 25 sales reps calling on approximately 8,000 salons every month, and our turnover had grown to over $24 million,” Cash said.

Not long after this, Gresham was named 2001 Telstra Small Business of the Year, which Cash describes as a “gold medal moment.”

“It was the proudest achievement in our working lives and we took all our staff to Melbourne to share it with us,” he added.

After winning the award, the team at Gresham continued to grow its range and sales force – which allowed it to become the number one haircare brand selling out of salons in Australia. Not long after this, it began exporting its products and soon the very multinationals the founders were competing against became interested buyers.

“… eventually we did a deal with one of them. We stayed on working with them for three years and the brand kept growing at 20 per cent annually during this time,” he said.

Here, Cash reveals the secrets to taking on international competitors and talks about managing the rapid growth of a small business.

What’s the most important lesson you learned?

A small business can compete very effectively against the multinationals by not being intimidated, being more customer-focused and more creative in responding to customer needs and market trends more quickly.

What’s the best way to grow your customer base, while retaining existing customers?

Provide the best possible customer service while developing new and innovative products. Reward your customers for their loyal support and never take their business for granted.

What was the biggest challenge you faced, and how did you overcome this?

Our biggest challenge was competing against multinationals with massive marketing and advertising budgets and having very limited funds for this ourselves. Our simplest and yet most effective strategy was to give hairdressers as many free products to try as they wanted, and gain their recommendation of the brand.

 

What advice do you have for avoiding the traps of business growth?

Because we were growing at a rate of 50 percent each year, the biggest risk for us was cashflow and funding the growth. So we paid no dividends for the first six years and offered large incentives for early payment of accounts. We also negotiated extended terms for some of our larger suppliers on the basis that they were benefiting from our growth.

What’s the best way to retain staff and drive a successful culture?

All members of staff were paid incentives for their performance, from order processors in the warehouse, to the credit controller and, of course, the sales people. Our goal was to achieve less than one per cent mistake rates on orders processed.

Staff were all invited to annual conferences to exotic places like Bali, Vietnam, Hamilton Island and Malaysia. Some of our staff had never been on a plane before. This built a great team of passionate people very excited about coming to work and doing the best they could.

And what about succession planning?

In our case we had no real succession plan. We had only considered getting into business and being successful. This did cause some distress when we were bought by a very large multinational, as we had four directors and 100 staff to consider.

Gresham’s full story can be found in a new eBook that celebrates the achievements of 20 Telstra Australian Business of the Year Award winners from 1992 to 2011. Click here to download the eBook for free.

The 2012 Telstra Australian Business Awards will be held in Sydney, on 29 August.

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Lorna Brett

Lorna Brett

Lorna was Dynamic Business’ Social Web Editor in 2011/12. She’s a social media obsessed journalist, who has a passion for small business. Outside the 9 to 5, you’re likely to find her trawling the web for online bargains, perfecting her amateur photography skills or enjoying one too many cappucinos. You can follow her on <a href="https://twitter.com/#!/dynamicbusiness">Twitter @DynamicBusiness</a>

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