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ECOMIST AUSTRALIA 5 YEAR STRATEGIC PLAN
JANUARY 2013
The objectives contained in this plan will only be realised if it is well implemented. That is, it results in a series of activities that are well ordered sequential and well implement to achieve the results expected in the business. Leadership, direction, communication, planning, measurement of progress and corrective action will be key to a successful implementation.
Peter Vrachas
MISSION
Our ultimate aim is to improve the businesses of our commercial customers and thehomes of our domestic customers,through high quality products and excellent after- sales support.
As Franchisor our aim is to facilitate the needs of our franchisees for sufficient profit, flexibility of lifestyle, respect, independence, belonging, leadership and meaningful work.
VALUES
Interest of franchise owners first
Profitable franchises
Conduct ourselves ethically
Tell franchise owners the truth
Support and lead franchise owners for success
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BACKGROUND
Ecomist Australia commenced its operations in 1993. A franchise system was developed and launched in 1994 with three franchisees being appointed by January 1995. By early 1998 Ecomist had franchisees operating their own businesses in NSW, Victoria, Queensland and the Northern Territory. The success of the franchise system has been recognised with franchisees becoming regional finalists in both the 1997 and 1998 Franchisee of the Year Awards, as judged by the Franchise Association of Australia and New Zealand. Ecomist now operate 30 franchises in all states of Australia and continues to grow steadily. Four of the territories within Sydney are company operated.
The company markets and services a range of products that provide Insect Control, Odour Control, Fragrancing and Hygiene. The business has as its core product an innovative programmable aerosol dispensing system, which in 1997 won an award for Best New Product from the Aerosol Association of Australia and New Zealand. Aerosols used in the sophisticated computerised dispensers include, odour neutralisers, air fresheners and an insect repellent.
The company also markets a complete range of hygiene products such as soap dispensers, nappy disposal units, sanitary bins, hand dryers, paper products and many others. Ecomist will continue to add to the product range by forming strategic alliances with the most reputable suppliers.
After 20 years of operations and primarily focussing on the commercial market the company has achieved notable success. A national distribution network, turnover of $6m (franchisees), $3.6m (franchisor), 6000 commercial customers, 8000 domestic customers, 20,000 serviced dispensers and strong profitability for both franchisees and franchisor characterise its success. In addition the Ecomist business model has proven to be robust and delivers consistent and predictable earnings. This is due to the strategy of selling only consumables and a service that customers use regularly and that provides for consistent repeat business.
The company is also proud of its values and the culture that drives daily life. It is one of providing the right support and leadership for franchisees to achieve their business goals as well as their personal goals.
Over the past few months the company has reflected on the business, evaluated trends in results, its market penetration, its product sales, revenue and cost streams, competition and people. It has assessed financial health and identified the risks to revenue and cost structures. In light of this review and to build on its past success and that of its franchisees, new goals have been set for the next 5 years. The goals, strategies and an action plan are the subject of this Strategic Plan document.
Current situation and change that is needed
There are a number of factors that compel Ecomist to continue to be dynamic and change to meet the needs of the times. The most important of these follow below.
1. We need stronger & more consistent growth to survive and prosper. The business has been flat the last three years and our ability to gain new customers must improve. Growth has mainly come by concentrating on a few niche markets and seeking out customers that have not used the product or service before.
2. We need greater diversification (Industry, Products & Customers). Our industry risk to Schools and Aged Care is too high. We are heavily reliant on only a few industries such as Schools (30%) & Nursing Homes (20%).
3. Our number of customers should grow faster and our focus aimed toward gaining smaller but a greater number of customers. We have too few customers, only 6000 customers as an organisation. Our persistent and misguided concentration on Schools & Nursing Homes as larger lucrative customers has resulted in overexposure to these sectors.
4. Increase the value of each invoice and cross sell to existing customers to reduce the inherent product risk. We are heavily reliant on Service Income (80%) from Serviced Dispensers. It is important that we reduce this product risk by cross selling other products. We should aim to sell 3 products to each customer.
5. Competition in our core markets has increased significantly making it more difficult to gain new business.
6. Prospects in our niche markets are reducing as we near saturation in each of our traditional markets.
7. Telemarketing appointments in core segments are becoming less effective & more costly increasing the cost of customer acquisition.
8. With the advent of the GFC customer needs, outlook and values have changed – increasingly our customers
· Look to consolidate suppliers
· Want products & services that represent good value
· Interested in what value you can add to their business not what you are selling
9. Our product differentiation is no longer the strength it was. The market has caught up.
10. It is harder to sell a 12 month serviced dispenser in mature franchises in core segments.
We must continue to evolve to ensure survival, profitability and value.
OBJECTIVES THIS YEAR (Sum of Franchise Owner targets)
· Sell 185,000 Cans
· Sell 5000 Dispensers
· Sell $1100k – Other Products
· 1000 new customers
· Zee Turnover up 10%
· 2 more franchises
· Cancellation rate - 8% or less
STRATEGIC OBJECTIVES in 5 Years (June 2017)
· Continue growth trends (6%-10% pa)
· Franchisee turnover - $10m
· 25900 serviced dispensers in the field
· 250000 can sales
· $ 2.5 million Other Product sales (EA sales) - $3.7m (Zee Sales)
· EA turnover $6m
· 2,000 Schools (1500 now)
· 500 Nursing Homes (350)
· 1,000 Hospitality (600)
· 1,000 CCC (600)
· 4,000 (Food prep, Restaurants, Cafes, Retail) - (1500 now)
· 3,500 Other Commercial (1500)
· 13,000 active Households (8000) - Insect Killer
· Reduce percentage of schools from 29% - less than 20%
· Highly profitable franchises – Average of $80k per franchise
· Satisfied Customers (98% satisfaction rating)
· Customers buying 3 products (dispensers, spray soap plus 1 more)
· Strong mutually beneficial relationships between ZOR & ZEES & less than 5% in dispute
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ECOMIST AUSTRALIA 5 YEAR PLAN – KPI’S – GAP ANALYSIS
KPI / June 2012 / June 2013 / June 2014 / June 2015 / June 2016 / June 2017NOW / GAP / THEN
# SERVICED DISPENSERS / 19000 / 20717 / 22017 / 23317 / 24617 / 25917
# DISPENSERS SOLD - SERVICED / 3559 / 3000 / 3100 / 3200 / 3300 / 3400
CANCELLATIONS / 1842 / 1700 / 1800 / 1900 / 2000 / 2100
# DISPENSERS SOLD - NON SERVICED / 1980 / 2000 / 2000 / 2000 / 2000 / 2000
# ACTIVE NON SERVICED DISPENSERS / 8000 / 9000 / 10000 / 11000 / 12000 / 13000
# CANS SOLD BY EA 000's / 175 / 185 / 197 / 213 / 231 / 250
OTHER PRODUCT SALES - $000s / 910 / 1100 / 1300 / 1600 / 2000 / 2500
FRANCHISEE TURNOVER $000s / 6000 / 6600 / 7300 / 8000 / 9000 / 10000
EA TURNOVER $000s / 3500 / 4000 / 4400 / 4900 / 5400 / 6000
# COMMERCIAL CUSTOMERS / 6000 / 7000 / 8000 / 9300 / 10600 / 12000
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KEY ASSUMPTIONS
In order to achieve the conservative objectives in the 5 Year Plan there are a number of factors that must hold true over the next five years. These key assumptions follow below.
1. Growth of serviced dispensers is an average of 1300 a year(ie New Sales less cancellations)
2. Sales of 2000 non serviced dispensers and consumption of 3 cans per annum by each active non serviced dispenser.
3. Each serviced dispenser consumes 8 cans per year growing to 8.5 cans by 2017.
4. Sale of Other Products quickly spreads more widely to more franchisees in order to grow by 20% per annum. By 2017 Other Products form 37% of the turnover of each franchise and 42% of EA’s turnover.
5. Have been able to diversify more into Other Products, Other Industries and to more Customers. Our ability to gain new customers has matured and become a strength.
6. As a result of the growth of new customers the number of serviced dispensers per customer reduces from 3 – 2 reducing customer risk.
7. Evolved to using as least half person in sales per franchise from the current level of a quarter. BY 2017 we should be close to 1 person selling per franchise. We have become a sales led organisation.
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Following below is an assessment of the likelihood of the Key Assumptions holding true.
Assumption 1 & 2. VERY LIKELY (Grow by 1300 Serviced Dispensers)
What is built into the plan is the level of sales we achieve as a business now. It does not assume any substantial increase in capacity to sell more dispensers. It assumes a steady state. It is far more likely that we should outperform this target as we reach more sectors in the market and increase sales capacity.
Assumption 3. VERY LIKELY (Consume 8 cans a year)
This is the rate of consumption that occurs now. The plan assumes a steady state of 8 cans and a small increase in about the 5th year. Can consumption rate is a critical factor in our business and has been stagnant the past three years. There are a number of factors contributing to this. It is however realistic to assume it will not decline any further and will hold at current levels. Therefore the growth of serviced dispensers will lead to a commensurate increase in usage of cans and a small growth in the consumption rate.
Assumption 4. MOST LIKELY (Grow Other Products by 20% per annum)
This is the biggest challenge in the Plan. Growing Other Products by 20% per annum is a stretch goal. However, it is a pivotal strategy to diversify our product sales and improving our capacity to do so will be a major focus of Franchisees and Franchisor. The Key is to become a broad based mainstream supplier with an advantage is serviced Insect Control and serviced Odour Control.
Assumption 5 & 6. MOST LIKELY (Diversification to more industries, more customers)
This is also a challenge as our sales capacity is strong only in traditional core markets. It is a weakness in the general market. We will need to learn how to win business from competitors and gain market share. We cannot rely on schools and nursing homes for our future. Education and training programs as well as our people will need to change for this capability to become a core competence and grow our customer base.
Assumption 7 MOST LIKELY (more sales activity)
Franchise owners are currently more service and admin focussed than sales and marketing focused. A cultural change is needed to evolve to a sales and marketing priority and focus. It is however very achievable and critical to success and a bright future. The equivalent of 1/2 person per franchise must be allocated to the sales function consistently and effectively.
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What change is needed?
People, Systems, Processes, Marketing, Operations, should all gradually change and support what we want to become. That is
A LEADING PROVIDER OF A COMPLETE RANGE OF QUALITY ENVIRONMENTAL PRODUCTS & SERVICES TO THE COMMERCIAL MARKET
Our competitive advantage is Serviced Insect Control and Serviced Odour Control.
Any change will be gradual, planned, controlled & strategic. Change should be effective and improve the business of every franchisee and that of the franchisor.
EA commits to an Action Program to
· Support Zees to meet sales targets
· Mentor Zees for performance
· Lead Zees to meet growth plans & profitability
· Improve monitoring and reporting systems
· Offer whatever support Zees need to grow
· Continue to improve HO infrastructure
The GAP between now & 5 years is easily filled. At our conference in August 2012 this
was the unanimous view of all the groups in the workshops.
The Action Program following below comprises a large number of projects to be done
over the next two years. Each project is a major initiative and will have its own plan with
an action program and well defined desired outcomes. The Program in its entirety is
aimed at taking us from where we are to where we want to be in 5 years time.