Going to the next level

Callidan Instruments founder and chief executive Garry France talks to AMANDA GOME about his success in taking a niche technology from start-up to the next level.

By Amanda Gome

In 2002 Garry France was a consultant to the coal industry. Then he founded Callidan Instruments to manufacture analysers that measure the amount of moisture in items such as coal and food.

He is now riding the mining boom and made $1.6 million profit this year, with $8 million turnover and 35 staff.

France, now 41, talks to Amanda Gome about how he took his manufacturing business from a start-up to the next level and about future plans, including a possible float and new equity partners.

Garry is happy to answer your inquiries. Send them to feedback@smartcompany.com.au One reader has already asked him a question (see end of article).

Amanda Gome: Why be an entrepreneur when you could have had a cozy life consulting to the likes of BHP?

Garry France: I was a mechanical engineer who was lured by the dollars. Am I that shallow? No. I saw an idea and had an idea of building something and developing technology. That was the real attraction.

You began by playing around with microwave equipment in your shed in Mackay (Queensland). What did you do that was unique?

We basically created a new product based on importing high technology equipment from the USA and processes from Germany and then adding our own patented new technology. So while there were already microwave analysers in the US and other countries, our design meant they were simpler to use and cheaper to make. We could sell them for $25,000 when competitors were selling them for more than $100,000.

You used it to analyse the moisture in coal, an industry where you already had contacts. How did it grow from there?

People in the mining sector heard about it. Then the food processing companies began to use it. We sold five analysers in 2002 and this year we sold between 60 and 70, of which 60% are sold overseas. Engineers in mine sites around the world need analyzers, so they jump on Goggle and we have three sites. We were told to do that by the search gurus to optimise our sites, because the more sites the more links, which pushes us up the search engines.

The research and development costs would have been huge. How did you raise the money for the business? What did you do to make sure the business was financed efficiently?

In 2003 we realised we needed to take on more capital. We made presentations to venture capitalists but they wanted too much and too much control. We thought there has to be a better way. At the time we were dealing with COMET (the Federal Government’s Commercialising Emerging Technology program) and we came up with a new approach.

You decided to raise capital privately and held a presentation to offer a 20% stake in the company in 20 allotments of $50,000 each. By the second presentation you had made the money. Would you do that again?

Well, the investors would say yes. We have paid out over half of them and for them it has been a significant investment. In hindsight for us, it has been so successful it would have been better to have got money from the bank than to give away equity and worry about shareholders. But then would the bank have lent us the money?

We also got a COMET grant and a Commercial Ready grant, which helped.

Did you raise enough money?

Yes, but the costs of research and development are large. We also set up a consultancy arm, so while we were developing the technology we could provide services for other companies. That business is called Real Time Instruments and specialises in the supply, maintenance and support of on-line analysis equipment.

Now about 40% of sales come from equipment sales and 60% from consultancy services.

How did you launch your export drive?

We got actively involved with Austrade to investigate who would make the best agents and distributors. In some countries we have one exclusive agent and others two or three agents. We are still trying to understand how one model works better than another. For example we might have a high profile agent who lets the product sit on the shelves, or we might have two or three agents in Seoul who hammer it to death and do really well.

What is your next challenge?

We still haven’t realised our potential. Why aren’t we selling three times as many analysers? Why aren’t we making $10 million profit instead of $1.5 million? Why can’t we go public?

One of your best tips?

We have doubled in size every year, which brings stresses and strains.

We took on external directors to give advice on finance and strategic direction and we brought in business consultants to teach us about marketing, sales and business growth.

I am no good at marketing and sales. While they (Synergy) were expensive, they taught us to be more confident about ourselves. They broke down the sales process and taught us a 10 point plan to create new opportunities through the sales and after-sales process. We learnt to touch the client all the way.

What’s your biggest drawback as a leader?

I enjoy doing new things rather than being systematic and running things. Some people enjoy strategically laying out plans and doing marketing in a certain fashion. But I enjoy the new ideas and the start-up phase. I also found it hard to delegate and let go of the reins to employees.

Has running a business from Mackay in Queensland held you back?

No. We all love it. It’s really relaxing. You are out of the rat race.

Where do you get ideas for future development?

I travel a lot and I also focus on solving problems for clients. Ideas don’t come from crystal balls. They come from listening to clients.

What is your next big idea?

For the last two and a half years we have been doing work on clean coal technology – we want to develop technology to improve boiler efficiency and make better use of coal to generate those efficiencies. We have done some trials and are now talking to major power stations.

I am now the chairman so we are looking at acquisitions and taking on a private equity partner.

Why can’t we go public in the future? If we have the right private equity partner, plan for organic growth and acquisitions…

Have your hours decreased since you moved to the chairman position?

No. I usually work a 40-hour week. I don’t have the stamina to work an 80-hour week. Never did.

Comments

Steve Chambers writes: Hi Garry. Firstly congratulations on your venture! It must be extremely satisfying to see your dream materialize.