Breaking into international markets – Autogrow Systems
Taking a hobby business from the backyard to the back of beyond is the dream of many a Kiwi entrepreneur, but Autogrow Systems Ltd Managing Director Jeff Broad has done just that. As the winner of the 2011 ANZ Exporter Assistance Prize in the Business.govt.nz Flying Start Business Plan Competition, Jeff says he’s found success by focusing on quality, getting out from behind the desk and running a marathon instead of a sprint.
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A green-fingered tech wizard
Life for Autogrow Systems Ltd started 20 years ago, when a friend of Manukau Institute of Technology electronics lecturer Jeff Broad returned from a holiday opining about hydroponics. Jeff tried it himself at home, but soon tired of getting his fingers green. Putting two and two together, he applied his electronics know-how with his passion for gardening, and soon set about building a home automated greenhouse watering and climate system.
“People said I should put it on the market but I thought ‘Yeah, whatever, there’s bound to be lots of stuff out there’, but eventually when I did have a look there wasn’t that much,” he says.
It wasn’t long, however, before the business was a victim of its own success and Jeff received an ultimatum from Mrs Broad to move it elsewhere before it took over the house. This prompted Jeff to start seriously looking at the market potential for his systems for the first time.
“Then we were visited by an American who was over here. He wanted to come to the Autogrow headquarters and he came around to my house. It was a surprise for him, I think, but he wanted to import some of our stuff. Then it got bigger and bigger, so we had to get an industrial unit and start to do things a bit more properly.”
An export turning point
Today, Autogrow is a truly global brand at the cutting edge, preparing to launch its latest product – the iPad-compatible Autogrow Multi automation software – into territories as varied as China, Mexico and Turkey. Jeff describes the product, which he wrote his award-winning export plan for, as the biggest turning point in his company’s 20-year history, but it’s not his first exporting success by any yardstick.
Within two years of starting his business, Jeff was successfully exporting his hardware to Australia. But even though he had the Southern Hemisphere sewn up, it wasn’t enough because it was only seasonal success. So he thought back to the American he took back home to Autogrow HQ, and set about researching and developing a hardware platform specifically for the Californian market, which spawned two products – the IntelliClimate and IntelliDose. The experience was one of the first to shape Jeff’s diligence in selecting export partners.
“That was interesting, because having designed it, we went back to that original company and I phoned the marketing manager, a young lady. I told her about these products that were nearly ready for the market and asked her if she would market them. I sort of assumed they just would, but she said they were way beyond her understanding and she didn’t think she could do them justice.
“So I carried on trying to convince her they were worth doing and she said she was about to go on a sales trip through California in two weeks and she offered to ask around for us. I thought ‘Well, that’s not going to work because she doesn’t really understand what the product is anyway’. So I asked if I could go with her, and to my surprise, she agreed. We had a great time and at the end of it she said she’d heard my sales patter so many times it was imprinted on her brain and she felt totally confident with the product.
“That product has grown and now represents about 50% of our turnover.”
Today, Autogrow’s biggest market is the US, followed by Australia, the UK and the Middle East, while the brand is also making steady inroads elsewhere.
Having researched emerging economies and the way high-tech European automation hardware is often too complex and high maintenance for developing horticultural markets, Jeff has sharpened Autogrow’s point of difference to be a leader in reliability and usability.
Previously, his customers’ only option had been to invest in cost-heavy equipment requiring special installation, parts and repair directly from Europe. However, Autogrow’s knowledge of its target market has led it to offer medium-sized commercial greenhouse operators around the world a cost-effective alternative.
“We use a lot of plug-in field wiring, for example, so if something needs to get swapped out you don’t need to send in a technician from Holland to go into China to connect it all, you can just get someone local to pull the plugs out and send the thing off for repair. Everything about it we have tried to make easy, functional and practical. We’ve also built some of the science of horticulture into the products and made them multilingual.
“It’s all to do with ease of use, really - ease of installation, ease of serviceability.”
Top tips
Don’t grow it alone
When Jeff set about developing Autogrow’s new Multi software range, he set up an advisory board made up of CEOs of businesses much larger and far more experienced in exporting than his own.
“The first thing they said when they saw the business plan was that it was a start but it needed quite a bit of work. So we spent jointly, among the four of us, some months working on that and knocking it into shape, and focusing very much on how to approach the export market.”
He picked Roger Fulton, CEO of Fero, Brian Knolles, CEO of Senztek, and Richard Laird, former CFO at Spi Capital.
“Everything I had in my original business plan they challenged, asking why there, why are you doing that? I’d go away and do some more research, and come back with answers or a change of mind. Some of the original concepts didn’t really hold up. So we eventually ended up with a really good plan that we are now starting to put in place.”
Put quality first
“Having a good, reliable product is important. Our British wholesaler, for example, used to express some interest in rebranding to their own brand. However, when I spoke to them recently about it, they said they had decided not to because the Autogrow brand is so well regarded in the UK that they no longer wanted to do it.
“And that’s what you need to be doing – you need the brand to build itself. Make a product that really does deliver – we put a lot of technical know-how into our product to make sure it does actually live up to the promise.”
Excessive margins don’t exist
Autogrow’s original business plan was based around a 50% margin, a figure Jeff had independently checked. However, his caution was wasted on the wrong people, and he found out pretty soon his margin was nowhere near enough to grow the company.
“You’ve got to understand you do need large margins, you can’t survive on less than 50% and you really need more than that if you want to grow the business. You need to be looking at 70% margins. I didn’t understand that and no one pointed that out to me.”
Choose your champions wisely
One of the keys to Autogrow’s export success has been who the brand partners with locally. In every market it has entered, the company has avoided established distributors at the top of the tree for agents hungry enough to actively sell. Jeff does this because it is required by the nature of his product.
“Think about the type of distributor you need. With our technical product it’s a little bit different, it’s not like buying a PC and going to a distributor’s catalogue. Ours is functionally different, so you need to have someone who’s going to go out there and show and tell, and that’s probably not a large distributor. They need enthusiasm, they need to be excited by your product and want to share that with people. That’s very important.”
Get out from behind the desk
Jeff says most of his market research was paid for with shoe leather and Air Miles.
“We do a reasonable amount of desk research – but not too much – and I don’t go spending a lot of money on consultants to do that. Get an overview of the market, then pick one of the bigger, better trade fairs and go there as a visitor. Don’t immediately go there to set up a stand.
“Target people, and really do talk to them, take them out and go out to dinner with them and get them to open up a little bit, and you can learn a huge amount about that market. Then you can decide if that’s the market you want to get into and whether you’re going to go back there next year and have a trade stand. Going there the first time as a visitor is also not too expensive to do.”
Embrace technology
Autogrow’s latest product taps the portability of iPad tablet computers – a fact that Jeff says never fails to impress.
“We have changed from selling hardware to mainly selling software because building expert systems into very powerful computers, to do very smart things, has suddenly become possible.
“One of the main interfaces to the Multi is actually going to be the iPad. There is a good reason for that. It gives you mobility around the greenhouse so if you need to calibrate a sensor you just grab your iPad and walk out to the sensor and do it. And at the same time, it adds that little bit of wow factor, because everyone we’ve shown has gone ‘wow’ without fail.”
Don’t be in a rush
“We have been ploughing back the profits from what we sold into developing and improving, and doing things better. Of course, that is a slow process; on the other hand, it does give you time to learn, which is pretty invaluable – it gives you time to learn about the markets, learn about what works well and what doesn’t.
“I think if I started off with $2million behind me, I could have done it all that much quicker, but then I might have made some big mistakes as well. Whereas doing it slower does give you the chance to digest things, think about things and learn, and eventually you get it pretty well right.”
Put your hand up
Autogrow has developed its Multi range with the assistance of a Ministry of Science and Innovation grant for 2011. “It’s not hard to get,” Jeff says, “You just have to put your best foot forward.”
Business drill-down
Autogrow Systems |
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| Business type: | Automation software developers for the horticultural industries |
| Main products: | The IntelliClimate and IntelliDose greenhouse automation systems |
| Number of staff: | Eight |
| Years in operation: | 20 |
| Main markets: | America, Australia, UK and the Middle East |
| Autogrow Systems Ltd designs and manufactures greenhouse climate controls, and irrigation and plant monitoring systems. It was founded by managing director Jeff Broad. Jeff has a degree in Electronics and Systems Management. He has spent most of his life working as an engineer/manager and lecturer in the electronics/computer industries. In the mid-80s, Jeff became interested in hydroponics and set up a small hydroponics system in his back yard. This soon led to him developing a full automation system for his garden, which was later refined and commercialised to form the basis of the Autogrow Systems product range. | |
Information supplied by Business.govt.nz
