WHEN Stream Group CEO Don McKenzie decided to acquire an embattled New Zealand insurance claims company late last year, the goal was to make it profitable. He never expected an earthquake. With a strong underlying Australian business that acts as a ‘Youtube’ for damaged properties, he expects 500 per cent total revenue growth this FY.
With a platform that allows builders to place tenders for property repairs online, ‘Storm Boy’ McKenzie has expanded his business locally, across the Tasman and plans to enter the UK by late next year.
“With the earthquake in Christchurch we’re having a big year, we’ve got quite a lot of expertise there and we couldn’t have picked a better time to acquire a New Zealand company,” he says.
“The opportunity to acquire Freemans Group NZ came in November last year and we spent time implementing our systems and processes. We took over all their debt and didn’t have to pay, it was on goodwill.
“We acquired their customer base and they had 50 people. We cut back operating costs, we made it profitable, and with the earthquake we’re going to see some mammoth growth.”
He highlights the fact that no one was killed in the 7.1 magnitude quake, but there is a lot of recovery work to be done, which will probably keep Stream Group busy for the next three years.
“We have two types of revenue – professional fees revenue which in New Zealand will be $6 million to $7 million, and then we have claim maintenance revenue which will be over $100 million from the earthquake alone,” says the 27-year-old.
“It’s a small chunk of the market, but we’ve made the decision not to over-commit, and by doing that we can outperform the market and be in a good position from there.
“It will be about double the revenue of Australia, but it’s a one-off event and Australia’s underlying revenue has been strong. We had 3500 claims in 2009, 13,500 in 2010 and we’re expecting 26,000 claims for 2011.”
Stream Group has enlisted a private equity firm as a 12.5 per cent shareholder to provide capital, expertise and advice as the company enters the next phase of growth, which includes expansion into the US and the UK.
For McKenzie, entrepreneurship is about finding holes in the market and listening to the ‘little comments’ of customers.
“It’s about doing what the client wants, meeting what the market needs and if you can’t do that then you don’t get ahead. It comes out of experience and listening to clients,” he says.
“It might just be the little comments off the cuff like ‘I wish this, I wish that’ and then coming back to the next meeting with a solution. It’s about spotting the opportunities with clients that others ignore.
“We target to make a commercial return and that’s really based on what the market numbers are – at one time you might have additional resources you can’t fill that are needed in case of a catastrophe.”
McKenzie started out at age 18 working for his parents’ home improvements company Absolutely Aluminium, where he was given the name ‘Storm Boy’ by builders, as he was always on his bike to lend a hand when the rains came.
Stream Group is the largest of 10 businesses McKenzie has accumulated since 2010, including a futures, options and foreign exchange company McKenzie Trading Services.
For the last nine months McKenzie has also been running a fledgling cattle stud west of Strathpine called Clear Mountain Stud.
“It’s only in the infant stages at the moment but we’re really looking at niche opportunities for it. At the moment we’re in negotiations with an existing herd, because you can’t just go in and buy 50 cows, you have to put time into setting up the farm itself,” he says.
“I’ve got a property out in Warwick and the plan is to ship off the herd to the farm to fatten them up – it’s something relaxing.”
For a full profile list on Brisbane’s 2010 Young Entrepreneurs, including interviews with all of the finalists, get a copy of the special annual edition of Brisbane Business News – out now in more than 500 greater Brisbane newsagents.
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