Mark Fletcher has deep experience as an owner and adviser in independent retail. He's founder of Tower Systems and CEO of newsXpress. Mark talks about the ongoing evolution and future of independent retailers.
In this episode of Small Business Banter, @Michael Kerr and @Mark Fletcher discuss the evolution and future of independent retailers, particularly news agencies. Mark shares insights from his experience with News Express and Tower Systems, emphasizing the importance of adapting to change, leveraging technology, and understanding market dynamics. The conversation highlights the critical role of independent retailers in communities and the need for them to embrace innovation to thrive in a competitive landscape. In this conversation, Michael and Mark Fletcher discuss the journey of transitioning a long-standing business, the importance of local businesses in building sustainable communities, and the complexities involved in selling a business.
Mark shares his experiences with various acquisition processes, the significance of maintaining business performance during transitions, and the emotional challenges of business ownership.
They also touch on the need for government support for small businesses and the potential benefits of politicians gaining firsthand experience in small business operations.
Takeaways;
Sound Bites
Chapters
00:00The Evolution of Independent Retailers
15:10Adapting to Change in Retail
29:59Leveraging Technology for Growth
28:52Navigating the Complexities of Business Transition
32:36The Importance of Timing in Business Sales
34:48Maintaining Business Performance During Transition
39:31Defining Roles Post-Acquisition
42:08The Loneliness of Business Ownership
44:25Preparing for a Successful Business Sale
48:22Legislating for Small Business Awareness
50:27Reforming Government Procurement for Small Business Support
Michael (00:01.422)
Hi and welcome into edition 150 of Small Business Banter. Mark Fletcher from News Express and TOW Systems is in with me today on Small Business Banter. Welcome Mark.
Mark Fletcher (00:13.624)
Thanks Michael, good to be here.
Michael (00:15.542)
Excellent. In terms of our discussion today, Mark's got, has founded two businesses. He'll tell you about those in sec. We're going to be, he's dealt with a lot of independent retailers, news agencies, particularly, but other independent gift shops and retailers, which when you look around the country, they are, they're everywhere, but they're incredibly vital and important in the smaller community. So we're going to talk about the role of
and the future of small independent retailers. And we're also going to have a chat about Mark's businesses, one of which he's recently exited. So can you, Mark, just give us an overview of News Express and then an overview of Tower and then we'll rip into it.
Mark Fletcher (01:00.056)
Yeah, so I didn't found News Express. I actually joined them three years after they started. And back then they had about 20 stores in the group. And I joined and it's now about 200 stores in the group. And these are independently owned local news agencies that curiously don't identify as news agencies. identify as transformed kind of gift and homeware stores, really playing outside of what's traditional for news agencies. So News Express is a marketing group. It's not a franchise.
And we're supporting these businesses through supplier deals and a number of arrangements to help them really grow profitability and grow the long-term viability of those businesses.
Michael (01:40.728)
So that often means diversifying from what they were.
Mark Fletcher (01:43.897)
Very much so. And look, we could talk about it as we go on, but I think that's a key thing for local small business retail. can't anymore let our shingles define what we sell and who we sell to. With Tower, I started that in February, 1981. it was, my goal was to create a source of income that didn't rely on my time.
So to create a product that I could sell and that could sell multiple times and I was gonna earn more than what I would just through hourly type work. I failed at high school and I didn't get my HSC as it was called back then. But I joined CSIRO, I was very lucky to be one of two people joining the Department of Computer Division of Computing Research in East Melbourne. And that gave me a really good footing for four years in
software programming, computers, mainframe computers. And then I went on to do another couple of roles. And then by the time I got to 1981, that's when I decided I wanted to, from home, start to create a product. And that was when I was developing a software product for newsagents initially, because I'd worked in a news agency when I was in high school. Created the product and took a couple of years to kind of try and get customers. I knew nothing about selling. And for probably the first
15, almost 20 years of Tower's life, we were primarily focused on newsagents. We did a little bit with radiologists and a little bit with optometrists, but newsagents were our prime source of income. And then along came the GST. We had a massive windfall. And so rather than kind of spending that money, I decided we'd reinvest it and started to expand the business. And now Tower serves 16 or 17 different vertical markets in the small business space.
Michael (03:40.312)
Well, look, there's a lot of interest in there, particularly your pathway from school that didn't quite sit, but you had a natural bent into computers. it was because you ended up in CSIRO and doing some programming or whatever, getting familiar with computers and programming, which is pretty cool.
Mark Fletcher (04:03.544)
Yeah, I started actually as a computer operator in East Melbourne and through that, working with various other CSIRO divisions, learning programming through that process. And that's what gave me the skillset that I was then able to use.
Michael (04:17.219)
Yeah. But also, yeah, must say to them, this is one of the things that comes up often. There's a lot of pressure in and around education to follow a career path. you chose to do something that was a bit more innately of interest, which, you know, is a love for more kids who are feeling like they've got to be a whatever to, you know, to go with what they want. That's not the topic of the conversation, but it is nevertheless interesting. Also, your early
identification of this concept of not being restricted to being paid for your hours and wanting to build something that was repeatable or while you sleep kind of business. That's pretty innovative.
Mark Fletcher (05:01.868)
Look, it was one of those things where, you know, working for the four years within the public service, and then I went from there to actually work in a bank in the software space. It was clear to me that I didn't want to, I mean, I'm very happy working, didn't mind hard work, but I didn't want my value or my financial worth to be tied to just those hours that I put in.
And it wasn't because I'd read a book or something, it was just a realization. And it was only after we'd sold the news agency software, probably for the third or fourth time that I realized, you know, there was an opportunity there. And, and look, it's a side story, but very briefly, for the first five years, we never charged an annual support fee to use the software. just, once they bought the software, they could use it forever and there was no extra cost.
And then one Saturday, I thought to myself, am I, why am I doing, all these phone calls and doing all this stuff and not charging a support fee? So I just sent out invoices to the customers we had at the time for a support fee. And I was shocked when people paid it. And then there was this realization that there was the software sale and then this add on support. And again, that hadn't come from business training. was just, just, I just thought, well, I should do this. And it worked and that kind of set us on a path for.
Michael (06:14.155)
You
Mark Fletcher (06:28.792)
broadening the business.
Michael (06:29.507)
So that was was tower systems and an early developer of this software to help news agencies particularly, but obviously it's expanded across a lot of sectors now. So in terms of news agencies, was that the heart and soul of your customer base in the early days?
Mark Fletcher (06:32.332)
Yeah, that's right.
Mark Fletcher (06:55.294)
It was, we did do radiology, as I mentioned before. The thing is, we had at that stage, by the time we'd done radiology, we had about 15 or 20 radiology practices. And then a major US film company who were selling film products into radiology practices said, if you sign up for five years with our film product, we'll give you radiology software from America for free. And the moment I saw that, I said, we're gonna get out of this marketplace.
You know, we can't compete with that. So we had done radiology, but it was news agents that were really the heart and soul of the business.
Michael (07:31.972)
Yeah. And often we talk about on this podcast, the heart and soul or the commercial infrastructure of smaller, often regional, but not only regional communities and retail shopping strips. And so the news agency always plays a pivotal role in, if you walk down the main street of a lot of smaller communities and towns, you'll see...
Main Street will be a news agency and they're vital. They've changed, they've evolved what they've offered, but can you talk about their role and this you mentioned needing to evolve what they offer, what they sell to survive?
Mark Fletcher (08:18.68)
So news agencies started in Victoria actually in the 1800s distributing magazines on the gold fields. And for well over hundred years, was a retail channel that was regulated by the publishers. They had very tight control. The government had put in place through what became the ACCC effectively
a guarantee, if you like, where newsagents would have a territory and all the papers and magazines sold in their territory had to go through the news agency. So for decades, that was, you know, river of gold for newsagents, river of gold for publishers. And then in the 1990s, that started to be deconstructed. 7-Eleven won a court case that, you know, I think in the back channels was supported by the publishers. They didn't want newsagents to have the control they had. And so that started to see the breakdown.
structurally of what was previously a monopoly business. And, you know, in hindsight, it had to happen. Monopolies like that didn't really serve a place. But newsagents lost their monopoly protection, if you like, for no compensation. So they had to give up what was a real asset for no compensation. And so in the 1990s, smart newsagents started to think, well, what else should I be doing in my business? You know, they're already selling
about 35 % of all greeting cards sold in Australia. They were selling at that stage, almost 100 % of all lottery tickets sold in Australia. They were doing tobacco, stationary, games, things like that. Yeah, very much general stores. So if you look at a news agency today, typically they don't sell tobacco, only around 60 % sell lottery products.
Michael (09:56.834)
a little shopping mall in a, of sorts. Yeah. Yeah.
Mark Fletcher (10:09.55)
Newspapers and magazines are a tiny, tiny part of the business. And evolved news agencies are selling gifts and homewares and clothing and all sorts of unique items. Through News Express, we've got a commercial relationship with the Royal Australian Mint, where we're selling millions and millions of dollars of mint coins each year through our stores. So we've really evolved away from the traditional.
and good news agents are doing that. The channel now has got about 25 or 2600 stores in Australia. That's down from around 4200 stores probably six or seven years ago. So the channel is smaller but most of the businesses are stronger than what they were six or seven years ago. We're still losing some each year but we're not losing as many as we used to and we're far less reliant on print media and those sorts of things in the channel.
Michael (11:06.115)
So what are the reasons they're being lost? it a shrinking local market and aging owners who can't sell the business or just competitive tensions?
Mark Fletcher (11:19.598)
Primarily it's owners who stubbornly hold onto tradition. There was one that closed last year. The ABC ran a story and said, you know, news agents are dying and so on. But that news agency, I knew pretty well. And they were running it as if it was the 1980s. It was a very traditional old school business. You know, I know of news agencies in towns where populations are 5,000 and less.
And those businesses are growing and growing really well by, you know, there's one in New Merk in Victoria where they have a specialty baby shop within their news agency. There's one in Mount Morgan, which is 45 minutes out of Rockhampton, where they have got an awesome coffee shop offering really an extraordinary range of coffee and tea. And, you know, that's good high margin product. People go there for the coffee and the tea and they buy other news agency items when they're there.
I know of one in Serena that's probably one of the best gift shops that you're going to find anywhere in Queensland. And Serena is 25 minutes out of Mackay and it's a population there of under 5,000. So these are news agencies that identify as a news agency, but they actually trade far away from what's expected for a news agency.
Michael (12:33.899)
Yeah, but in some respects is it still that shrinking but core news agency part of it, newspapers, is that still a hook for that business? It's still like an essential service provider in smaller places and from which you build into gifts and...
Mark Fletcher (12:56.91)
It is, it's kind of a brick in the wall. It's a small brick in the wall, but it's there. know, newspapers played a vital role in the news agency channel during COVID because they gave us permission to be open. We're an essential service. And I say we because I own two news agencies myself. The thing is, are they critical to the future of the channel? No, they're not. Probably 10 % of News Express stores
don't sell magazines and probably six or seven percent don't sell newspapers. So even though they identify as a news express, they don't have those traditional items. papers and magazines, you if you think about it, we make 12 and a half percent from newspapers. That's a tiny, tiny margin. And so they get put in the cheapest location within the store. They generate some traffic, but
around 80 % of all newspaper customers don't buy something else in the store. And so we look at the basket efficiency of the product and say, well, it's not as efficient as it might have been 15 years ago.
Michael (14:04.227)
Okay. Yeah, it's and from my understanding of the newspaper industry, it's, well and truly shrinking and, you know, in terms of being a paper, newspaper, but that, you know, I'm fascinated as to how, who, who are going to be the next, those news agencies still exist.
Mark Fletcher (14:19.47)
Yeah.
Michael (14:33.155)
You see this, you know, percentage don't sell any newspapers anymore or any magazines that you're saying that's going to keep that percentage keep growing.
Mark Fletcher (14:43.79)
So how they're evolving their businesses is by creating, for example, a website. So I mentioned the one in Yumerco where they've got a baby shop within the shop. So they created a website which is called One Baby and that's their own brand. So they've still got the shop that looks as a news agency and then online they present as this baby shop. And I think by creating an online presence under a separate branding,
you can open your plan B and then start to transition towards that type of business if you see that being successful.
Michael (15:17.032)
Maybe, online, possibly physically as well in the store.
Mark Fletcher (15:22.766)
Yes, both. I know a newsagent in Western Australia, for example, they decided that they were going to sell high end pet related products, you know, two, three, $400 items for pets. And I said, why don't you put them in the shop? And she said, I won't do that because they won't sell. And I said, look, just, just give it a shot. So of course, you know what happened. She had the online store that was growing, put these products in a shop and sure enough, people started buying those products. And so she
wouldn't have done that if she hadn't had the online experience to see what was possible.
Michael (15:54.754)
Yeah, yeah, yeah. it's a complete, it's a bit like blowing up your own business slowly, isn't it? But that's, it's just the sheer power of online and the ability to create something quickly and if it doesn't work, try something else or, yeah.
Mark Fletcher (16:01.41)
Yeah. Yeah.
Mark Fletcher (16:19.5)
Yeah, look, think online is very much that opportunity for retailers. And I think the more we experiment with what we can do online, kind of the more exciting it can be in terms of how far we can take our businesses.
Michael (16:33.355)
Yeah. So this goes to in the work I do with owners and owners of businesses in smaller communities. It's a battle. of the, there are ages and stages within the industry. Some are really on the way out. are on the rise. But there are always entrepreneurial
types who will be able to adapt and take the business in a new direction. They take a look at what's there. They might pick the bones out and say, look, that's of no value, but this just the physical retail presence, the reputation, the brand, or it can be something from which to build. the psychological and emotional
types that's going to be able to look at it a traditional news agency and then say we're going to become an online gifting retailer. mean who are the kind of people that are the do you see the kinds of people that are transforming these businesses and what what do they look like?
Mark Fletcher (17:54.926)
They can be any age and they can be from any background.
It really depends on, personally, I think it depends on their energy level, their energy level and their appetite for change. if you look at it, I think this goes almost for any independent retail business. You can look at that and say, all right, I'm buying that business and that does these certain things and I'll keep doing those things and I'll get similar results. Or you can say, like you said earlier, you can blow up the business.
the call, stick with that and then throwing out anything that's not working. You can do it with a pet shop, with a jeweler, with a garden centre, with a toy shop. So I think it comes down to what your appetite is for embracing change and how much of, how far ahead of that curve of change you want to be. I think small business retailers have got to understand that their success is entirely up to them.
It's not up to their suppliers, it's not up to their landlords, it's not up to their banks, it's up to them. And if they don't see it that way, if they don't see the world that way, then I don't think they're gonna be the right person to own a local independent retail business.
Michael (19:10.083)
There's not many small businesses that are easy. So hang on to your hat. But the opportunities are, I agree entirely, the opportunities are there, but you've got to make them. You've got to take a few hits and go sideways or go backwards and then come around the other side. So with these independent retailers and you're working across lots of different industry sectors, niches.
Mark Fletcher (19:14.072)
No.
Michael (19:39.554)
What's the platform? It's a bit of a broad term that you would encourage owners to think about. Is it a combination of an e-commerce website and a marketing plan? What are the things that you provide and that you see that a independent retailer can use to really ratchet up their growth from where they are now?
Mark Fletcher (20:06.382)
So look, one of the tools within the tower software is a thing called the insights dashboard. And we built that really wanting to answer some very basic questions. What's working? What's not working? What am I missing out?
Michael (20:21.645)
So what's selling, what's not selling?
Mark Fletcher (20:24.77)
What's selling, what's not selling? What am I missing out on? Is theft possibly an issue in the business? So there are six kind of different areas that the insights dashboard looks at. And we realize that retailers, they don't know what they don't know. And so they're not necessarily going to go and look for those things like theft, for example, 99 % of retailers will not go and
use anything in the software to say is theft an issue. So with the Insights dashboard, we decided to push this information to them. So we found, for example, that...
Michael (21:02.603)
Sorry, Mark, that's out of their POS system or point of sale, assuming they have one. Yeah, and assuming they have some, yeah.
Mark Fletcher (21:06.232)
That's right, that's out of the towel software. Yeah.
And so it's about trying to help them understand because creating this insights dashboard came out of the work we do with News Express, my experience in retail and also to post software. So it's bringing together the multiple businesses. And so if you look at, for example, what I'm missing out on, if you look at the top 100 items in an independent retail shop, they're out of stock of those items on average between 20 and 25 % of the time.
So if they were not out of stock, we know from sales history that they would get a certain value of sale. So we can say to them, you're being out of stock over the last 12 months of the top 100 items has cost your business X thousand dollars. Now, as soon as you put that in front of a retailer, if they're motivated to be profitable in their business, that catches their attention. And the moment you've got that attention, you can then have these other business conversations.
Michael (22:10.625)
Yeah, so that top 100 list is drawn from a whole lot of retailers across a whole lot of sectors. what's going on in businesses a bit like mine right across the country?
Mark Fletcher (22:24.77)
Yeah, and what am I failing to do to leverage that opportunity in my business? If you look at small business retail, a lot of their relationships are personal with suppliers and things like that. And if a supplier says, this is going to be great, you should put it in. Because you like that person, you might have a meal with them, you might have a coffee with them, you'll do what they say. And I'm, through the software and through the work that we do, I'm trying to say,
make emotionless decisions based on the evidence and be profitable as a result.
Michael (22:58.881)
Yeah, yeah, because there are a lot of wonderful businesses out there that I think that it's a curation of things that the owner likes. And sometimes they pick the, even going back to my banking days, people had this remarkable gift of saying this kind of
cartoon character is going to be big because there's a movie I'm going to spend half a million dollars and buy all the gear and sometimes win hugely and sometimes just lose everything. But those curation, they're wonderful. That's a reflection of that individual's interest and personalities. But I feel like a lot of them, you look in there and you go, I don't understand who your niche is and who your customers are and whether your business is successful.
There's this other more rational way and if you're in, assuming you're in business to optimize what you get out of it, through that software you talk about, you're looking at your store, your performance as a standalone where you can make it better, but you're also drawing on what's happening in other stores like you right around the country. think that's, then you get away from this idea of I've got to pick the market or pick the
curate. can actually, if it's selling over there, it's, you know, and it's a number one, I probably should think about having it here.
Mark Fletcher (24:26.598)
Well, you look at the tools we've got access to today. If we look right now at the time we're recording this, there are around 930,000 searches a month in Australia that have the word Pokemon in the search. And so Pokemon is outperforming Disney in terms of a search keyword. Now, through various online tools, we can see what people are searching for, what questions they're asking, whether it's the Pokemon game, Pokemon cards or Pokemon clothing or plush.
And smart retailers can use that information to then leverage themselves into success with Pokemon when previously they may have had no connection with Pokemon at all. Now, we're in this period where we've got access to these tools and online search data is really helpful because it can inform us about things that we know nothing about ourselves. And it's fascinating.
Michael (25:18.007)
Yeah, sure. And as you say, it's there. The issue is us not embracing it or investing. You you've got to invest in it. You invest time and money. So you're enabling an independent retailer to get all the data they need. Do you help them build out websites?
Mark Fletcher (25:23.971)
Mmm.
Michael (25:46.528)
Okay, so then and you give them sort of through that data some, you know, some, guess call it advice, call it direction around what what's selling, what's not. So put that on your website and you should be starting to see some results.
Mark Fletcher (26:04.238)
Very much so. So through Tower, you've got the Tower POS software, which sits in the store. They've got a version of it they can take to marketplaces if they want to do pop-up retail. Then through Tower, Tower will create Shopify websites, big commerce websites, WooCommerce websites, Magento websites, and has created hundreds of these websites for customers. So it connects from the point of sale software through to the website. And then we provide a service where we'll, six months on or 12 months on, we'll take a look at the website.
and give them some advice on what's working, what's not working, how they could tweak it, and how they can use tools within the web technology to drive more traffic for the website. And so it's a kind of a holistic service where Poz is the manager of the data, but the website is the front face that helps you reach customers anywhere in the world if you want to go that far.
Michael (26:57.875)
Yeah, and yes, indeed. And if you have that combination of a physical presence as well in a interesting place, you can get them to come see you. So that, you know, more like a destination thing. Yes, it sounds great. More power to you and Tau to make viable more of those businesses. We all go to these places and there's always plenty of cafes and this
probably increasingly plenty of food options, but if we can get the retail part of those towns, those businesses humming, I think it makes for more sustainable community. It's probably not a bad time. We first met maybe five, six years ago, I can't quite remember, but can we talk about...
You had a really interesting, I love your pathway out of school, pre-HSC. I think, you you went and did your own thing and you did it for reasons that I think more of us should, you that concept of you hear about all the time about, know, earning while you sleep. It's been around longer than the last, you know, decade or so with social media. So you started Tower.
It's 43 years old and you've recently transitioned it to another owner. Do you want to talk about the process, some of the things that brought up for you when you've had a business that long, the process you went through to finally sell? I'd be fascinated by that.
Mark Fletcher (28:52.878)
Look, it's complex. I started the company in 1981 and my first approach from an outside party to consider acquiring was probably 2009. And I didn't know what that looked like. So I went through a process and
that was leading into due diligence. And that company traded on the Australian Stock Exchange. And I pulled out of that process once I had seen another acquisition of theirs where they were acquiring companies by issuing shares. And I saw the share price go up prior to acquisition and then decline post acquisition. And I thought, I don't want to be part of that. anyway, walked away from that pretty quickly. And then
Michael (29:50.744)
It was nice to get the approach though. I'm guessing you weren't really looking to sell at the time actively. It was happenstance.
Mark Fletcher (29:55.799)
Yeah.
It was happenstance. And so if we fast forward then to probably about 2012, I was approached by an overseas company. you know, it was, this was in a period where in probably 12 months, I had four different approaches and my response always was the same. I'm not looking to sell.
be fooled to not consider it if the price was right. By then, you know, I have two daughters, neither of them, one of them was in the business, but she's no longer in the business. She's raising two kids and I've got another daughter who's a primary school teacher. Within the business, there wasn't anybody who had an appetite to take it on through a management buyout. So I knew it's something I was going to have to resolve and
through the work that I do with Tower and with News Express, I get to talk to a lot of owners about when they sell and how they sell. And the advice I was giving to people like me was, it's something you need to resolve at a time of your choosing, rather than having it being resolved for you when you're in maybe hospital or unwell or whatever. So about four years ago, I was approached and this is around the time we first connected.
Mark Fletcher (31:26.438)
And, you know, this company was one of the Australian sort of the Constellation Group out of Canada. They're a publicly traded company. And we started a due diligence process. But again, I wasn't totally invested. I didn't feel that it was moving as quickly as it could. And so partway through that process, I stopped it.
And they were very, really wonderful and courteous and respectful. And they said, look, if you change your mind, let us know. And we would touch base every probably six or eight months. And then at the start of last year, their managing director within Australia was in Melbourne and came in for a chat. And I said, look, I have no interest in selling. It's the last thing I want to do. But the advice that I would give myself is, you know, you're approaching an age where you have to do something.
because again, I didn't want to be just, you know, in hospital with a terminal illness or something and having this decided for me. So I said,
Michael (32:30.54)
And or leaving the problem to your nearest and dearest possibly.
Mark Fletcher (32:36.182)
exactly. I mean, I was lucky in the sense that, you the business was debt free. We were very self sufficient and had been for many years. But I did know that the value in the company was going to be greater if I was alive than if I wasn't alive. well, it's true. It's, you know, it's this thing because when do I do it? And so
Michael (32:50.307)
To be totally frank, yeah. Yeah.
Mark Fletcher (33:03.886)
In that last 12 months, I ended up meeting with three different parties who all happened to inquire at around the same time. And I got to a point where with Vila APX, which is part of one of the Australian arms of Constellation, I signed a letter of intent with them. We started a due diligence process and
things move from there. We had a lot of data room, we had a lot of information we had to put together. Through that process, learning a lot about the business. And it then got to a point in the last week where I still hadn't signed a contract. I did have a contract from them and I hadn't signed the contract. And that was the time that I had to make the decision. Because up until that point, it was a non-binding letter of intent. So I could have walked away, they could have walked away.
And so I did a couple of things. First of all, I polled all of the staff in the company and said, this is where I'm at. I'm interested in your feedback on what I should do. I won't necessarily do what you say, but I want to know where you sit. And I then spoke to a whole bunch of people within the business. And it was...
That was on a Wednesday and by the Thursday morning, I'd made the decision it's time to do this. So by that stage, we'd got through due diligence. They were ready to sign the contract on the other side. I was ready to sign the contract and did it and the deal closed within 24 hours.
Michael (34:48.055)
Yeah, it's from, the way you went about that is absolutely the right way. It wasn't rushed. You'd been down the road a few times before and you reflected and said, I think you meant you learnt even more about your own business through the DD process. It sounds to me very much like you didn't take your foot off the accelerator at any time, the business was still performing well.
Mark Fletcher (34:58.829)
Hmm.
Michael (35:18.147)
because you can get distracted by approaches from parties.
Mark Fletcher (35:18.84)
Yes.
Mark Fletcher (35:24.622)
Yeah, look, I mean, if you look at that, we invested in that last six months. There was an opportunity for an external marketing campaign, about $45,000. And if I was purely running the business to maximise my return, I wouldn't have done that. But I did it because my objectives through the process was to
to run the business as I would if it wasn't being sold. Out of respect for the potential purchases, out of respect for the staff, but also I felt better doing that. So yeah, no foot off the accelerator and it hasn't changed. I'm still within the business. I'm here for at least a couple of years, very much enjoying. I didn't know how I would go working in a business owned by somebody else, but very much enjoying it, enjoying meeting other companies within their world.
and talking with them. And, you know, I still feel like I've got a lot to contribute. And I'm very comfortable in their situation, they buy businesses and hold them. That's the Vila model within and constellations model. Generally, they buy businesses, software companies like us, and they hold them. They don't force dramatic change. And so you can see within the tower world, the people, nobody's been lost, all the staff are still here.
Michael (36:23.831)
Yeah.
Mark Fletcher (36:54.066)
And the only difference is they are part of a bigger community and that gives them more opportunity if they want to look elsewhere within that community for other roles that they could fulfill.
Michael (37:05.569)
Yeah, I think that's the idea of a good acquirer. mean, it sounds like you spoke to three or four. And I think their willingness to say, respect that you said, it's not my time, will keep the dialogue open. And that's so important because the deals where it's, I know what you're referring to with those, we're going to give you.
shares and we're going to buy another 10 businesses and we're all going to be you know unicorns or gazillionaires and culturally it's about hopefully it all hangs together and we'll make a ton of money. That's mostly not what it's about for a lot of owners and you're staying in the group, you're excited about it so there are good acquirers and you get
And you don't know that at start, you've got to get to know them and run a respectful process where if it isn't the right time, you say that. And those good acquirers, they know that at some point, the timing will be right and you're better off to kind of leave it open for future discussions.
Mark Fletcher (38:22.892)
Yeah, it's the funny thing is, going into it, you don't know any of that. Like you said, and so, you know, it's, it is a process of getting to know people. And, you know, every business has its own quirks. And so you've got to having gone through the process with some others earlier.
Michael (38:30.272)
Mm-hmm.
Mark Fletcher (38:49.76)
It helped us be prepared for due diligence and, you know, we'd done a number of things to tidy up the company and make it sale ready, you know, in terms of vehicle leases and various things like that. And that certainly helped. On their side, because they weren't, they were keen to get a deal done, but they weren't putting overt pressure on.
And I think that was really important. It gave you a real feeling of confidence that this was going to be a good relationship.
Michael (39:22.743)
Yeah. Yeah. So that the step from being the you're out totally is that in terms of an ownership sense? I mean, you're out totally. Yeah.
Mark Fletcher (39:31.502)
I'm out totally. They 100 % own the business. I work for the business as effectively as a consultant, but doing what I was doing before. And I still have the News Express business and they know about that and we share an office and all of that's very straightforward and fully documented and understood.
Michael (39:44.535)
Yep. Yeah.
Did you go through the process of defining what your role is when you're not an owner and you're within the group for the next few years? Or is it they kind of leaving you to your devices because they...
Mark Fletcher (40:05.858)
So within Tower, always ran, I played a role in product direction. didn't own it, but I played a role in that. All sales and marketing I ran. And then we ran a very flat business. I would talk to anybody, whether it's help desk or developers or whatever. And so the plan always was that after acquisition, I would still do those same things. And so it's not...
documented in black and white, but it's very well understood by the various people on their side, by me and the people on our side.
Michael (40:42.465)
And you've got this team, which is a big part of their confidence in the acquisition, the systems, the software, but also the team, I'm assuming.
Mark Fletcher (40:55.052)
Yeah, and I think within their broader group of companies, you know, as we talk to more of those companies, I think there are opportunities for kind of learning and sharing insights. And I think there are opportunities there. I'm certainly energised by different businesses that I'm talking with and learning from them and having conversations that you wouldn't have if you were a sole owner just in your own kind of little bubble world.
Michael (41:24.803)
Yeah. Yeah. Look, it's a, it's a constant thing. We're talking about it with independent retailers out there, starting a business and, and, trying to work out what to do next and what to buy and how to change the business. And, know, there's a lot of, a lot of small bubbles out there that, you know, the, um, that, part of the reason this podcast, big part of the reason is to say, well, you're an owner is what another owner has done with, you know, with a particular issue or the particular time of their ownership. And
you know, share, you know, because it is it's very can be very lonely and very challenging on your own. Yeah, definitely. We all need some support.
Mark Fletcher (42:08.014)
It's interesting you say that because it is extremely lonely when you are an owner of a business. Because ultimately, it doesn't matter how well structured the business is. Ultimately, it all comes down to you. You're the person responsible. And it's difficult because it doesn't matter how much you might talk to somebody, COO or somebody else.
they're probably not the person who's going to get the call at three o'clock in the morning if something's gone wrong or whatever. you know, that's why you've got to find the right way to land a business through a sale process to make it work out. And through the time that you own the business, you've got to work as hard as possible to not let it kind of get into your head to a point that it sort of damages you if you like.
Michael (43:05.953)
Yeah, yeah, yeah. Yeah, I mean, it's a thin line and it's... I think a lot of people in business are there for all the best reasons, but it's so easy to just go a little bit too hard on and forget that part of your life. It's... Yeah, checks and balances from good close...
Mark Fletcher (43:28.684)
Yeah.
Michael (43:30.643)
trusted advisors or other people that you know in business or mentors or coach, whatever it is, talk to some others about just those things at a level where they can listen and kind of help steer you back to where you should be or where you want to be if they know what you're really all about.
The reflections for me on that, a really orderly, thoughtful process to think ahead about. You don't want to be leaving the problems of your business to somebody else because you're ill or whatever. I think that's a lesson well learned for everybody.
And it doesn't mean you have to go out there and flog your business tomorrow. It just means you've got to be thinking about and have an answer to some of the key questions. it in fact saleable? What can I do to make it more saleable? What can I do to make it more valuable? And that should start... It's actually tied to the success of your business on an ongoing basis. If you understand those things...
what makes it more profitable, more sellable? The answer is things that make the business easier to run, more efficient, more profitable. So it's this idea, yeah, sorry, you go.
Mark Fletcher (45:01.687)
Yeah.
Mark Fletcher (45:06.158)
One of our mantras in both the businesses, of one of our mantras is make every day a payday. A lot of people own a business thinking I'm going to make my money when I sell the business, which is a mistake. If you ensure that every day is as profitable as it possibly can be, then the selling of the business will take care of itself. And that means, you know, buying products, carefully buying products that are going to sell.
pricing those at the highest price point you can possibly sell them for. Making sure that theft is as low as possible, making sure your labor cost is as low as possible without harming customer service, making sure that your occupancy cost in the retail space is as low as it can be. And if you work on this principle of making every day your payday, then the time you do come to sell, it's going to work better for you. And I think that's often forgotten by retailers.
The other point that I would make is I knew early on that I'm not a big legacy person. don't, the business has never been a shrine to me and the office has never been created as a shrine to me or my persona. And so I wasn't and have never been a believer that I have to leave this monument.
It's transactional, it's practical. I needed to earn a good income while I was in the business. I needed to sell it for a reasonable price. I needed to make sure that everybody in the business had a stable future for themselves professionally and that the customers, know, thousands of customers were all well taken care of. And all of those things had to come into play to make it work.
Michael (46:56.995)
Yeah, I mean having clarity about that at your own personal level is to be admired and you know, I'm sure it was tested at times but you know, that's an extremely rational basis on which to do what you need to do to build a business for eventual sale. It can be other things but you for you it's great to hear you say that
that there was a purpose for the business. There's probably a few, a key one was it provides you and your nearest and dearest with what they need. Love it. I'm trying to implement into this podcast a standard question at the end, which is pretend you're the...
Mark Fletcher (47:38.402)
Yeah, exactly.
Michael (47:53.2)
You're the head of the Federal Small Business Department in Australia. what would be your top... And you've seen a lot of businesses around the country in both small and big places. What would your priorities be for making small business more resilient and a more sustainable part of our economy?
Mark Fletcher (48:22.318)
Look, the first thing I would do is that I would somehow legislate that every state and federal politician every year spends one day, sorry, one week a month, sorry, one week a year, I should say, working in a small business in their electorate. That is chosen at random through a blind ballot.
So they can't control which business they work in. They can't go to a mate's place and sit up the back and have some beers. So I think that every politician, regardless of whether they're in opposition or government, spending a week a year working in a small business would in itself change the perspective of all politicians on the value of small business and the role small business can play in
Michael (48:58.019)
You
Mark Fletcher (49:20.268)
building a stronger economy. That would be my key thing that I would want to see happen.
Michael (49:24.375)
Yeah, that would be a platform.
Mark Fletcher (49:28.546)
Yeah, there's one other thing that I would do as well, and that is I would take a thorough look at the acquisition processes. governments, federal, state, local, I think they think they do acquisitions of anything from pens to pads to
cars to computers or whatever, I think they think they do that well. And I see a lot of money being spent with consultants, particularly in the software side that is, yeah, I'd like to see them forced to procure at a lower cost with less use of consultants. We have an obsession with consultants.
Michael (50:11.031)
This is procurement we're talking about.
Yeah.
Mark Fletcher (50:27.734)
in Australia that's costing billions of dollars lining limited pockets and the money is not getting to where it could really make a big difference. know, everybody says at election time small business is so critical to the country and to which I would say, where were you between the elections? You know, what were you doing to support small business between the elections? And small businesses are so vital because we, small businesses give people a start. They help.
with the local narrative of towns and of regions. And I think we've got to support them in more practical ways.
Michael (51:01.975)
Yeah, yeah, they're like, they're excellent. Okay, straight to the pool and straight to the small business band a pool room for those couple. Thank you, Mark. Like I really appreciate you taking time out. It's, it's great to catch up again, to hear about the work you're doing with small independent retails, which is just a cornerstone of so many communities.
Mark Fletcher (51:13.65)
You
Michael (51:30.807)
And also, you know, congratulations on after 43 years, both exiting on good terms and staying in and enjoying what you're doing with within the bigger group. So all power to you. If if somebody wants to to get hold of you in in what's the easiest way to do that?
Mark Fletcher (51:54.862)
Um, look, they can call me on my mobile, happy for them to do that. And it's 0418 321 338. And people can also, yeah, and people can also email me mark at towersystems.com.au either of those works.
Michael (51:58.466)
Yep. Yep.
Michael (52:03.127)
Yeah, I'll put that in the show notes. the, yeah.
Yeah, yeah. Excellent. All right. Well, I thoroughly enjoyed the chat, Mark. Thank you so much. And I do look forward to hearing more about the great work you're doing.
Mark Fletcher (52:24.514)
Thanks Michael, I'm really grateful for the opportunity to talk.
Michael (52:27.661)
Thank you. All the best.
Mark Fletcher (52:29.806)
Thank you. Thank you.