Making the switch from subsidiary to business leader in his own right, Michael Toweel knows a thing or two about sizing up a business opportunity.
In his time at the helm of VitrineMedia Australia, he has diversified his product line, to quickly win ASX-listed clients, and expanded into new markets. If it’s a retail or real estate storefront on a high street, chances are, VitrineMedia is behind it.
Michael took the opportunity to head up VitrineMedia in 2012, running the Australian arm of a French parent company focused on LED display screens and signs. While enjoying financial success as a subsidiary, he was keen to take matters into his own hands.
“I thought we had a whole lot more to offer as an Australian business,” explains Michael. “In October last year, we bit the bullet, and said, hey, we’d like to buy the business and distribution, and that’s where it really started.”
“It was hard to break away from the parent company and lose the safety net of having their money behind us, and now it’s my money, my life, attached to this business. But I felt confident and passionate enough about the business, and knew it would work.”
Michael had earned a solid reputation in the market, and already experienced the power of knock-on effects.
In the early days, VitrineMedia had a copycat problem, with competitors importing knock-off LED products which would fail after six months. To build goodwill, Michael would personally remove the product from stores, and offer the potential customer 50 per cent off – at pains, squeezing himself on the margin.
But the strategy soon started paying dividends, when VitrineMedia landed a contract with Flight Centre to supply LED displays across more than 600 stores.
“Flight Centre was one of the early wins that kept us going, as we would’ve survived without it, but would’ve struggled,” says Michael. “Once we got the Flight Centre contract it suddenly took us from ‘VitrineMedia, may have heard of them’
From the Flight Centre partnership, VitrineMedia had lift-off. It proved a launching pad for contracts with other large companies like Retail Food Group, however, Michael says this created an entire new set of challenges.
Cashflow, as any SME knows, ebbs and flows, especially when running a business heavily reliant on contracts, and at the mercy of traditional trade terms. How can you realistically forecast revenue, and effectively manage your inventory, when you can’t accurately anticipate purchase orders? In the absence of a crystal ball, Michael needed another solution.
“In the early days, as a subsidiary, our trade terms were really, really lenient, where we could invest in huge amounts of stock and stagger the payments very comfortably,” says Michael. “When I took over, that was the first thing that changed – everything became a 30-day account, with 50 per cent required upfront, then it became 80 per cent upfront. When you’re getting a $100,000 container every six weeks, it can get a little tight.”
Michael found a way to free up working capital by tapping into finance with Moula. As he puts it, “short-term help for long-term gain”.
“One thing I’ve got to say, you can’t grow your business by shrinking it. You can’t stop spending and hope to grow your business, It just doesn’t work like that. You’ve obviously got to be smart with where you spend your money, but have to look at your ROI, and have to spend in order to grow.”
Just like Michael, you too can grow your business without straining your cashflow. Find out how a business loan from Moula can help your business seize opportunity.