We have a client called AJ Parkes Pty Ltd. And in December 2021 they celebrated 125 years in existence.
This is an amazing feat.
But let me get something clear. They are not a medical business.
On average 90% of medical businesses in Australia will die, disappear, get sold, go into liquidation or shut down within 10 years. Of the remaining 10%, 5% may have survived 10 years or more but that is all they are doing – surviving. Yes, they are still profitable but not as much as their owners would like.
The reality is that when you take into consideration hours worked by medical business owners operating the businesses of this 5%, they would have earned more and had less stress if they work on medical services.
That then means of the remaining 5% these are the ones that are making serious money and considered profitable.
Wikipedia shows that there are less than 100 businesses in Australia which have survived more than 100 years. That is a tiny number when you consider there were 2.4 Million trading businesses on 30 June 2021.
There are no medical businesses that has survived for more than 100 years. Nil, Zero. In fact, there are hardly any over 50 years.
Now, in keeping with my ego, I would like to think I had a major part in AJ Parkes’s success but even I must acknowledge my 7 years as a business advisor to them it is a drop in the ocean when they had been around for 118 years prior to my involvement. Besides, if I did suggest this, I get the distinct feeling the GM & CEO may not be too impressed.
That is not to say it has been easy for the company. It started trading when the horse and cart was the major form of transport. It traded during 2 world wars, the Spanish flu, and the great depression too. Then came the oil crisis of the 1970s followed by super inflation and 18% interest rates. Then we had the crash of 1987. I have no idea how many recessions they have gone through, but I guess quite a few.
And recently we had the global financial crisis and now Covid19.
In its 125-year-old history, it has changed hands a few times. There have been board room busts ups. There have been family bust-ups too.
And I doubt it has been profitable in all its 125-year history. I bet there have been times when cashflow took them to the edge and there were times when the business felt it had no heartbeat. And I would also guess there may have been an advisor or two that may have told them to shut up shop and go home.
And yet, despite all these things it is still trading, survived and is profitable.
The company held a celebratory party and its current CEO, Derek Walton, gave a speech which was quite interesting. He explained how it is that the business survived 125 years and still going strong. I may advise the company but when a CEO running a 125-year-old business tells you the secrets to its success one listens because it has massive gravitas.
These are Derek’s list of why AJ Parkes has longevity and why it has been successful:
1. Indispensable Team
Every person in the team has a role and without them, the business would not be able to operate.
Treat them well. Be true to them and they will make the business better for you. Make sure you help them develop and grow.
Michelle joined AJ Parkes as an apprentice when she was 18 years old. Over the years she learnt skills and progressed. Today she is the General Manager of the company running things on a day-to-day basis. I am not allowed to tell you how many years ago it was that she started because then you would be able to calculate her age and that would result in a punch to my nose.
There are other long term serving employees too. It shows that they care and want the best for their team which in turn is good for the business.
I often find medical businesses have a disconnect between doctors, owners and team members. Does your practice have such a disconnect? If so, what can you do to solve it?
2. Raving (Happy) Customers
Having a great team is great but you must sell things. The AJ Parkes customer list is full of repeat customers. Repeat customers who continue to buy from you shows that they:
• Are happy to buy
• Love the experience
• Believe in the quality of goods made
I appreciate that medical businesses do not sell goods. But patients consume healthcare. So, I like to call them customers or consumers and they now have expectations. Are they:
• Happy or just content with your medical service?
• What makes you different from any other medical business?
• Do they really trust you?
And be absolutely critical and honest. I find medical professionals will deny the above even when true because that means they are admitting they are not good at what they do. But if one accepts something is wrong then there is greater chance progress can be made.
3. Innovation
In 1896 Mr Parkes started the business producing high-quality medallions and uniform buttons for Government using die metal. The business was sold to Eric Faux in 1941 and the family descendants continue to own the business to this day.
But the business has had to reinvent itself several times in terms of its offering. Today they produce name badges, pens, medals, trophies and awards to name a few.
They continue to invest in new technology, automating as much as possible.
To stay ahead you need to think ahead about what customers want. That means constantly analysing current offerings and coming up with different products to keep customers engaged.
A medical practice is no different. A GP needs to offer more because patients demand it.
4. Mentors
When Derek joined the business, he was in his own words, ‘a bit raw’. But one of the other board members took him under their wing and mentored him. Those teaching are as valuable today as there were when first given.
5. Get a ‘Sounding Bord’
Despite me telling Derek I am a business advisor he prefers to call me his ‘sounding board’. He knows I know very little about their manufacturing process. He knows that if he were to ask me to make a name badge it would take me 125 years to work out what to do.
But Derek also knows that not everyone involved in the business needs to have manufacturing or service skills. He knows that someone from the outside sees something that those on the inside do not.
Derek, Michelle and I meet every month. We go through their figures and discuss what is working and what is not working. And they then tell me their thoughts and I let them know what I think based on my knowledge and experience. Sometimes they take my advice and sometimes they don’t. They decide the direction of their business.
Sometimes we get it wrong. And sometimes we get it right. But we learn from those we get wrong and move forward with those we get right. And that is probably the reason this business has made it through the last 125 years. It adapted to its environment, did not dwell on mistakes and ran full force when it got it right and during that process, they also made sure their customers and team were happy.
And if this formula has worked for AJ Parkes, maybe it could work for your medical practice too.
