Advisor Insights with Ben Carter: CEO VAE Group, Business Owner, Advisor

Louise Broekman: Hi, I’m Louise Broekman and I’m here spending time with a wonderful entrepreneur and friend Ben Carter. Welcome Ben.

Ben Carter: G’day Louise.

Louise Broekman: And today we’re going to be sharing some thought leadership and your insights into advisory boards. Ben, do you mind sharing to start with a bit about your entrepreneurial journey?

Ben Carter: My entrepreneurial journey actually started down a non-entrepreneurial path, in that, I did a Graduate Degree in Mechanical Engineering and went and joined a global air conditioning company. Went through their training program, wanting to work my way up into the upper echelons of management in that business. And what I’ve found over that journey of 11 years with that company, my first company in the industry, was that bureaucracy and good decision making don’t go hand in hand. And basically the business as it grew and as we were acquired one of the company, it totally changed and it became an environment I wouldn’t want to work in.

So I finished up my first 11 years with a global manufacturer of air-conditioning equipment. Went and did a deal with ANZ co-equity to run a contracting business in Queensland, in mechanical contracting. So putting in large air-conditioning systems into the high rise buildings and shopping centers, hospitals and things like that.

 

And that deal was all meant to be a part of my first foray into having an equity stake business. Anyway, joining that company as their general manager and three months later the GFC hit, the valuation of that company didn’t really work and it went from an equity play to a save-the-company play. So I spent three years working for ANZ private equity in an air-conditioning business called HVAC in Queensland. And basically it became about rebooting the business and trying to get a platform for it to grow into the future.

 

So through that gap, through that experience, I’ve got a lot more… my eyes have opened a lot more to how running a business works and pitfalls and cracks and tricks. Probably about six months before I finished up there I decided that I wanted to go and venture out into the wild world myself in my own gig.

 

I started looking around to see what was available and believe it or not, the opportunity came from an unlikely source. My father-in-law was 65, he had a little business called Enertec Australia selling air-conditioning and electrical products up in the PNG. And I thought, he wanted to retire and his likelihood of selling the business was quite low. So I came up with a deal with him, over a Sunday roast, to buy the business off him and turn it into an air-conditioning contracting service and automation, like a building controls business.

Louise Broekman: Fantastic. And how long have you been in business for now, Ben?

Ben Carter: So that was June, 2011, so 8 and a bit years now. A bit of a wild journey out of that time and we’ve grown pretty quickly. So do you want me to tell you a bit about that? I went into the business entirely in Australia. At that time there was a lot of oil and gas work going up in PNG and through a contact of his in PNG they reached out to myself, knowing my background and said “Are you interested in looking at this job in the middle of the jungle in PNG, to air-condition 20 buildings for Exxon-Mobil?.” I said absolutely. And at that time it was just myself and one other in the business. It was two of us. I had a little office out at Ipswich in Tivoli, and basically through negotiations with Exxon-Mobil and their representatives at a big mining company in Australia. We negotiated a deal to do the job and it was three months into my new career, I had a $20 million project in the jungle of the PNG, which turned out to be a wonderful venture.

Louise Broekman: Fantastic. And when you think about that, that was 2011, you’re now operating in PNG, Australia and New Zealand, is that right?

Ben Carter: Yes, since that point in time, we’ve expanded to have offices… we started off in Brisbane. Actually we started up in Ipswich. Now we moved to Brisbane just to allow us to get more traction in the workforce, opened up to more availability. In 2012, I joined forces with a company called Value Added Engineering, or VAE and halfway through 2012 came up with a deal to merge the two companies. So I actually bought them through an equity plan, gave them some stock in my company. And then took the unusual step of changing my company name Enertec Australia to Value Added Engineering Group, so VAE group.

Louise Broekman: That’s fantastic. Ben, can I just ask, how many people do you employ now?

Ben Carter: Yeah, so we’ve grown from 2 to we’ve got just over 300 now. Operating in Brisbane, Gold Coast, Townsville, Cairns, Darwin, up in PNG and in Christchurch, in New Zealand, as well as now Sydney as well, in New South Wales. So, the expansion slowly filtering out through into other locations and that’s how I’ve guess we have increased our numbers that way.

Louise Broekman: I’m looking forward to seeing what happens next for you. You’ve had an advisory board for your own business, and you also have been sitting on other people’s advisory boards. Do you mind just sharing a bit of your experience around advisory boards?

Ben Carter: Yeah, absolutely. In the early days, when we sort of grew from a couple of people up to about 50, I was using different people in different stages of that growth, more in a mentor or coaching role. And then in 2013 we hit a plateau with probably around 70 -75 staff and were then getting into a size of business that I hadn’t run before and neither had any of my partners. So, that was kind of where we’ve been to.

Ben Carter: We felt that to help navigate the things that we didn’t know, that we wanted to formalise our advisory structure. And so what we did is we brought an advisor in first up in 2014, onto our board and changed it into an advisory board, to allow access to that advice and without the legal ramifications of being a director. And that worked fantastically.

Ben Carter: For the first 12 months we had one advisor on our board. The experience, knowledge and information we gained there I still use today. From that, we then said we need to formalise the advisory board. At that point engaged a Chair. So I was lucky enough to pick up a chair who is ex-Leighton Holdings, a gentleman by the name of David Hudson who is still my chair, 3 and a bit years later.

Ben Carter: We went to a more of a formal advisory board where we had the Chair plus two Advisors. And that really helped us break through that sort of platform or that plateau or the glass ceiling we hit in 2014. Which then enabled us to jump up and grow in 2015 and 16 and then to then jump up and grow to the size we are in the last couple of years. And so now that advisory board, we meet 8 times a year. We did meet monthly, but we found that was a little bit too taxing on the executive team. We now do 8 meetings a year and it gives us a break between a few. We’ve got three advisors and a chair and then myself and the CFO also sitting on the advisory board.

Louise Broekman: That’s terrific. So Ben when a lot of businesses start their first advisory board, they go from an independent chairperson to external advisors, which is, I guess, the structure that you had earlier on in the piece. What’s been the real benefit for you, do you think? And the impact of your advisory board has had for you personally and for the business?

Ben Carter: Well the first and most obvious thing is it’s really helped us to navigate situations that we’ve never experienced before and particular around strategy and structure around the business. I’ll get a lot of really good advice in terms of that which has enabled us to acknowledge when the business, as it’s grown, when we need to make a structural change or a strategy change.

Ben Carter: So that’s the first thing, the second thing is by having those 8 meetings a year, it really holds myself and the executive team to account, to get the action items at the end of the board meeting by the next board meeting. Because it’s the first item on the agenda and our chair is very good at making us realise that we haven’t done them… the things that we haven’t done that we committed to do. So it really brings a discipline into the business, about actually getting things done.

Ben Carter: The third thing was, it really mattered to get a strategic document together that mapped out, just more than 12 to 24 months. So we’ve got a three, five year plan now. And it’s a professional plan with advice from a range of different people that have a lot experience in the areas that we are now getting into. Like for example, mergers, acquisitions, HR, sales and marketing for a large business. So, that’s another thing.

Ben Carter: Probably the other big thing from my perspective is the network. Each of those advisors is connected to a massive network of people, not only through, Brisbane in my case, but throughout Australia. And then through their network, that’s how I’ve just how I’ve been able to navigate places like New Zealand’s expansion, PNG’s expansion and navigating the whole tax and company set up over there. So, those are probably the key things that I can think of off hand. But without that advice and with that advisory board structure, I’ve got no doubt that we wouldn’t anywhere near as successful as what we are.

Louise Broekman: You also sit at the other side of the table as an advisor on other people’s advisory boards. Interesting perspective. So if I can maybe just wrap up and get your tips, what tips would you give other business owners, as well as what tips would you give other advisors?

Ben Carter: Yeah, absolutely the best… the biggest tip I want to give is going to the advisory board asking the questions of, what you’re going to do? Not telling the advisors what you’ve just done. On the couple of advisory boards I’ve sat on, I sort of get this is what’s happening retrospectively, where the owners of those businesses then haven’t been able to navigate a few pitfalls they’ve got themselves into. Whereas if they had brought those issues up before making those decisions, then I feel they could have probably, in some cases, got better decisions or more rounded decisions. For me, definitely going down that path is a big thing. Having good reports gives us a snapshot of where the business is at. I know we are not a statutory board, advisory boards need to have a good understanding of the financial sides of the business to give good advice.

Ben Carter: Also, I think the other big key thing I’ve really noticed lately is that the board and the executive team, normally the board doesn’t sit on the advisory board meetings in some cases. And there’s a real disconnect between, in a lot of cases, what the board really wants and what the executive team is telling you they want advice on. A big take away from me is making sure that before you start your advisory board process that the board, CEO, CFO or whoever else is on that executive team are all aligned on what the strategic direction they want to take their businesses. Whether they want equity, whether they want income from the business, whether they want growth or sustainability. Because quite often I’ve seen mixed messages coming out in what they’re trying to achieve and therefore that’s hard to give really good advice that relates well to that situation.

Louise Broekman: It’s interesting because it does change too, over time. So you’ve got to constantly read in on that too because circumstances change. What advice would you provide to advisors, Ben?

Ben Carter: Yeah, that’s a good question. Advisors… to have honest conversations, is probably a good one. I can see in, not only my advisory board, but advisory boards that I’ve sat on, that the people who come into those meetings are extremely talented with such a wide range of experiences, and to seek out and not be worried about offending the executive team. I’m a bit worried about that maybe I do that a bit too much in some of my advisory sessions. The executive team is there to get the raw truth of the situation and if you think something’s not right say it. Whereas I think as some of the advisors, particularly those who are new to being on advisory boards, might think; Oh you know, do I need to cotton glove this a bit or just tone it down a bit. From my perspective as CEO I just want straight out whether they think it’s right or wrong. Because at the end of the day it’s my decision where I take that advice or not.

Louise Broekman: And that is different to a governance board and when an advisory boards are independent, the members, there is no hidden agenda. So then there’s no reason why… they only want the best for you, don’t they?

Ben Carter: Absolutely. And you know, from my perspective also, if the executive team is getting advice, that they don’t think is good advice, than they need to rotate those advisors out. You’ll find that the advisors, if they giving advice and the executive team sort of disregards it. I’m not saying they don’t have to follow it, but they sort of don’t even acknowledge the advice. Then you find the advisor’s want to exit anyway.

Louise Broekman: Yeah.

Ben Carter: And it’s kind of like, in the early days with coaching, you know, once you got all of the things from those coaches that you need, you need to find a new one and the same with the advisory boards. As your phases change, then you know, I’ll recommend you change out your advisors to suit the new situation that you’re in.

Louise Broekman: Yeah, that’s right, still have the management discipline, but the voices can change but the discipline, maintains… it maintains itself.

Ben Carter: Absolutely.

Louise Broekman: Ben, thank you so much for, for sharing your insights. It’s very generous of you and I look forward to having another interview with you in 12 months time and see where you are then.

Ben Carter: Yeah, I know. There are some things happening at the moment. So I look forward to telling you about them.