02 August 2009
Xuereb: Brothers persist as downturn bites advertisers
(ABC News, 2 August 2009)
Advertising was one of the first industries hit by the global financial crisis, as businesses started slashing all non-essential spending.
For two young brothers just starting out in the game, the downturn meant changing their business model and adapting a line from Shakespeare about screwing their courage to the sticking place and hoping they didn't fail.
Jason and Jamie Xuereb started Mediapoint three years ago with just $500. "When we first started out, we tried to be all things to all people just to get our name out there and to get every job that we could and we were working 60 to 80 hours a week," Jamie Xuereb told ABC1's Inside Business.
"We found we were wasting our time in jobs we weren't effective in. So what we did is we found the four products that might not have been the most profitable, but they were the most suited to us.
"That was enough money to buy the plotter off eBay, which isn't a good story I know, but at least we grew and saved our cash."
The brothers make stickers, banners, retractable signs and vehicle graphics for companies including Mambo, Nando's and Smorgon Fuels' Biomax. "We can turn around things really quick compared to our competitors," he said.
"Our turnover at the moment is only half a million dollars a year, but the next few years we're looking to at least double that. The barriers to entry are a lot higher than they were 12 months ago, with the prices of machinery jumping up, and also the cost of materials.
"Also there's less competition because those businesses that were being run ineffectively are going out of business, so the work is coming around to us. A lot of businesses out there, in the good times they stuck with a supplier, but now as business is slightly slowing, they're looking for cheaper prices or a different service.
"Instead of getting those larger orders, relying on 20 large jobs, we're getting 100 to 150 smaller jobs. No client is over 1 per cent of our sales."
The increase in the investment allowance and new industrial relations laws have made Mediapoint think twice about hiring.
"A few months ago we had a bit of a backlog in production, so it was either we get some machinery or we bring some people in," Jamie Xuereb said.
"With the rebate it made it clear to us at the time that we should bring in some new machinery. With the IR laws introduced on July 1, what it's telling us is that it's harder to get rid of an employee.
"Especially as a small business, there's always an element of 'you're not going to do well in the next few months. The way around it is instead of looking for a full timer/part timer, is to look at bringing in someone casual at first."
Learning on the run
The brothers are still learning these finer points of business.
Jamie Xuereb is studying a Bachelor of Entrepreneurship at RMIT.
"When my mates are out Saturday nights, out partying and that, I'll be stuck doing other homework," he said.
"I'm turning 21 in a month's time, and Jason's reasonably aged, he's turning 27 soon.
"But when people deal with me, especially when I was younger a couple of years ago, they had a bit of a second look at me, so it was a bit of a barrier to entry for myself."
Before Mediapoint started showing signs of making a profit, their parents thought they were wasting their time and should get a real job.
But there was also another reason they were not too thrilled with their sons.
"We started from the lounge room, putting our computers and our first machine in there, and as we bought a few more machines we took over the front room, then we took over the billiard room and we took over little bits of the laundry.
"We basically took over downstairs of the house, but at least they had upstairs to sleep in, I guess."