Asset finance

Tankworks Australia

Finding the right niche at the right time has paid big dividends for the team at Tankworks Australia.

Matt Tranby, Stuart Heldon and David Mortimer know all about rapid growth.

In 2003 they were running Watertank Team, a tank installation business, when their major supplier came up for sale. Parramatta Tankworks had been making water tanks since 1934. It was a company with a proud history, but now sales were stagnating.

Enter Matt, Stuart and David. Confident that the market for water tanks was strong and getting stronger, they merged the two businesses — and Tankworks Australia was born.

Since then, they’ve increased turnover from around $1 million a year to more than $10 million, and significantly boosted profitability at the same time. They’ve also opened new manufacturing sites in Brisbane and Melbourne.

How have they done it? By finding the right niche at the right time.

“The demand for rainwater tanks went crazy”, says Adrian Tischler, Tankworks Australia’s Chief Financial Officer. “The drought was having an effect, water restrictions were starting to come in, and people were becoming more environmentally conscious.”

They also transformed the operational side of the business. “They turned it from a craft-type process to a modern production line process”, says Tischler.

And they established a unique selling proposition that was perfectly targeted to the growing market.

“We are almost completely flexible”, says Tischler. “We’ve got thousands and thousands of tank sizes that we can make, and that’s a real bonus for builders with property sizes getting smaller. They need to squeeze the tank in somewhere, and if they can just fit it in under a window or around a laundry door, then they’ll come to us.”

That niche gives them pricing power. “Three metre high round tanks are us and nobody else in this field, so we put a premium on that.”

Nothing stretches your financial resources like rapid growth, and Tankworks has used a range of different financing tools to bridge the gap.

“The Commonwealth Bank helped us with an Asset Finance facility”, says Tischler. And after years of relying on an overdraft for short-term funds, Tankworks has also taken out a receivables finance facility. That allows them to borrow against invoices before they’ve been paid, speeding up cash flow.

“We’re exposed to small businesses who could be getting crunched for cash, and that’s starting to blow things out in terms of receivables”, says Tischler. “Receivables financing was the obvious option for us.”

What advice does he have for other rapidly growing businesses?

“You’ve got to be looking out for anything that could trip that growth up. We’re talking about cash flow; we’re talking about becoming so busy that you don’t have time to do the important things right. You just get too stretched. All of a sudden you’re not a customer-focused organisation any more, you’re an inward-looking, problem solving organisation.”

 

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  As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances. All products mentioned on this web page are issued by the Commonwealth Bank of Australia; view our Financial Services Guide (PDF 59kb).