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Q & A with Ken Wells

Ken Wells – General Manager of NorthStar Group

Q. Can you tell us something about your business background and general approach to business, Ken?

A. I have managed teams large and small, and as a consultant have helped many business owners improve and grow their businesses. My focus has always been to turn poor performing areas into great performing areas, through leadership, planning and group effort.

My general business philosophy is that it is all about people and the relationships we have with them.

Q. Please give a brief description of NorthStar’s operation.

A. We operate primarily in the insurance reinstatement industry, and work for all of NZ’s major insurers and loss adjusting firms. We provide estimation, coordination, project management and trades staff to remediate damage to homes and businesses incurred through storms, fires, burglaries and other events. We also have a commercial asset services division that handles larger projects for shopping malls, retirement villages, schools and factories.

Q. Describe your role in helping NorthStar achieve its goals.

A. As General Manager I oversee client service, operations and service delivery, health and safety, finance, HR and business development. As co-owner, I carry out strategic planning and operational forecasting with my business partner, who founded NorthStar in 2002.

Q. How many years have you been involved with NorthStar?

A. I officially joined in 2015 as a shareholder, director and GM, however I have been associated with the business since its inception, in an advisory capacity.

Q. Can you tell us about other businesses you have been involved in?

A. I have been a shareholder and director of:

·         The Company Catering Company – NZ’s largest privately-owned industrial, commercial, institutional and functions caterer

·         Jigsaw Business Solutions-Consultancy working with business owners to improve, grow and ultimately sell their businesses

·         Peak Solutions- IT company developing forecasting and planning software for manufacturers in NZ and Australia

Q. Each time you invested in a business, did you have an exit strategy?

A. Mostly (but not always unfortunately)! My view now, is that from the day you start a business, you should be planning how you might sell it one day. It does not mean you have to, but you should prepare the business so that it could be profitably sold at any time.

Q. Could you give an example of a strategy that worked well?

A. I spent 2 years grooming my catering business for sale. This involved: Maximizing income through increased fees, rebates and recoveries; reducing unnecessary costs; upgrading marketing collateral; improving brand profile; prominently sign-writing all company vehicles; obtaining testimonials from clients; securing key competitors’ clients; systematization; building relationships with suppliers; preparing key staff; tidying up all financial documents including the balance sheet; hiring a merchant banking firm to research possible purchasers in NZ and overseas; lastly, simplifying every part of the business for potential purchasers by way of flow charts. The business was valued at the beginning of this exercise, and when it was sold 2 years later there was an increase in value of $5m (in 1999) over the original valuation, due mostly to the grooming process.

Q. How about others that weren’t so successful?

A. The IT company did not sell for a profit, and this is due to my not understanding the industry as well as I should have, relying too much on the major shareholder (brilliant at IT but just learning how to manage and grow a business), as well as too little research re alternatives in the marketplace…. And most importantly we did not develop an exit strategy early enough and the market overtook us.

My consulting business, whilst steadily growing was not scalable (and thus not very saleable) due to me being too intimately involved in service delivery, rather than growing a pool of associates around me (classic mistake for a sole operator in any market, but especially in professional services).

Q. What lessons have you learned from these?

A. A business owner should be steadily working to remove the reliance on the Principal, systematize every aspect of the business so that it can stand alone without the owner’s day to day involvement, know his or her market inside out and strive to be “in a good market that you are good at” versus “all things to all people”.

Q. If a business looks like a good investment but you cannot see an obvious exit strategy, would you still recommend investing in it?

A. Only if the day to day returns from the P&L bottom line were exceptional compared to my day to day involvement. There may not be an obvious exit strategy, however the owners should thoroughly investigate and plan for possible exit strategies, including selling their shares to fellow shareholders according to a pre- agreed formula.

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