Starting vs. Growing a Business
Many founders excel in the early stages of building a business but often find that the skills required to grow a business are quite different and more complex. While entrepreneurs like Elon Musk or Bill Gates have successfully navigated both phases, they are rare exceptions. More commonly, entrepreneurs find that their strengths in starting a business don’t always translate into scaling it as it matures. However, recognising this distinction and making the necessary changes can unlock significant potential.
How One Founder Unlocked the True Potential of His Company
Take the example of Damian James, a Melbourne-born entrepreneur who identified a gap in the healthcare sector. With an ageing population and increasing demand for care, James saw an opportunity to disrupt the podiatry industry—a field focused on the medical and surgical treatment of foot and ankle disorders.
At the time, podiatrists in Melbourne typically ran private practices, charging patients per visit. Some would also visit aged care homes in the evenings to provide services. James realised there was a more efficient way to deliver care, particularly to elderly patients. He saw an opportunity to provide podiatry services directly to aged care homes during the day, making it more convenient for the residents.
A Business Built on Simplicity
Armed with a bachelor’s degree in Podiatry, James launched Aged Foot Care, offering aged care homes a service that removed the traditional overheads of maintaining a private office.
Over the years, Aged Foot Care went through various growing pains, including a costly rebrand to Dimple. By 2015, Dimple had reached $2.5 million in revenue and was generating approximately $200,000 in profit. Despite this progress, James felt the company was hitting a ceiling, as his management team consistently failed to meet targets.
A Strategic Move for Growth
Recognising the need for a fresh approach, James brought in external expertise by hiring a Chief Operating Officer (COO). He knew this would require giving up some equity, so after commissioning a valuation of Dimple at $2.5 million, he offered the COO a combination of salary and equity—5% of the company upfront, with the potential to earn up to 20% for achieving specific revenue milestones.
The move paid off. James soon promoted the COO to Chief Executive Officer (CEO), allowing him to step back from the daily operations and focus on guiding the company’s vision and values. Under new leadership, Dimple remained committed to its core strategy of partnering with aged care facilities while accelerating its growth.
The Result: Rapid Expansion
By 2017, Dimple’s revenue had grown to $11 million, a significant increase from two years prior. With James focusing on strategic oversight and the CEO managing day-to-day operations, the business thrived.
Zenitas, a healthcare company with a similar focus on delivering care to patients in homes or care centres, recognised the value of acquiring Dimple. By adding podiatry services to their offering, Zenitas could become an overnight market leader. In July 2017, Zenitas acquired Dimple for $13.4 million. In less than three years, Dimple’s value had increased by over 500%, demonstrating the power of bringing in the right leadership at the right time.
Starting and growing a business are two distinct challenges that often require different skill sets. While some founders may be equipped to do both, many find that bringing in someone with the expertise to scale the business can unlock its true potential. For business owners, the question becomes: Is it time to bring in someone else to take your business to the next level?
If you have any questions about this article or would like to speak to one of our advisors about how you can improve your business, please do not hesitate to contact us or call our office on (08) 6212 7200.
