Succession for growth
For TDC Sawmills the question of succession planning means one thing and one thing only: growth. When founders Tony and Clare Davies-Colley left farming to start a sawmill business they knew they had their work cut out. Farming provided regular returns and the couple were good at it. “But it frustrated me that I couldn’t control what happened to the product after it left the farm gate,” says Tony. “I wanted to maximise my effort by working with the customer.” After farming, the next venture they knew was sawmilling, so they leveraged the farm to buy some equipment and launched into milling low-cost timber for pallet manufacturers.

“Our philosophy was to bite off more than we could chew – and then chew like stink!” he says.

Timber’s a notoriously tough business and competing on price meant TDC had to achieve volume – 100 cubic metres per day. It got there in four years. The company grew 50% per year for the first six years, even though its first customer went bust.

At first, Tony and Clare did everything, running the mill, sourcing the wood, selling the timber, marketing the business, hiring staff, managing accounts and doing the administration. As a pair, they work well, with Clare being systematic and thorough and Tony hands on and entrepreneurial. The hard work paid off: TDC now employs 215 staff, turns over $40 million and runs 24 hours a day. So where’s the succession story in this? Tony is the first to point out that their devotion to so many tasks was a great way to start the business. But without extra help the growth would have stalled.

“When we got to 90 staff and began a second shift, it was time to employ some key management personnel.” In the last four years TDC has employed a financial controller, a sales manager, a human resources manager and two production managers. The goal is now to appoint a general manager within the next year.

“The biggest task for us in the last few years has been building a structure where the key man (me) is not essential to the business. Everyone puts pressure on you to reduce that risk and that’s a good thing, really.”

For Tony, the end game is not to have a job, but a business that runs without his daily input. “I’d like a slightly better lifestyle, where we have more flexibility to do what we want.”

Of course, as ASB’s Kevin Reilly points out, the only way to achieve this is to create a business that can last the distance. “TDC is a great example of building resilience into a start up. Tony and Clare’s succession story is admirable.”