Calvin Smith, former investment banker and chief executive and shareholder of K9 Natural, the raw petfood company talks to Gill South about succession strategy:
Our attitude is that we will make the company big enough so that we are not an SME by the time we need a succession plan. In that way, if we need liquidity we want to have the option to list on the NZX.
This year we are looking at a $7 million turnover, $15 million next year, $30 million the year after. The business has the potential to easily be a $100 million turnover business but I prefer to keep that at the back of my mind and focus on achieving this year's target.
At a $30 million turnover and our growth trajectory, we have options if we need a succession plan. We don't know whether we will have an IPO but our intention is to run the business for the next three to five years with that as a possibility.
We have five shareholders, who hold 90 per cent of the company and some staff who hold a total of 10 per cent. One of the founder's daughters is a key member of the staff but she has earnt her role. She is currently one of our top sales people. I very strongly believe that it should be through ability not inheritance that people are hired.
A lot of companies get screwed up when inheritance is chosen over ability. A lot of people dream of their kids working for their business. It's a romantic idea but it depends what you are in business for. I'm in it to make money.
I believe that K9 Natural is a sustainable business, something that will go on for a long period of time and because of that, I think we are only probably five per cent through the journey of the growth curve. There's a lot of scope for it becoming large. At that stage the family might want to get involved, but they will have to earn their jobs.