Buyers do their homework

ELLEN READ talks to a couple who did some hard work before deciding which business to buy.

A growing band of young small-business owners are finding a new way into self-employment.

Rather than learning on the job, perhaps from knowledge passed down from their parents or from taking over a family business, they are highly educated people who study with the intention of setting up their own companies.

Duncan and Gretchen Hawkesby are a case in point. The couple, who have a baby son, met while studying for marketing degrees at Otago University.

Duncan Hawkesby spent a year looking for a business to buy.

"I looked at 100 [businesses] in 12 months, everything from sheet metal to sports equipment firms. It was a good learning experience," he said.

He narrowed his field to the food sector eight months into his search and refined that further by identifying three growth areas - home meal replacement, organics and functional foods.

Added to the wish list was that the company would have an established history of at least five years.

"I wanted to buy an existing cash flow and a business that was already profitable to use as a business for growth," Hawkesby said.

The firm the two bought in July 2000 - muesli bar maker Nature's Oven - was set up in the mid-1980s by two couples.

When the Hawkesbys bought it it had four staff and was making three to four batches of 800 bars a day. Now 12 people are on the payroll, equivalent to 9.5 full-time jobs, and production has increased to seven or eight batches, six days a week.

For two weeks last month a 24-hour-a-day production line operated as stock was built up to launch a multipack of bars.

"Keeping up with demand is one of the biggest challenges," Hawkesby said.

The product range of Nature's Oven has also expanded since the Hawkesbys took over. They have added the Naked range to the original two, Magic Muesli and 100% Natural.

"It's brand evolution or brand revolution and we did both," Hawkesby says in true marketing speak.

The Naked range is produced, packaged and marketed differently.

It has introduced organic ingredients and contains no emulsifiers or preservatives.

Hawkesby said the firm would look at adding more organic products when it could be sure of the consistency of the supply, the product quality and the cost.

Although growth in the muesli bar sector was levelling off, he said, Nature's Oven could play on its New Zealand origins while many rival products were Australian.

Hawkesby, reluctant to give away sales figures, said that the last balance date at March 31 showed the firm was 98 per cent ahead of the previous year's revenue.

The Hawkesbys (Duncan is the son of former television newsreader John Hawkesby and Gretchen the daughter of businessman Graeme Hart) have their own roles within the company.

Gretchen is the general manager, handling the day-to-day running of the company, and Duncan takes care of sales and marketing.

"I try to work more on the business than in the business," he said.

They also share childcare - Gretchen puts in the early hours in the office until she swaps with Duncan late in the morning.

Asked what he enjoys about running his own company, Duncan Hawkesby has a quick answer.

"If I make $80 in my own business, I enjoy it more than earning $100."

He said the continued learning process was one of the best things about being in business and the value of networking should never be underestimated.

"I've learnt a lot and received a lot of assistance from customers, suppliers and competitors," Hawkesby said.

Nature's Oven is overseen by a board that includes the two Hawkesbys, a senior partner from Deloitte Touche Tohmatsu and an independent director. The four sit down every couple of months to review progress and goals.

"It keeps us on track and the principles of running a small business are the same as for a large company," Hawkesby said.

Accordingly, one of the biggest problems the company faces is the time it takes to work through legislative changes such as ACC or employment law updates.

"It's frustrating because then I'm not doing sales - I'm having to figure out whether we need a lawyer to help us with something," Hawkesby said.

And like many other businesses, tax breaks are top of his wishlist for Government assistance.