Rapid growth sounds like a good problem to have, but it can take a good business down if not managed right.
Walking that fine line between explosive growth and chaos requires balance. As Katie and Andrew Phillipps have found while building their childcare company Provincial Childcare Holding Ltd, that balancing act extends beyond the finances, it’s also about managing people and their expectations.
The Phillipps bought their firs childcare centre in Rotorua in 2013 and just four years later have 22 centres, with another two in development, and employ over 300 staff. It’s a supercharged success story with no end in sight, but as Andrew explains, with growth come challenges. “In the first year we were in Rotorua 40 weeks out of 52, whereas now we haven’t seen some of our centres for three or four months, so being able to transition everyone’s expectations, while managing the ever expanding workload had been the biggest ongoing challenge.” He adds, “…that includes the personal challenge of having three of our own children who are now seven, 11 and 14. We work to ensure we’re spending enough time with them, while travelling.”
Andrew and Katie chose the childcare industry because they were looking for something meaningful to throw themselves into. After they bought their first centre, they were deeply impressed with the level of teaching expertise in the industry, but felt the teachers needed to be given a better platform to succeed. Giving them that platform became a central driver of Provincial’s growth, says Katie.
“Opening up opportunities for them to succeed was a win for them but it was also a win for our business. And it became a lot of fun. It started as a job but it was actually really fun so it became, ‘how do we make this bigger and have more people become part of what we really enjoy?’ It’s the people that make it worthwhile.”
The plan was to buy and enhance, acquiring good centres that needed “a tune up”, improving them then growing the roll. As more and more childcare centres were added, mostly through acquisition, Provincial had to manage a growing team of teachers and a growing client list; families in this case. Expanding on Andrew’s point about balance, Katie says part of the challenge around growth was balancing cash flow against the expectations of the teachers and those of the families sending their kids to Provincial Childcare centres.”Obviously everyone wants the best equipment available and a great working environment so it’s really treading the balance between finances and your people.”
Katie explains further, “We’ve had really good support from BNZ who have backed our decision making and vision, which has been key to growing so quickly. But also making sensible business choices and making sure we’re monitoring key metrics at all times.”
Andrew’s background in corporate finance has allowed them to manage cash flow with a high level of precision. Childcare funding from the government comes through on three funding dates spread evenly across the year, so precision is critical as those funding dates approach. Couple Andrew’s financial skill with Katie’s people skills and passion and you’ve got a formidable and self-contained team. Despite that, they still felt they needed to bring in some extra help to keep that growth sustainable.
“Growth brought us to Hayes Knight,” says Katie. “We’d outgrown our accountant and these guys were the right size for us. They could provide the quality and support while the cost was still reasonable.” Andrew says Hayes Knight’s ability to work in Xero also appealed. Their previous accountant was pulling Provincial’s data out of Xero and putting it into their own system and not tying it back into Xero. Working with a Xero-capable team has helped make their historical data more reliable. Personal trust also played a part; they knew Business Advisory Director Tristan Dean through their common involvement with a school board.
Tristan explains that Provincial was already operating at a high level strategically and financially, they just needed some help to keep things tidy while they pursued growth. “They are easy clients. They’re running pretty fast in terms of their growth, and I guess they’ve relied on us to keep everything ticking in the background, to make sure things happen, because it is secondary to them – they’re out there chasing the growth and then building the systems, and we’ve got the scale to keep up with them.”
The Phillipps say Hayes Knight has also helped streamline internal processes that have made growth viable, and sorted Provincial’s tax structure, particularly regarding payments between their companies.
The business has now reached a scale where they have the resources to step outside their comfort zone and build new centres, with one underway in Silverdale, north of Auckland, and another due to start on the Whangaparaoa Peninsula at Manly later this year. Katie and Andrew are on a roll. They have recently jumped the Cook Strait for the first time buying a centre in Westport and they have no plans to slow down.