Case Study

Kelly Engineering – “Shane and I weren’t actually scared of growth, but we were scared of telling the employees ‘we are going to double our business in three years’ when we weren’t sure how we’d do it!  But now we’re confident about our strategy – and we’re executing it.”

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Kelly Engineering

Kelly Engineering, located near Booleroo Centre in regional South Australia, was founded 30 years ago. The company produces the Kelly Tillage system and the Kelly Smoother – farm machinery that enhance soil structure and health. In 2002, Shane Kelly took over the role of Managing Director from his father.


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obstacle

The Challenge

Shane visited several agricultural regions in the USA with Austrade, doing on-site research and exploring export opportunities. He found a clear demand for Kelly Engineering’s tillage equipment, so the company began exporting and experienced steady growth. In 2013, Calvin Stead was brought into the company as a consultant to help develop a more efficient supply chain.  Calvin joined Kelly Engineering full time as the CEO in 2014.

The company was growing, but in order to achieve sustained growth, Shane and Calvin had to become more strategic about which markets to move into, and in what order.

In a family business, it can be difficult to trust people outside the family to make decisions, especially about strategy, growth, and finances. But Shane felt that it was important to bring Calvin and several other members of the Kelly team to the Australian Centre for Business Growth’s Program. During the Growth Modules they tested their theories, plans and ideas about growing the company, and then worked together, as a team, to develop a three-year growth plan for Kelly Engineering.

“We were concerned that we might be going in the wrong direction, so we used the three Growth Modules as a way to test our direction, approach, and goals for the business.”
approach

The Approach

The Growth Modules helped Kelly Engineering define how much and what kind of growth it could achieve. Shane and Calvin had been quite conservative in their estimates of the company’s growth potential, and during the modules the team discovered that the market opportunity was much larger than they had estimated. However, in order to capitalise on the opportunity, Shane, Calvin and the team needed to learn how to lead and manage a much larger company.

Although the company had been successful in Australia, international expansion in America and Europe required Shane and Calvin to rethink their approach and research how business is done in these new markets. Growth meant that Kelly Engineering had to change from thinking and acting like a small, regional company to a large, globally-focused company. To adequately service the demands of these markets, Kelly Engineering had to adopt demand driven supply chain methodologies to be able to continue its rapid growth rate. Their new international customers expected high levels of quality and faster delivery times, which meant that Shane and Calvin had to begin manufacturing in the USA.

During the Growth Modules, Shane and Calvin gained a better understanding of how to sell and distribute to global markets, and how to manage cash flow when entering new markets. They realised that if they were going to operate in multiple markets, they’d need to modify their business structure and procedures to reflect differences in distribution, marketing, timelines, and payments. But their biggest learning was that they needed to change their mind-set.

“One of our biggest takeaways from the program was recognising how timid we were regarding our growth. We were being super, super conservative. Once we started to quantify the market opportunity, and considered what doubling looked like, we asked ourselves the question, “Given that we have been growing, what needs to happen for us to be able to double in three years?”

They shared their growth plans with existing team members and recruited new talent where needed. Some employees were resistant to change and hesitant to embrace the new growth plan for Kelly Engineering. Others were fearful of losing what had been built. Shane and Calvin had to determine whether each employee had the desire and/or capacity to grow with the business, and make personnel changes, as required.

outcome

The Outcome

Since taking part in AUCBG’s Growth Modules, Kelly Engineering has enjoyed strong growth in its exports, has successfully entered new markets in Africa and Europe, and has expanded its exports in the USA; growing by 54% year on year from the 2017 Financial Year to the 2018 Financial Year. The company now has a global workforce to support expansion in each of these locations.

Having weathered the 2014 global commodity crash, the company has since grown 19 percent per annum, and now exports into 20 different countries. Current take up rates in the US alone mean that Kelly Engineering will need to bring ten new dealers on board every year, effectively doubling in three years.

The company is also continuing its emphasis in research and development, and looking to invest $1 million in new facilities and equipment at Booleroo Centre, which is expected to develop a pipeline of new products over the next ten years for its major markets.

“We’ve grown profitably, we’ve grown numbers of employees, and all of the metrics are up, and all while managing cash flow, which has been the most exciting part.”

Thanks to the Growth Modules, Kelly Engineering has been able to realise its growth potential.

“Shane and I weren’t actually scared of growth, but we were scared of telling the employees ‘we are going to double our business in three years’ when we weren’t sure how we’d do it!  But now we’re confident about our strategy – and we’re executing it.”