The perfect Storm

A wave of government grants for community water projects has helped take Storm Sustainability from start-up to $50 million business in just two years. Managing director Stephen Webster tells JAMES THOMSON how the company is handling explosive growth

By James Thomson

A wave of government grants for community water projects has helped take Storm Sustainability from start-up to $50 million business in just two years.

October 2007 was a very big month for water and solar solutions business Storm Sustainability. In the space of a few weeks, the company won a tender to supply 1200 scout halls with rainwater tanks and then picked up another 530 jobs from a $200 million Federal Government project that awards grants to community groups for water saving projects.

“It was a real thrill,” says Storm managing director Stephen Webster. “All of a sudden we had a lot of work on our plate.”

A thrill, but also a challenge for a business that Webster says is still basically a start-up. The way Storm has managed its increased workload highlights the value of strong systems and procedures for fast-growing SMEs.

Storm was established in 2004 after the company’s chairman and founder Grant Griffiths (a former executive at Pacific Hydro) wanted to install a rainwater harvesting system with an underground water tank. He found someone who made the tanks, but it took nine separate tradesmen to get it installed. Griffiths knew he had spotted a business opportunity to provide a full rainwater solution. “It’s that same basic business model that Storm uses today,” Webster says.

The business drifted along doing some domestic work for a few years before Griffiths approached Webster (he knew him socially) about running and investing in the business.

Webster has a fascinating CV. He started his working life as a lawyer in London in 1982 before returning to Australia and working in Sydney and Melbourne with Allens Arthur Robinson and Mallesons Stephen Jaques. But after 10 years in law, he was ready for something else. “The lifestyle didn’t really appeal to me. It was lucrative, sure, but the fee-for-service model didn’t really appeal.”

After considering some corporate jobs, he decided to go and help a friend who had a pie company called Boscastle, operating from a factory in the Melbourne suburb of Coburg. Pretty soon, Webster was hooked and became an investor and joint managing director.

Webster describes his time at Boscastle as “a real life MBA”. He learnt about cost control, brand development, implementing systems and procedures to control quality – and, most importantly, managing workers.

His legal training was not completely forgotten though. Boscastle worked hard on brand differentiation and developed ways of using seeds and seasoning on top of its pies to identify them. When a competitor began copying the seeds and seasoning, Webster sought and received Australia’s first food decoration trademark. “It took a long time to get, but it was worth it.”

By the time Webster sold his share in Boscastle in 2005, the company’s revenue had hit $6 million. Webster took a year off to spend time with his family before joining Storm in December 2006.

The key to Storm’s business is that it takes responsibility for every step of a project, from assisting a community group to get funding for its tanks, to organising suppliers and all tradespeople, from plumbers to arborists. “We want to be completely responsible for what we have done,” Webster says.

While developing a team of project managers to manage relationships with these sub-contractors has been a challenge, the most crucial issue has been developing a set of project management systems and procedures to ensure that all the 1730 jobs the company won in October are completed on time, on budget and to the correct quality standards. “It’s quite complex, but it’s not an unmanageable issue.”

Webster’s one regret about the business’s growth is that he didn’t hire staff earlier as the business ramped up (staff numbers have grown from six to more than 40 since Webster joined).

But he’s careful not to complain too much. The community’s heightened interest in sustainability issues and the billions of dollars of government money being poured into water and solar projects have helped created a perfect storm of conditions most companies can only dream about. “I think that we have been very blessed with our timing,” Webster says. “Sometimes you have good luck and sometime you have good management, and I must say good luck has played its part.”

The company’s immediate focus is winning work from the Federal Government’s National Solar Schools Program, which offers schools up to $50,000 to install rainwater tanks, solar power systems and solar hot water systems. Storm will also continue to work with the scouts, installing water and solar systems at scout camps and larger scout facilities.

Webster is also pushing into the area of metering and monitoring, which will provide Storm with an on-going source of revenue. He expects this technology will become an increasingly important part of sustainability systems – monitoring technology allows owners to check on the reliability of their solar and water systems and metering systems provides data about the amount of energy or water that is being saved that can be used for education or marketing purposes. Storm is partnering with a Silicon Valley firm on the metering and monitoring technology.

Webster expects the economic slowdown will have some impact on his business as discretionary spending falls, but he’s quick to point out that the company’s products can provide some individuals and organisations with some protection from higher energy prices. “We are looking at solutions for customers that will provide them with savings in times of higher energy prices.”

Storm, which has eight shareholders including Webster and chairman Grant Griffiths, should not need extra capital as it expands over the next few years, but Webster says the shareholders have been careful to set the company up to make it easy to raise money if needed. “We are setting up the business to run like a major public company.”

He’s looking forward to the challenge of managing Storm’s huge growth. “That’s what’s so interesting about business. You have financial challenges, operational challenges and people challenges.

“Who’d be a lawyer?”

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