Many are the small family businessesstarted in a garage or spare room that never make it beyond the four walls ofthe building that housed their inception. Happily for Patrick Dickens, newlyawarded Ernst & Young Emerging Entrepreneur of the Year, Centurion Systemsis not among them. Started in 1986 out of a 6x3m2 ZoZo hut in Dickens’ backgarden, the company has grown into an industry leader in the access automationsector with a host of awards under its belt. It’s on the verge of expanding thecompany-owned factory operations for the third time and has seen its turnoverleap from a modest R225 000 to a staggering R250 million. Not bad for aself-funded concern that began life as an after-hours pursuit.
When Dickens’ father-in-law asked him todesign a control card for a motor he wanted to attach to his gate, the electricalengineer didn’t think much of it. “I’d left my corporate job to start my ownuninterrupted power supply (UPS) business which was called Antec and I remembertelling him that I’d do it for him but only after hours and only so long as itdidn’t interfere with my real job,” he recalls. “But word got around among hisfriends and all of a sudden one became two became three.” Pretty soon, bothDickens and his brother-in-law Richard, a mechanical engineer, were working onthe gate motors. “It was very much a weekend thing. Antec was my 8 to 5 job andI’d do the motors if I had any spare time,” says Dickens. But, however investedhe was in his UPS business, Dickens wasn’t blind to the business potential inhis part-time ‘hobby’. “One day I looked at it and thought, ‘This is actually amuch easier job than UPS so I told Richard to leave his job and work full-timeon developing our own motor, which he did.” Centurion Systems was born and intime, Antec closed down and the partners decided early on to focus onmanufacture and assembly instead of installation.
Even in those early days, car hijacking hadalready made its appearance in the local domestic scene and by building systemsthat met South Africa’s specific security needs, Centurion managed to create aniche for itself. Right from the word go, Dickens has ensured that all thecompany’s systems are unique in some way. “What we realised was that hijackerswould turn off the Eskom power supply, wait for people to drive up to the gatesand get out of the car to check why they weren’t working, and then hijack themin the driveway. So we designed a battery-operated gate motor, which no one wasdoing at the time. That’s how we niched ourselves,” he explains.But having an industry first is not alwaysas easy as it sounds and the company’s competitors took advantage of the factthat their own gate motors were far larger and ostensibly more powerful thanCenturion’s. “We went through a lot of pain over that in the beginning. They’dcarry theirs and ours around together to show the difference in size andconsumers didn’t realise that ours were just as powerful and in fact had morebenefits,” recalls Dickens. But the pain didn’t last long and as customersstarted to experience the advantages of battery-operated power, sales figuresstarted to climb.
Stickto your knitting?
As the market grew, Dickens relates how thecompany experienced an increased demand from installers for a basket of alliedproducts including intercoms and remote controls. “My father-in-law used totell us to ‘stick to our knitting’ so to speak and we did at first but it soonbecame clear that we needed to diversify,” he explains, adding that the companyinitially outsourced the supply of these products before eventually manufacturingtheir own.Always bearing in mind the importance ofuniqueness, Centurion went on to pioneer the development of battery-operatedbooms and at one point boasted the fastest gate motor on the market. “Forsafety reasons, other countries had limitations on the speed at which anautomatic gate could open and close but in South Africa, the safety focus wason getting in or out of your driveway as quickly as possible, so we made asuper-fast motor,” says Dickens. Today the company’s focus is the broader fieldof access automation and its products include gate automation, domestic garagedoor automation, roller shutter doors on factory doors, traffic booms andbarriers, sliding door motors for airports and shopping complexes, equipmentfor limiting access to parking bays, intercoms, magnetic card readers, radiotransmitter/receiver systems for access control and infra red beams and otherproximity detectors.
However, local market conditions weren’tthe only driver behind Centurion’s product development. Sometimes the bestplace to learn is in your competitor’s classroom. Not only does watching themclosely give you a better idea of where their weaknesses are, but it can alsoteach you a thing or two you don’t know. As Dickens explains, “We’d stripcompetitors’ motors to see how they were making them and sometimes to learnbetter ways of doing things, even if they were just minor things. But we havenever ever copied a product; it was about learning techniques.”
Cash flow challenges
Looking back now, he remembers cash flow asone of the biggest challenges in the start-up phase. “Fortunately Antec allowedus to survive in the early days and to pay the bills but we battled with cashflow initially because no one would give us payment terms. Eventually, afteryou have a track record of paying everything for six months, they might giveyou a small amount of credit but really, it grew very slowly,” he says.Ironically, Dickens also lists cash flow as one of the company’s most importantsuccess factors. “We had a very tight cash flow and my wife, Ann, has to bethanked for that. She’s not an accountant but she’s our financial director andshe made sure that people paid and that we didn’t spend all the money we made,”he says. Tight financial controls remain a feature of the company even today.
Moving out and up
It was also Ann who gave Patrick andRichard the push to move into their first premises. “After about five years ofus operating out of the garden, she decided she’d had just about enough of gatemotors on her kitchen table and she told us to move out,” he laughs. The firstpremises they rented consisted of 60m2 of office space and 200m2 of factoryfloor. When they grew too big for that they built their first factory of 800m2and 200m2 office space. “We had to take out a loan to build the factory but ourthinking was that if the business didn’t work out, at least we had an asset tofall back on,” he recalls. Growth led to two premises expansions and thecompany is now looking to build a new factory across the road from its currentKya Sands location. “We hope to start building early in 2008 and then we’lleither rent or sell where we currently are,” he says.
One of the biggest stumbling blocks facingfamily-owned businesses is the inability of the founders to let go of certainfunctions as the business grows. So accustomed to always having done everythingthemselves, they refuse to delegate to others. Entrepreneurs are usually goodmulti-taskers and initially, they may be able to manage on their own. Butthere’s only so much that one person (or a small family team) can do andinevitably, their lack of delegation will lead to reduced efficiency, poorperformance and the eventual demise of the company.The family businesses that truly breakthrough to the big time are the ones that gear up for growth by employing – andutilising – a team of skilled people.
Doing so requires the maturity to admityour limitations, which is what Dickens did as Centurion grew. “It soon becameapparent that back-integration was required to obtain the quality, delivery andprices that would enable Centurion to become a strong manufacturer, so westarted to invest in plant and machinery necessary to manufacture our ownproducts. As volumes grow, we look at purchasing the required machinery, suchas injection moulders or NC machining equipment,” he says.“When I studied at university there was nosuch thing as a microprocessor but these days they’re contained in almost everydevice. Because I didn’t have the expertise to do the electronics inmicroprocessors, we employed someone who could handle that side of things,” heexplains. The business’s growth also necessitated massive operational changesover time, “When you start it’s easy to assemble ten units but as you grow youneed to automate a lot of things,” he adds.Centurion’s ability to stay the distanceand manage growth has led to numerous business awards, including the Ernst& Young Emerging World Entrepreneur of the Year Award in 2007 and placementin the South African Sustainable Growth Awards over a number of years.
The security market, driven both bytechnology and socio-economic factors, is constantly changing and Dickenspoints out how important it has been to stay ahead of these changes, somethingthat requires new product innovations. This is the task of a team of 11engineers at Centurion.
But it also means watching the market forchanges and responding to them quickly, or even better, anticipating them beforethey occur. Dickens relates how the company nearly missed a vital marketchange. “We didn’t see the first major change as well as we should have. Whenwe started, most gates were being sold to domestic homes but as townhousecomplexes started being built, this changed. All of a sudden, instead of beingable to sell 20 motors to 20 different homes, there was now a demand for one,large gate motor at the entrance to a townhouse complex. Because we initiallyhad a policy of providing battery operated motors, it was difficult becauselarger industrial gates need to be opened and closed hundreds of times a day.To get around the problem, we allied ourselves with a big overseas company andimported a unit that we were able to install into the townhouse sector,” heexplains. The A10 sliding gate developed by Centurion and launched in 2003fulfils the requirements for a locally designed and manufactured industrialsliding gate motor.
Looking to the future, Dickens would liketo focus more on the export market. “At the moment we export to 46 countriesbut that only makes up about 12% of our business and I believe there isenormous untapped potential there. We’re just scratching the surface.”
Advice on making it in security
Dickens’ advice on making it in this industry
– Give excellent aftersalesservice – whether you’re supplying the system to installers or installing ityourself. It doesn’t matter whether the problem lies in your system or in howit was installed – it’s your name on the product and customers will call you totell you your system isn’t working. The people who don’t make it are the oneswho think that it’s as simple as installing a system, taking the money and notcoming back when there’s a problem.
– Be prepared to work with smalloperators who do not have access to a line of credit and will thereforeprobably ask for payment terms. You need to learn who to trust and who toavoid.
– As you grow, consider putting adistribution network in place.
– Manage your cash flow – it’sabsolutely critical. So many businesses that seem to grow really well suddenlydie and when you get down to it it’s because they’ve spent all the money thatthey’ve made.
Since theevents of 9/11 security is top of mind globally and Dickens comments thatenormous opportunities exist in the security export market. When gate andaccess automation was, at one stage, a ‘trust’ product, purchased mainly by theaffluent, it is now sought after by all levels of society who requireprotection of their assets. Because of South Africa’s notorious securitysituation, the country has an excellent reputation worldwide for securitysystems and other related products and services.
Opportunitiesexist in both the home and office security markets but it’s worth bearing inmind that, depending on the sector you choose to target, you could be upagainst some pretty stiff competition. There is a significant swing towards thelatest high-tech innovations, particularly video intercoms, but this market isdominated by Chinese, Japanese and Taiwanese suppliers, who manage massivevolumes coupled with the highest level of expertise. Fingerprint and retinaidentification systems – which fall into a group of security systems known asbiometrics – are also growing at a phenomenal rate but at the moment thesesystems are priced out of the domestic market.
“They’remainly for big building security purposes, and although the technology isadvancing at a rapid rate and a couple of the big guys have got it right, theyaren’t yet 100% reliable,” says Dickens. But then rapidly changing technologycharacterises the security industry across the board and to make it in thisgame, you need to stay on top of the latest developments. Remember too thatwhile some local systems may find a niche in the overseas market, everycountry’s security concerns are different and it’s vitally important toresearch your market thoroughly first.Dickensalso points to an emerging Do-It-Yourself market, particularly in the UnitedStates where the end-user installs his own equipment. This obviously requireseasy-to-use manuals and installation documentation.