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Dairy hygiene company is flushed with success

Even with a great product, it’s vital to have the right structures in place to build a business that can handle expansion, ADF Milking’s Charlie Green tells Chris Lyddon.

ADF’s dipping and flushing system, which offers dairy farmers a way to save time and money while combating mastitis, is winning sales around the world. Charlie Green became involved with it in May 2009 when its inventor, his neighbour James Duke, asked him for advice after being approached by several major dairy equipment manufacturers.

“He probably had 2% or 3% of the UK market in farmers with herds over 100 cows, which we regard as the real addressable market,” Mr Green recalls. “We said: ’what would the business look like of you got 5% market share in five years in the countries that you decided to invest in?’ “We looked at the cost base of his existing operation and used that to get an idea of what it might cost in an overseas territory, to hire salesmen, a manager, technical support, an administrator to look after the sales side, a financial controller and basically roll out a business.”

The forecasts were that a 5% market share would see revenues in the tens of millions within five years, but it needed investment and structure.

“I’ve known James for about ten years; he’s got a brilliant mind,” Mr Green says. “He’s passionate about his product. He saw that cows were not getting dipped quickly and consistently, and felt that there was a better way to do this. He is the soul of the business.

“I said, ‘I would be keen to invest in the business and help you on one condition and that is that we put in place a strong management team’. He looked at me rather wryly, smiled and said ‘I’m in total agreement; this is not my forte and will enable me to focus on my strengths’.

In addition to finding a top-class CEO, one of the other things Mr Green insisted on in the investment plan was allowing for ‘a really good finance guy’. “If you’re going to grow a business like this in several jurisdictions then within three years you’re probably supplying 600 farms a month around the world. How you track your invoicing, debt collection and cash flow needs someone who is right on top of their game and is good at IT and the processes and disciplines to make that work. Otherwise you will have a warehouse full of people just trying to collect your cash.

“We’re just trying to use all the principles and structures that large companies use to operate. We’re applying those to a small business and getting much better results out of it”

“James and I went out to Australia and New Zealand in January 2010 just to do some marketing diligence,” Mr Green says. “We sold our first system after a meeting in a pub in New Zealand, Australia and New Zealand have been great for us because there are some very large herds with big rotary parlours and the quality ADF offers is exactly what they’re after.
“With a business like this you can’t just go into a new country and sell the kit,” he points out. “You have to make sure you have the infrastructure in place, the dealers to install and service the kit, and that you can keep supplying them with it.

“Quality of service and quality of product is everything. We’ve just done a big survey in Australia and New Zealand to ask our customers whether they would recommend us to other farmers and how happy they are with the product, and 100% of our customers would recommend the product to other farmers. We recognise that this is the way the farming community works. You sell systems by giving people the confidence that it is the right decision for them.”

The company has also sold systems into Canada, Spain, Portugal and Italy.

“We’ve had to design the product to have an additional valve in it for the US market,” Mr Green explains. “That’s in trials at the moment.
“A really good marketing person can have your message out there and deal with the trade shows that are a very important part of the business. We’re just trying to use all the principles and structures that large companies use to operate. We’re applying those to a small business and getting much better results out of it.”
The product is under continual evolution, says Mr Green. “Feedback from our customers is vital, you have got to really listen. If you modify the product based on their feedback to make it work for them, they very often become your staunchest supporters.”

•Charlie Green is a non-executive director of ADF Milking.