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Keys to SME success

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Leading speaker manufacturer is wired for sound.

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If you’ve seen the latest Star Wars installment, there’s a good chance you were sitting in a cinema decked out with Krix speakers.

The global company began in 1974 in a backyard garage in suburban Adelaide, South Australia and has evolved into a manufacturer of some of the world’s best speakers.

Krix

Its 24 staff – including five Krix brothers – have made speakers for more than 3000 cinemas in about 30 countries worldwide and thousands more systems for private homes.
Chief Executive Gary Krix said the company started as a consumer hi-fi speaker manufacturer and soon opened a small shop in Adelaide.

“My brother Scott started it out of our garage, he always had an interest in audio and that evolved into starting his own company,” he said.

“It was tough to create a brand name out of nothing … but a big break came in 1980 when the Capri Cinema just down the road said they need a solution. Scott developed something and they found it to be really good and the work started to flow.

“Over the next five or six years we did just about every cinema around Australia.”

About 35 per cent of Krix sales are outside of Australia and include dealerships in Norway, Malaysia, United Arab Emirates and China.

The company, which has won more than 40 industry awards, recently went through a lean period but has bounced back to record its strongest year ever.

It has also won funding from the South Australian Government to improve the efficiency of its cabinet assembly in Adelaide.

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Krix said the Middle East had become its biggest market for commercial cinema while China was an emerging market for consumer products.

“We’ve got a big customer in Dubai and they’re building about 500 cinemas around the region,” he said.

“Last year was our best year ever, so we seem to be on the right track again.”

 

Gary Krix shares his 10 keys to running a successful SME

Build your brand
It’s been vitally important for us to always aim for a certain standard and never deviate from it. We had four or five years up until about a year ago where things were pretty tough but that’s one thing we stuck to because we knew a strong brand was the only thing that was going to keep the company moving forward in the future. You have to maintain that standard – it’s easy to cut corners and that might give you short-term success but not in the long term. We wanted to protect our brand, make sure it’s a strong brand and one that people associate with quality.

Innovate
We only have about 24 employees and we’ve always had a very strong research and development investment so we’ve always allocated a lot to that to make sure innovation is a very key part of what we do. Keeping that running when times are tough – in those four or five years the company lost quite a bit of money – we didn’t reduce our R&D department and we also kept our sales and marketing department, we knew the only way to survive was to keep the company moving forward and not drop down into a small heap. The market is evolving and we try to bring in four or five new products each year.

Diversify
We have commercial cinema and consumer hi-fi and over the past 10 years the average contribution from both has been about 50/50 but they are very different markets. The R&D is completely different, the way they are designed is different, the way we sell and market the products are completely different so it’s sometimes hard to allocate the right resources to the right product range and it’s been an ongoing challenge but it’s been good to have that diversity. It’s probably something that’s helped the company move forward. When one part of the market has dropped at least you’ve got the other part moving forward. Sometimes it’s been an issue making sure you’ve got the right focus in the right category but certainly over the history of the company it’s been good to have that diversity.

Have confidence in the future
It got pretty grim there for a while but we always had confidence that things were going to get better and that’s when it comes back to the brand. In those tough times when we had to cut our manufacturing down we stuck with our R&D and we knew we had a great brand name and we knew that things would get better and we would get through it so you’ve got to have that confidence to keep moving forward.

Maximise efficiencies
We’ve done a lot of work on our manufacturing to make sure that we are efficient. We wouldn’t expect customers to pay twice as much because it’s Australian made, that’s just wrong … we are at the high end of the market but we’ve always made sure we’ve made our products efficiently because people want a premium product but at a realistic price. When we’ve made changes we’ve tried to not only make the products better but also so it can be made more cost effectively.

Find a niche
It’s important to try and own your space, it’s a very competitive market and there’s about 150 to 200 brands of audio products represented in Australia – some of them aren’t in our space at all but quite a few of them are so it’s a matter of us finding a niche and expanding those products. Being a small company we don’t want to try to be something to everyone but we do want to be good at the parts of the market that we are targeting. We do offer a fairly diverse product range from small concealed speakers to home theatres right through to the extreme end of the consumer range that we call Series X, which is basically commercial cinema for the home.

Establish strong relationships with dealers
The contact between us and the customer in the consumer market is not through Krix, it’s through the dealers so they represent Krix but they generally sell other brands as well. It’s important to make sure they are alligned with Krix and what we’re about and make sure that they provide customer service. It’s been a strong focus over the past year or so, we now get all our key dealers to Adelaide a couple of times a year for a couple of days. We get 20 or 30 of them to spend a night down here and that’s important. It might seem like a little thing but it makes a big difference to how we operate. It also helps us to understand our customers and where Krix as a company needs to be so we can focus on the right products for the part of the market we want to be in.

Invest time in export markets
China’s a market that we’ve are doing a lot of work on – it’s been a four or five year project – but it’s starting to increase. Just because it’s a huge market doesn’t mean you’re going to get huge sales, it takes a lot of work to get established and you slowly start building on that. A lot of it’s about just being there – like at trade shows – and being seen and there’s always a bit of luck in getting the right people at the right time. I think being in the market for a while lets people know that we know what we’re doing and have the right products. So having that 40 years’ experience and having a diverse product range means a lot. There are three main trade shows around the world for commercial cinema. We had a period when we didn’t go to any because things were so tight and it was probably a mistake in hindsight but we are just getting back into that. With the consumer hi-fi it is difficult because it is such a huge market. But back on China, the one thing we’ve done is that we have a Chinese person working for us now and having someone who can communicate with them in their native language has made a huge difference. The cultural differences too, if you can overcome them it can make a huge difference.

Get the right staff
It can make a huge difference having a few key staff in a small company like ours and you need to have the right culture to attract the right staff. So it is critical and I think most businesses have learnt that it is really about the staff. It is the thing that can really make a difference.

Best place to base an international company
Most contact is done over the internet these days so from that point of view there’s not an issue and going to trade shows it doesn’t really matter if you are leaving from Adelaide or Sydney – we are always going to be based in Australia. We like it here and we sell a lot to Perth (in Western Australia) and a lot to the eastern seaboard so Adelaide is relatively close to both. It’s a good location, it’s easy to get around and the cost of labour and rent is probably a bit more attractive in Adelaide so from a cost point of view it’s definitely a good place to be.

 


Key contacts:

Gary Krix
+61 8 8384 3433
info@krix.com

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