Ben Chong is a Director at Jetabroad, an online travel agency specialising in international airfares. He shares his experience on moving from a start-up to a small business and beyond.
Seizing the moment to build scale
Since starting our business, we have realised the need to develop scale. Scale produces a range of benefits including: the ability to spread our fixed costs across a larger number of customers, greater negotiating powers with suppliers and access to resources such as more staff and technology.
While the Internet allows businesses to acquire large numbers of customers to achieve scale, timing is equally important. Search engines like Google, Bing, and Yahoo! have attracted millions of Australians searching for travel-related topics every day. We took advantage of this by investing significant funds in pay-per-click advertising.
Those who search for travel-related topics are often presented with a Jetabroad advertisement. If they click on the advertisement, they’ll land on our website where we invite them to perform a flight search. We pay the search engines a fee every time we receive a visitor through our advertisement. By recognising the potential in a new advertising medium, we’ve been able to acquire a large number of customers, at scale.
Make ‘small bets’
As an entrepreneurial business, we’ve tried to mitigate the risks associated with building the business. The key to this is starting small and developing gradually, we’ve adopted a culture of taking ‘small bets’. This means if we’re unsure about the return on a new initiative, we’ll see if there’s a way we can adopt a low-cost prototype.
If it doesn’t work out, we’ll scrap it or see if it’s worthwhile developing another prototype. If the prototype works well, we might extend or develop it into a full-blown system. In either case, we’ll have learnt something we didn’t know before. By working this way, we’ve been able to contain our risks and avoid cost blowouts. It’s also been surprising to see which ‘small bets’ have grown into something much bigger than we first imagined.
Cash flow, cash flow, cash flow
Cash flow is the lifeblood of any business, especially a growing one. We review our cash position on a daily basis. Early on, we made the mistake of investing in a capital-intensive project. While the project had a positive return on investment for our business, it consumed a lot of upfront capital meaning we had fewer funds to spend on marketing our business.
As a result, our business didn’t grow as quickly in that period as we would have liked and it took some time before we realised a return. These days, we attempt to make investment decisions after assessing both the cash flow impact and return on investment of the project. We prioritise projects where the positive impact on cash flow will be the greatest.
As our business has grown, we’ve tried to keep a flat organisation for as long as possible. Keeping a flat structure means refraining from putting up unnecessary barriers and hierarchy between management, staff, and customers. This has allowed us to shorten the feedback loop, ensuring that customer issues, especially recurring ones, are dealt with quickly and permanently.
It also means we hear good news stories from customers quickly. Another advantage is that it allows our management team and staff to engage with one another in a continuing conversation about the evolving vision for our business – so we are all on the same page when it comes to implementing growth strategies.
Ben Chong is a Director at Jetabroad, an online travel agency specialising in international airfares. Established in 2005, Jetabroad is now one of Australia’s largest online travel agencies, with annual transaction sales of more than $100m and growing.