Bob Ansett, of Budget Rent-A-Car fame, tells Business Spectator's Isabelle Oderberg:
- In doing his rounds on the speaking circuit, he has detected a change in attitude and a positivity has emerged
- This is the shallowest of the recessions he has experienced in his business career, which started in 1965
- Recessions are opportunities and if he were running a company he would be seizing opportunities
- There isn't really an upside to declaring bankruptcy, but with courage, optimism and hard work, you survive it.
Isabelle Oderberg: So Bob, what have you been up to in the last few years?
Bob Ansett: Well, I spend a good deal of time on the speaker circuit and particularly with conferences and conventions of corporations, but also in regional areas where local governments are trying to stimulate activity by local business and these days I probably do about fifty of those presentations a year. That's been my average for some time now and in addition to that I've been actively engaged in a political issue on the Sunshine Coast where I live and attacking the state government over the amalgamation process of local councils on the Sunshine Coast particularly Noosa.
IO: You've been working to oppose forced amalgamation in Noosa of Maroochydore and Caloundra councils and you're trying to get the amalgamation reversed. What are your key concerns?
BA: Well, the key concerns are that the planning process that's been in place in Noosa for a long time that restricts the heights of building and the plot sizes for building could be at risk and Noosa has been unique in that it's virtually had in place a population cap which is restricted to the building heights and the plot usage for building. It has been able to stay within the forecast number which is 55,000 and wants to remain that way to preserve the very special features of Noosa.
IO: And you're still on the speaking circuit at the moment?
IO: The business world has a strange atmosphere at the moment. What's your impression of how people are dealing with everything?
BA: Well, over the last month, I've noted and detected quite a change in attitude, because I've had experience with three recessions and overall five economic downturns over my business career, there's an interest in knowing how I dealt with those recessions and economic downturns. In the last month the subject they've wished me to address is what preparation they should follow to come out of a recession and take advantage of what historically has been reasonable economic growth to follow a recession or an economic downturn.
So there's a positivity that has emerged, I've found, over the last four or five weeks. Prior to that, it was really how you deal with a recession and I emphasise the fact that it was always my view that it was a time in which a company could get market share at a very low cost because competitors run scared and cut back on promotion and marketing and employment and therefore they put at risk their customers and so that was the theme prior to about five or six weeks ago. I still use that, but not as the primary observation that I make during the course of these presentations.
IO: As someone who's spent sort of so many years running a company, are you relieved that you weren't running a company in the environment that we've seen over the last year or two?
BA: Not really. To put it into context, this has been in my experience the shallowest of recessions that I've encountered over my business career. I think it's one that was beat up by both the government and by the media. I think Australia was better suited than probably any other developed country in the world to deal with the recession, because of the economic growth we had over such a lengthy period of time and the fact that the government had no external debt.
Probably the thing that made this recession different from others is that interest rates have actually gone down. In previous recessions interest rates have really blown out and it's had a further impact on business, but this time around that hasn't happened and of course the stimulus packages and all of the other the things that have occurred over the course of the last 18 months. So, no, it wouldn't have frightened me at all. As I said, I used recessions as opportunities and if I was running a major business today, I'd be seizing those opportunities.
IO: What would your advice be to anyone looking to start their own business in this kind of climate?
BA: Well, some of the great businesses of the world have started during times of recession. In fact my father's business Ansett Transport Industries, or Ansett Airlines as it was then, started during the Great Depression because he saw an opportunity as other entrepreneurs do during market declines and economic difficulties to get a foot in the door that might otherwise be very difficult in a booming economy. The trick is to find something, a niche, that you see an opportunity in, whether it be a service or a needed product and then have the perseverance and the courage to build a business and I've always found it's a pretty good time to start a business during difficult economic times.
IO: How do you think that doing business has changed since you were a company boss? Or has it?
BA: It's changed a great deal. When I started in 1965, with the Budget Rent-A-Car system, there were very different relationships in business that impacted on the organisation's ability to achieve objectives. For example, Australia was very heavily unionised and there was a middle role for unions that businesses had to deal with and we had a very much them and us attitude in the workforce; them being the management and us being the workers and part of the problem was a consequence of corporate behaviour in the past. But we sort of worked that into a different formula and built a business that was very close to its employees and looked upon its employees as extended family and so we managed to introduce a different philosophy to management and that enabled us to succeed. Today that's pretty much taken for granted. It's not probably quite as extreme as the things that we did, but business knows today that their relationship with their employees is critical to their success and work very hard to ensure that that relationship is a very positive one with mutual obligations.
IO: As you look back on your business career and the life that you've led, what do you want your legacy to be?
BA: In 1965 we created a different sort of business, a business that built a brand that became one of the most recognisable brands in Australia, but more importantly, that was an admired brand and there aren't many businesses that have followed in our footsteps. The only one that comes to mind of recent years is Virgin and they've followed a similar formula, although it seems to be drifting a little bit at the moment. The brand was our people and we built a brand of personalities that first gave us good media access and response to what we were doing and it created a fun environment for our relatively young work-force to enjoy what they were doing and to become very good at what they did and at the time that was very unique. I don't think any other business had done anything like that at the time. So, that was part of it.
As a consequence of that we were able to introduce a process of delivering consistent customer service excellence and even today you don't find too many businesses that can make that claim and we managed to do that for the 25 years that I ran the business and it brought the delivery of customer service to a new level in this country. I suppose those are the sorts of things, in the corporate sense, that would be considered a 'personal legacy'.
IO: One of the things that led to the current financial crisis was both personal debt and company gearing levels. You had an experience with declaring bankruptcy. Is there an upside to it? Is there a positive way you can look at it?
BA: Well, I don't personally think there is. I spent 20 years living in America and the theory there was that an entrepreneur didn't really reach their potential until they had been bankrupted at least once, but I don't necessarily accept that and I don't think that quite applies in Australia. One of the things, when I started my business, was that the trend was that you funded your growth with debt as opposed to equity because the interest on debt was deductible at a time of very high taxation in this country, so it was a strong motivation.
Now, that's changed today and certainly from the day I started the business I was a guarantor of the debt that the company used to build itself and that was the cause of my bankruptcy when after the '91 recession the debt had blown out. It was the worst of recessions, that one, because it was compounded by the enormous interest rates which got up to about 22 per cent. When you're funding a debt of something like $40 million, which we would've been at that time, that takes away most of the profit, as you can imagine. Then, on top of that we had the pilot strike which in our industry, in rental cars virtually shut us down for almost six months, when you couldn't get on an aeroplane and it was just an incredible consequence of factors that came into play.
I left the company because I couldn't fund its debt anymore and managed to get the US Budget Rent-a-car to take it over. The company, and this is perhaps the thing that I'm happiest about, didn't miss a day's trading, it didn't retrench employees and the culture of the business stayed in place, even after I had left it in 1990. I guess it just reinforced the fact that the principles that the business applied were so sound and the brand was so strong that it was able to continue on even though it was in desperate difficulties there for almost 18 months.
IO: So, on bankruptcy, are you saying that you can come through it...
BA: Oh, of course you can. Yes, absolutely. It does take some courage and it takes optimism and hard work. All those things are, I guess, for the real entrepreneurs, not unusual, those characteristics. I had a football coach at university in America called Jack Curtis and he always used to say to us that a football is really no different from life; in both you get knocked down plenty of times, but it's how you get up that matters. It's not a bad philosophy for today, with businesses that are struggling; you're going to take a few hits, but don't be depressed. Pessimism is a self fulfilling prophecy and take the optimistic side of things and rebuild.
IO: There's been so much in the media in the last however many years about your your family situation, your personal life. Do you find that frustrating that that sort of dirty laundry gets aired in public?
BA: You mean over the challenge of my father's will?
BA: Well, I've never said a nasty word about my father, even when he bought my major competitor Avis in 1977. Although we did have a relationship, it was certainly ruptured - it was a funny relationship at the best of times and as a consequence he bought a competitor, which really did create a media frenzy in the sense that it was really a David and Goliath battle and I ultimately won the battle, but it was to lay the foundation for what was to be an ongoing media interest in the Ansett family for all sorts of reasons. I fully understand that and sometimes the facts aren't quite as they should be and that does disturb me, but I built my business based on a personal recognition. I became the face of the company and Budget Rent-a-car. My father's name was on his company.
SIO: Do you think having your skeletons ripped out of the closet is just one of the pitfalls of being part of a famous business dynasty?
BA: Well, it's a positive and a negative. I was able to leverage off that famous name for a number of years, until I established my business. Then it became less important. But it was important in the early years and I'm the first to recognise that. It can depend a lot on the way, the behaviour of the parties involved. It can depend on a little of luck. If it goes badly, well then of course it's going to be blown out of proportion in many respects through the media, but I understand the 24/7 media cycle that we have today. It's a human interest one as well as a corporate one and so it does get a lot of attention and so I look at it overall as very much a positive in my case, but I can understand in other people's situation, people like James Packer, who's quite a private person, must be a bit offended at the amount of visibility that comes his way as a consequence of that famous Packer name.
IO: Thank you so much for your time, Bob.