In our second episode of the Switched On podcast the Managing Director of Davenham Switchgear, John Corcoran, shares many lessons learned the hard way. This single interview is a frank, brutal and highly valuable lesson for anyone who wants to learn how to do it right.
Who is John Corcoran?
John Corcoran is the Managing Director of Davenham Switchgear, the largest builder of electrical panels in the Republic of Ireland and a company that exports power solutions all over the world. The soon-to-be 40 year old company had a rocky start, suffered through economic ups and downs, panics and recessions, and eras of both shockingly low and offensively high interest rates.
Yet, under John's leadership, the organization and its team of 220 workers came out on the other end of that tunnel not only in one piece but also on top of the industry. It's telling that more than 30 of the company's key employees have been on the job for more than two decades.
How does an entity like this get off the ground? What was the unique mixture of leadership, providence, and team cohesion, that brought it to where it is today? And, finally, what did John Corcoran learn from that journey?
Keep reading to know more, or you can click here to jump straight into the 2nd episode.
How It All Got Started
Davenham Switchgear (DS) was an idea of several young men, as John recounts it, who really didn't have a solid sense of where they were headed, who simply wanted jobs so they could survive. John learned some of those early, hard lessons while he worked for another company in the early 1980s, discovering that office-heavy organizations can't get much work done in the switchgear industry. Combine that with lack of direction and an unsuccessful try at partnership, and the result was predictable.
Wasting no time, John acquired a small loan from the local bank in those easy-money days, when one-page contracts were the norm and handshakes, and friendships, counted for more than signatures and legalese..
The new company, Davenham Switchgear, rented their business premises. As they expanded, they acquired
more rental space. John says that when they needed another building, something always eventually appeared. There was not grand plan based on a specified percentage of expansion and carefully calculated square-footage. It just happened, almost organically..
The company never even hired a permanent salesman because that's just not the way they do business. John explained, for instance, that some of the company's suppliers have been around for 40 years. Especially in those early years, everything was based on personal relationships, trust, friendships, and paying the bills on time. And the part about hiring a salesman?
John gave it a try a couple of times but it just never clicked with the way Davenham does business. John says
the company might "go down the marketing route" again someday, but only to keep things as good as they are, not to expand for the sake of expansion..
What was the secret during those first decades? "No mystery," John explains. It's about working hard, being honest, and looking after your customers. Somewhere in that three-piece formula there's a lesson for every modern-day entrepreneur.
But he also admits that getting a break here and there helps, as does having long-term suppliers
you can trust. Davenham Switchgear has been doing business with Demesne for 30 years, to cite just one example. Sometimes breaks appear in the form of a strong economy, low interest rates, vacant buildings,
and people who give you good advice, as John learned when the company was facing a financial crisis..
Solving the Money Problem
There was a time when the company owed €800,000 on its credit line and was carrying a mortgage on their main facility to the tune of €450,000. The math worked out to where they were paying €110,000 per month toward penalty and interest, and nothing toward the note's principal. What happened next is like something out of a novel, but unfortunately it was real.
One of the company's financial advisors recommended that, because banks were virtually throwing money
at borrowers in those days, the company should sign a new note for €5 million. The purpose? No one
really knew. No one in the company's leadership had a clear idea of why they should borrow five million.
It was at this point when one of those breaks John talks about happened. He was introduced to a more
level-headed financial professional who talked some sense into him and his partner. The deal for the five million was already underway but at the last minute, the new financial advisor convinced John and his
partner to pull the plug because there was no reason they needed that much money.
They were still on the hook for the monthly €110,000 on the original note and mortgage, but at least
they didn't dig themselves into a massive rut that could have been a quick road to ruin. And, on the advice of the new advisor, John ended up borrowing not €5 million but €2 million, at a very low rate of interest, and for a 20-year term.
The company has since paid the loan off in full. When they got it, the funds allowed them to pay off the original €800,000 note and the mortgage, so there was no penalty to pay every month. The €110,000 in "interest and penalty" vanished, and payments on the new loan were lower, so it was a win-win, or a really big break to use John's terminology.
John Corcoran doesn't like being described as an entrepreneur. To him, that word carries meanings that go against the grain of what he is and how he runs his company. What lessons did he learn during the past four decades of guiding DS to the top of its industry?
He'd tell you he now knows the value of taking care of employees, building a reputation, paying attention to quality, working hard, creating relationships with customers and suppliers, not trying to grow just for the sake of growth, and keeping your eyes open for those breaks that come along every so often.
His business philosophy, a term he'd never use, has nothing to do with textbooks or theories or expansion goals. It's about treating people well, considering their needs, and doing your level best to give them great value for their money. For people like John Corcoran, reputation is the name of the game, and you can't learn that lesson from a book.
Hear the Interview
Listen to our full interview with John by searching ‘Switched On Demesne Electrical’ in your podcast player or just click this link
Episode 2 of our new Switched On series of podcasts is available to listen to right now!