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From backyard shed start-up to Rich List

Tuesday, 8 November 2011 | By Oliver Milman

Dorry KordahiIt’s fair to say that Dorry Kordahi’s path to becoming one of the wealthiest young entrepreneurs in Australia is a little unconventional.


Before he launched marketing and merchandising company DKM in 2002, Kordahi dabbled in an array of different professions, ranging from basketball player to hairdresser.


Even once he started up, the beginnings were humble. Kordahi spent the first two years of the business’ life located in a shed in his backyard.


Those days appear to be a long time ago now, with DKM Blue formed following a merger with his brother Danny’s business DK Blue, commanding a turnover of $10 million and Kordahi making the BRW Young Rich List for the last two years with an estimated wealth of more than $20 million.


He has even found time to emulate his hero, Sir Richard Branson, and write his own book – The Power to Act.


So how did he do it? We spoke to Kordahi to see what secrets he can pass onto the next generation of start-ups.


It’s quite a journey from the garage to the Rich List, isn’t it?


Yes. If you told me 15 years ago where I’d be today, I’d tell you that you were kidding yourself.


I wasn’t very good at studying. I failed my HSC and didn’t go to uni. I loved basketball and sport, but I also loved making a buck here and there.


I had drive, which was maybe entrepreneurial, but I use the word entrepreneurial quite loosely. Everyone wants to be their own boss, but it comes back to having the belief and the passion to do it.


When we had the previous economic boom, every Tom, Dick and Harry was a broker. They saw the gravy train and when the bubble burst it showed who the true players were. The real entrepreneurs are the ones who grow sustainable businesses that survive when the going gets tough.


How did it all happen for you then?


From school, I become a hairdresser before I went on to work with my cousin and older brother Danny in their t-shirt wholesaling business.


I loved it. I had failed my HSC so I was like a sponge – I treated it like a degree. The best lesson in business is to do it, pay attention and learn from other peoples’ mistakes. That beats any degree.


I spent five years there and realised that the business was over-spending and was under-capitalised. I thought I could run a tighter ship and make more money.


Did you feel you had something to prove?


Well, one driver was to prove that I knew what I was doing. I didn’t know much about things like tax, but I had a philosophy and saw how other companies pitched themselves.


I saw there was an opportunity to pitch solutions rather than products. There are 5,000 competitors in a $2 billion merchandising market pushing the same thing. If you present five or six options to a client, you take away 20% of the work.


So, what point of difference did you want to have?


I knew that China was going to play a big part in the industry. I knew I could import directly and increase margins. I set up an office in China nine years ago, which was a bit unusual then as Hong Kong was seen as the safe haven.


If I go to a client, I push a relationship-based transaction. It doesn’t just come down to how cheap you are.


You have to listen to clients and treat them with respect, as they are paying the bills.


I also launched Branded, a magazine, for $30,000 an issue and piggybacked it onto industry titles such as B&T. I did this to educate the market about merchandising, to show that it has as much value as above-the-line advertising.


Brand managers thought that the biggest logo or ad was the winner. I wanted to educate these people that there was another solution.


What did you do next?


I went to Europe. I was going for 10 weeks but I ended up staying for six months. It was when there was 33 cents to the pound, so I spent a lot of time going between different friends’ houses and staying with them.


While I was there, I visualised the business and how it would work, its structure. I wasn’t prepared for growth before, but I came back prepared for success.


Many entrepreneurs aren’t prepared for the growth and they go into a spiral. You have to look beyond what you will do once you’ve just launched the business.

Is that when the garden shed came in handy?


I had a computer, a desk and a garden shed. I would just buy and sell, I never carried any stock. I would talk to clients and get stock when I needed it. It was slow, steady progress. Without the cashflow, you can’t grow.


Didn’t the shed put off clients?


I was in the industry for five years and they all knew me. I had a good, trusted name in the industry, which is more valuable than any profits.


I made sure I delivered on time and to expectation and, in return, I gave them 30 days to pay me. Some said “no, we won’t support you”, but they are now knocking on my door asking to work with me.


To start with, I got the Yellow Pages out and start calling, asking for clients to give me a chance. Out of 100 calls, you’d get about a 2% return through cold calling. Then, if you provide excellent service, you get the next order.


How long were you in the shed for?


Two years. I was turning over $1 million and making a lot of money for myself, but I was scared of growth. I had to move to a $35,000 office space in Stanmore and I was shitting bricks.


I was in the mentality of keeping overheads down and running a tight ship. I thought the extra cost could sink the business and I had the fear factor of the next step.


Those first steps are the hardest. People worry too much about having a $50 million business, but what is the profit in that? Do you have the profit to drive growth to the next level, or is it turnover?


If you’re not making a profit, it doesn’t mean anything. I think we were successful because we invested during the GFC. We were proactive.


The business has been a bit of a family affair isn’t it?


I have two brothers and one sister, who are all working on businesses. My older brother, Danny, worked with me and my cousin and we were always fighting and bickering.


I said “I’ve had enough, I’m going to go and do it myself.” Then he started DK Blue, which was in a different market to my business. We ran the businesses for six years before two years ago we decided to merge. We’re now joint CEOs.


My brother is great at sales, while I run operations. I suppose I wanted to outdo him when we were young. We drove each other forward.


Didn’t you have a run-in with your other brother when he worked with you?


While I was working in my back yard shed, David was asking for a chance to join me. So I said yes, but he’d turn up to work in his pyjamas.


We didn’t have many clients at that time but I’d still sit in my office while he’s go inside the house for a nap or to watch TV.


I told him that if you don’t respect the business then it won’t respect you. You have to have that drive and respect for the job you’re doing. So I fired him.


It was a great lesson. Business is business and family is family and I didn’t want to blur those lines at that time.


How is the business faring now?


We’ve had organic growth, which has been fuelled by word-of-mouth and getting the fundamentals of the business right. We’ve diversified the business, which gives great scope and options for clients.


Rather than advertise, we distribute magazines that will cost us $20,000, but we will sell ad space in it. We can get $150,000 in sales on the magazines a year.


We’ve got 18 people now, but we still run a tight ship. I don’t really value one-dimensional people. If you’re going to grow, you need people with a diverse range of skills, but they are hard to find.


I’m very hands on with the business. I want to build experience rather than hire it. Raw people cost less to hire and then I can train them my way. If you hire expensive people, they are often set in their ways.


We’re looking at growing to $20 million turnover in the next two to three years. But it’s a tough industry. It’ll take a lot of work.