Always new horizons for G8: CEO
may seem strange, but Gary Carroll, who heads up Australia’s largest for-profit childcare operator, believes G8 Education is a start-up.
A start-up based on the Gold Coast that just happens to have 10,000 staff and more than 500 childcare centres throughout Australia.
“That’s because we have got to where we are by buying every childcare centre that was around for a number of years,” he told business leaders at the Growth, Strategy and Investment Forum yesterday held at the Home of the Arts and hosted by Gold Coast Leaders.
“We actually don’t have a core product, we don’t have a number of foundational processes and we really need to build our leadership capability so we can take that next stage of growth,” he said.
Mr Carroll took the reins as managing director of the childcare giant in January last year and says he has been intent on giving G8 a purpose.
His comments come as the sector struggles with a range of issues including an oversupply of centres being built or planned by developers and rising staff costs.
However, Mr Carroll said he sees the oversupply as a “short term” issue that will be resolved in the future.
“Our running joke is that every taxi driver in Sydney has built a childcare centre,” he said. “So there are lots of them around … for me it’s a good thing. Bit of short-term pain, but it will be good in the long term if you do have a true sustainable advantage.”
Mr Carroll said part of the rationale for calling the business a start-up was that he sees enormous room for growth.
There are 7500 childcare centres in Australia, most run by independent operators.
G8 is the largest of the forprofit operators and much larger than its nearest rivals.
“Even though we are at 500 centres we could be so much more,” he said.
“During the next five to 10 years we could double the size of the business. So that feels more like a start-up than a completely mature business.”
For a period, G8’s footprint was doubling every year, but that swift expansion has plateaued recently.
Mr Carroll said that was the result of not having the right platforms for growth including a clear and defined purpose for being in business.
“We did not have a purpose statement when I joined the business two-and-a-bit years ago. We had grown like Topsy, there was $700 million of revenue and no purpose,” he said.
“A purpose is what gets your team to come to work every morning. They need to feel they are part of something bigger than they are.
“We came up with a purpose statement: We ignite the love of learning in every child. My educators love that. That is what they do every day.”
Mr Carroll said the chief advantage he inherited from his predecessor was scale, which enabled G8 to offer services other childcare operators can’t.
“We are running a pilot with an allied health provider, offering occupational therapy, speech therapy, podiatry, to a pilot group of centres on an exclusive basis … they are giving us a percentage of their fee in exchange for doing that.”
Mr Carroll said that enabled the company to bring in diversified income streams so it did not have to be so reliant on occupancy levels.
“Our scale gives us a way of getting additional revenue streams so I don’t have to have the fee increases I normally would have. I become more and more competitive over time. And the cool thing about that is it is occupancy agnostic. Occupancy goes up or down and the fees keep coming in.”
G8’s share price has struggled recently, falling from as high as $4.71 to as low as $1.91 in the past 12 months.
In August the Gold Coast’s largest listed company announced a half-year profit of $23.7 million – down 22.1 per cent on the previous period.
Shares closed yesterday up 1 per cent at $1.995.