Set In Stone – Keystone Productions

Set In Stone – Keystone Productions

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Jon Le Roux is quick to point out that if he knew in 2003 what he knows today, he wouldn’t have joined Keystone Productions so quickly when founding partner Chris Bolton suggested they launch a business.

The business has enjoyed steady growth since launch, owns four properties, has paid off its high-tech equipment and encompasses a number of sister companies that feed into its industry, so it’s a good thing ignorance is bliss.

“We had no idea how tough it would be launching a business. We took so many risks to get where we are today without realising just how risky they were,” he says. It’s taken ten years, but those risks have paid off and today Keystone is widely regarded as an industry leader.

Growth strategies

1. The team

Le Roux co-founded Keystone Productions with two partners, Chris Bolton and Warren Liss. At the time, he was working in the finance industry and DJing on weekends and in the evenings. Liss was involved in stage design, and Bolton specialised in theatrical lighting. “Chris approached me about starting a business. Essentially we would be three freelancers. The whole business was based on our various skills sets. Together, we could offer a wide range of services.”

With his background in finance le Roux did the books, all three agreed to always carry their own weight, and the business would be equitably split from the beginning.

It’s a system that has remained in place since launch. Le Roux’s brother Justin later joined the business, and the four partners hold equitable shares. “I run the company on a day to day basis. My partners do what they’re good at, which is enhancing their skills and offering their experience and knowledge to clients,” says le Roux.

2. Investing in equipment

Three years into the business, the decision was made to invest in, rather than hire, equipment.

 

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“It made sense to open a second company, purchase equipment and then rent it to ourselves,” explains le Roux.

Shares were sold in this second business to help raise capital. Of the R3 million needed, R1,5 million was invested by Keystone, and the remaining capital came from an equity investor.

“We opened a second company so that we could also rent the gear to our competitors,” says le Roux. It took five years for the second business to see a return on investment, but it’s now operating at a profit.

3. Investing in property

The team made a similar decision with property. “When we had grown enough to need office space, we decided to buy rather than rent,” says le Roux. For the first eight years this made the business almost impossible to run in terms of cash flow.

“We opened a company to own the properties, and each of our other companies pays rent to the property company.” The property company has tenants across four properties, and today three of the bonds are paid off.

“We own three commercial properties outright, and only one bond has money still owing on it. These assets can be used for collateral if we need growth funds and it means the entire portfolio is stable, but things were tight getting here. All our profits went into paying rent and salaries in the other businesses, and to paying bonds in the property business. We needed to be incredibly patient and survive the tight times to be where we are today.”

4. Organic growth

The partners have opened a few different companies and each supports the industry they work within. This means they own the entire supply chain around organising an event.

“Over the years we’ve extended our offering from supplying the sound and lighting at events to staging the entire event. We’ve invested in photographic, sound and video production studios; we offer 3D renderings of events free of charge so our clients can see what we can do for them; and we own our equipment. We can also rent out our studios and the equipment, so we have multiple revenue channels. It took a lot of risk getting here, but we’ve got an excellent stable of products and services today as a result.”

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Mitigating risk

While they were building Keystone into what it is today, the partners always had a clear goal in mind: They were only going to target corporate clients, who they saw as a less risky clientele than public events where suppliers are often not paid if the crowds don’t come, and their differentiator would be based on doing the job better than anyone else, with a wider array of services on offer.

“We can create the concept for the event, do the stage design, theatrical lighting and all post-production under one roof. No-one else currently offers the full array of services that we can. We’re highly specialised, largely because my partners don’t concentrate on running the business, but on staying at the top of their game and ahead of industry trends. The investments we’ve made over the years have put us in a leading industry position.”

For the founders of Keystone, patience has been the name of the game. “When we invested in the studio for example, we knew it would run at a loss for the first four years. But after that it will be an established studio with a mature client base. We’re in this for the long-haul, and each of our decisions reflects that.”

Vital stats

  • Players: Warren Liss, Jon le Roux, Justin le Roux, Chris Bolton
  • Company: Keystone Productions
  • Est: 2003
  • Connect: www.keystoneproductions.co.za; +27 (0)11 482 9360