Turning a good idea into

commercial success
2 The nature of the business

1 Introduction
At 15 years of age, John Ilhan told his mother that he was going to have
his own business, a Porsche and a house by the water. We all agree
that there is a lot more to life than money, but it is nice to dream.
Growing up in Broadmeadows in Melbournes northern suburbs, John,
at age 31, was single and still living at home with his parents. He had
not yet realised his dreams. Less than 10 years later, he is featured
regularly in the Business Review Weekly Rich 200 list, with a personal
fortune of over $300 million. He lives with his wife and three daughters
in the bayside suburb of Brighton (yes, it is a house near the water!).
John remembers his humble beginnings
and doesnt believe success has
changed him. His positive
attitude to life and work is
summed up by his
comment below:

John Ilhan is the owner and Chief Executive Ofcer of Crazy Johns mobile
phones and services. This private company has established a signicant market
share in the competitive Australian mobile telephone market, through achieving
its business objectives of providing quality customer service and offering the
best possible prices. The business strategy is to offer better customer value
than competitors in the market place. It is a re-seller of Telstra products, using
innovative ways to build an increasing, and loyal, customer base.
From small beginnings as a one-person operation back in 1991, the company
has grown to now offer the largest range of mobile telephones and associated
services in Australia, with over 100 stores across the country and 600 employees.
The business is organised around three, interacting components:

RETAIL

100 stores nationwide

Developing new
Kodak Express
CALL CENTRE
co-locations
Outbound activity
e.g. calls to customers
Inbound activity
e.g. calls from customers

Crazy Johns, Southland.

If youre really intense and you work hard

enough and you believe in what you want, you
can do anything. Anything is possible.

CORPORATE
Business solutions
for Major companies
Government departments
Public authorities,
other businesses

Crazy Johns business values centre on two key questions:

How can we do business differently?
How can we do business better?

When addressing these questions, John Ilhan requires everyone working

in the business, including himself, to always remember to not become too
complacent or arrogant as a result of success. Everyone must listen to
customers, staff, organisations and the community, in order for Crazy Johns
to continue to prosper.
The Case Study, as well as telling the story of John Ilhan, illustrates how
his business values and business strategies have led to Crazy Johns having
substantial impact upon the mobile telephone market place in Australia
both in terms of price but also in terms of altering the business behaviours
of competitors.

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3 The role of the entrepreneur

John is an entrepreneur. The concept of entrepreneurship is about coming
up with creative business ideas (often involving risk-taking) and then
nding enough resources and opportunities to put these ideas into action.
Characteristics that help describe the entrepreneurial spirit are passion,
perseverance, ability to solve problems and a never-give-up attitude to life.
Its these traits that can help the entrepreneur create a successful future in
the business world.
Being an innovator that looks to create better goods or services at every
opportunity is a key strategy to being a successful entrepreneur. John had the
entrepreneurial vision to see there was a gap in the mobile telephone market:
he saw that retailers were not offering competitive pricing or a decent level of
service to their customers and so went about lling this niche. He is a hands-on
risk-taker who grasped the opportunity to work with Telstra and open more
shops. He re-sold the Telstra product and added his own value to the basic
product through additional products and services.
Entrepreneurs like John Ilhan contribute signicantly to the ongoing success
of Australias economy through job creation, promoting competition and by
implementing innovative new ideas when starting a business. Many successful
entrepreneurs are people focused and able to motivate their staff on the
journey to achieving the goals set by the business. An entrepreneur cannot just
set up a business and sit back and wait for it all to happen. Consumer tastes
change and the entrepreneur needs to generate and apply innovative ideas to
ensure the business is providing what the customer wants.
Crazy Johns brand and business is innovative for a number of reasons. It has a
catchy business name, a well- known mascot and is viewed as offering value to
the market both in terms of price and service levels.

4 Starting out an idea, a vision

Entrepreneurs need a creative vision and should research their market
to establish if there is a need for their idea. John Ilhan had a variety of
experiences before opening his rst store. John started an arts degree and
worked for Ford, selling eets of cars. He then had a position selling telephones
at a well-known electronics retailer. As one of the rms best salesmen, he
opened a new store for them. It soon became the most protable of the rms
Victorian outlets.
John identied the poor customer service that was offered as a result of little
competition in the industry. And that dream of improving his lot in life lingered
as did the house by the water and, well, he was 31 and perhaps it was
time to leave home!
John understood people and the importance of providing great service in a
growing and changing industry. He eventually started his own business, selling
mobile telephones. He believed that an honest approach was the best approach
to doing business, so he was up front with his customers. He explained his prot
margins and the fact that he needed help from customers to meet his targets.
To achieve set goals, however, and to obtain nance and meet business
objectives, it is essential to prepare a robust business plan. A business plan is a
like a road map in that it can guide the business in its operations and activities,
both now and in the future.

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 Turnover: the amount of income the business expects to receive in a given

period. Converting this turnover into actual prot and increased market share
is vital. In 200304 turnover for Crazy Johns was more than $200 million
across Australia thats not crazy!

were less impressed with his success. Crazy Johns also established alliances
with key suppliers, for example, being a leading retailer in Telstra MobileNet
connections and handsets. Customers knew they could get competitive deals.
Today, Crazy Johns is helping businesses access the latest mobile, voice and
data technology, through alliances with Telstra, Nokia, Sony Ericsson, Motorola
and Samsung (among others).

Overheads: a business needs to minimise overheads (expenses) like rent,

wages and insurance to remain competitive. Keeping overheads as low as
possible enables the business to charge more competitive prices, which
should lead to more customers and ultimately better prots. This was the
formula used successfully by Crazy Johns.

6 Building the business not all plain sailing

John started Crazy Johns as a one-store operation, with $15,000 that he
borrowed from his parents.
Initially, no one in the industry was willing to help him. John nearly closed the
business due to lack of money, but was able to turn things around when he
introduced secondhand mobile telephones and pagers, bought on weekends
from the Trading Post. Word was also spreading about Johns excellent
customer service.
The introduction of new competitors, such as Optus, helped break Telstras
dominance of the market. This resulted in dealers receiving $15 for every
mobile telephone they could connect to Telstra. In 1993, John changed the
store name from Mobileworld to the more appealing Crazy Johns. Although
competition increased over time, so too did the nancial benets dealers could
receive by signing new customers. Unusually, John ran a cash back programme
in which he gave the dealer incentive money he received back to customers
to build up customer numbers and boost the cash owing into the business.
He also continued offering his innovative customer promotions to grow the
business to over 100 stores. This approach of continuous, innovative strategies
is deeply imbedded in the business culture.

Crazy Johns has developed fun and out-there marketing initiatives, through
sponsoring a variety of sporting codes and high prole shows such as The
Footy Show. The Crazy John mascot also grabbed headlines as the successful
bidder for an apartment on Channel 9s The Block. All rent received on this
property is donated to charity.

For many businesses, staff wages represent the biggest ongoing expense and
so are closely monitored. A balance between too many staff and too few staff
needs to be achieved so that stafng costs are not too high and customer
service levels are not too low.
Predicted prots: the ultimate aim is to have revenue (sales) exceeding
expenses to make a comfortable prot. The entrepreneur needs to be
realistic when predicting prots and should expect prot to build up over
time as the prole of the business improves
Location: when deciding to establish a business, one of the most important
decisions that needs to be made is the selection of an appropriate location.
Prior market research can help an entrepreneur determine an appropriate
geographical area to suit the style of business they intend to operate.
John Ilhan took these factors into account when planning his rst business, by
choosing an inner city location with reasonable rent, saving on stafng costs
by working alone and concentrating, initially, on retail customers. By making
his goals of excellent customer service at competitive prices specic and
measurable, John knew exactly what was required to succeed, even though, in
the beginning, things were tough. He was keen to establish a good brand and
develop a good business model. John did this by minimising overheads (such as
using second-hand carpet in his rst store) and offering customers much lower
prices. John introduced innovative product offerings such as selling a mobile
telephone for $1 when his competitors were charging $200.

5 Not so crazy but certainly different

In a competitive marketplace, developing a unique selling point that
differentiates your business from that of your competitors is a benecial way
to build a protable and successful business. With a focus on good, friendly
customer service at affordable prices, customers were more than happy to take
advantage of Crazy Johns approach to business, although competitors

In addition, Crazy Johns supports a range of charities John Ilhan has

not forgotten his working class background and what it is like to struggle
to survive. To date, Crazy Johns has donated over $1.5 million to charities
Australia-wide. These include Kids Under Cover, providing shelter for homeless
and at risk kids; the Winmar Cup and Lighthouse Foundation
which celebrates, supports and empowers young
indigenous people to take responsibility for their own
lives; and The Shane Warne Foundation which
raises money for seriously ill and underprivileged
children and teenagers.
So perhaps John Ilhan is not so crazy! Johns rst
name was originally Mustafa. He changed it after
he and a best mate called John, who did
everything together at school, were called
the two Johns. The unique name,
Crazy Johns originated when John and
a friend were discussing the company
name of his rst store, Mobileworld. A customer
walked over and said I just walked into your
shop enquiring about a phone; you give away
hundreds of dollars worth of accessories; you
guys are crazy!.
The unique name Crazy Johns was adopted
as the business name and $20 was paid to have
a caricature drawn. This character is still used in
company promotions.

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Crazy Johns, Bondi.

7 Where to next?
Crazy Johns has plans for rapid, further expansion, by considering options
like doubling the number of stores through licensing the name and products to
selected franchisees who meet tight standards. There is also the possibility of
establishing a franchise agreement that would allow the brand to be used as a
retail brand in Indias telephone sector.
A recent alliance with Kodak Australia will see Crazy Johns co-located inside
selected Kodak Express stores. Why? The photographic and camera industries
are changing so rapidly with digital cameras and mobile phones racing
ahead. A customer can walk out of the co-located store with a camera phone
connected to Telstra. Thats innovation!
In June 2005, Crazy Johns College will launch training courses for all staff
across Australia. The facility, located in Melbourne, will offer specially tailored
courses and programs for staff, including induction for all new staff to ensure
a common understanding of the history, values and culture of Crazy Johns. It
is intended that it will become a centre of excellence in training. John Ilhan is
investing in his people.

8 Conclusion
John Ilhan is an entrepreneur who started out with nothing. He has been able
to build Crazy Johns from a single store to a household name and achieve
the number one position in mobile telephone retailing in Australia. Each store
reinforces the brand values of great service, the biggest range and the best
mobile telephone deals. Johns belief in himself is an inspiration and demonstrates
that regardless of your background or education, with some vision and willingness
to work hard, you can do more than just dream. He knows, however, that the
business must listen to customers, staff, other people, organisations and the
community to remain at the top of a very competitive industry.

GLOSSARY
Alliances
When businesses join together to achieve a favourable outcome for both
parties.
Business plan
A written document detailing the overall plan for the business in terms of
marketing, operations and nance.
Caricature
A cartoon representation of a character or person.
Chief Executive Ofcer
Also known as the Managing Director; this is the most senior
management person in an organisation.
Entrepreneurship
The willingness to take risks and start new business ventures.
Franchisees
A person who pays a fee to another business operator to use their
established business name, expertise and knowledge.
Innovator
A person willing to try new and creative approaches to solving problems
or doing things.
Licensing
When a business grants permission to another party to undertake a
particular activity.
Market research
Finding out information about the characteristics of potential customers
to solve marketing problems and help with marketing decisions.
Market share
The share or percentage of the market a business has based on sales
revenue.
Niche
To sell or provide a product or service that is needed but not being
provided by other businesses.
Private company
A company that has a limited number of private shareholders (owners)
and is not listed on the stock market.
Unique selling point
Provide an appealing sales difference to your competitors.

Questions and Extension Activities for

Crazy Johns are on www.afrbiz.com.au
For more information about Crazy Johns
please visit: www.crazyjohns.com.au

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The Australian Financial Review and Australian Business Case Studies Pty Ltd. Whilst every effort has been made to ensure accuracy of information, neither the publisher nor the client can be held responsible for errors or omissions in this Case Study.

An entrepreneur has a number of considerations to keep in mind.

These include: