Victorian furniture company goes from brink of closure to making $22 million

Two brothers were drowning in so much debt they faced losing both their homes and the family business. But then a “desperate” move changed everything.

Two brothers thought they could lose both their homes and business until a remarkable turnaround during the pandemic. Picture: Supplied

An Australian family business that had seen two brothers mortgage both their houses and borrow $500,000 was in “so much debt” that they nearly shut it down to go and work on farms.

Started in the 1960s, McPhails is a Victorian-based furniture business that was founded by Keith McPhail, a fourth-generation farmer.

He initially launched the business on the back of people leaving behind good quality furniture when they moved, which he started snapping up, storing in a warehouse and auctioning off at the end of each month.

Later he added in new furniture and ran McPhails until he sadly died of cancer at the age of 50.

Brothers Casey and Taylor McPhail took up their dad’s legacy but faced a huge struggle to keep the business alive and were “extremely stressed” when the pandemic hit.

“Covid happened and we nearly gave up as it was that hard before then as we were in so much debt, so we went and bought a log splitter and were going to split wood and go work on farms,” Taylor told news.com.au.

“We came back into the shop and put a heap of stuff on Facebook Marketplace up cheap and it sold out straight away. In one week, we went from zero turnover and the next week we did $200,000.”

Brothers Taylor and Casey McPhail made a desperate move that ultimately saved their family business. Picture: Supplied

Little did the dad realise that the move would be a game-changer for the family business that they had nearly lost in 2020.

“It was more desperation. We were actually on the line of going completely broke and losing our houses if we didn’t try and sell whatever we could as we would have had nothing,” he revealed.

But the boom on Facebook saw McPhails bring its staff back in to “run the phones” and takings grew to around 180,000 to $250,000 a month turnover, which meant the business was breaking even.

“Then it was $250,000 to $300,000 – and we were losing every month prior to Covid,” he said.

“Then in April of the first Covid year we made $750,000, May was $750,000 and then it dropped down as we ran out of stock.

“So when it went off, we ordered 100 containers of supplies – everyone was saying be careful don’t order too much, it will fall in a heap, as we normally have 10 containers on order.

“But in July it went off again and we hit our first $1 million and then went to $1.3 million for the month and eventually got to $2 million about a year after.”

They went from a team of four employees to 30 – and from one shed to renting all 22 available sheds in town. They have since built an 8000sq m warehouse. Picture: Supplied

It means the brothers went from making a loss to a turnover of $22 million a year in just 24 months.

The 32-year-old also introduced a $59 flat delivery fee – a move he is convinced spurred the business on. The company now fills a truck with $45,000 worth of furniture to drive as far as Mildura, Adelaide or Cairns.

They also had to buy up trucks, going from one to 10 in the space of a year, to keep up with demand.

“We got on and bought a lot of stuff before everyone else bought it – we were about six months ahead when you could get availability of vehicles and furniture,” Taylor said.

“We ordered ahead of the game – it was going gangbusters – and we were the only ones that had stock and people were taking delivery straight away whereas Harvey Norman was a 25-week wait.

“It was a good feeling. It was exciting every week. You are making so much money but you also couldn’t get staff. So we were driving trucks ourselves, selling furniture, running the website – we were on all time. I would be on Facebook to midnight talking to people and selling stuff.”

When lockdowns hit, McPhails was struggling. But then they had an amazing turnaround. Picture: Supplied

In the 1960s, their father realised that many customers were leaving plenty of good quality furniture behind when they moved, so he started storing it in a warehouse and auctioning it off at the end of each month. Picture: Supplied

As a result, everyone in their sales team has a truck licence now, and even though they shut down a warehouse last year, that hasn’t affected turnover.

Online sales are still booming, bringing in $400,000 a month for the business, he added.

The warehouse and showroom are based in the northeast Victorian city of Wangaratta, which the businessman admitted was a bit of a “weird” location.

“Why would you buy furniture from Wangaratta? It’s like a dreamy thing, the area, as it is the gateway to the high country and wineries but there is not much here in Wangaratta – it’s not a tourist town. There is nothing here really – just a furniture shop,” he said.

The main ranges offered by the furniture store are the popular rustic and Hamptons styles, which he said are little bit chunkier, bigger and slightly better quality compared to their competitors.

The brothers introduced a flat delivery fee. Picture: Supplied

The business also delivers in two weeks. Picture: Supplied

The brothers name their furniture ranges after the cities and towns they believe the style would suit.

These include the Flinders range which feature a herringbone design crafted using South American eucalyptus, and the Canberra range which features plush couches and ottomans.

There’s also the Milan range, which is made using solid Tasmanian messmate timber and is finished with resin, while the Mt Eden bedroom suite is crafted from the premium hardwood, European white oak.

The brothers were prepared to go work on a farm like so many other failed Victoria business owners were doing. Picture: Supplied

Now that life has returned to normal post-pandemic, things haven’t slowed down for the furniture company.

“After lockdowns finished, people would bring iPads to the shop and come up and buy $15,000 worth of stuff. The salespeople were basically order takers and didn’t have to sell anything,” he said.

“People would drive six hours to come to the store and would say we want all this and it still happens now. Someone from Newcastle went to the Australian Open, caught the train to Wangaratta, caught a taxi to the store, spent $10,000, went to the pub for lunch and then caught the train back to Melbourne later in the afternoon.

“People have also flown from Adelaide to Melbourne, hired car and spent $20,000 and then went back to Adelaide that night.”

Taylor, who has a double degree in commerce and law, said the company spends a whopping $100,000 on Facebook advertising a month but in January it reached 2.5 million people.