TERRY CLUNE, TAXBACK GROUP FOUNDER:EVERY ENTREPRENEUR has been through it: the moment when they begin to doubt whether their long-cherished business idea really is the next big thing.
For Terry Clune it happened in Dusseldorf, Germany, in the summer of 1996, as he waited for 110 classmates from Trinity College Dublin to arrive from Ireland.
“I’d set up a work-abroad programme for them, organising jobs and accommodation for the summer. They all came off an Aer Lingus flight and straight to me. Suddenly I realised I was responsible for them all. I had parents on the phone, wondering how they were. It was really daunting.”
Clune’s doubts proved to be unfounded. His student initiative was to be the beginning of a business venture that still engrosses him. Once back in Ireland, he began processing tax refund applications by means of college computers and the business skills of his mother, Marina.
Two years later he set up a company based near the Usit office on Aston Quay in Dublin, specialising in reclaiming tax for students who had worked abroad.
Today, the Taxback Group is a global business with 21 offices in 17 countries. More than 600 staff are employed by the company, which specialises in money transfer, tax reclaim and visa services for individual and business customers.
On paper, it’s the perfect entrepreneurial narrative: bright young entrepreneur spots a novel business idea, acts on it, and makes his fortune before the age of 40 (Clune is a youthful 37). But it hasn’t all been plain sailing.
“In 2000, we had a real shock to our business. The US, which was a major part of our business, changed the tax law relating to J1 visas. It reduced the market for us by 90 per cent. Our business was pretty much wiped out there. It was a tough time.”
The company was forced to rethink its business model entirely, Clune says. “We had to diversify pretty quickly. Five or six key people on our staff were working intensively on it. We figured out new markets and developed a range of new products in the space of six months.”
The company turned its attention to Australia. At a time when thousands of Irish and British were travelling there on working holidays, it was an obvious move.
The business also helped to secure its dominant market position through an innovative PR strategy. At the time, backpackers were prohibited from reclaiming tax in Australia. The Taxback Group launched a case against the government to change that position. “Thousands of people on working holidays signed up, and were kept informed of the case,” Clune recalls.
After nine months the case was settled and the law was changed. “It was a fantastic result for us. It opened a floodgate of claims and became a source of revenue which we needed at the time.”
It was also at this time that the company began to move away from its reliance on the Irish and British diaspora. With increasing globalisation, workforces were becoming more international. The Taxback Group spotted a niche market, offering tax services and visa processing to thousands of workers employed internationally – from Filipino nurses working in Ireland to Brazilian construction workers employed in Australia.
Nowadays, providing visa and tax services to students and international workers forms only part of the business. The Taxback Group also offers travel-related financial services, such as VAT recovery, to corporate clients. “Many businesses don’t realise that, if they do business abroad, they are entitled to reclaim VAT on a range of expenses – conferences, fuel, client meetings, market research,” says Clune. This can amount to savings of close to €1 million a year for some companies, he says.
It’s a service that has an obvious market during a recession. Among the high-profile clients watching their pennies and using the Taxback Group’s VAT-recovery services are three British premiership football clubs and a Formula One team. Although Clune is coy about the identity of celebrity clients, to him they’re obvious candidates for the service. “Take last year’s European Cup final. You’d two British teams playing each other in Russia. Both would have incurred huge expenses.”
Formula One teams face similar issues. “There are huge VAT costs involved in Formula One – the fuel, for example. The airlines that fly that fuel in also have to pay landing charges. Even the fees for membership of the Grand Prix Association are huge . . . and VAT-deductible.”
But it’s not all exclusive clients. The company also targets individual Irish people who own properties abroad. Clune believes most property owners are unaware of the tax writedowns available to them. “There are lots of costs associated with properties that you can write off against your tax liability,” Clune says.
“Say you have a house in France with €8,000 a year in rent – you’re probably liable for somewhere between €2,500 and €2,800 in tax. We can usually write that down to zero.”
Clune’s business may be built around a global concept, but on a personal level he is a man with strong roots. Originally from Co Wicklow, Clune chose to locate the Taxback Group’s headquarters in Kilkenny city. He now lives just outside the city with his wife Kate, who he met through the business, and their three young children.
“It’s a better quality of life in Kilkenny, particularly when you have young kids. I also don’t travel as much as I used to,” he says.
That said, Clune strongly believes the future for Irish businesses lies beyond Ireland. “Irish companies need to concentrate on looking at opportunities abroad. Ninety-five per cent of our client base is overseas, for example. There’s so much more opportunity abroad. The market here is simply too small. We’ve spent 10 years focusing on property at home; we’ve forgotten how to do business properly.”
Clune, who won the 2009 Ernst Young Entrepreneur of the Year award, comes across as a man brimming with ideas. The company has introduced a live messaging system on its website to communicate with customers, he says, and it is now considering outsourcing it to third parties.
Like all true entrepreneurs, Clune’s eye is always on the next thing. He believes there is a wealth of opportunities open to entrepreneurs in Ireland. “It’s very simple. Businesses need to listen to their customers.”
All of the Taxback Group’s new business ideas came from customer feedback, he notes.
“I see huge areas of business that nobody’s doing. There’s a range of opportunities out there.”
So what does he believe is the next big thing?
“Now, that would be telling,” he smiles.
ON THE RECORD:
Name: Terry Clune
Job:founder and chief executive/ managing director of the Taxback Group
Why is he in the news?was named the 2009 Ernst Young Entrepreneur of the Year
Age:37
Family:married with three children
Lives:originally from Co Wicklow, now lives in Kilkenny
Background:degree in business and economics from Trinity College Dublin. Spent one week with PwC after graduating
Hobbies:has been spotted in the skies around Leinster in a hot-air balloon
Something that might surprise:Interest in star signs – knows his Scorpio from his Taurus
