IN this week's SME Focus, a young entrepreneur explains how he spotted an opportunity to create a niche business that could capitalise on the booming popularity of the takeaway coffee.
Name: Ian LeBruce.
What is your business called?
Where is it based?
What is its turnover?
We've been trading for less than a year, but our turnover is estimated at £148,000 for 2014.
How many employees?
Three full-time, with another joining later in the year. We also have access to over 200 designers.
When was it formed?
March 2013, with trading starting five months later.
What does it produce, what services does it offer?
We print portable advertising on biodegradeable takeaway coffee cups, manufactured by another company from vegetable waste, and distribute them to independent coffee shops in city centres around Scotland. The advertiser gets their brand in the hands of their targeted demographic, the coffee shops get free cups which removes one of their biggest costs and on top of this, we use locally sourced cups, which are renewable.
Who does it sell to?
We have partnerships with more than 300 coffee shops in the city centres of Edinburgh, Glasgow, Aberdeen, Dundee, Perth and Stirling.
We've also had success with campaigns for charities such as the Scottish Association of Mental Health.
Why did you take the plunge?
I drink a lot of coffee and often wondered about where the cups come from and the volume of waste they produce. I did some research and found that there were 2.5 billion takeaway coffees sold in the UK in 2012 with this number set to hit 3 billion by 2018, and that most of these were served in disposable cups. The vast majority of the cups are either shipped or flown in from China and they aren't biodegradable. It occurred to me that I could create a viable business which replaced them with locally sourced, environmentally friendly cups.
What were you doing before you took the plunge?
I was trying (and failing) with another idea for an online educational platform to transform the way school kids learned. I quickly found that my idea was a good one, but ultimately beyond my current capabilities. After two months of research and conversations with people in the education sector, I learned that I didn't stand a chance of convincing schools to use my product. The competition is established worldwide leaders, and I would have needed a lot of investment to get it up and running. Prior to this, I worked in the video games industry on several well-known titles including Grand Theft Auto V and Minecraft: Xbox edition.
How did you raise the start-up funding?
We are in talks with several investor groups at the moment to allow us to reach our potential. Careful cashflow management has been key so far, alongside taking a few calculated risks with any money I had before starting the business. We are hoping to get the capital in the next few months to optimise distribution and streamline our design process.
What was your biggest break?
When I was invited to join Entrepreneurial Spark, an incubator for small-to-medium businesses that has provided us with free office space and access to mentors. The help from ESpark was instrumental in us landing our first sale; it was tough to get someone to commit to a relatively untested product and getting the first big contract took some time. Being recognised by SMARTA and O2 last year as one of the 100 best small businesses in the UK was a huge stepping stone. We have also won the Shell Livewire award.
What was your worst moment?
I started the business with a friend I met at university. But after making some sales and getting our first few campaigns out there, he realised that he didn't have the time to keep going with it. Having that conversation wasn't very enjoyable. The second bad moment was when an early sale pulled out of the deal after everything had been agreed. It turned out that we hadn't been talking to the real decision-maker, a vital business lesson for everyone involved!
What do you most enjoy about running the business?
The wide variety of entrepreneurial people that you meet is incredible. Seeing positive change from campaigns feels great; during mental health week, we saw hundreds of people on Twitter and Facebook talking about the cups.
What do you least enjoy?
The time-consuming nature of filling in forms has got to be the least enjoyable part of business. It's often the same information required time and time again.
What are your ambitions for the firm?
I want to make a huge positive impact on the planet. I want Cappuccino Ads to be the go-to place for advertising and design: the more customers we get, the bigger an impact we can make. In the last six months, we have expanded from one city to six and by the end of 2014 Cappuccino Ads will have a presence across northern England. In 2015 I aim to take the company over to Ireland.
What are your five top priorities?
Building a team of rock stars capable of taking the business to the next level; expansion into the north of England so that we can beat potential competition; increasing our product range; making a more complete marketing package; getting some funding to enable us to accelerate our growth.
What could the Westminster and/or Scottish governments do that would help?
The signs from the Scottish Government have been encouraging over the past few years, attracting big events, like the Commonwealth Games, is vital for the country to bring in big financial opportunities. Businesses need a certain amount of predictability to survive, things like stable taxation rates help this.
What was the most valuable lesson that you learned?
Always be opportunity-hungry. Our first cup campaign came out of the blue when an Edinburgh University student, Yulia Solodyankina, went missing. It seemed obvious to get her face seen by as many people as possible, so we got it printed on to coffee cups and distributed them throughout Edinburgh and Glasgow. This was one of the aforementioned financial risks that I have taken so far. Naturally, this garnered some media attention.
How do you relax?
For the past year, I've been teaching myself Spanish in my free time. I've set the goal to become fluent in it by the end of 2014 and become tri-lingual. You never know when it will come in useful! My background before business was in the video game industry and I still enjoy a game of Pokémon now and then.