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Who Needs a Dragon?
Although we have probably never met, you almost certainly know my voice. Every month 30 million shoppers hear me say “Cashier Number Three!” as they wait to get served in the Post Office,banks retail stores and in around 8000 locations in the UK.
By: Walton PR
When we started in queue management we were hungry. We had very little capital to invest but we did have an idea. The new linear queues in the Post Office were a big hit at the time. Instead of having separate queues for each window one single line would feed every teller. The effect of this was to eliminate the possibility of people who arrived after you getting served before you. Everyone took their turn and customers loved it.
In observation we noticed that not every customer moved promptly from the head of the queue when a teller became free. So we set out to create the “Cashier Number Three Please!” system which made the process more efficient by ensuring there were no gaps in the serving process.
But here was the dilemma. Without money we couldn’t design and manufacture a product and without a product we couldn’t get funding for the business. How could we ever get started?
People have asked me, “If Dragon’s Den had been around then, would you have gone to them?” to which the answer is an emphatic No! Dragon’
We realised that we could go direct to our prospect with a business case. They needed our product to be invented. If they could buy it they would save a small amount of time and money on each counter transaction that they made with every customer, adding up to millions across their network. Their customers would also get served quicker, further increasing customer satisfaction with their new linear queues.
We worked out our business plan in fine detail. How much could we manufacture our system for and at what price would we sell it? How long and how much would it cost us to design it and get it manufactured?
Armed with these facts and under the protection of a standard Non Disclosure Agreement we took our pitch to the Post Office. Our proposal was that they collaborate with us to turn our concept into reality. If they bought just six prototype systems during the development phase at what would be the eventual retail price this would give us enough cash to fund our third party costs. We would fund our own time and expenses. Once we were in production (fingers firmly crossed) we would replace the six prototypes with final production systems. As a final sweetener we offered to pay a commission on every sale we made to any other organisation for the first five years of our business.
Once we were through the formal purchasing process, they agreed to go ahead and the rest is history. In 2004 the original owners sold Qm Group to the management team and I stayed on as Deputy Chairman to help groom the business for the next step forward. By this time we employed some 90 people and our turnover was approaching £10 million. The business was rightly recognised as an innovative, proactive supplier famed for its good ideas and strong service ethic, something for which we are all proud. In 2007 we sold again and became part of Qmatic Group.
So what have I learned about starting businesses?
If you have an idea for a business make sure that you focus on the right thing – the idea.
Here’s a checklist of does and dont’s
Don’t get put off by lack of finance
Think hard about your concept
Who will buy it and why?
Where’s the competition – why is your offer better?
How much will customers be prepared to pay and what’s their cost/benefit ratio?
How much will it cost you to design, manufacture and get your solution to market?
How will you protect your idea? ( e.g . NDA, copyright, patent?)
Now think laterally about the funding issue.
How much do you really need to get going?
What are your available sources of finance ? – make a list, family, friends, unused assets that you could sell
Remember this is stake money – and you should never risk money that people can’t afford to lose.
Do you still have a funding gap? What’s the simplest way to meet it? Could you go to a major customer or trade customer – what would they gain by helping you?
Exhaust all of these possibilities before you turn to a third party who you don’t know to help with funding. If nothing else, you will have worked out the detail that trips most people up in these negotiations. Try a Business Angel rather than a “Dragon” or a bank – this way you will get patient funding and hopefully relevant expertise contributing positively to your success.
For more information on Terry Green and his book, please visit www.terry-green.co.uk.
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A small PR Consultancy specialising in start-ups, small and ethical businesses based in the Cotswolds. Established in 1989.