02 July 2015

How my own small production unit boosts my business

LittlePod founder explains how building a manufacturing facility in her driveway has given her the scope to turn her business into a £1m operation

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LittlePod, a Devon-based producer of high-quality vanilla and chocolate ingredients, is known for its natural Madagascan vanilla paste in a tube.

Background

“In 2006, I hosted a vanilla day for my local community in Farringdon, east Devon. A friend who is an expert came over from the USA to give a fascinating talk on the history and cultivation of vanilla. It made me want to help more people to find out about natural vanilla, which is underused, while helping producers in the developing world. I launched my business in May 2010, after my friend had introduced me to his wonderful new vanilla paste.”

Starting up

“I decided to put the paste into tubes, but didn’t know where I could get them made. I contacted the Manufacturing Advisory Service and they helped me to source tubes and put me in touch with Duchy College in Launceston in Cornwall, which was home to the Food Innovation Service, a small incubator for food industry start-ups. I did everything there under their HACPP [a food safety standard], which I needed, even though vanilla is extremely safe. I produced my products there for a year.

“Then for two years, after gaining approval from an environmental health officer, two days a week I made my products in the kitchen of my local village hall in Farringdon. The business was growing, so this wasn’t a viable long-term solution, and the rental agreement was coming to an end.”

Building for the future

“I was granted planning permission to have a dedicated production unit built on the driveway next to my house. Had I not done that, I wouldn’t have been able to take advantage of commercial opportunities that would soon come my way.

“Fortunately, I got an EU/REG grant of £17,500 towards total building costs of £42,000 – I got a good price from a local builder. I now have the facilities to become a £1m turnover business. Previously, so much time was lost setting machinery up and down; now we can just open up in the morning and start production.

“Partly as a result of the new production facility, we gained the SALSA [Safe and Local Supplier Approval] accreditation, enabling us to supply manufacturing businesses, and soon afterwards a large food distribution group took us on. Now we also supply Rodda’s, the well-known clotted cream maker. Our products were selected from 14 types of vanilla, and our paste and extract is in their new clotted cream custard.

“Shortly after launching the company in 2010 at Hampton Court, we found a distribution network and now sell all over the UK via farm shops, delis, independent stores and prestigious outlets such as Fortnum & Mason. Today, 20% of our products are exported.”

Recipe for success

“Without investment in the new production facility, there’s no way the business could be taken on to the next stage. Before large customers will order from you, they need to be sure you have the necessary production facilities and capability. We also needed space so we could take on more employees. By 2017, we hope to have 10 employees.

“As well as MAS, HSBC has been very supportive. After 42 years I left my previous bank, because they just didn’t get my business and nor my vision. HSBC has been totally helpful and supportive throughout.”

Factors to consider

“We looked closely at costs and sales forecasts before committing to building our new production facility. Any significant investment you make must bring sufficient additional sales. Your systems and processes must also be able to support your growth. There’s no point having new orders coming if you can’t fulfil them.

“Access to cash is another key consideration when you’re trying to grow your business. Find out if any grants or loans are available to your business and access as much as free advice and help as you can from business support organisations. Being able to show you can manage small grants wisely can help you to access bigger grants. We’re now on the growth accelerator programmes. Participating in things like that can help you to find out what grants are available.”

The views and opinions expressed in this article do not necessarily reflect the views of the HSBC Group.

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