Support from the Department for International Trade helped the firm identify the US as a good prospect and this is now a strong focus for the business. Marmalade of London’s exports currently comprise about a third of its sales but the scope for export growth is enormous. “In the next five years we could easily be doing ten times what we are doing in the UK in America alone, and possibly the same in Canada,” says Piers. “Opening orders even for small US gift stores can be worth $10,000 and can climb steeply from there for larger retailers. Some orders are so large they can clear the company out of a particular line, making restocking a constant challenge.”
“By mid-September we sold out of a 40ft shipping container within a week of a trade show,” says Piers. “We thought it would see us to the end of the year. We need to keep ahead of all that stock ahead of time but because of the cash flow, we can’t be as well stocked as we want to. This is the vital time of year, and we risk missing those sales.”
Support for stock investment
To keep pace with this rapidly growing North American demand, it needs to invest in the stock it can hold in the US. HSBC UK has been key to helping here. As well as a £140,000 business loan to fund stock growth and new production facilities, the bank is also reviewing their trade finance needs. “With this money, we can really speed growth up,” says Piers. “To sell a candle in the US, our money is tied up for a bare minimum of six months. This new trade finance could be central to that. It will grow with us. It would also mean we don’t have to put our house up for collateral.”
“This would hopefully allow us to massively expand in the US, Canada and elsewhere.” The new financing facilities may also enable Piers and his co-founder, Helen, to scale back the equity funding they are seeking. “We were in the process of issuing £1m of new EIS shares, and this means we could give up 50 per cent less equity. We could cut that back to £500,000,” he says.
This will help reduce dilution, and so preserve more value when they hope to exit, either through a trade sale or an AIM float in the next four to five years. To get to this point there’s much still to do to execute on Marmalade of London’s growth strategy. Other export markets beckon. “One customer in Asia asked for ten 40ft-shipping containers in one go,” says Piers.
The company will also diversify into other categories such as skincare. The ultimate goal for the business is to increase annual unit sales from one million to five million and turnover to £75m. Other export markets also beckon, including Dubai and Asia.
Its recent purchase of a new eco-friendly UK warehouse, thanks to a six-figure funding package from HSBC UK, has helped Marmalade of London keep up with current and future demand by tripling its production capacity.