Where do you Grow from Here?

Iron & Stone, who supply metal window boxes were recently featured in the Weekend Financial Times Money section under the heading “Growth Strategy that fits on your Window sill”.

Founded by brother and sister team Rhyddian Gilbertson and Anna Hodgson, the company has successfully established itself as a niche supplier of aluminium flat pack window boxes.  You can find their website here.

Selling 10 boxes a week at an average price of £110 they are on track to make revenues in excess of £50,000 in 2012 which is a healthy 30% plus rise on Revenues in 2011.

In the FT Article, the experts, who had around 100 words each to comment, when asked suggested

• Greater use of Social Media, the Garden Network for instance
• Advertising
• Customer References
• Management Companies of Serviced Apartment blocks
• Different products for different markets
• More Effective Marketing – better understanding of the market
• Definition of the Brand
• Leaflet and Newspaper Advertising

So far so good but it got me thinking about what advice I would give them.  Thinking through my Six Simple Strategic Steps for SME Success methodology, I have picked out some specific areas and tried to provide actionable rather than general advice.

I must stress that I do not know the company and my comments below are based on a quick look at the website and the excellent article in the FT.  This is purely my view of things from having read the article and I have no financial or other relationship with the Company or the Finanancial Times.
Revenues

The Directors claim gross margin on the product is 50% (although in the last three years it has been 44%, 39% and 33.5% in 2011).

Administrative Expenses have been consistent at around 11,000 for three years.  This means that in 2011 they had to sell nearly 300 boxes before they broke even and this was without either of them taking any money out of the business.

To pay themselves £20k each (including all PAYE etc), they would an additional 1,100 window boxes.

This suggests that they need to target sales of 1,400 boxes a year to make a small income from the business, that is 27 boxes a week, as compared to their current sales of 10 a week.

My first comment is that I think a price reduction is ill advised and is more likely to drive them out of business in the medium term.  Instead they should stress the quality and longevity of their product and position it as a “quality” and “premium” solution which is worth paying for.

If anything they could stretch their pricing from £90, £110, and £130 to £99, £129 and £149 without making much impact on purchasing.  Perhaps use the internet psychology and end in a 7 making their prices £97, £127 and £147.  Quality is the theme here.  They are not in a mass market and piling high and selling cheap is not the answer.

Further more given that many people want to buy more than one box, perhaps then offer a discount on these higher prices for quantity.  People love a bargain.

Working Capital

While I know it is difficult for small firms to get good terms from their suppliers, finding a supplier who will allow them to pay less upfront and more on delivery will protect them from poor quality from their suppliers.  Going direct to a manufacturer in Poland instead of going indirect to a manufacturer in China is certainly a sensible move which they are already exploring.

If the manufacturer will accept a proportion of his price on delivery, this will free up working capital in the business and enable the Directors to sell some of the new consignment before they have to pay for it.  This working capital can then be used to reduce their borrowings or be reinvested in another part of the business.

I think that they would benefit from using my Six Key Metrics for running a business which I explain in my Six Simple Strategic Steps for SME Success programme.

Customers and Markets

While it is easy to say understand your customers and markets better, let me try to give some specific advice.  The Company has already made successful sales to the Staffordshire Housing Association and English Heritage.

I believe that they should certainly seek opportunities for volume sales (B2B) as well as the consumer sales (B2C) through their website.  A list of all the UK housing associations can be found here for free – http://www.housingnet.co.uk/rslSearch.php – and this site also makes it possible to get contact information.  A case study in pdf format of the Staffordshire Housing Association sale could be simply prepared and emailed to other UK housing associations for very little cost.

A similar exercise using the English Heritage example could be prepared and targetted on the restoration market.  A brief Google search throws up lots of organisations who are interested in Architectural Restoration.

Consumer Market

This really focuses on the website.  Firstly my search for Iron & Stone caused me difficulties.  The website address is http://www.mywindowbox.com.  I think that they should trade as this or at least make this name more prominent.  If the site is not easy to find people will go else where.

While there is a sign up option, it should be higher up on the page and they should A/B test more compelling designs.  The offer of a news letter once every two months is not compelling, people want instant gratification.

I would suggest preparing a small eBook – Everything you need to know about having a Window Box – and make it a free down load in exchange for name and email.  The bi-monthly news letter can then keep them in touch but I would also suggest that they consider a much shorted and more personal autoresponder sequence to keep themselves in their customers minds.

If the searcher is considering a window box purchase, he will have made his decision after two months.  Some daily emails with useful advice when buying along with a photo and personal contact information is likely to be much more successful.  I have read that it takes a minimum of five touch points with a potential customer before he is ready to make a purchase.

They should also try to better understand the nature of their repeat business, which reportedly is high, and try to design a marketing strategy to reinforce this.

Social Media and Video

Video has trebled the number of visitors to my site in three months.  The Directors simply must get out there with their iPhone 4S and make some video of their product, including how to assemble and put one up.  This is so compelling and will certainly impact sales.

The company should definitely have a channel on YouTube (owned by Google and the second largest search engine in its own right) which will drive additional traffic

If they want to know more about how to do this check out Jules Watkins site http://ivideohero.com.  He sells an online course for $97 (£67) which will tell them all they need to know.  (Full disclosure – I have an affiliate relationship with Jules but this is not an affiliate link – please just tell him I sent you).

I will not go on in depth about Social Media but I do think the company should have a Twitter and Facebook presence at the very least.  To be known it must be possible for them to be found.   Remember the online mantra is – Find me, know me, like me, trust me, do business with me, evangelise me.

Use of Affiliate Schemes 

On the website their is a list of useful links and mutual back links are provided by some of these.  I have to say that the first company on the list Foxes Boxes is a dead link and should be removed.

What I would suggest is a closer collaboration using an affiliate scheme.  The Directors should be prepared to offer up to 20% commission to their mutual affiliates for driving sales to their site.  This would mean more active promotion of the site on the third party sites (including video which they could simply embed from YouTube).

In return they could set up a similar affilate arrangement the other way and earn some additional income.  From an execution and website point of view, this is not difficult to do.  They could simply set up an account at Clickbank  – http://www.clickbank.com/index.html – which would run the whole affiliate arrangement for them as well as opening them to a wide affiliate audience of affiliate networkers.

Magazine Articles

The Window Box Company which offers Window Box Services (nothing to do with Iron & Stone) (http://www.thewindowboxcompany.com/media.php)  has been extensively covered in Magazine Articles which cost nothing except some time.

Full Marks to the Directors of Iron & Stone for getting in the FT which is great exposure but probably not to a buying audience.  As well as the national magazines look at the region magazines too – each county has a ******* Life magazine for example.  (see my blog post on Wiltshire Life here).

This has been a very rapid run through and I must stress that I know little about the company and have never met the directors.  I think what they have done in creating this business has been brilliant and I wish them great success.  I hope these comments, offered in a gesture of support for their business, can contribute in some very small way to that success in the future.

If you have a comment on this, please leave it below or you can contact me, John Colley, The Six Minute Strategist at jbdcolley[at]aol.com.

What do YOU think they can do?