How to grow a business from a bean
(City A.M. (UK) Via Acquire Media NewsEdge) IN THE age-old debate over whether entrepreneurship is innate or can be taught, James Eder - founder of The Beans Group - makes a strong case for the former. At 13, he and his brother Michael created M&J Photography, taking pictures of dogs in their local park, developing them, and selling them to owners the following weekend. At 17, he took part in a Young Enterprise programme. At university in Birmingham, he helped his brother Michael set up a business capitalising on the wristband craze. And at 22, just weeks after graduating, he founded a company that, seven years later, has 40 members of staff and a recognised profile in campuses across Britain.
MARKET POTENTIAL In the 2012-13 academic year, over 2.3m students were enrolled in UK universities. And even before the tuition fee hike, this group was unlikely to pass on a promotion. So Eder created website Student Beans - founded in 2005 and offering exclusive UK student discounts and vouchers - to help brands tap into the student market.
The company has since been renamed The Beans Group and split into two so much information on the student demographic, we wanted to find a way to sell that to marketers. Think about it, often large brands will pitch to young mums. But a student house of six occupants will likely turn into six families - that's a huge market."
Today, the company runs a number of core campaigns each year. It created the first national online freshers fair - where companies are charged £5,000 to £10,000 for a virtual stand, and can supplement it with email marketing, banners, displays or homepage takeovers. This year, it got over half a million visitors. Later in the academic year, Student Beans runs the Refresher's Wall - which repackages the freshers fair theme. Voxburner, meanwhile, runs a Youth 100 - research listing the top 100 "mostdesired" brands to the 18-24 group (among this year's winners were Domino's, Wetherspoon and Sony).
LIGHTBULB MOMENT After graduating, Eder began applying, unsuccessfully, for jobs in London. And his brother had a job at JP Morgan he was desperate to leave. Fortunately, Eder had an epiphany moment: "despite being 22 and told repeatedly that I didn't have enough experience to lead and manage a company, I knew I just had to do it." So, after graduating, he and Michael visited Birmingham businesses to see if they would be interested in working with Student Beans. "This was before the website was even up and running - we had to sell a vision." By launch, they had 200 companies signed up.
And inspired by the Daz Doorstep Challenge TV adverts, which featured Danny Baker, Eder created his own version, "Bean Patrol", to get students on board. "We'd knock on people's doors asking whether they'd heard of us. We told them that if they put a window sticker up, they could win something. At the time, I had no idea what that something would be." It took six months - of 18 hour days, countless rejections, one rugby tackle, and Eder donning a bean-shaped furry suit - to get half of the Birmingham student body signed up. How did he achieve this so quickly? Three years studying business commerce had taught him an important lesson: word-of-mouth is a powerful marketing tool. "And if you have a product that people aren't going to talk about, I'd tell you to give up and go home."
ROCK BOTTOM Despite the uphill struggle during those early months, it wasn't until Eder tried to launch Student Beans in 18 cities nationwide that he hit his lowest point. "While we had hired people to go door-to-door selling, they lacked our passion and understanding, so I ended up doing most of the flyering at university campuses, and meetings with business owners, myself. It was a rainy day in mountainous Sheffield, and I approached a restaurant owner to offer a free trial. He screamed at me and threw me out of his restaurant. I was nearly in tears. I got in the car and drove home that day. But I did go back."
STRATEGIC PARTNERSHIPS It was with the support of The Prince's Trust that Student Beans achieved lift off. Eder presented his business plan ("I felt like I was on Dragon's Den") in return for a £2,000 low interest loan. He used that to pay a web development firm to build the company's first beta website, and started charging businesses for advertising straight away.
But it wasn't until he negotiated a £7,000 deal with KPMG that Eder could start to grow the business. "We also had clever partnerships. When we were launching across the country, for example, I audaciously contacted Core Group - which owns Ibis and Novotel - asking for accommodation in exchange for advertising. They signed off 70 nights including breakfast instantly. It was one of the many things I naively asked for. But if you don't ask, the answer will always be no."
Although the business has long been profitable, Eder remains prudent about expenditure. He cites Boo.com, the tech business that became Europe's big internet casualty after management blew a $100m investment in the blink of an eye. "What were they spending that on? We've just moved offices - but that's taken seven years. Get staff a good chair, yes. But they can use a door as a desk."
And while Eder has global ambitions, he is conscious of the dangers associated with scaling up. "We've heard stories of brands expanding internationally, spending a huge amount of money, and ultimately damaging their business. It's a fine line." Nonetheless, his long-term ambition is to "touch the lives of 100m young people every day. It's a big intent! But four years ago, there were seven of us, now we're over 40. When I was 22 and graduating, the biggest challenge was finding a job. The biggest challenge today is finding people to recruit."
GIMME ...STARTUPS CROWDFUNDING THIS MONTH Films of London Target: £125,000 for 25 per cent equity Film production and development company specialising in low to medium budget feature films.
Raised: £61,200 via Seedrs 18 days left Lawbit Target: £120,000 for 6.48 per cent equity Online legal service providing plain English contracts for small companies. Raised: £64,040 via CrowdCube 45 days left Quantid Target: £85,000 for 12.75 per cent equity App helping users improve their health and fitness through selftracking and social networking. Raised: £2,060 via Seedrs 78 days left Red Advertising Target: £400,000 growth capital for 15 per cent equity UK-based internet company providing online Enterprise SaaS human resources solutions. Raised: £315,350 via CrowdCube 17 days left Sourced Market Target: £700,000 for 18 per cent equity A farmer's market-style retail outlet in St Pancras Station looking to open a second shop.
Raised: £400,475 via CrowdBnk 18 days left JAMES EDER CV Company name: The Beans Group Founded: 2005 Number of staff: 40 Job title: Founder and head of new business Age: 30 Born: London Lives: London Studied: Business Commerce at the University of Birmingham Drinking: A good Merlot Eating: I love Italian food - I have moved on from my student staple of baked beans!
Reading: Re-reading Getting Things Done, by David Allen Favourite business book: It's between The E-Myth Revisited, by Michael E Gerber, and The Naked Leader, by David Taylor Talents: Skiing, networking, cooking (getting better) Motto: "If it was easy, everyone would be doing it" Heroes: Steve Jobs, David Karp, Arianna Huffington First ambition: To be a pilot Least likely to say: "What's the worst thing that can happen? Let's not do it!" Awards: Future 50 (2013), ITC Award Young Entrepreneur (2013)
(c) 2014 City A.M.
[ Back To TMCnet.com's Homepage ]