What does it take to successfully grow an SME business?

From conception to scaling-up, growing a successful SME business comes with a range of challenges.

Securing clients, funding for growth, recruitment and simply time management were just some of those challenges discussed by leading entrepreneurs and business owners at a recent SME event held in partnership with TheBusinessDesk.com and law firm JMW.

In the first half of this two-part feature, the entrepreneurs behind YourZooki, DA Languages and Fanattik shared their stories about growth and their plans for 2022 and beyond.

Marcus Mollinga, co-founder of YourZooki

Preston-headquartered liquid supplements business YourZooki has gone from strength to strength.

It is now exporting to nearly 50 countries and has been scaling its expansion into the North American market recently.

Co-founders Marcus Mollinga and Jack Morrison launched the business in 2017 and have since secured investment totalling £2.85m over the last 14 months from the likes of Metro Bank (£1.6m) and Investec (£950,000). They have also launched a London hub and have plans to further strengthen operations in the UK.

Marcus and Jack decided to launch the business after Marcus suffered a knee injury and was told to take some fish capsules to help with the healing.

It gave him the initial idea of turning a bulky tablet into a liquid drink that was tasty too.

“It’s tough launching a business, you’re constantly firefighting and you’re up and down all the time, but we had an idea that we were passionate about, and we knew the rewards would be great,” he said.

YourZooki was initially bootstrapped by the pair. Cash flow was a matter of making sure they had “a few hundred quid” in the bank and enough stock.

They went knocking on the doors of pharmacies and health food retailers to sell their products.

Marcus said: “We got listed in a pharmacy in London and that was a big tick in the box. And then we got on QVC from which we got lot of exposure from that and started emailing distributors from different countries.

“Around a year ago we started working with GNC – the world’s largest specialist supplement retailer and we got into 2,500 stores in North America. That was a great deal, but we also soon found that doing business in the USA can be challenging too.

“Different states have different rules and you have to have a US bank account which is pretty difficult to do and we’re learning all the time.

“We’re now in several European countries and that has expanded fast, but our focus still remains growing the UK business, growing our recurring subscription revenues on our website and positioning the products in the right way in the right channels to get customers and persuade them to subscribe monthly”

Asked about investment, Marcus said that having looked at the different options they decided to go for debt funding and have so far taken just under £3m of debt to significantly expand its Blackpool and Preston-based production capabilities after demand soared during the pandemic.

“The reason we chose debt funding was because we’re confident in the business model.

“We didn’t want to give away any equity. So, we got some debt in that allowed us to grow build the team to around 50 staff. In July (2021) we did our first equity raise and ended up taking an investment from a high net worth with a much lower valuation with terms that were in our favour.

“You can see companies raising funds at a really big valuation, but we didn’t want to do that and preferred to go for a lower valuation but a term sheet where we still have full control of the business and essentially do what we feel is important to us.”

As a start-up, recruiting the right team members can be challenging especially when larger companies are paying bigger salaries. But for Marcus and Jack, recruitment was all about getting people who fit into their culture and vision.

He added: “Every member of staff who comes into the business get shares, so they feel part of the YourZooki family.

“We’re bringing in a head of talent in house just to solely focus on bringing on staff especially for technical roles as we’re up against huge companies who will pay a lot more than a start-up, so we have to look at other incentives such as giving away shares.”

Matt Taylor, Managing Director at D.A. Languages

DA Languages is a fast-growing provider of interpreting and translation services to businesses and the public sector operating across the UK as well as overseas, delivering over 60,000 interpreting sessions per month across in-person and digital channels.

Last month the firm was acquired by European private equity firm IK Partners from Foresight Group for an undisclosed sum.

Explaining what the deals means for the business, Matt Taylor said: “We are well placed in the UK market and currently at the top two for interpreting and translation services.

“But this will make us think about what we can really do with our technology to take it to the next level.

“We already have smartphone apps on the client side with B2B and a multilingual site for the linguist to access work through a smartphone app.

“But we’re also looking at how we can take that into different countries.

“People often think supplying language services is straightforward when expanding internationally and when your supply chain features English as a target language it is straightforward so you can have Canada, Australia, New Zealand, America. But once you start going outside of that, it gets much more complicated.”

Pre-pandemic, the business initially operated through face-to-face meetings with 20,000 interpreting sessions a month.

In April 2020, around 93% of the revenue disappeared during the first lockdown and overnight the business was forced to take its business completely remote.

“We had to move to telephone interpreting and video remote interpreting.

“We were quick to adapt to new technology, to get the training out there for our staff and for our clients to access the services really quickly.

“The NHS needed us, it was a challenging time for the whole country and so our staff worked hard to help our clients through that initial lockdown period.

“We were able to build better relationships as a result of that and. have kept those clients throughout that period.

“Not only were we able to get those language services up and running quickly, but the accessibility became so much easier.

“The service was complemented when we acquired one of our software as a service platform supplier because of course Covid didn’t last a few months it’s still ongoing.

“The fact that we own all our remote interpreting technology has meant that if we want to make a change, we don’t have to wait for a six-month lead time, we can put a change into an algorithm within a day or two. It’s definitely made us speedier and more reactive.”

One of the areas of growth for the firm will be in the private sector such as call centres where language can often act as a barrier for customers.

“There’s a lot of very compelling reasons why language services are used in the public sector which is mainly to help people with limited or no English access public sector services. There are some obvious reasons why the private sector could be using language services more effectively and call centres are an example.

“If calls with people with limited English are not dealt with very well, that call could last 30-50 minutes longer than it should, but it doesn’t have to.

“If you were to use language services to support that call, customers get a better outcome of the cost and the time. So, there is some obvious ways to open up the markets and there’s a huge amount of space globally.

“The language services industry is booming and has continued to do so for a number of years with more than £5bn a year growth and that’s only going to get faster as more people get the accessibility point of languages.”

Anthony Marks, Managing Director of Fanattik

Anthony Marks founded Fanattik at his kitchen table and has grown it into an international pop culture brand, licensed by many of the world’s leading film and video games studios to create gifts and collectibles which are then supplied to retailers worldwide.

The company creates products from bottle openers and money boxes to 24k gold plated collectibles featuring brands such as Jaws, Jurassic Park, and Back to the Future.

Their products are sold by retailers in the UK including Argos and HMV and it has distributors across Europe, Australia, Canada, New Zealand, and the UAE.

It’s a business that has gone strength to strength with 2022 being the year it expands into the US market.

Getting to that stage has been a journey for Anthony who has made ‘many mistakes’ but has learned from them on the way.

“When I initially started, I spent a lot of time trying to get into retailers such as John Lewis and Debenhams. They’re fantastic brands and would have been great to brag about but not the right outlet for our products.

“There’s so much work that you have to put in and it wasn’t worth the money. Our niche is actually the specialist retailers, and we service them to the best of our abilities and that’s what has worked for us.

“I know I’m never getting into Tesco, and I don’t mind that there’s much bigger companies that can go into Tesco and hit those quantities and hit those price points. I’m happy in our specialist market with bricks and mortar stores like Forbidden Planet or online retailers that maybe people in the mainstream won’t be aware of.”

A ’geek’ at heart, Anthony describes himself as a product person first who didn’t know anything about finance.

“It’s taken me quite a long time to get to where we are now and I’m very happy where we are, but I could have got to where I am six years ago.

“I didn’t know anything about finance. I should have got investment sooner.

“I self-financed everything we needed with the money in my bank account as I had a young family, and I didn’t want to take any financial risks and so it just took so long to get to the big licenses.

“Now I have a seat at the table, and we can talk to people about Back to the Future, Marvel, Star Wars, Jurassic World and so on, but it just took way too long to get there.”

Talking about the move into the US market, Anthony said he was supported by the Department of International Trade.

“There’s so many things to take on board when you’re doing business in the US.

“I did get a lot of help from the Department of International Trade. It doesn’t cost anything to have a phone conversation with them and they can help with setting you up with a lawyer to helping to fund a purchase order through a syndicate of banks.”

He added: “Although we’re a positive cash flow business right now, and we’ve got an inkling of what the American market can do, it’s so much bigger than in the UK and Europe that I don’t want to be caught short.”