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From £605 startup costs and an old Scrabble board to £1m turnover

  1. 1m turnover
    ChrisGoodfellow

    ChrisGoodfellow UKBF Regular Full Member - Verified Business

    Posts: 139 Likes: 42
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    What’s the minimum you would need to start a million-pound business? What about £605 and an old scrabble set?

    Last Christmas the Ellie Ellie team swelled to 26 people, fulfilling 12,000 orders of cufflinks, home wear and other personalised gifts. The business turned over £1m last year, working out of a converted old soap factory - and it’s on track to double revenue this year.

    They haven’t sought investment. Instead, like a lot of startup success stories, it started with a founder balancing several jobs, getting over a false start and trying to differentiate herself through hard work.

    The design graduate that struggled to find a job

    Ellie Ellie founder and MD Danielle Plowman’s light bulb moment happened when she was working on a checkout in Marks & Spencers. She’d just graduated university, and was trying to make enough money to live and afford to go to job interviews in London.

    When scanning items she saw a familiar looking eight-12 year-olds’ party dress; she had submitted the same design as part of a job interview months earlier.

    “I had an interview with a Marks & Spencers supplier. I did a collection for them, they took it away and showed their designer. I didn’t get the job,” recalls Plowman. “About nine months later a very similar item to what I had designed came through the till. Essentially my ideas had been used as inspiration for their company. I thought; I didn't want to be involved in this, I want to make my own money from my own designs.”

    Plowman was able to open a shop making alterations, but it barely paid the bills and eventually, she closed it down to go travelling for a year - an experience she says was crucial to building confidence, problem solving and dealing with setbacks.

    Getting a sale in the first three hours of listing

    After getting a good reception to the few products she had sold while in Australia, Plowman wanted to try selling when she returned home penniless.

    She had registered with Not On The High Street (£500) and paid for a website (£99) before leaving, so could rely on an old Scrabble set and a few cufflink parts (no more than £5) to make a unique gift - she received her first order within three hours with a total startup cost of £605.

    “I was in a studio flat. I had a Scrabble set and some jewellery findings, five necklaces, five jump rings, which are cheap. Everything was very minimal, I’d literally order one box and send it out. I’d buy eight envelopes for a pound at the pound shop. That’s all I could afford to buy.

    “I started with a necklace and a ring. Then I started noticing cufflinks were quite popular; I don’t think I even saw a pair of cufflinks until I made one. Cufflinks are still our biggest seller today,” she says.

    Hiring their first employee

    After a year of building the business while working part time at a theatre, Plowman moved into an office and hired her first employee in 2012.

    Working out when to hire your first employee is a big challenge for startups. And the difficulty of balancing experience and cost is something we’ve covered before on BusinessZone. Plowman felt that it’s about when, as a founder, you’re turning down opportunities and are not spending enough time on building the business and the vision - “when you’re doing a really bad job on loads of things”.

    “Learning to delegate is the most difficult thing. I imagine it’s like when you take your children to school for the first time; you’re relying on someone else to teach your baby and look after them,” she says. At this point, the business’ revenue was £55,000, with about £28,000 profit.

    The next struggle was to get over expectations; the pressure of wanting the employee to generate enough revenue to cover their wages and to be able to complete jobs as well as the founder.

    Sustainable growth and profitability

    When asked how the business would have grown if it had investment, Plowman hesitates. It’s not something she’s considered although, on reflection, she remarks it could be quite a daunting prospect.

    “To have a large investment would be quite scary: if you grow too quickly it can cause problems. We grew rapidly for a few years and we’re still trying to iron out problems as a result, staffing structure being the biggest one.”

    Having seen other similar startups present on Not On The High Street during its rapid growth, she estimates Ellie Ellie could have been twice as big. However, growing organically meant they could resolve issues, for example, implementing a stock and ordering system early on.

    “Maybe our profit margins are better because of it. We might have had a bigger turnover, but the sustainability of the company wouldn’t be as strong as it is,” she adds.

    More than that, the tests that come with bootstrapping, including balancing cashflow and growth, can help you mature as a business leader she argues.

    New factory and founder advice

    Today, Ellie Ellie has a full-time team of 16 people. You can buy everything from personalised wooden egg cups to happy hour watches, and the team’s looking to relocate into a 7,500 sq ft warehouse.

    Asked what advice Plowman would give founders who are thinking of bootstrapping, she sums it up:

    “I didn’t feel particularly talented, but I thought what I had to offer was the ability to work hard. Working hard, and having resilience, a vision and determination are what you need.”

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