Monday, October 29, 2007

Heaven Fresh UK: The Beginning

I will be dedicating the next few posts to the UK experience as it relates to a micro-multinational distribution company. It has been over a year that we started Heaven Fresh UK and  the UK web site (http://www.heavenfresh.co.uk) was launched in the last week of November 06. 

Given that the Heaven Fresh branch was already doing quite well in Germany,  UK was a natural choice for us to further expand our operation in Europe.  I contacted the UK Trade Commission in Toronto with our intentions to open an office in London in early 2006. UK consulate put us in touch with London based organization called Think London (http://www.thinklondon.com). Think London helps foreign companies get started and settled in London UK.  Before I flew to London, Think London's staff had already laid out a week long schedule for me to meet solicitors and bankers as well as had the appointments setup with real estate agents to see commercial properties in North, South, East and West London. While I was in London, they took me around to get me oriented with the city to be able to chose a proper location for business. My initial experience of the business environment in the UK was extremely positive mainly due to the professionalism of  the Think London's staff.

I was well aware that London was an expensive place to live and operate a business and that we needed to allocate sufficient working capital to compensate for London's expensiveness.  Our target was to break even in first 3 months but just to be on the safe side we allocated funds for 6 months, or so we believed.  With Think London's help I found an office/warehouse that I liked but when it came to signing the lease I came to know that the landlords in the UK wanted a deposit equal to 3 month's rent along with 3 month rent in advance. To top it all off, property taxes are tenant's responsibility in the UK that have to be paid to the government directly by the tenant above and beyond the rent payment to the landlord. I had only allocated rent for two months in the plan and paying six month rent in advance along with "counsel taxes" meant being left with  no working capital.

Seeking more capital from the investors before making even a single sale in the UK meant sending a message that I did not know what I was doing.  Therefore, I decided to activate the plan B to store the products in a public storage and had one and only company employee, Shahzad, operate the business from home.  As expected, we got our first online order within first 48 hours of launching the UK web site. Christmas season turned out to be a perfect time to start the online sales in the UK. In the very first month, we did about £7,000 in online sales. This figure tremendously boosted my confidence. By looking at the first month sales, I knew that the UK was going to be a goldmine for us, given that we overcame all the "UK surprises" and carried out the business as we had planned.

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