That’s right. These were businesses with large industrial areas, offices, health and education organisations and so on.
We went through the list to see if they ticked the box of somewhere that could be interested in energy cost savings. Once we decided that, we looked at whether we knew anyone there.
After that, we approach them with a fully though-out concept for their business. We explained fully what we could do for them specifically, rather than just try to sell them all the same thing.
For example, for some businesses, a charge from fluorescent lights to LEDs can save them 50% of the cost. In some of the more advanced cases, then we look at solar and other technology. We went to these clients with a thought-out, factual approach.
We went after sectors such as car parking, which isn’t very sexy, but it uses a lot of energy on lighting. Universities are another important area for us.
We took six months developing the service offering and creating pilots so that clients could see what we are capable of.
You hit barriers straight away with clients who say they don’t have the money or say that they want to see the work you’ve done for other businesses. Of course, as a new start-up, you don’t have that, so it’s hard.
What we did was create pilot projects for free or at cost and then take other potential clients to see them. We did free stage one audits and modelling on the savings that could be made, to show the potential.
We did one university, one car park, one warehouse and three of the towers in the Crown complex in Melbourne. We put in LEDC lights that were worth about $3 million in Crown.
Above: Paul Schlaphoff.
Any start-up needs a cashflow behind it and we’ve had to watch the pennies very carefully. We are constantly reviewing the business model and we’ve spent on advertising that goes directly to the decision-makers in these businesses.
We run on lean start-up principles. We don’t have a five-star eco office and don’t have excess staff. You really try to get bang for your buck.
We set up a structure so there would be two tranches of investment, where the partners pitch in more cash. You need cash in the bank to launch a project but you then need more cash to go forward from that.
It’s all about time. The more cash you have, the more time you have to get clients. Once you get clients, you’ve bought yourself time. It just keeps going.
The gestation period needed by businesses. We thought we’d show the concept, they’d agree and we’d proceed, but it has proved a longer process than we expected.
In some cases, it can take six months, when we thought it would be around three months. Because the business is so new, you have to convince the decision-makers that the technology all works.
We did speak to a lot of independent consultants who got on board as advocates for us. When a client goes to a third party for a peer review, it’s persuasive for them when that person talks highly of us.
We also focused on our supply chain – we sought the best technical solutions, which we used to influence clients. When you’re in a room with a potential client and three different people from three different areas are all positive about you, it’s really helpful.
With the pilot projects, we’d set up pilots where we knew what the answer would be. We’d say, ‘We’ll put up 10 of our lights in the corner of your warehouse and you let us know what your workers prefer.’
We knew they’d prefer lights that were on sensors, were more like daylight and used half the energy.
Above: Sam Furphy.
Well, we’ve crunched the numbers and think we are on for $10 million in our first year. We could’ve been more conservative but it’s good to set goals, like JFK saying that he wanted a man on the moon. There’s nothing wrong with big goals.
You need to understand what drives your clients and for us the hot button is to save money on energy costs. We needed to be quick to market and respond to those drivers.
One option for the future for us is to expand into each state or we could be bought out by a much bigger player. For me, I’m in this for the long term.
Our biggest threat is increased competition and cheaper imported products from China. They don’t stack up to ours in terms of quality or warranty, but people can be attracted to the cheaper short-term cost.
If energy costs suddenly dropped, that could be a threat to us too. But I can’t really see that happening.
This article first appeared on StartupSmart.
