Sometimes the idea of a business can come out of one simple conversation.
Compare and Recycle is a comparison site for people looking to recycle or purchase a refurbished mobile phone. The app’s managing director, Matthew Moreton, spotted the gap in the market when his then-partner was looking to sell her old phone.
We catch up with Matthew to talk about how he started and is growing his business.
First steps in building the business
The idea for Compare and Recycle first came about in 2009. I was surprised at the lack of options for comparing the prices of second-hand mobile phones so it immediately became obvious to me that a comparison site in this rapidly expanding sector could have legs.
With several years of experience in web development and what seemed like a decent idea, I began working on the site and signing up to affiliate schemes for the various phone recycling companies. After a few months of work the site was ready to go live but I knew driving traffic to it would be a completely different ball game.
I was lucky enough to know an experienced former business owner who had recently sold his company. As well as offer me advice; he invested a small sum into the company. This was a great help in getting things going but I knew that we had to use that investment wisely and start generating income as quickly as possible.
The biggest challenge we faced in those early days was cash flow. Getting invoices paid on time was difficult, something that’s still a challenge to this day! Lack of cash flow seriously restricts your ability to continue your marketing efforts and bring traffic to the site, which can easily kill a small business.
Initially, all our sales were driven through affiliate networks. While this is great for when you first start out, this can later cause its own issues such as having to wait months to be paid the commission you are owed.
The obvious step was to start making direct deals with our merchants, leading to more negotiating power over commissions, more rigid payment terms and no longer having to rely on the platforms provided by the affiliate networks.
To come to this point we needed to reach a critical mass by providing enough leads to merchants while juggling the low commissions and high costs of marketing the site.
“The biggest challenge we faced in those early days was cash flow”
By working tirelessly to improve the conversion rate of the website and optimise our marketing campaigns, we were able to get into a position where we one-by-one managed to move merchants over to our own platform. This was the basis on which we could begin to really grow the business.
Developing the business
Having now put ourselves in a position to really develop the business, we began to focus more on our relationships with our merchants.
When going through affiliate networks, most communication with merchants would be done through account managers. Now we are in a position to speak to merchants directly and on a much more regular basis.
Visiting the companies we were working with in person allowed us to develop much closer relationships with them, helping us understand their businesses better, improving the service we offered to them. These close relationships became key in driving the business forward and improving our ability to negotiate commissions with merchants.
Over time we discovered new tools and techniques to strengthen our marketing strategy. The increased number of customers resulted in more exposure from the media and we began to be featured both on television and in print.
Later on, things began to plateau and my business partner’s interest in the company was beginning to wane. I bought out his share and this in turn reinvigorated the company. My new focus was on expanding the team, bringing new skills into the company while being able to transfer some of my own responsibilities.
We continue to grow, leading to new challenges. For instance, finding new team members who offer additional skills and ideas, developing new projects while maintaining the existing business and having to move offices and upgrading our infrastructure to keep up with our expansion.
The only way to learn is by making mistakes and along the way I’ve learned a few important lessons.
Cash flow really is king. You can be doing a high volume of sales but without getting the cash you’re earning back into the company quickly, you’re always going to find it difficult to invest in the marketing, tools and people to help grow the business.
Knowing your niche is vital. You may be keen to try and diversify as much as possible from day one but sticking to the core business and getting that right is essential. Really understanding your niche gives you an edge over competitors who aren’t as focused as you are.
Competition is often a good thing so don’t be afraid of it. Having some competition will keep you on your toes and drive you to innovate. If you have an idea but someone else is already doing it, don’t be put off. If someone else has the same idea then there’s a good chance it’s a good one!
Building the right team is key, but sometimes it can be difficult to give up control of certain aspects of the business. Giving your team the opportunity to contribute ideas, will not only help them, but will help your business. Treating employees fairly and rewarding them for their efforts helps to keep your staff motivated.
When looking at your exit strategy, you should work towards making sure you wear as few hats as possible in the business. By that, I mean slowly hand over control of the various aspects of running the business to your employees, so that when it comes to selling up, the company doesn’t rely on you too heavily, maximising its value.
Setting your aspirational goals
When setting yourself aspirational goals, it’s more important to think what is going to excite you and keep you motivated than it is to be realistic, worrying how quickly you can reach your targets.
The simplest goals to set yourself are almost always financial. Personally, I find that just aiming to get rich isn’t what drives me to continue growing and developing the business.
When I originally set my goals of where I wanted the business to be, they seemed a long way off. While I’m not quite there yet, I’m getting closer and the idea of achieving what I set out to do keeps me motivated. I aim to build a team of 30 people and, having made it a third of the way there, this is a goal that I feel will be fulfilled within the next few years.
“The simplest goals to set yourself are almost always financial”
To me, your working environment is hugely important. I’ve always dreamed of having a super-swanky open plan office that would be among the most impressive in the area. We’ve moved premises a few times over the years and while the image I have in my head might still be a couple of moves away, we are getting closer.
As I said, financial goals are often the easiest to set yourself and anyone running a business will obviously have targets they want to hit.
My target was always to reach £10 million of turnover and since we’re on course to get there, I’m beginning to think maybe I’ve aimed too low: perhaps £100 million should be my goal!