International Finance Package Frees Up Company for Growth
Long payment cycles and a lack of funding were holding Brand Packaging back, until Santander stepped in with a financial package to kickstart expansion.
- Company turnover: £2m
- Sector: Business services
- Sussex-based Brand Packaging Solutions designs and assembles gift packs for high-street retailers, sourcing goods and raw materials from the Far East.
- Set up in 2009, the company turned over £100,000 after its first year of trading, and £500,000 after year two. The next year-end should bring the company £3 million in sales.
- The three founder-directors have an impressive roster of high-street clients including Asda, Tesco, Debenhams and Argos.
- Despite its success, the company faced a big challenge with extended trading cycles of up to 16 months between developing products, ordering goods or materials from the Far East, delivering products to retailers and receiving payment.
- Its incumbent bank was unable to fund its growth plans, so the company looked elsewhere for a solution to its specific needs, including a flexible approach to the complexities of international trade, duties and tax.
- Santander put together a £700,000 finance package that includes an import loan facility, invoice finance and foreign exchange services.
- Today, Brand Packaging has six new employees and is in a strong position to find new clients, having found a banking partner able to meet the challenges of its niche market.
Brand Packaging is a Sussex-based retail services business that works with the licensing agencies of household brands such as Coca-Cola to develop gift packs for a growing number of high street retailers. The company was launched in 2009 by its three director shareholders – Richard Longhurst, William Wootton and David Farrington – who had previous success in the industry.
With its sights firmly set on expansion, the company’s performance to date gives a persuasive demonstration of a fast-growth business in action. In its first year of trading, Brand Packaging's turnover topped a respectable £100,000. By its 2012 September year-end, this figure jumped to £500,000. The current financial year, plus the 2013 Christmas trading season, is expected to bring in a combined £3 million in sales.
A chance call from a buyer at national retail chain BHS in August 2010 changed the focus of the company. The buyer was looking for seasonal gift packs incorporating goods from strong brands. Using their established working relationship with a premium brand – Coca-Cola – and their understanding of how to capture its values in a consumer-friendly way, the directors worked with The Licensing Company (TLC), Coca-Cola’s brand licensing agency, to design gift packs that included the iconic Coke bottle. In doing so, they successfully forged a new direction for the company.
“Our relationship with TLC and our experience of having run this kind of business before really has given us a lead. We know how to pitch the products into retailers and talk knowledgeably about their market,” Richard says.
This first deal paved the way for ongoing success and during its second trading season, Brand Packaging secured deals with BHS, Asda and Waitrose. Since then, it has added Tesco, Argos and Debenhams to its customer base.
Despite an increasing list of clients, the operation faced challenges unique to its market niche. Brand Packaging sources raw materials and assembled gift packs from the Far East – China in particular – which brings import risk. In addition, the business faces long trading cycles of up to 16 months.
During its first trading season, Brand Packaging’s incumbent bank provided import loans and invoice finance. However, the bank was unable to cover the company’s growth requirements and this was hugely limiting in terms of the directors’ vision, so they began to look elsewhere.
A 'can do' approach
“As we grew we knew we wanted to work with Santander because they were the most professional and had the most ‘can do’ approach of the banks we saw.” The directors worked hard on the business plan, whilst remaining in contact with Santander Relationship Director David Pearce, and were finally in a position to move Brand Packaging’s banking to Santander in May 2012.
David says the directors' history of working together and their abilities were persuasive. "They could demonstrate that they had done this before. There was a good spread of skills within the management team. We bought into that track record and management skillset," he says.
Finance with forethought
After spending over two months learning about the company and its requirements, David and the team at Santander put together a £700,000 finance package that included an import loan facility, invoice finance and foreign exchange services.
The solutions specifically addressed the import and growth issues that were hindering Brand Packaging’s development. As well as providing trade finance loans and foreign currency services, the bank guarantees duty payments on the imports and has set up a VAT deferral arrangement for the company with HMRC.
The package provides room for growth and the directors enjoy a close working relationship with David and Santander Trade Finance Director Andrew Morton. "The trade finance side has become quite a straightforward process and we have a very easy professional relationship with Andrew Morton, who always responds to questions very quickly," says Richard.
Designs on the future
The Santander team provided a tailored financial package that allowed Brand Packaging to find and win new business, in the face of industry conditions that limited company expansion. The business that began with three now employs nine people. “The strength of this particular finance package is that it has enabled the company to grow,” says David.
In the future, Brand Packaging wants to sustain its growth while streamlining the business, a strategy possible now that it has a banking relationship with Santander, who understand its market challenges. “We need to develop a business that is not dependent on any one person, and focus on improving across all areas,” says Richard. “With Santander’s support I can see us sustaining our growth over the first three years. We want to make sure that this business is secure in the way we manage it and bigger than the sum of its parts.”
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Relationship Director Comments
There was a good spread of skills within the management team. We bought into that track record and management skillset.