The owners of a rapidly growing and successful business found securing the finance to support the global expansion of their company a huge challenge with neither the banks nor the high-profile investors of BBC’s Dragons’ Den willing to help.
Joe Denham and Paul Owen set up VegTrug in September 2009 after realising a gap in the ‘grow your own’ market for products that allow people to grow their own vegetables in the smallest of places, be it in a garden or on a balcony. The company’s range of stand-alone growing beds come flat-packed, but are designed to be easily constructed to enable people to grow a variety of vegetables all-year round.
Having experienced rapid expansion in the UK after securing large reseller contracts, VegTrug quickly found success in Germany and the USA, before signing distribution agreements in Australia. The fast growth of the company meant Joe and Paul were desperately trying to secure funding to finance the manufacturing and distribution of the product to retailers and resellers around the globe. This problem only got worse for the pair after being repeatedly turned down by the banks.
Joe says: “We found it very challenging to gain the confidence of the banks to support our business development model as we didn’t have the level of personal assets they required in order to offer us the financial support the business needed. As a result, our growth strategy was massively hindered.”
Joe and Paul then ventured into the Dragons’ Den, appearing on the BBC’s hit TV show, in hope of securing investment from some of Britain’s most famous venture capitalists. Despite strong interest and encouragement from Theo Paphitis, the pair failed to obtain the £200,000 investment they needed and left with nothing.
Joe says: “After being frustrated by our conversations with the banks and our experience in the Den, we heard about the financial products offered by Bibby Financial Services and were impressed by their friendly and reliable approach. Through their specialist International Trade Finance facilities they were able to offer us the cash flow boost required to fund the manufacturing of our products in Japan and then distribute on to our customers all over the globe.
“When we began to secure the really large contracts, where buyers were looking to order thousands of VegTrug units, the facility from Bibby Financial Services provided us with the funding we needed to operate and manage these projects more efficiently. More importantly, we retained a 100% stake in our business, something which wouldn’t have happened if things had gone differently in the Den.
“With the help of Bibby Financial Services we have gone from strength to strength, and are now one of the leading manufacturers in the ‘grow your own’ market, with an established worldwide brand. Their insight into international markets and expertise in communicating with overseas businesses on a local level means we have a great head start over our competitors.”
In terms of the fortunes of other UK business trading internationally, Joe has serious concerns over the support available.
He says: “The coalition Government is pushing the message that UK exporters are key to driving the economy forward and helping us move out of this troublesome post-recession climate, but if the funding support is not available to the small and medium-sized business community capable of doing this, then growth will obviously stagnate.
“The effectiveness of the ‘Project Merlin’ agreement between the Government and the leading UK banks is yet to be known, but I think more needs to be done to make sure exporters have the financial backing to secure opportunities for growth.”
With access to finance a concern for many businesses looking to trade internationally and develop growth strategies, Bibby Financial Services is intent on supporting those businesses who can help reduce the trade deficit and ultimately drive the economy forward.
Bibby Financial Services international trade finance package can provide businesses with upfront funding against confirmed orders and then an ongoing supply of cash against the value of invoices raised. In addition, a comprehensive credit management and collections facility supported by their specialist team of multilingual staff who will communicate with overseas customers in their own language – this proves invaluable in collecting outstanding customer payments efficiently.
Using this service can also smooth out the problem of fluctuating exchange rates by offering multi-currency facilities as well as foreign exchange and forward currency dealings for protection against exchange losses. Bad debt protection can also be provided.
As the UK's largest independent invoice finance provider, Bibby Financial Services currently provides cash flow funding for nearly 3,800 businesses, handles annual client turnover of more than £3.9 billion and advances in the region of £321 million every year to help small and medium-sized firms from a variety of business sectors grow and realise their potential.
The full range of facilities available include recourse and non-recourse factoring, export factoring, confidential factoring, confidential invoice discounting, construction finance, recruitment finance, IT sector finance and trade finance.