The Globe and Mail

More than anything else, Bill Hennessey wants to sell you a conversation piece.

The 23-year-old is in the business of peddling live lobsters, but the way he sees it, the value of doing business with him goes beyond simply purchasing a crustacean.

"You're having a dinner party and your friends show up and see the Atlantic Ocean Harvest box sitting there and they say, hey, what's this, and you say, well our lobster was in the Atlantic Ocean yesterday and now we're going to eat it," he explains. "Next thing you know you're cracking lobster together."

That's one thing Mr. Hennessey wasn't doing much of when he left his native P.E.I in 2002 at the age of 18 to attend University of Western Ontario.

"When I came here, I couldn't find fresh seafood," he says. His father, during a visit in Mr. Hennessey's third year, made the observation that he had noticed many travelers leaving the East Coast with live lobsters. "I put the two together and said, hey, if I start a business where my supplier pulls seafood from the Atlantic Ocean one day and the next day it's on your door step, I can address this need," he says.

On his way to earning a degree in business administration from UWO's Ivey School of Business and having already started one small business — an events planning company he got going in his third year, www.HennesseyEvents.ca — Mr. Hennessey was in a good spot to contemplate going out on his own. And, in fact, it had always been part of his post-graduation plan: "The only time I ever gave 110 per cent to something was when I owned or initiated it and I knew if I was going to work to my full potential it was going to be in a business I had equity stake in."

Following the conversation with his father in 2005, Mr. Hennessey began to research the idea. "I talked to others in the business, I met with potential suppliers on my trips home." In effect, he began putting together a business plan. "At that stage, the idea changed a number of times, whether we had a catering division, or just sold lobster, all did all kinds of seafood."

By the time Mr. Hennessey graduated in 2006, he'd nailed an approach (a focus on lobster with scallops and shrimp as an added bonus), selected a supplier and began to think about where he was going to get the cash to make it all happen.

That's where the Canadian Youth Business Foundation (CYBF), a national charity providing start-up financing to entrepreneurs ages 18 to 34, comes in. After an application process Mr. Hennessey describes as "complex," he was handed the maximum loan amount ($15,000 to be paid back within five years) and paired up with a mentor in the fall of 2006.

Mr. Hennessey made a conscious choice to base his business in Toronto rather than back home on the East Coast because it's a differentiating point between him and the competition. "There are two or three other companies that do what we do but they're all based in the Atlantic provinces," he says. "We're here where the market is and have a better understanding of what our client is looking for."

Since he had no plans for a storefront, and in fact, would never even see the lobsters he was selling (they go straight from his supplier's boat on the Atlantic to clients' doorsteps via FedEx overnight delivery), Mr. Hennessey had no need for an office outside of his home, a huge cost saver. And because he planned on running a one-man operation, he had no need to search for staff.

Where Mr. Hennessey couldn't skimp, however, was on packaging. Transporting live lobsters is tricky. And then there was the question of branded packaging versus plain.

"I decided to go with branded because when we're at shows, displays, demos, that visualization of the packaging with our logo on it is key," says Mr. Hennessey.

He hired a designer to work on the logo and design and a manufacturer to actually produce all the bits and pieces.

The elaborate packaging includes an outer box (similar in layout and size to a 24-bottle beer case) strengthened by an inner wax layer. After that, there's a three-dimensional molding layer that conforms to the size of its contents and keeps them cool. Last, a "thirsty pad" goes in, a piece of material that's been dipped in the Atlantic Ocean, along with ice-cold gel packs.

To make sure that he was covered in terms of food safety and liability, Mr. Hennessey met with the Canadian Food Inspection Agency and contacted the Western Business Law Clinic (UWO's law school) for free legal advice. As long as he displays a carefully worded disclaimer on his web site and doesn't ship cooked and live seafood in the same container, Mr. Hennessey is covered.

He then turned his attention to marketing, which he saw as crucial to Atlantic Ocean Harvest's launch, planned for just before the holiday season.

His marketing plan was a two-pronged approach: tackling the GTA and then Canada as a whole. "If we're going to do a food show or a mail drop, we'll do that in Toronto. But we also are going to invest in Google ad words because we know there are people out in Calgary in Vancouver who actively seek lobster delivery," he explains. "Here in Toronto sure there are people googling lobster delivery, but we're trying to push this idea on anyone who's eating lobster."

Google ad words were key, and so was building his own web site. Mr. Hennessey hired a developer to build the site, and says this part of the start-up process was the most challenging. "The biggest mistake I made was rushing into the technology side of things," he says. "Anything is possible with a web site, the question is, how long is it going to take?"

Initially, Mr. Hennessey had plans for an e-commerce site, complete with a shopping cart. But he quickly realized his web developer wouldn't not complete the project on time (and went through two more web developers after the business was open before finding one that could get it done.) "So we planned to start out just taking orders on the phone," he says.

Getting those phone orders to come in started with getting word of his business out there Mr. Hennessey's tactic was self-generated PR. "Anywhere I went, I told people about the company and its story," he says.

People were impressed that a guy barely out of university had taken on such a challenge, he says, especially other entrepreneurs. "I found that successful people are very happy to help a young person starting a business."

In the end, all that talk scored him three TV appearances, including one on Toronto's CityTV's Breakfast Television.

Mr. Hennessey liked the idea of appearances on shows like BT because he felt they could provide more value than any print ad could. "There's a real educational component," he says, explaining that such TV spots give him the opportunity to drive home the main benefit of his product: It's fresher than the alternative.

"When you buy a lobster at the grocery store, it's been shipped via ground. Then it often sits there for seven days in tap water with added table salt until it's sold or it dies. If it dies, it's boiled in water and marked up $2 a pound, added to ice and sold as cooked," he says. "We're fresher because the lobster is out of its initial surroundings for a much shorter time and we then maintain its surroundings until it gets to your door."

Mr. Hennessey admits his lobsters cost more than those at the supermarket around the corner. "If you order for eight or more, our prices, including shipping, are comparable to high end grocery stores," he says. And then there's the whole experience factor, he adds. "That's what you're really paying for."

Atlantic Ocean Harvest opened with a bang on November 21, 2006. Mr. Hennessey deliberately made his first day of business coincide with his appearance on Breakfast Television ("Before I even got back to my office my phone was ringing from people who'd seen the show.")

Timing was everything, he says. "It was a very smart thing to launch in time for the Christmas season," he says. "We placed orders on day one."

But once the holiday season had wound down, Mr. Hennessey noticed a drop in orders and traffic to his site. "Research indicated that January to April was going to be slow," he says. "It's a seasonal business, so I was ready for it."

Mr. Hennessey says he took the lull as an opportunity to further develop the business. Since January, he's struck up a couple of business partnerships that help him get exposure for Atlantic Ocean Harvest and save money at the same time.

One such partnership is with a new company called The Perfect Steak, which offers a similar service as Atlantic Ocean Harvest. Mr. Hennessey says they're likely to share TV spots and also to attend food shows as a pair. They also went in together on a flyer drop in the Toronto area — cutting Mr. Hennessey's costs in half, to about $1,500, on the distribution of 25,000 flyers.

After a quiet winter, Mr. Hennessey admits building a business from the ground up is no easy task. Most challenging has been the unpredictability of sales. "One week is just crazy and then the next it's slow. At the end of the day it's difficult to budget."

But he expects Atlantic Ocean Harvest's business will warm up along with the season's temperatures. "We've already seen things start to pick up and I'm confident it's just going to get better," he says.

Along the way he's been doing what any young entrepreneur should: learning, and having a good time. "Bringing my East Coast secret to the rest of Canada has been fun," he says. "The best part is meeting so many people and learning a million and one things each day."

How he did it

Bill Hennessey was a recent university graduate looking for something to do. The 23 year old combined his business education with his love of seafood in creating Atlantic Ocean Harvest, a seafood delivery company specializing in live lobsters.

Start up costs

Packaging and logo design $1,600

Packaging manufacturing $4,500

Web-site development $3,000

TOTAL $9,100

Monthly costs

Google ad word fee $200

Utilities $350 (including web site costs, BlackBerry and phone bills)

Seafood costs $2,000

Shipping costs $1,000

Attending food shows $250

Promotional flyers $450

TOTAL $4,250

Number of $24 1.25-lb lobsters he needs to sell a day to break even: 6