Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.
As summer turns to fall, few Canadian traditions can match sitting in the backyard with friends, warming around a roaring fire pit.
Brad Carpenter is betting that the Brits would appreciate the practice equally as well.
Mr. Carpenter is the chief executive officer of Burnaby, B.C.-based Solus Decor Inc., a $3-million business that sells fire vessels and water features for home landscapes, plus fireplace surrounds. He has spent the past year working on the expansion of his 17-year-old company to Britain, with hopes of moving on to Europe, as well.
Having lived in Britain previously, he is familiar with its corporate setups and accounting. “It’s not that dissimilar to Canada really, albeit there are all the European regulations on top,” he says.
One of the biggest issues is exposing British consumers to the tradition of gathering around a fire, which is not a popular thing to do, aside from Guy Fawkes Night every November.
To counter that, Mr. Carpenter staged a soft launch at the famed Hampton Court Palace Flower Show in July. “A lot of people looked at it, especially the fire pits, and went, ‘What is it?’ because it really doesn’t exist there,” he says.
Solus Decor is trying to find partners to showcase its products. A landscape designer/nursery in Brighton has agreed to take on a couple of units.
“We think we’re ahead of the curve. We want to be first, which is challenging because you’re creating the market and you need to do a lot of education,” Mr. Carpenter says. He has chosen to forego a bricks-and-mortar retail location.
Regulations also pose a problem. Though his waterfall bowls are fine to sell in Britain – once he’s fitted them with a standard three-pin plug, of course – his gas-powered, free-standing fire vessels must undergo an expensive and time-consuming process to be approved for European sale, costing upward of $60,000 and taking between six and eight months.
Mr. Carpenter will continue to manufacture his products in B.C. The company has one employee in Britain, while the rest are in Canada.
One ray of sunshine may be the pending Comprehensive Economic and Trade Agreement being negotiated between Canada and the European Union. Mr. Carpenter is hopeful that it will reduce shipping costs, but he is unclear whether it will affect standards and requirements.
“We could potentially eliminate having to certify for Europe for our gas vessels,” he said, “which have been certified here [in Canada], and we’ve spent tens of thousands of dollars doing just that.”
The Challenge: How can Solus Decor launch successfully in Britain and Europe?
THE EXPERTS WEIGH IN
Lui Petrollini, partner, Ernst & Young, Vancouver
Whether you need a storefront depends on the product and the expectations of the marketplace. If people feel they have to touch and see the product before purchase, it might be more beneficial to have a bricks-and-mortar-type outlet. Ultimately if you’ve got a home service centre such as a Home Depot or Rona, it gives the consumer a place to go and see that product.
It’s always good to have management on the ground. Whether it’s you doing it or someone else whom you trust, I don’t think you can just enter a market without having some kind of presence to manage your entry, and that presence doesn’t necessarily have to be the owner and CEO. It could be a strong sales force that’s either representing your product as an agent or working exclusively for the company.
Ultimately the way your product is going to sell well is through relationships that you generate with companies or retail establishments. It’s very difficult to do that as an absentee provider.
Simon Knight, products manager, Intertek Canada, a quality and safety solutions provider to industries worldwide, Vancouver
It’s pretty easy for a manufacturer to make sure their product has been tested and accredited properly to enter the domestic North American market. Europe, though, has a long history of having different infrastructures in most of the countries. When it comes to North American and Canadian standards, the fact that you’re good over here doesn’t mean you’ll be good in Europe.
Our advice to a manufacturer is to seek guidance on how to enter a market they’re not familiar with. If you go down the self-declaration route and you miss something, the implications are product recalls, issues with your brand name and brand equity, and it could cost you a whole bunch of money.
Bruce Rempel, owner and president, Dryrainge Equipment Co. Inc., maker of an all-weather golf driving-range cover, Saskatoon
From our perspective, the biggest thing was transport. That’s how we got ahead because we started manufacturing in the U.K. because what was killing us was the shipping costs and the VAT, or value added tax. Obviously if you’re manufacturing in the U.K. you’re not paying those things.
Dryrainge is a fairly specific product, and people need to see it and touch it. It’s tough to make certain sales on the Internet – people like to get a grasp of the product they’re buying. Does it feel smooth? Is it heavy duty? So I think it would be beneficial to have a storefront. When we were in the PGA trade shows with the Dryrainge we sold more units when people could actually see it.
On the Internet, you need to get yourself on the right search engines. We have been paying more for our marketing, we’ve been doing Facebook ads and Twitter ads. I believe we’re getting more traction. I believe social media is pretty strong – it just depends on what’s the right platform for your product.
THREE THINGS THE COMPANY COULD DO NOW
Establish a presence on the ground
Let potential customers see and feel the product in person.
Consider manufacturing in Britain
Cut down on shipping costs and taxes by building some products on-site.
Explore social media marketing
Experiment with different platforms on the Web to increase traction.
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Interviews have been edited and condensed.