Browne’s niche is glass; not the standard type, but one that uses liquid crystals to change shade at the touch of a button. The application is more than a gimmick, as its growing order book from customers in Ireland, Britain, mainland Europe, the Middle East and the Far East confirms.
Smartglass is on course for a turnover of €2m in its current financial year with gross margins of more than 50%.
A typical installation involves a large window that can turn from clear glass to shaded with one touch of a remote control. A public area can thus be transformed into a private one in an instant.
High-profile installations in Ireland include those at the Central Bank, Guinness Storehouse and the Blackrock Clinic, while the company recently shipped its largest export order to date, valued at €200,000, to a government office in Jeddah, Saudia Arabia.
Browne started his business in 2003 as an importer and distributor of products in the domestic market with founding partners Frank Bagnall, Bob Hudson and Kevin Root, who between them have skills embracing marketing, business development and design engineering.
With the high expense of importing glass, they quickly saw the potential to grow the business by getting into manufacturing. The company started production in August 2005 from a unit on an industrial estate in Kilcoole, Co Wicklow.
As one of only a handful of manufacturers and distributors of this type of glass in the world, Smartglass has found a ready market for its product among architects and building material specifiers looking to add a “wow” factor to their projects. The company shows at design exhibitions in Britain and further afield. “Exhibitions are expensive at about €20,000 a time but we get a surge of interest afterwards, much of which translates into orders, so it’s worth it,” Browne said.
Smartglass gets 65% of its turnover from exports. The company was selected by Enterprise Ireland for its high-potential start-up programme, an initiative where the state agency helps firms that it believes have the capacity to succeed in global markets. This takes the form of grant aid, redeemable equity shares and access to Enterprise Ireland’s global support network.
“When we first went to Saudi Arabia to assess the market, the local Enterprise Ireland manager had a full programme of potential customer appointments for us, opening doors for us that we would never have dreamt of,” Browne said.
The demand from the Middle East region, which already accounts for 20% of Smartglass’s export business, is such that the company has plans to open an office in Dubai. It already has two bases in the UK, with four staff employed between two small offices in Portsmouth and Colches-ter.
Smartglass employs 10 full-time staff plus a number of contractors and expects numbers to rise to 15 by the end of this year on the back of a full order book.
Managing cash flow has been Smartglass’s biggest hurdle, Browne admitted. To date, the business has been largely funded through a combination of bank overdrafts and equipment leasing.
Typically, there is a time-lag of 60 days between receipt of an order and getting paid. “It’s a small country and we have an ethos about paying our bills on time. Unfortunately, that isn’t always reciprocated,” he said.
As the company starts to deal with ever larger export projects with higher ticket costs, the potential for exposure grows.
On smaller domestic orders, the company looks for payment upfront but on commercial projects this is more difficult to arrange, Browne conceded. For the moment, he said, he is not overly worried. “Thankfully our bank has been very sup-portive and we can draw on extra funds when we need them,” he said.
Nonetheless, Browne is keen to do more domestic work, as he believes that the general public is more open to new ideas about house design. “Our biggest problem here is the cost of advertising to raise awareness of our products. Television is expensive and print media is very fragmented and not cost-effective in terms of potential return.”
Browne is having some success with his company’s website. “We employed a talented young website developer who understood our needs. The site is generating up to 50 inquiries a day, depending on how active we have been in trade shows at the time,” he said.
Browne divides his time between travel to trade exhibitions and dealing with paperwork back at base. “I’m surprised at the amount of time it takes to deal with regulatory and compliance issues,” he said. “A lot of my day is tied up with that.”
The company went into the black last April for the first time with net profits of €25,000. He said Smartglass is on course to net €200,000 by the end of April 2007 on projected turnover of just under €2m. The plan is to grow this to €4m in the following 12 months, he said.
Keeping costs under control is a discipline the company has become good at. “When we went about sourcing manufacturing equipment, we were amazed at the range of prices for the same items. We spent a lot of time travelling the world to get what we wanted but the time invested saved us a fortune.”
Locating its base over the border from Dublin in Co Wicklow also ensured that the company has a lower operating cost through more competitive rent as well as a good supply of labour.
“We’re fortunate to have a good team who can see the benefit of being in on the ground floor of an operation that has a lot of potential growth,” he said.
Smartglass’s challenges
- Grow export markets, which already account for 65% of turnover
- Overcome the firm’s biggest problem of managing cash flow
- Find more cost-effective ways to reach domestic consumers
WHAT THE EXPERTS SAY
Use the website to boost sales
Tom Trainor, chief executive, the Marketing Institute
THE cost of getting sales is high and the firm must reduce this if it is to maximise profit. Leveraging the web is one way of making a big impact on this important metric, by more cost-effectively generating inquiries. The key is to define the target customer and then attract that group to the website, and convert visits to inquiries.
This requires an investment of time and brainpower, but the results could make a considerable difference to profit performance. This is about much more than an attractive website. The cornerstone of the web strategy is a very clear understanding of exactly who the target customers are. Only then can decisions be taken about how to find and attract them. The site must be configured to achieve search-engine rankings, resulting in improving the quantity and quality of visitor traffic.
Put exhibition ‘wow’ factor online
Brian Hurley, director of services, Hewlett-Packard Ireland
SMARTGLASS can grow its web-based sales by investing in the online demonstration of its products. When Smartglass exhibits at trade shows it experiences a surge in interest as the product’s “wow” factor is so compelling. The challenge is that the cost of an exhibit is €20,000 and economies of usage cannot be achieved.
Smartglass can achieve these economies through adopting one of three online communication options. The first is to record a trade show demonstration and make this available online. A second video alternative is to use customer vignettes of the different ways the product has been used with demonstrations of benefits and customer testimonials. Finally, an online, interactive demonstration to replicate the trade show experience in identifying how the product could meet customer needs could be on the web.
Control credit to aid cash flow
Mark Fielding, chief executive, Isme
THE business has been largely funded through a combination of bank overdrafts and equipment leasing, which can be expensive. The issue of cash flow is usually more associated with inadequate debt collection rather than overspending. Too little cash creates problems and a company, while trading profitably, could collapse due to slow cash flow.
Browne needs to consider the firm’s credit policy and monitor the ratio of debt in the sales ledger to sales and drive it down. Smartglass needs to have a clear-cut written credit policy and ensure that customers know and understand it.
Planning and controlling cash flow will allow the company to spot potential bottlenecks, reduce its dependence on bankers and control the business through informed decisions.
Low-cost publicity is good value
Willie Maxwell, director, InterTradeIreland Acumen
NOT all influencers, architects and specifiers attend trade exhibitions or log on to the internet. To achieve the maximum profile, Smartglass needs a full-blown product marketing programme. This can be done as product brochures, mail shots and telephone calls to targeted audiences. It needs to be followed up with personal or group presentations.
A systematic sales-generating and lead-response process is vital to a growth company such as Smartglass. This is not necessarily big-spend territory as the right processes, carefully selected and executed, can begin to turn into a pay-for-itself exercise very quickly. The objective is to make influencers aware of the product.
A PR professional would find it relatively easy to place selected product and installation stories in the trade and lifestyle press, which will increase demand for the product.
Develop proper finance strategy
Michael Garrigan, regional business manager, Bank of Ireland
HAVING established itself within the home market, expanding overseas is the next logical step for Smartglass. However, this will bring challenges and can put added pressure on working capital. As well as a sales and expansion plan, Smartglass needs to develop a medium- to long-term finance strategy.
Effective cash-flow management should continue to be important to Smartglass. So sufficient funding to support expansion and maximise growth is essential. Overseas expansion may call for specialist funding advice and expertise on areas including commercial foreign exchange finance.
Smartglass should look at invoice financing to generate cash that can be used to finance growth. As this means the business can raise funds without having to increase traditional borrowings, it is ideal for growing companies.
TV shows an ideal shop window
Michael Flynn, director, financial advisory services, Deloitte
THE main issue for Smartglass is how to target the market efficiently and cost-effectively. The levels of domestic sales show that the marketing carried out through standard channels such as trade shows and print media has generated increased interest for the product. However, this has not converted to sales at the rates anticipated.
The company could target those who influence design and fit-out in the Irish market. Direct targeting of architects, interior designers and building managers may prove cost-effective. Other methods to target the wider home improvements market could be achieved by product placement in home decoration shows on television.
Getting the architects, designers and homeowners to know the product and its potential application in a design context should result in greater volumes of sales.
