Coffee and gum
Gumbuster International Ltd and Irish Coffee Distributors are two start-up firms that have made a splash in the services sector in recent years. This is no mean feat considering this area of business has been dubbed the "Cinderella" of Irish industrial policy.
The services sector accounts for 80 per cent of all Irish business, according to Mr Brendan Butler of the Small Firms Association. In the past however, it has been overlooked in terms of financial assistance.
Things are changing however. Earlier this year the Government released a report acknowledging the importance of the services sector and outlining ways it could be developed. The report, entitled `A Government Strategy for Services', set employment targets of 117,000 jobs before the year 2001. City and County Enterprise Boards, which deal specifically with companies of less than 10 employees at start-up level, offer a wide range of services to fledgling companies. Their client base boasts a good balance of companies in both the services and manufacturing sectors. Forbairt, the Government agency charged with developing indigenous industry, now offers support to 500 new start-up businesses in the services sector each year. The Bank of Ireland's Enterprise Support Unit also provides assistance. LIKE many successful entrepreneurs Mr Richard Tyler started up his business with one idea and very little money. From his experience in contract cleaning he knew that chewing gum posed a "huge problem" because it was virtually impossible to remove. In 1995 he got a feasibility study grant worth £5,000 from the Dublin City Enterprise Board (DCEB) and put it towards building the very first `Gumbuster' - a machine which used super saturated steam and a laser system to get rid of unsightly gum. It worked.
The first Gumbuster was basically a "box on wheels" says Mr Derek Keogh, a director of the company. But even a "box on wheels" needs to be patented and the company lodged its Irish application straight away. Gumbusters took on two employees and began offering a gum removal service in Dublin. One of its first customers was Dublin Corporation who asked it to eradicate all chewing gum on Grafton Street. This took a total of eight weeks to complete as the busy shopping district had around 500 pieces of gum for every 50 square metres.
More employees were taken on as Gumbusters received employment grants worth £20,000 from the DCEB. Securing seed capital was crucial at this time. Mr Keogh invested money in the business and financial assistance was sought and secured from the Bank of Ireland. A research and development (R&D) grant was secured from Forbairt to develop a commercially feasible prototype on which to base all future machines. So far the company has sold machines to companies in Denmark and Ireland and is in talks with companies from Sweden to Spain, Russia to Australia. It is currently waiting to finalise the world-wide patent on the machine.
Meanwhile it has divided the country into eight geographical regions. Gumbusters have been franchised out while Mr Tyler and Mr Keogh explore the world market. In just two years the annual turnover for Gumbuster International Limited has reached £350,000. The company directly employs 10 people and provides indirect employment for the seven franchisees who each employ two people. Mr Tyler and his army of gum removers are now considering setting up franchises in the UK, a market estimated to be worth about £1.2 million.
When 24-year-old caffeine addict Mr Fintan McKiernan set up his cafe in Dublin he imagined his future lay as the proprietor of a chain of coffee emporiums. In fact, now he heads up Irish Coffee Distributors, a company which provides coffee, coffee machines and water coolers to offices around the country.
During a two-year stint as a financial trader in Tokyo, Mr McKiernan carried out extensive research on the coffee market, selecting only the best supplies.
At the Cafe Inn in Dublin so many people asked where he got his coffee from that he secured the franchise from London-based company, Nairobi Coffee, and began selling the produce to other coffee shops. Soon it became apparent that there was big business in coffee distribution. Mr McKiernan began by sending mailshots to every business in the Irish Financial Services Centre. He was amazed by the response and was soon able to sell the thriving coffee shop, expanding the distribution business with the proceeds.
Other capital came from the pockets of Mr McKiernan and his partners as well as from bank loans. "We stood to risk everything if it was not a success," he says. "I have friends in the manufacturing sector who got a lot more support".
Irish Coffee Distributors did get support from Fas. It vetted all the staff and paid for half of their salaries for an eight-week trial period. The company expanded to supply water to offices and many of the clients who bought its coffee decided to buy its water as well.
Being a small company has helped says Mr McKiernan: "We are more hungry for business and being small gives us a lot more scope," he says. With more than 200 existing clients and a turnover of £150,000 per annum, chances are Irish Coffee Distributors won't be small for long.