From ZERO To £1M Turnover In 6 Years

Hello, Luke. Hello. I'm talking to Luke Pearce, who's the co-founder and director of the Radical Tea Towel Company, and Luke has gone from zero to hero in the space of about 5, 6 years. The business started properly working about 2014, and this last financial year, I think you were very happy with about a 7-figure revenue that came in, and I'm obviously really so grateful. Thank you so much for coming on this and taking your time to tell our customers and our prospects how you've done it and all the nitty-gritty details. So, so what gave you that lightbulb moment, and how did it all start?

Well, I went for dinner at my parents' place in about 2011, and my mother had a problem. She'd been shopping online looking for a present for an elderly relative, and she wanted to get him something political in nature because the guy was a big trade unionist. He'd been involved with the National Union of Teachers, and he was just really interested in politics, and she wanted to get him something, but she didn't think a t-shirt would be suitable for for him. He was 90 years old, and I'm not sure he wore t-shirts, and she didn't want to get him a mug or something that he'd have to go to the post office to pick up, and so needed to go through the door. And so for some reason, my mother just had this idea in her mind that she needed to get him a political tea towel of some kind. And you would have thought that the internet had such a thing, but it didn't. She was explaining her frustrations to me over dinner She'd spent all this time searching on Google. At the time, I was really keen on the idea of starting a business. I don't know why, but I just had that idea in 2011 that that's what I wanted to do. My ears pricked up when she said she had a problem. You always keep an eye out for other people's problems when it comes to business ideas. I told her that she should start a radical tea towel company. She said that she didn't know where— how she would do that, where she would start. I said, well, you know, Dad is a designer, and I could maybe help build a website, start a Facebook page, and Mum, you know, you can do the boring thing, which is finding manufacturers. The boring thing as far as I was concerned. And so the three of us decided, yeah, you know what, why not just do it? So we started, and yeah, that's where the idea came from back in 2011.

Wow, and then obviously you started it from home because I remember you telling me about how you got fed up with picking and packing and all the bubble wrap and packaging in the kitchen at your mum and dad's.

Yeah, well, we used to, you know, in the early days you do everything yourself, don't you? You don't have any money coming in, so you want to minimize the amount of money going out, that's for sure. So we were in— it was, well, it was the kitchen table, but it was also my father had a home office from the publishing business that he ran. We'd all go in there. We didn't get many orders in the early days. It was just friends and family, literally friends and family, about 20 friends and family would go on and make quite big orders. We sold about £1,000 worth of products, I think, just to friends and family. It was mainly my mom packing the things up. I think it's important to do that actually, because you get you start to learn about what your customers, you know, what's a typical order and how are your customers going to receive a package and what people are ordering. And so you get this kind of quite hands-on knowledge of what's going on in the business by doing that. But over time, we were able to build up the amount of customers coming in. I remember a really big moment for us was we got featured in The Guardian's What You Like column. The Guardian Weekend magazine used to have a column at the time called What You Like, where people would just write in saying, oh, I've discovered this really nice fish and chip shop, or these really cool people baking cakes, or whatever. And someone wrote in and said, oh, I've seen Radical Tea Towel, and they're doing this, this, and this. When I say someone wrote in, it was actually a friend of mine who I'd said, can you write into the What You Like column? But they published it, and that weekend I remember we had 75 orders on the Saturday and 72 on Sunday. And that's when we knew we had a business.

That was the sort of defining moment in terms of like, right, and can you remember what those first items that you sold were? And like, I can imagine the excitement of like, this is proper money coming in now.

Yeah, yeah, it was really exciting actually. Well, you know, it's exciting that friends and family felt that they wanted to support the business and buy, and I'll never forget that, you know, those people who were there right at the beginning, those friends and family who said, you know what, I'm going to support you and I want this to be a success. And who knows whether they actually needed tea towels or liked our designs. The designs weren't as good back then, but they were there at the very beginning. And, you know, some people weren't, but I'll always remember the people who were. And, um, but yeah, eventually you get strangers buying from you who just found us on Google or whatever, or we'd start a Facebook page and would English posts now and again advertising our products mainly. And yeah, that was pretty exciting. We only had 10 designs in the early days, and so people didn't have a lot to choose from.

And how were you actually marketing? How did you actually get— obviously I know that you got that really great break from the Guardian column, which was fantastic, but did you go with Facebook right from the outset, or was it— and what was the cost cost per lead back then? Can you remember? I mean, how did you decide you were going to build that sort of initial momentum?

So in the early days, we had that one PR coup with The Guardian, which is never really to be repeated, I must say. And other than that, it was word of mouth. So friends and family would actually mention us, and we did a bit of, you know, we started a page on Facebook. We didn't really have any followers, so we were kind of just shouting to the unknown, really. But then I remember my mother posting some of our products on Facebook groups, for example, or other people's Facebook pages. And we also, I think, made an effort to contact some blogs in the early days. And we also started a Twitter account and tweeted a few times. And I remember somebody tweeting, saying, oh my God, there is a radical tea towel company. That got us, I think, a really big sale at the time. I think somebody went on the website and spent £100. That was our first 3-figure sale, which was quite a coup for us. It was all small. It was winning one customer at a time back then, and every order that came in, you'd get days and weeks where you'd get one order or something. It was all very small scale. I think it was in late 2012 that we discovered Facebook advertising. I can't remember how we discovered it, but I decided I was going to experiment with it. The platform was very limited at the time, but the great thing about it was that almost no one was on it, and so the costs of reaching people was very low. I can't remember the exact— I mean, things like cost per impression, cost per click, I barely understood them in those days. All I knew was that if I put up an image of some of our products and a bit of text accompanying that, then I could pay Facebook and Facebook would push it out there, and it seemed to result in an immediate impact in terms of people then coming on our website and buying from us. And that for me was a kind of recipe for success I needed to keep on pumping money into.

So it was a money-making machine. You put a pound in and you got 2 or 3 or 4 back.

Yeah, exactly that, exactly that. Although I was very unscientific about it back in the day, and I wish I could have gone back and talked to myself and said, okay, well, you need to calculate exactly where the point of profitability is here. Because I just had this idea that, oh well, if we're getting £5 or £6 back for every pound we spend, then that's a good thing, and hey, I should celebrate that. But actually, it would have been well worth us carrying on spending money and scaling the spend at, say, a £3 or £4 return. But for some reason, I would just switch the ads off then, or we'd run out of stock and not really look at our growth potential in a serious manner. I mean, in recent years, that's where we've really been able to take off, is figuring out exactly how much we can afford to spend on ads and then pushing that as far as it will go.

Yes, yes. And so at what point did you get to where you thought, right, this has become, you know, so overwhelming that we do need to now look at, you know, the logistics, outsourcing the logistics and the fulfilment and things like that?

Well, we went through a couple of Christmases. I mean, this was a— you've got to remember this business was very much a side project for us, and outside of November and December, which is when the Facebook ads seemed to work for us, We really didn't do much with it, and it didn't really feel like it was going to go anywhere. But every Christmas, it would get worse and worse. When I say worse and worse, better from a business point of view. You'd get more sales coming in, but it became a bit overwhelming. I remember, I think it was Christmas 2014 or 2015, maybe. '15, perhaps, where my mother was up until 2:30 AM and still hadn't managed to get all the orders out for that day. And it was just kind of— it was ruining a 3-week period for her in early December and late November. And we'd always assumed that we couldn't outsource it because we didn't have the capacity in the rest of the year. We didn't have the volume coming through. But I think at that point, late 2015, early 2016, we said, you know what, let's have discussions now with people who might be able to do this for us and just see what their terms are, see what their costs are, and see how we might be able to reach some kind of agreement because this is becoming beyond our ability to deal with now. It got to the point where I was having to turn off the adverts, not because of stock, not because we couldn't get customers, not because of the cost, but because we couldn't pack up the orders anymore. And that was a clear signal to us that something was wrong in the business and was holding us back.

And with hindsight— I know it's a lovely thing, isn't it, hindsight— but do you think you would have perhaps done it a lot, lot sooner, or would even from the outset, or you mentioned that learning stage initially with the business was quite critical to really get a feel for the business, but if you had to advise someone when to do it, what, when would you think that would be?

Yeah, I mean, yeah, there's no question we would have done it sooner, we would have done it sooner, probably at least a year sooner, We just assumed because of the seasonality of our business that that made it an unattractive prospect to a company that we might work with. But you see, we didn't test that. We didn't actually go out and speak to people. And once we did that, then we found that actually people were really interested in working with us and we could come to some arrangement that would work. So yeah, there's no question we would have done it a lot sooner. And I think the main thing is that that would have, in particular during the Christmas time, I think that would have freed me you know, and my mother up to focus more on the marketing side of things, on the Facebook side of things, which then would have enabled us to grow to the next level, which would have given us the finance in order to make outsourcing fulfillment work for us and in order to grow the business in other ways. So, you know, it's kind of a chicken and egg situation, but I think as soon as you have customers coming in on a reasonably regular basis, I think you should be looking at getting other people involved to do this for you, for sure.

Yes.

Your energies are much better spent on growing the business and developing the products, not picking and packing the orders. That's the truth of it.

Yes, and did you find once you had outsourced it that— because obviously it's a bit of a loaded question and of course a rhetorical one because I know the answer to it— but how did things go once you'd actually outsourced it?

Once you have someone else taking care of the day-to-day operations side of things, then that just frees you up to focus on the product development and the marketing, doesn't it? And certainly that's what happened with us over time. You know, there's no question we wouldn't be able to get the kind of growth that we had if we were trying to do all the packing ourselves. Now, there is another way of going about it, of course. What you can do is say, well, okay, I'm not personally going to do the packing, but I'm going to hire people to do it for me in my own warehouse or my own storage or bring people into my own house or whatever in order to do it. The problem is with that then is you've got all of the management and the HR and the administration side of doing that and then having to teach people how to do it. And the truth is that there are fulfillment companies out there like yourself that just know how to do it properly because they've been doing it for years and they do it for other clients. And so they've got actually a far better idea of how to do it efficiently than you have. But your energies are much better spent on the things that only really you can do, which is talking about your brand and how you started the business and your unique method of customer service, for example.

Yes, yes. And did you then very much solely focus on Facebook throughout the business growth, or were there other sort of channels, sales and marketing channels, that you then developed as well?

The main one I would say is email. I think every e-commerce business should have an email list, no question. It should be messaging your customers once a week, former customers, current customers. Email's great for that. You know, people want to hear from you, actually, it turns out, and you have this ongoing relationship, and it's very— it works very well, both for the people receiving the emails and for you as a business owner. The problem is with email is it's harder to scale than something like paid advertising. That's the great thing about paid advertising is you can reach massive numbers of people who've never heard of you before, whereas email tends to be a much smaller grouping. We've had occasional small PR hits, you know, mention on blogs and that kind of thing, but I think nothing has come close to the scalability of Facebook, and it's unmatched really out there. Among all the platforms. By Facebook, by the way, I also mean Instagram because they're the same company and the advertising platform is the same for both. Snapchat, I think some businesses are having success with that, but it depends. You have to be a specific type of business. Snapchat didn't work for us, but if you've got a business that is specifically appealing to young people, for example teenagers, then that seems to work for some people. It's very cheap at the moment.

And have you made any howlers of expensive marketing mistakes that you can warn other people not to do?

No completely shocking ones, but I think that print advertising is basically dead now, and the difficulty you have is that everybody who talks to you about print advertising is trying to sell you print advertising, and they talk about it in a way as if, oh, you know, you've just got to try it and see how it goes, but you can very easily drop, you know, a few thousand pounds on advertising in some publication. And it's just, you know, the difference is with social advertising and pay-per-click advertising, whether it's Google, Facebook, Snapchat, or whoever, is that you can see an immediate return to the money you put in. And you can immediately decide to spend more money if it's doing well for you, and less if it's not. And you can start with as little as £5. £5 a day, that's what's great about these things. Whereas if you want an advert in a national newspaper, you know, or some mainstream magazine, you're going to be dropping several hundred, several thousand pounds on something like that before you know if it works. Without knowing if it's coming back. I think journals might still be useful for, you know, really niche products marketed at specific audiences. You know, if you're selling fishing equipment and there's a fishing journal that is really popular among people, fishing enthusiasts. If it's an obvious match like that, then there could definitely be value in getting your brand into that kind of publication. But with something like ours, radical tea towels, right, historical tea towels, okay, we could be advertising in history magazines, we could be advertising in political publications, but it's not quite enough of a match. It's not a perfect enough fit for us in terms of ideal customer, so not really worth it.

No, no. And you've also now started to— well, I say started, quite some time ago— and now have a good presence in the States, and I understand that's going very well as well.

Yeah, we launched in the United States a couple of years ago and Canada as well just this year. So yeah, we kind of just copied and pasted the business model, really. We wanted a presence in those markets, so we work with a warehouse in those markets, because that means that the packages just arrive quicker to customers. And we've created separate websites where the products are advertised in those currencies. To customers in those markets as well. So it's a much more personalized experience that way. But yeah, I mean, I'd encourage any e-commerce entrepreneurs who are able to make their product work in Britain, there's no reason why you can't make it work abroad as well.

And vice versa.

Yeah, absolutely.

Yeah.

If people are doing well in those other markets. Britain's a great market to come to actually, just because there's a very high penetration of e-commerce. The percentage of people who shop online, I think, is higher in Britain than anywhere else in the world, certainly of an equivalent size market, even more than the US. So, you know, it's a great place to come sell online, for sure.

So is the next continent Australasia?

Well, I don't know if it will be. I mean, we sell to Australia at the moment through our UK website. You know, your company actually fulfills a number of orders for us shipping out to Australia. The problem is with Australia is that there is quite a bit of a smaller population, only 25 million people, 22 million people, something like that, and it's a very long way. So our cost in getting products out there en masse, our cost in setting up there, and then what the potential is out there are somewhat reduced. It's definitely one to explore in the future, but it was, compared to say getting on a plane and going out to the US to reach a market of 300 million people, it's less of a no-brainer. So at the moment, we're happy fulfilling that from the UK.

I understand the logic behind that perfectly, yeah. So where is the business going now?

Well, we've got some work to do to expand the new Canadian website for sure. Canada, it's a smaller market, but it's 40 million people, and actually people in Canada are quite interested in in politics and in political history and the type of stuff we have on our designs. And we've got a number of Canadian designs, unique Canadian designs, in production as well. So we think that's got some real potential. We want to grow our base in America where very few people have heard of us, but we're finding that we're still getting a decent amount of growth in the UK as well. And we've got some new products that have come out recently that are doing well for us, like face masks, for example, that are really in demand right now. It seems that there's development on all fronts, which is good. We'll obviously keep on bringing out new designs. Over time, I think what I'd like to do is to bring in some more people into the business to help us run the business, bring a unique style, bring some new energy into the business as well, because it's been great fun running it, but I don't I think that I have a monopoly on all the good ideas. In fact, I know that for sure. And having some more enthusiastic people working with us, I think, would be of great benefit.

Yes, I can see that. And I mean, it's been a phenomenal journey, really, hasn't it? I mean, to hit the £1 million, you know, mark in terms of revenue after really sort of 5, 6 years of doing it earnestly And I think, you know, it's a phenomenal story and inspiration for other e-commerce business owners in terms of what's achievable. I really appreciate you taking your time out to share your story because obviously I really hope it is inspiring for those, especially those people that have just launched and they're really keen and they want to get going. So if you had to go back and tell your younger self, what sort of lessons, you know, 5, 6 years ago would you have said, by the way, you know, make sure you do this or don't do this? Is there anything you can think of?

If only I'd have known everything then that I know now, I think. I think the main thing I would tell myself is to get bigger, faster, as quickly as possible. And there's no question on that list would have been outsource fulfillment quicker, spend a lot of money on training myself up on how to use Facebook ads. If I could have spent, back in 2012 or whenever it was I discovered Facebook ads, if I could have spent £10,000 then on getting myself world-class training, I don't know, if I had to pay an individual that knew what they were talking about, if I had to go and work for free for an agency and use £10,000 worth of my time, whatever it would have taken, we would have earned that back so much, multiple times over the year. What's really frustrating for me is that Facebook ads were so much cheaper back then, and that we could have scaled so much quicker and for so much less money than it's now taking us. That would have been money well spent, spending more money on training myself, my own knowledge on that. We would have borrowed money sooner, I think, and because now we know that we had potential. I think we kept on telling ourselves that we were so niche that we'd probably reached the maximum number of people who'd be interested in us, but actually that's just kept growing. And we, knowing now how much bigger we could have been, we would have borrowed money in the early days to get more stock. And then obviously there's other small things as well, like finding the manufacturers that we now work with and and the people who now work with us as well that could have saved us time. But the truth is that it's been a 9-year journey from idea to crossing the 7-figure mark, but the truth is that all of that could have been done probably within 2 years, 24 months I would give myself to get from nothing to where we are now. I think it could be the scale it could have been. And the other interesting thing is that I would say this to any entrepreneurs starting out is that we came up with this idea 9 years ago, but I would say at least 50%, if not more, of the money that we personally have ever made from this business has been made in the last 12 months. That's something that happens that just with the scale of things is it just in the early days, you just don't expect to make any money in the early days. But focus on getting bigger as quickly as you can, getting more customers through the door. If you're making sales, that's the most important thing, and the profits and the money coming in will come a lot later. You've got to be patient for that.

That's amazing. Thank you so much. That's a perfect thing to finish on, and everyone's going to go rushing off to get themselves really genned up on Facebook advertising and contact tracing circle and all those sorts of things. But no, I really appreciate it. Thank you so much. And it has genuinely, you know, always been an absolute pleasure working with you. And we love working with, you know, people who sing off the same song sheet. So thank you so much.

It's been a real pleasure. It's great to work with a business that, you know, is kind of ethically right on, has got good values, and, you know, wants to do business properly as well. You know, business I think often gets a bad name in all kinds of circles. You know, we think it's like a dirty thing, but actually, you know, small businesses like yourselves, like us, you know, are providing jobs to people and are growing the economy and keeping people gainfully employed. And it's been a real pleasure to work with you, and I would far— I really enjoyed working with business like yours compared to, you know, some of the massive multinational conglomerates, that's for sure. Who do fulfilment, where they're just not going to care about you in the same way. So it's been a pleasure.

It's been a lovely journey together, hasn't it? Well, I will let you get back to the sunshine, and thank you again, and we will be getting that curry organised as soon as we're allowed to.

Sounds good.