Darren Sharples, Director at Cloudstix tells us how he has managed to grow a successful business and franchise in an industry that is consistently coming up against barriers.
What’s Your Career background?
Both myself and my Co-Director have backgrounds in sales and marketing. It was this similarity which led us to start our first business together in 2001. We had known each other for some time personally, and when my previous business partner moved abroad, he sold his share of the business to Paul and that is where it started!
How did Cloudstix Come to be?
Cloudstix was started as a partnership in 2012 and then became a limited company in 2013. The business was started as we were looking to implement the key marketing strategies we had been advising other businesses to adopt into something we could grow ourselves.
Our friends and family were already using electronic cigarettes and when we looked at the margins some of the companies were making, we quickly acted to bring better quality products to the UK market at up to 40% cheaper than competitors were selling for.
We needed to educate ourselves quickly. If you are in an industry then you have to live and breathe it. In the E Cigarette industry it’s very dangerous to sell a product you know little about. We have a team of people who know electronic cigarettes and the legal requirements inside out. They are well paid but worth it so that Cloudstix is on the ball with all red tape requirements.
You trade both online and offline, what guided you to this Omni channel offering?
It was very natural as both of our backgrounds cover retail and online marketing so it was a no brainer. We started selling online first, but we soon had consumers turning up at the office requesting to purchase there and then and so one section of our office became dedicated to a store. We traded like this for 12 months before opening our second store and then the numbers grew from there.
What’s the most challenging and most rewarding aspect of running your own business?
The most challenging aspect is never being able to switch off, constantly replying to emails and solving problems. The rewarding aspect is being able to sit back after many years in the industry and being proud of the brand that we created now being very well known in the UK market place.
We pride ourselves on quality; if you are in the market to sell a low quality product then a long hard look at yourself is needed. We believe you should be proud of the products that you sell and would put that product in the hands of your family with zero concern for safety. That is what Cloudstix did, we brought quality products to the UK market, lowered the price for UK consumers without compromising security.
How have you dealt with all of the controversy surrounding e cigarettes?
It’s been trying at times, but we have remained very professional and have dealt with the hard facts only. We always knew electronic cigarettes were much better than smoking real tobacco and this has been fully backed up by scientific research which is now thankfully in the public domain. It would be nice if the national press hadn’t ran so many damaging stories about the products being dangerous as this put a cross on the whole industry. If your product is manufactured well and you test it then you should have a great & safe product for consumers.
What led you to franchise the business?
We opted for franchising because it was a method of expansion that had been recommend to us by another company who had gone down that route. We wanted quick & fast growth and although new to franchising it was something we understood, we employed a franchise consultant to work with and took it from there.
People approached us almost straight away to become franchisees, and we are still approached consistently, however we can usually tell within 5 minutes if they are the right people to work with. Sadly 95% of enquiries are not the right people who expect them to be buying into a fully trained workforce and not just a turnkey business. This industry requires in depth education; our franchise solutions covers full onsite training and this includes the regulations involved in the industry. We would be very foolish not to train any franchisee on the matter.
We have found success through franchising and I would recommend it to other business owners. It depends on the business model, if its right then yes why not? I certainly wouldn’t rule out growth within your own umbrella as well as you then have full control over your brand.
With the new legislation around E Cigarettes, how will your business and position as Franchisor be affected?
It will certainly cost us a lot of money, our total bill to be TPD compliant will run close to £250,000.00 which is crazy. We do believe the industry needs regulation to cut out the low quality products from the market but the TPD article 20 was way over the top for electronic cigarettes.
*In brief – The TPD is the Tobacco Products Directive; an EU directive that is governs the control of tobacco and the way it is advertised, packaged and where it can be smoked. The latest version also includes e cigarettes – this is referred to as Article 20. There are now restrictions on the size of E liquid tanks, refill containers and strength of nicotine among other stipulations.
Will Brexit affect your business in any way?
The TPD was created in Brussels and forced upon member states so if we do exit then it will be down to UK government to shape the future of our industry. I can’t predict the way in which the industry would go.
Do you have any further plans for growth, if so what are they?
Yes, we have recently completed a major distribution deal for one of the main manufacturers in our industry. New premises have had to be locked down with warehouse facilities. This has been a very stressful time especially with TPD coming at the same period.
If you had one piece of advice for those thinking of growing their business, what would it be?
Never go beyond your means. If you can afford a loan to grow quickly then do it, if you cannot then do things slowly overtime.