Mentors assist in an enterprising sea change
Australian Financial Review - Your Business Quarterly - Special Report
A visit to a salt lake became a business opportunity for one British couple, writes Miriam Hechtman.
Shaun and Deborah O’Toole discovered the product on which they are now building an export business while on holiday in Western Australia. Living in Britain at the time, investment banker Shaun and food professional Deborah, were travelling around WA when they found Lake Deborah and its 5 million-year-old rock salt. Where others saw a geological oddity, the O’Tooles saw a business opportunity in supplying prestigious fine-food salt. “You cannot expect to succeed in export markets just by sitting in your office in Australia. There is absolutely no substitute for going to the markets where you’ve decided you are going to make an effort,” says Shaun, now managing director of Lake Crystal Salt.
After discovering the salt, the couple initially returned to Britain to “get on with their lives”. “We intended to move to Australia at some stage in the future. Then 9/11 [the September 11, 2001 terrorist attacks in the United States] occurred and impacted my area of business, and we decided that it would be an opportunity to act upon our business idea. I applied and was granted a business skills visa and moved to Australia at the beginning of 2002.”
The O’Tooles knew there was a market for fine-food salt and had some idea about targeting the product when they got started. “We believed that the unique qualities of the lake salt would be a competitor to any fine-food salt in the world,” says Shaun. One of the first misjudgements the couple made, however, was the assumption that Australians would welcome a home-grown product. “The appetite [for the salt] wasn’t as large as we assumed, and we realised that it was going to take some time of educating, attending food shows, whatever, to gain the interests and confidence of Australian consumers and retailers to list our products.”
Having invested in a start-up company that lived and died on sales, the O’Tooles quickly paid more attention to export markets. They registered with Austrade and were assigned a mentor through the New Exporter Development Program, with whom they were able to discuss what the product was all about, the segment of market it was best for, and the countries to focus on.
“I think the thing that impressed me the most was the speed of reply, and how you weren’t waiting months to get some feedback. The interaction was pretty informal with your mentor, and pretty immediate.”
Shaun also received financial assistance through the Export Market Development Grant scheme. Having the funds to travel to the markets, as well as developing a website and marketing brochures, was invaluable, he says. “I knew I had to do it, but it made finding the funds to do it a lot easier.” With a fine-food product with a price point there are only certain markets that you can go to. “And by degrees, and by trial and error, and by most importantly visiting those countries and finding out and trying to sell your product, you find out where you should concentrate your resources,” Shaun says.
There was more interest overseas than in Australia. One-third of Lake Crystal’s sales are in Australia, the rest are in offshore markets like Japan, Taiwan, Singapore, Hong Kong, Britain and the US. Shaun says the attitude of buyers in Australia is now changing. “I think we’re seeing a sea change over the last few years. It’s been gathering momentum with the appetite for wholefoods trends in the marketplace, and I’m proud to say that now we’re listed nationwide, with Coles, and in a good many Woolworths stores as well.” Shaun says potential exporters should be prepared to work hard and have the marketing expenditure within their budget before selling any of the product. The success of a product depends on the amount of unique selling points it has, he says: the more unique selling points the easier it is to sell your product. However, he warns, being cheap compared with overseas competitors is not a unique selling point.
After three years, Lake Crystal salt posted a small profit at the end of the past financial year. Based on current trends, the company expects annual sales in 2005 of between $750,000 and $1 million. “Sales have doubled over the last 12 months and we expect sales to double again over the next 18 months.” The company is now at the point of consolidating, says Shaun, “because we’ve more or less reached our capacity with our packaging facility, and the next step is considering further investment which will go towards increasing the amount of our production capacity”.
