Business Essentials: The long grind of expansion

A teeth-whitening business wants to get bigger without losing its edge, says Kate Hilpern

If Dean Menzies is smiling, the chances are that plenty of other people will be smiling too: LaserBrite, the teeth-whitening business he started last July, is enjoying strong growth.

If Dean Menzies is smiling, the chances are that plenty of other people will be smiling too: LaserBrite, the teeth-whitening business he started last July, is enjoying strong growth.

"The idea came out of a project I was assigned during my MBA," the Glaswegian explains. "We had to assess the impact that US business trends have on the UK, and while others looked at fashionable industries like telecommunications or the internet, I chose a mature but highly cash-generative industry."

The more he researched, the more obvious it became that there was a gap in the market in the UK and continental Europe. "Teeth whitening was becoming increasingly available, but it was regarded as a luxury item and the pricing reflected this, putting it out of reach of the masses," he says.

After two years of scrutinising the market and the various products available, Menzies developed a business plan which he presented to a high-profile Scottish entrepreneur. "He was willing to invest £1m in the project but wanted 80 per cent of the equity. In effect, I would have been working for him, so I declined his offer, set up on my own on a shoestring and we have been growing since."

Although LaserBrite has advertised in newspapers and on the radio, the teeth-whitening centre itself, located in Glasgow, has been the main form of promotion. "We are very visible because we are located at a major intersection, with traffic lights on all angles. Most of our clients, of which there have been several hundred since we opened, have come as a result of that."

Menzies has worked hard to ensure that the main attraction of the treatment is quality at a reasonable cost. At £199 to £399, it is not cheap, but many competitors charge £500 to £1,100.

The next stage for Menzies is to grow the business further, and his plan is to create strategic alliances with other related industries. "Because teeth whiten- ing is a cosmetic treatment, I believe it sits nicely with beauty salons. So far, I have developed links with 12 exclusive salons, whereby they take the bookings and we turn up to carry out the treatment, and I am currently negotiating with a chain that has 120 salons. I would like to do a similar deal with gyms. This will mean going national, which is very exciting, but I am worried that it could have a detrimental effect on the brand image, causing it to be more heavily associated with 'bargain' cost than quality."

Strategic alliances could also give rise to control issues. "If we link up with national chains which have 100-plus salons and spas, we will have to employ an increasing number of dentists, which will open up the issue of how I can control the quality."

Whatever path Menzies takes, he is keen to avoid taking on too large a debt or giving away too much equity.

www.laserbrite.co.uk

WHAT THE EXPERTS SAY

Pete Ferns, director of NatWest Business Banking

"First, Dean Menzies should revisit his business plan. The key to successful expansion is monitoring your growth against that plan. He then has two viable options.

"Creating alliances with other industries is one, though it is likely to involve a lot of hard work to make sure the partners he selects are suitable, that the correct training is given to them and that they are delivering the service expected under the LaserBrite brand. On the positive side, it means he will maintain more control of the business and its profits.

"The other option is franchising, which will give Menzies the opportunity of expanding his LaserBrite business nationally but without the burden of raising all the required capital himself. It will also allow him to maintain more control over the brand."

Andrew Warren, board director, Cap Gemini Ernst & Young UK

"Menzies needs finance but of equal importance are the knowledge and resources to achieve the growth he seeks. One way he might do this quickly, with limited debt while maintaining sufficient equity, would be to encourage an existing business to invest and work alongside him in a corporate venture arrangement.

"One possibility might be the diagnostic and treatment centres (such as optical laser clinics) that are springing up on the high street. Many are operating on a national scale and could provide Menzies with the knowledge and existing infrastructure he needs. As the market develops, the providers are likely to be looking for ways to stay ahead of the competition, and LaserBrite could provide an attractive partnership option."

Barry Franklin, Business Link adviser

"Franchising takes care of many of the issues presented while being self-funding. The potential for growth at LaserBrite is enormous, and Menzies should consider the savings in time and effort he will make via franchising compared with trying to administer and control expansion centrally.

"Inviting dentists to invest in the business will remove most of his costs in recruitment, premises and equipment, while he will still retain his influence by heading the business. Good communication will be paramount in ensuring that the network is fully informed and he receives important market feedback."

If your business might benefit from our expert guidance, please contact business.essentials@independent.co.uk