Woman holding a pair of glasses

Fast moving start-up bucks the retail trend with solid bank backing

There is no doubt that retail is a challenging game, confirmed by Peter Costello’s address at ANRA Retail Nation 2014, where Mr Costello bluntly told the CEO of Woolworths Grant O’Brien and 350 assembled top retail bosses to just move with the trend, like retail has been forced to do for centuries.

One such retailer that is moving with the trend, with stellar growth results, is iframes. The concept is strikingly simple: Sell top-brand designer eyewear at prices well below normal retail. And deliver the next day on hundreds of in-stock items.

The concept has literally caught on fire. 15 months in, the new business has raised funding from ANZ twice and may be ready to face international markets as soon as early next year.

Edward Lakman, founder of iframes, explains the success quite simply: “We have 2,500 items listed online with almost 1,000 held in stock locally. It allows us to dispatch and deliver quickly around Australia and NZ for free, and we sell up to 60% below what you see in the stores. People like that!”

What is surprising about the business is that they went to the banks at a very early stage to raise funds. I asked Edward about whether they had sought outside help to tackle the approach to the banks. The answer was no.

“We provided cash flow forecasts and a strong business plan, as you would expect. Once we figured which of the banks wanted to talk to us it was easy. I did the whole application process over the phone with ANZ, and the banker even dropped by our office to pick up the necessary paperwork and documentation.”

iframes got funded under ANZ’s $1B lending pledge. In simple terms, they needed funding to buy stock (which enables the next day shipping model) and drive a strong marketing campaign.

What I found unique when speaking to Edward was that they soon realised the funding they received was not enough. Within a few months the business was taking off very rapidly, and they had to go back to the bank, asking for more funds.

“On the back of the results we had achieved in just the first few months of trading we convinced ANZ to quadruple our line of credit. No doubt the fact that we had expanded aggressively and put the funding to good use convinced them to extend the arrangement.”

Knowing how many business owners I speak to every week feel uncertain about taking on a debt obligation, I asked Edward how he managed the cost of the debt facility.

“You need to factor in the cost of interest in your P&L projections. But due to the funding we have been able to achieve critical mass and become profitable within twelve months of starting the business, which would otherwise not have been possible.”

By this point in the interview the main thing I was wondering was how Edward and his team had managed to convince ANZ. “Be confident”, Edward said. “You have to show the bank that their money is in good hands, and that you know what to do with it. And you have to confidently believe in your plan. If not, how can you expect them to believe in your business?”

Later on, Edward told me that ANZ also offered to connect him with business mentors, which he didn’t feel he needed at the time.

“I think that is a great service, the banks should push that harder,” said Edward.

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