40% YoY growth for the past 15 years – Tiny Box Company’s big growth journey
In each edition of Business Leader Magazine, we profile a UK business that is experiencing exponential growth in a feature called Fast Track. In this edition, we spoke to ethical packaging firm, Tiny Box Company.
Since being founded in 2007, the multi-award-winning firm has grown its turnover on average by 40% year-on-year for the past 15 years. So, how have they been able to do this? According to company Founder, Rachel Watkyn, it’s down to flying in the face of convention and going against everything that she was told about how a successful packaging business needs to run.
A gap in the market
Prior to setting up the Tiny Box Company, Rachel was running a small, Fairtrade jewellery start-up, but found it incredibly difficult to acquire the gift boxes she needed to send out her goods.
“I just wanted like 10 jewellery boxes, but you couldn’t buy them off the shelf, you had to get them made especially for you, with a minimum quantity of 1,000 units per size, lead time of 10 to 12 weeks and by the way, we’ll send you a quote in the post,” says Watkyn.
“I could not get my head around why you couldn’t buy off the shelf and why I had to have them specially made. So, I planted myself in the British Library and did loads of research around whether it was just me experiencing this problem, or with the explosion of Etsy at that time, was it waiting for a market disrupter. And it was, so I appeared.”
A year after founding the company, Watkyn and her business partner at the time, Christian Richardson, made an appearance on Dragons’ Den. But not all the Dragons wanted to invest.
Watkyn continues: “I was on Dragons’ Den in May 2008 and Deborah Meaden said to me that my business would always be niche, sustainable packaging was never going to be mainstream, and Theo, who did invest, said that I would have to compromise on my product offering and sell non-sustainable products.”
But despite agreeing verbally whilst on the show, Watkyn has never compromised her eco-credentials. Tiny Box Company doesn’t use any single-use plastics unless they are recycled, they use 100% recycled tissue paper, ribbon made from recycled bottles, and all their gift boxes are made using recycled and FSC-certified materials.
Diversifying the customer base
That appearance on Dragons’ Den saw Watkyn walk away with £60,000, but all the company’s growth has been self-financed, making its journey even more remarkable. A big driver of the company’s success has been down to its unique sales strategy, which enables the firm to cater to businesses of all sizes but not become too reliant on one segment of the market for its turnover.
Watkyn continues: “I started off with a product range of about 500 products, all off the shelf with a minimum order of one, and the idea was to keep that minimum order amount and that no one customer would account for more than 1% of our turnover. And we’ve stuck to that. This means we’ve got 120,000 customers and a solid customer base. So, if we walk into another recession, hopefully by having such diverse markets, if one market is booming and another is going down, we can remain stable.”
“Our sales strategy is to focus on the UK’s cottage industry, and because there is no minimum order, there are no barriers to entry for new businesses on the packaging side. But we also offer knowledge and consultancy – it’s not just selling packaging. It’s about selling a service and solutions for those bigger companies that do want to be more environmentally friendly.”
A key part of growing any business is the staff. And although 2022 has been a challenging one for Tiny Box Company where recruitment is concerned, generally, they have not struggled to acquire the talent they need for several reasons.
Watkyn explains: “We’ve never been able to offer huge salaries, but we offer quirky things like staff always get a birthday present, easter eggs, Christmas bonuses, and a Christmas present. I think the people that have joined do because we are a vibrant team that seem to be going somewhere, so there’s a good chance of promotion.
“But the biggest thing is we really encourage creative thinking. It’s a very flat management structure and we really encourage people to be the best that they can be, rather than telling them to adhere to stringent guidelines. If you’re looking for a workplace where you can make a difference, bring your own personality and be who you want to be, you can.”
Into the Great Recession
As Tiny Box Company was founded at the end of 2007, this meant it walked straight into the Great Recession of 2008, the largest global economic decline since the Great Depression. Yet despite this, they’ve been profitable since their second year of trading, maintaining a net profit between 10% and 16% every year. Aside from navigating some incredibly tough economic conditions, they’ve faced several unique challenges on their growth journey.
Watkyn continues: “There have been so many but one that sticks out in the early days was being blacklisted from Google. I didn’t even know that was a thing, but as we were an e-commerce business and 50% of our revenue came from online orders, that was catastrophic.
“We’ve been flooded and, as you can imagine, water and cardboard are not a great mix. Our first warehouse also caught fire. It was a really hot day and there was a halogen light where the insulation had been built right on top of it. The tin roof overheated, the light caught fire, and then dropped down onto one of our boxes.”
According to Watkyn, space has been an ongoing problem for the company too because they’ve been growing all the time and most leases want to tie you in for five to ten years. However, their continual growth means they’re outgrowing their premises much too quickly.
But no matter what adversity they’ve faced, one overriding theme has ensured they’ve been able to overcome any challenges.
“The overriding theme is when people say it can’t be done, you’re like, why can’t it be done?”, says Watkyn. “We’ve got to find a workaround here and I’m a right bloody pain. For example, with the print room downstairs, where we’ve got a bottleneck, I’m saying we need to set another printing machine up to get the work out, but the print room say there’s no space for it. Well, we need to find somewhere to put it.
“I drive everyone mad, but that’s the only way you’re going to get through problems. There’s no point saying, ‘Oh, we’ve got a problem, or let’s just give in’. So, it’s sheer tenacity. I’m not bright, at school they thought I had learning difficulties and ADHD. So, tell me why it won’t work and then we can come up with creative solutions to overcome those barriers.”
Big plans for the future
The Tiny Box Company is aiming for £30m turnover in three years and has already started a drop ship model to help them meet this target. But that’s not all the future holds for this fast-growing firm.
Watkyn continues: “We’re really focusing on corporate customers where we can add value as a consultancy, solution selling as opposed to just packaging. We also want to ramp up manufacturing. We’ve already got a factory in Cornwall, but there’s a lot more that we can be doing, for example, semi-manufacturing.”
Despite their ambitious growth plans, Watkyn has no plans to sell the business. She continues: “We’ll keep growing and see what happens. Maybe we’ll do a bit more acquisition because all we’ve done is bought the factory in Cornwall, so the logic would be to acquire other companies where there’d be vertical and horizontal diversification, which minimizes risk.”