Building a sustainable business

Entertainment to environment

After starting his career as a chartered accountant, and 10 years' experience at Warner Brothers, Jonathan made the decision to set up on his own. He launched a digital management business, working on multi-language texts, subtitling and dubbing for DVDs in the USA and Europe.

“The business was going well, but I realised that whilst I was well connected, I was still a small fish in a big pond. So, when the opportunity arose to sell the business, I took it.”

With awareness of environmental issues rapidly increasing, Jonathan turned his focus to sustainability, not only wanting to do something good for the environment, but also identifying long-term opportunities within the sector.

He met with a designer, who presented his sketches of eco-buildings and together they set up Green Unit in April 2012.

Green Unit: the concept

Now in its seventh year, Green Unit designs and manufactures environmentally-friendly, modular buildings in its offsite factory in Oxfordshire, delivering virtually completed, road transportable sections of green buildings straight to site.

A green building is a building that in its design, construction or operation reduces or eliminates negative impacts, and can create positive impacts on our climate and natural environment, according to the World Green Building Council.

The offsite building process has many benefits for both clients and the environment, including less wastage, more accurate timescale projections and relatively less disruption, compared to traditional building methods.

Green Unit’s eco-buildings – known as the ARC – have a unique curved design to mimic nature and can be designed and built to the customer’s needs.

“After doing research and development for the first six years, we decided we wanted to design a building that mimics the natural environment. The stunning Green Unit ARC sits extremely well in a rural setting, but the challenge is to identify opportunities in the urban jungle.”

The ARC is a sustainable building and has a high operational performance, thanks to its low embodied carbon and high levels of insulation. Its smart modular design means it can easily be added to in the future – along with its foundations – as requirements change in the future.

Early-stage funding

“We were lucky enough to initially fund the business ourselves using the money that I made from selling my entertainment business, with my business partner also putting some money in. I think we put in the best part of half a million pounds in the beginning”.

However, much like many other businesses starting out, Green Unit have required multiple cash injections to get the product to where it is today. In 2016, they needed £200,000 to put into concept development and received equity finance from an entrepreneur who supports sustainable businesses.

Equity finance is the raising of capital through the sale of shares in a business to third-party investors. Using this type of finance in smaller companies typically means you not only get money, but also access to advice and expertise too, especially if some shareholders are also directly involved with the business and maybe also join the company’s Board.

“We also received a £30,000 Leader grant – grants specifically for rural businesses –  which really helped us with buying necessary equipment once we started building the ARCs. I’m also looking at opportunities with the Oxfordshire LEP (OXLEP) and their local enterprise partnership.”

Manufacturing and the working capital challenge

A challenge often faced by businesses in the manufacturing industry is that a lot of the costs are upfront. It takes a lot of time and money to develop and test your product and get it through regulatory controls, meaning the money you put in is spent without any compensating revenues.

This can create a working capital gap which, even with confirmed orders, can make it more difficult for manufacturing businesses to release the cash needed to invest in future growth.

“I think one of the biggest challenges we have faced is cashflow. It takes a long time to generate revenues from the product. You don’t get the client before you have a product. So, you have to develop the product on capital.  And if you’re lucky, you will get some early adopter sales as we did.

“There’s a massive amount of belief that you have to instil into the client to believe in you, because they are taking a huge leap of faith.”

Green Unit today and plans for growth

Just recently, Green Unit has been able to move from a small research development facility into a new 25,000 square foot factory thanks to an encouraging order from a large client. The move has enabled the team to build the ARC road-transportable sections under cover rather than outside

“Whilst a giant leap of faith, this move has been absolutely instrumental to us. We knew we couldn’t win the business before demonstrating that we have the manufacturing space that will be equipped to handle the business if they give it to you. You have to take the space on before you get the business.

Green Unit has also taken a major step in recruiting people to work on the marketing, procurement, production control and finance side of things. The back-office team now includes six new recruits, including an experienced marketing manager, to really allow them to grow the Green Unit brand and reach new prospective clients.

Jonathan’s vision for the next five years is to build the sustainable products to a level that will allow the next financial injection to take the business into a volume-building producer.

“We have a prospect pipeline of £20M. It’s where all our promising leads go to get graded according to various lead qualification criteria. However, it’s a moving beast so we try to bring on new clients frequently.”

We quizzed Jonathan on the benefits of his ICAEW membership. Here’s what he had to say:

As a chartered accountant, I’ve also benefited from membership of the ICAEW, a key partner in the Business Finance Guide. This has given me access to training, support and information to help make the right financing decisions as we’ve developed the business.

I attend quarterly Business Confidence Monitor meetings which are held locally for Thames Valley and Oxford, which of course is great for me. I get a lot of value from these events because they provide a fantastic networking opportunity.

I’m also on the manufacturing community and have strong intentions to be a very involved participating member in the future when I have more time on my hands. At the moment, the community is aimed more at bigger manufacturing entities and I represent the small end of manufacturing so I’m keen to have a say on the panel at some point in the future.