From the big smoke to the bush, 365Cups founder Simone Eyles shares her startup lessons.
In 2009, Simone Eyles left Sydney and went “bush” — chucking in her graphic design and communications job to move five hours south-west to Wagga Wagga. She dreamed of opening a drive-through cafe with a cool ordering system. She is still dreaming about the drive-through, but the cool ordering system she founded with Mariusz Stankiewicz, 365Cups, has transformed into an app with 55,000 users. Her restaurant and cafe clients process 7000 orders every day using it.
As payment, Eyles had planned to take a percentage of each order, the so-called “clip-the-ticket” business model. The bank said, “No”. They refused her a merchant account to allow her to take credit card payments. That seems inconceivable today, when many of us could name a dozen merchant service providers. But in 2011, when Eyles’ business went live, the banks had a stranglehold on that market. And Eyles was positioned right at the edge of technology businesses.
“We were at a very early stage with smartphones, apps and digital businesses,” she recalls.
So she changed to a subscription model. Instead of marketing her app to end users — such as rival apps HeyYou and Skip — cafes pay a monthly fee to use the 365Cups app. “It clarified who our client was,” Eyles says. “At the start, it was all about the end user. Now the end user and the cafes are equally important.”
Cafes pay both a monthly subscription fee and a set-up fee, but there is no commission on sales. That solves one problem for restaurants and cafes, where everyone is taking a piece of their action. Ordering and delivery apps charge around five per cent of an order, squeezing the profit margins. Businesses can customise the 365Cups app with their own colours and logo. From that point on, the profit goes back to the cafe. The more successful they are, the more profit they make.
Managing the growth risk
It’s a profitable enterprise now, but Eyles spent most of the first year building 365Cups “on top of life and jobs”. She quit her day job after 12 months when the calls about the business became too frequent.
“That was a defining moment. We worked ridiculously hard for two years,” she says. Eyles has, at times, considered changing the business model but decided against it. “I crunch the numbers, every so often, but I am really happy with the model.”
She concentrates on keeping her lean business — five people — efficient by automating everything possible. The only exception is customer service. Clients of 365Cups can ring a phone number and find a person on the other end if they need a quick answer, day or night. Fortunately, it doesn’t happen often.
A $30,000 grant from Commercialisation Australia played a critical role for 365Cups in the early years.
“We didn’t have to get a loan. With the grant-application form, we got all our legal work done — our trademark, innovation patent, and Madrid Protocol.” (The Madrid Protocol allows companies to select several countries to trademark their business.)
Completing the 60-page application form was painful, but Eyles understood her place in the market better as a result, and it also formalised the business systems.
Eyles adds that completing a six-week Springboard Australia program in 2014 — an accelerator course for women entrepreneurs based on an American model — proved to be another defining moment. The range of contacts that she developed on the course would eventually became her “de facto advisory board”.
Given her chance to set up the company all over again, though, Eyles says that she would have definitely appointed a board.
“We had some hairy situations, things that were quite confronting and scary. I am weathered now, but I have been a bit naïve. Business is serious and tough.”
Making it Work in Wagga Wagga
Simone Eyles has seen a few ups and downs in her adventures as a regional business. She has learned to:
- Be proudly regional
- Demand the NBN
- Educate authorities
Eyles’ city friends teased her about the move to Wagga, but it has proved to be a marketing bonanza. “People love our story of being regionally based,” she says.
It also makes her popular with other regional small businesses with clients in far-flung locations.
Eyles started co-working to support herself through the early stages. Initially, she offered two desks in her shopfront office. Interest snowballed and she opened Working Spaces HQ, which now offers classes and workshops such as how to use Google Analytics, write a press release or use Facebook ads.
The data speeds offered by the National Broadband Network (NBN) have been an advantage, Eyles says. By 2017, about 4900 entrepreneurs in regional areas had started businesses because of NBN access; more than half of them (2500) women, according to research conducted by AlphaBeta for the NBN Co.
“In Wagga, we have incredible women — highly educated, who have travelled the world, worked at senior levels and now come here to have a family. Then they open online businesses.”
Digital businesses are not well understood by local government officials, who tend to be sceptical if they don’t see a shop with products on the shelf. “We have 7000 people use our app every day across Australia and New Zealand. I would like to see a shop in Wagga with 7000 customers a day,” she says. “People in the regions are not country hicks. There is a lot more going on in the regions than you would think.”
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