‘I went to Irish Nationwide to get a cheque and the doors were locked. I should have trusted my gut’

WHEN I LEFT school, I went straight into an apprenticeship to become a carpenter and when I qualified I started working with my brother as a property developer buying small plots in Cavan.

We would buy a half-acre site and build a house on it, then buy an acre site and build four houses on that and so on. We kept growing from there and about a year before the property crash we got to a reasonable size.

In 2006, we bought a site in Offaly with the plan to build 100 houses. We got phase one done and at that stage had a feeling something was coming down the line because houses weren’t selling so fast, but the banks were telling us everything was fine and there was no problem.

Then one Friday we went into collect the cheque for one of our stage payments from Irish Nationwide, and we were told to come back on Monday. We arrived on Monday and the doors were locked. The sinking feeling sets in real fast then.

We were led down a garden path by the banks and as a result we kept going with work. Each month, between suppliers and contractors, we were burning through about €1 million.

I went against my gut and it was a big lesson to learn. We knew something was wrong, but inexperience led us to think otherwise. We had never seen a financial crash before. I only recently learned in the past 12 months that I need to listen to my gut more.

Post crash

After the property crash, I didn’t know what I was going to do. I knew I wanted to have some sort of internet-based business and bring construction online somehow.

I was actually in the back garden with my girlfriend at the time hanging out the washing when the idea came to me. I turned around to her asked her what she thought of the idea for a website that can give a quote for your list of building materials online.

I figured I could set up a service where people could get quotations from different builders merchants all over the country. Like Gocompare.

That company was Build4Less and, to be honest, it was too far ahead of its time. The technology was just not there yet. It just didn’t work since customers were getting prices back off Heatons, Chadwicks or Brooks on my website and going into their local suppliers and asking would they match the price, bypassing our revenue model.

I did it for about 12 months and then said to myself it wasn’t working, so I figured I would sell building materials online instead, direct to the customer. That way I solved the revenue model issue immediately.

I went to my contacts and asked my suppliers to give me the same price as they did last year when I was building and went from there.

Some of the suppliers were a bit skeptical of the idea, but it was all about how you pitch it. I found there was no point going to a 60-year-old managing director and trying to pitch this to him. They hardly knew what the internet was, never mind selling their products through it.

I pitched it to young sales representatives telling them all the sales would go through them, and they just saw it as a new sales channel. But once the older generation saw the sales start to come through, they were on board as well.

Testing ground

Aside from some big orders on Build4Less, there weren’t many high points. I always viewed the business as a trial run in the Irish market to make all my mistakes.

I always had my eye on the US and the UK; when a market is small and the building industry is on the floor, it is very hard to make a living.

That said, Build4Less served me well when I was going through a rough time with the construction business going down the toilet and ending up with millions in debt. Also my brother died of cancer in the middle of it all, so I ended up carry the full debt. So, times were tough between 2007 and 2012, and Build4less was my lifeline at the time.

I was working with a Canadian builder and I rang him to see if he knew anyone in Canada who would be interested in taking a franchise, which led me to work with his brother-in-law to try and get the business up and going.

After contacting the Canadian embassy in Ireland, they invited me down to a building exhibition in Florida to meet some Canadian vendors we could do business through.

There weren’t many vendors there who interested me, but I ended up making a connection with a building materials supplier called ProBuild who wanted me to bring the business to the US and sell solely through them.

The vice president of that company asked what state I wanted to pilot the idea in, and I was completely inexperienced so I picked Florida, not knowing that it was the state hit hardest by the property crash.

It absolutely flopped because I had no market research done and limited funds since I had put everything into the Irish business.

I was able to carry it for about six to eight months, but the traffic never really came because we didn’t manage our search engine optimisation properly and our AdWords campaign wasn’t working – which meant the budget was gobbled up by Google. I got some good sales from it but not enough to justify the time and expenses.

Johnpaul Manning

Trying again

I was quite down about the US thing, so I decided to shelve it all for a while and ended up going into partnership with two people in the UK selling insulation – and that let to my latest business, Insulation4Less.

They had their expertise in insulation and I had my expertise in e-commerce, so we decided we would do the specialised business and focus in on a niche market. The advantage we had was really strong buying power from the get go because these guys in the UK were already buying millions worth of insulation every year.

The business took off very quickly. Insulation4Less went from zero to €500,000 in revenue in the first year and then our second year we went to €1.2 million, €1.5 million the following year and this year we’re looking to do €1.8 million to €2 million.

Once the UK business got to a stage where it was making money, I figured it was time to try it in the US.

I effectively googled insulation distributors, went over to Boston and a supplier liked the idea and agreed to be a distributor. They had 50 locations around the US, which gave us great coverage straight away, and then we really just started to convince other distributors to sign up.

Now we have eight of the largest distributors signed up to our platform and over 600 locations to ship from, and a sales office in San Antonio, Texas. The success the second time around has been purely down to experience and understanding the vastness of the US.

It is so easy to pull the US up on Google Maps and understand it is a big, well-developed country, but really when you get down to the nuts and bolts, moving away from the east and west coast and look inland, you find transport is expensive.

I simply had my eyes open going into the US the second time round. Now we’re in the process of raising our first round of funding and have already raised €300,000 with the aim to raise around €1 million in total.

Johnpaul Manning is the ‎co-founder of Insulation4Less. This article was written in conversation with Killian Woods as part of a series on business mistakes and what can be learned from them.

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