A noisy New Year’s Eve party was music to the ears of businessman Rick Parsons.
The neighbour’s complaint sounded like an untapped market and the business opportunity he had been waiting for. The idea for soundproofing specialists iKoustic was born.
The first year was all about establishing the company website and marketing the soundproofing products to home owners and the building trade.
But for the business to thrive, iKoustic needed to also target those contractors with the potential to be repeat customers, such as builders, dry liners, joiners and carpet fitters.
Rick also needed to educate prospective clients, encouraging customers to move away from the traditional view of soundproofing as only for recording studios.
“People would say we have a partition wall in the lounge and we can hear the neighbours through it. What can I do?” Rick said.
“The goal of the website and supporting information was to demystify acoustics. We had clear online prices, installation instructions and encouraged independent feedback. Those three points differentiated us from the competition at that time.”
Like any new business, cash and growth are significant challenges and stresses began to appear as iKoustic attempted to develop new products when average orders were still only £400.
Rick remembers: “I had sold my house to start the business in 2010 during the recession and didn’t have a lot of additional cash. I needed a cash flow strategy.
“We went through a couple of years trying to grow in difficult financial circumstances, this was the peak of the recession.”
A loan from the bank was out of the question because the business was not yet profitable, meaning Rick had to look at other options.
He had read about Pension-led funding (PLF) but it wasn’t until he applied for a loan and was told to come back in six months or try PLF that Rick approached us.
Rick was looking to borrow £50,000 to inject into his company which, at the time, had a turnover of around £400,000.
He ended up borrowing £60,000 secured against the company’s Intellectual Property and balance sheet. The iKoustic brand had value, had secured a significant amount of website traffic and had developed its own products. The company also had some domain, trademark and brand protection.
“Securing that pension gave us a lift, a really positive self-funded future. Suddenly everything looked a lot stronger. We still look back to that dark winter, where we had a three-month period of strong P&L but little cash. We didn’t know whether we could keep the cash going,” he said.
“The pension funding catapulted us forward in one leap to better security.”
iKoustic have now grown their number of products from 25 to 125 with the European market potential growing as modern living becomes more minimalist with noisy hard surfaces and electronic devices create more noise in more rooms of the home . . . creating a fertile, expanding market.
“We are getting more technology in homes, mobile phones, docking stations, bigger TVs. The level of sound is growing. People are also moving closer together, we have more density of population. We also have a preference for cleaner living such as no carpets. It’s a perfect storm of noise.”
“We have now expanded our reach into more markets, selling to resellers and installers as well as direct to domestic and trade. We started off with the home market. Now the workplace, from cinema to studio, hospitals, from schools to nurseries and gardens.
Their latest customers this week include a stylish gym in Edinburgh, an industrial production unit in the North West, a firm of architects in London and a house builder in Yorkshire. Their home market reputation has grown from Wetherby in West Yorkshire to shipping orders to over 30 international countries in six years.
“If it’s noisy we can help,” said Rick.
He said the quietest environment most of us have experienced is 30 decibels. Noisy neighbours normally register around 70db.
iKoustic’s Genie Clip system can cut out 70db in principle but Rick said: “That doesn’t mean it will stop the sound of the bus going by or the washing machine. It reduces the average. We are not trying to get to zero but trying to get back to background noise levels in most scenarios.”
What is not in doubt is Rick’s satisfaction with the funding from his pension.
“I am borrowing the money from myself for my company. I can’t lose. iKoustic has contributed more to my pension in the last year than any other single investment. That is a positive feeling all round.”