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External Influences 1: PotArts Ltd - Activity

Image: Maria is able to buy pots at an average price of €10 each from Spain. Copyright: Matthew Davids, stock.xchng

The holiday to Spain seemed a long time ago for Maria; three years had passed since she had gone to get a tan and have some fun but came back with more than that. PotArts was now her life but it was the sun-drenched Costa Brava that had inspired her. Travelling inland from the coastal town of Palamos, north of Barcelona, she was struck by the number of 'ceramicas' she saw piled high with ceramic tiles and pots of all shapes and sizes.

She had just finished university and had been relaxing following her final exams; she had no serious plans for a career but had planned to travel. She had brought back some teracotta pots for the terrace at her flat and during an early autumn morning with nothing much to do, she decided to make use of her AS level art skills by painting a design on the pots. Friends had commented on how attractive they were and asked if she could do some for them. She visited the local garden centre and was horrified at how expensive similar pots were, but bought some anyway and fulfilled the promise.

Word got around and friends of friends asked Maria if she could do pots for them too. Apparently, they liked the individuality of the product - they were a talking point because every pot was different. Maria was surprised by the number of people who enjoyed their gardening; she put it down to the number of makeover TV shows and Charlie Dimmock but when she delved a little further into the industry on the Internet, she found that it was growing at a rapid rate and was now worth over £5 billion per year. She decided to use some of her earnings to go back to Spain and negotiate the purchase of 100 ceramic pots. Even with the transport costs and the cost of her trip, she was able to secure the pots cheaper per unit than buying them in the UK!

Image: After the designs have been added to the pots, they retail in the UK for £35. Copyright: Sophia Lemon, stock.xchng

It all spiralled from there. She now has two studios - one in Beaconsfield in Buckinghamshire in the south of England and one in Stokesley on the edge of the North Yorkshire moors in the north. She employs 20 people in various roles, from transport and delivery to designers and artists, at an average wage (not including national insurance and pension contributions) of £250 per week. As owner, she reserved the right to travel to Spain and other locations seeking pots upon which to base their designs. Maria is now able to secure pots at an average price of €10 each, and after the designs have been added, they retail for £35.

The company was now a limited company with Maria as the major shareholder, but with contributions from her parents, as well as some friends of her mother who had some savings and agreed to purchase some shares. Maria had invested wisely in the two studios but had also bought transport vehicles, storage warehouses and other necessities through a loan secured on her flat, which she had kept. 60% of her capital is in the form of loans.

The growth in the business was reflected by the rise in turnover: 120% in the second year and a further 110% in the third. Turnover for the forthcoming year is predicted to be £850,000, which would represent an increase of 40% - still healthy, but Maria thinks that it is to be expected that things will slow down given the rapid rise of the early years. Profits are expected to be in the region of £200,000 next year. Maria has estimated that the demand for her product is both income and price elastic, although she is not sure of any exact value!

One new aspect to the business has been the establishment of a link with the United States; her contact thinks that the suggested retail price of $60 would be about right and the products would capture that 'Englishness' that so many people in the States love, especially given the favourable view of the British at the moment in the US! The contact has forecasted that sales to the US could form around 20% of total forecasted turnover within two years. Maria is very pleased with the way the business has developed and is looking forward to the challenges that lie ahead - she does not know exactly what to expect but is looking forward to it anyway!

* = forecast figures

The government's commitment to improving public services is likely to lead to a rise in the National Insurance Contribution (NIC) by employers by a further ½% in the next year. Further legislation being introduced in the EU will tighten up health and safety and employment laws in the UK.