by Real Business - Thursday, 30th August 2007

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Take a trip to the shaving corner of your local Boots. These shelves represent the £80m UK market for shaving foams and oils.

On these shelves, the global brand is king. Faberge's Lynx. Gillette. Colgate's Palmolive. Noxzema from Procter & Gamble. Nivea from Beiersdorf . Even Boots' own "Botanics" brand seems to struggle for its patch of space.

And hidden on the second shelf from the floor, with the most distinctive packaging of the lot, is King of Shaves. Meet the most enlightening story in the UK consumer goods market.

So how can a tiny brand, created just eight years ago, be competing against such mighty competitors? You'll find the answer 25 miles north-west of London, in a sleepy Buckinghamshire village.

Will King isn't the kind of man who spends much time staring out of his windows onto the swan and lakeside scene outside. This 36-year-old's mobile phone message exhorts, "Enthuse, Exceed, Enjoy, Will." From the Buckinghamshire offices of KMI (Knowledge & Merchandising Inc) there are plans afoot to create a host of world-beating brands.

KMI has an office in New York, plans to launch a range of hair care products this winter, has an established licensing agreement with Ted Baker to produce its branded fragrances, and is planning an assault on the ferocious world of shaving products. There's much more, too. The evidence is all around King's office. Unfortunately, visitors are sworn to secrecy. Let's just say that King's 19-month-old son Cameron Halcyon King has been a major inspiration for the new-product development team.

None of this was in Will King's life plan. Twenty years ago, his hopes centred on becoming an international sailing champion and leading courses at Cowes sailing week.

Instead reality dawned, as well as a sobering second-class degree at the University of Portsmouth in mechanical engineering. King then drifted into advertising sales. This was more like it.

Next came the events and conferences business. This was chastening, too. "I would bring in the business development contracts and the bosses would spend the money. One place had more company cars than employees," says King. "Another went under and then I had my idea and went for it."

This period was turbulent, but it taught King something very important: copywriting skills. You can see this across all the group's adverts and literature. He also discovered the joys of products with substance. "I decided I wanted to be selling products you can hold and feel, rather than are abstract and not real," he says.

An extraordinary redundancy gave King the final kick. His now business partner and chairman of KMI, Herbie Dayal, had to make King redundant as part of a cost-cutting exercise management consultancy client Hedges Wright.

"We met because Will had to be made redundant," smiles Dayal. But instead of becoming bitter, King recognised that the business needed to be rationalised. Executioner and victim stayed in touch. King used Dayal as a sounding board for his ideas.

To an untrained eye such as mine, Will King looks to have rather a good complexion. But it wasn't always like that. Shaving rashes, caused by poor-quality foams, gave him the inspiration for an oil-based product.

The products' prototype names were Sunrise (for men) and Sunset (for women). But while playing a game of Pontoon, King's father drew a King of Spades. The wannabe brand was born. King Jr did wonder whether it was a bit arrogant putting his name on the product. Dad put him right.

The product has become, literally, a textbook business school story. Students from London Business School have been shadowing King and KMI for the past three years.

Of course, it hasn't been easy. As his friends and contemporaries enjoyed regular salaries, better homes and holidays, King's lifestyle declined. "We spent from 1993 to 1998 in the Valley of Death," says King. "Low sales, negligible profits with one brand. They were tough times and we decided that we could not carry on with using the wrong type of suppliers."

Getting into Boots was a massive step for KMI. First, it established credibility - getting into the front door of major organisations is rarely difficult; executing a deal is. King: "First of all you need a good product. I like things that physically exist which are more real. Then you need persistence. It is like trying to chat up pretty girls. Just say hi." Easy.

King's confidence comes from the experience of learning and recovering from mistakes. "The more you do, the more confidence comes," he says. "But you must keep your feet on the floor and you should be okay."

Did he never look in the shaving mirror and wonder what he was doing with a tiny tube of oil that looked unlikely ever to register on the radar screen of the larger operators ? A long question with a short answer. "No. I always knew it was the right thing to do."

King's management technique can be described as tight, in all senses of the word. He gets animated discussing the minutiae of managing the supplier network out of his small office. There is a sense that money does not easily flow out of the door unless it is likely to bring in a specific return.

But behind this outlook is a brash marketing skill. Promotion ideas often cost the price of a stamp. For example, King sent samples to former England rugby captain Will Carling; he became the face of the product just when he became involved with the late Princess Diana. Diana's son Prince William, the future king, received another tube. No-one knows whether he has used it.

The business is becoming increasingly sophisticated. Today each employee produces £500,000-plus in turnover. "There is a sense of growing up that means we do have to constantly revisit how we position ourselves and how we grow our people," says King.

Dealing with suppliers is key. "The business environment is changing and there are many specialists out there, such as tube manufacturers, fillers, printers. We have four staff in charge of 42 product lines who deal with 100 suppliers," says King. KMI's approach is to use its HQ as a command and control centre and then outsource everything else. It's a lesson many growing businesses could learn.

Even with the best supplier relationships, KMI recognised that it either needs to sell millions of tubes of shaving oil or develop a wider range of products if it is ever to become a £100m company. As Herbie Dayall says, there is a difference between operating a firm with a single product in a single market and the situation now when the company crosses a range of different markets and appeals to both men and women.

This prompted the group to consider moving into fragrances. Dayal: "I realised that shaving oil is a low unit-cost product at one end of the purchasing spectrum. Fragrance is at the other end so I thought we should try and move into this world."

His marketing process was simple. "I phoned the designer Paul Smith, and Ray Kelvin at Ted Baker. Paul Smith did not return the call and Ray Kelvin's PA did straightaway and arranged a meeting."

Come the meeting, Dayall explained that they wanted to build the King of Shaves business; Kelvin said that his plans were pretty similar. "After 20 minutes, Ray said, you want to do an after-shave with my name on it?" Dayall said, fine. The deal was done.

Kelvin, who is notoriously press-averse, liked their style, listened to their plans and agreed on the spot to a deal. "They approached us and made a very attractive proposal. They had bothered to understand us as a brand and what we are about and gave us confidence, despite their size," says Kelvin.

Although the terms of the worldwide licensing deal are not disclosed, Ted Baker receives a monthly royalty fee. The product is manufactured, produced, designed and sold by KMI which then gives a sliding scale of fees to Ted Baker as sales rise, particularly during the Christmas period.

The next product line is haircare. A new range of products is being launched with Paul Burfoot, the Soho barber, under his "Unisexy" brand. These products, developed in partnership with KMI, go into Boots in September.

The impact of such developments is only just beginning to trickle through to the bottom line. Private company accounts are notoriously opaque. What is the point of producing profits that get swallowed up by the taxman, when you might as well reinvest the money into the business?

But this year the business is forecasting sales of £7m and operating profits of £700,000 in the 12 months to December. That compares with sales of £5.5m last year and £3.9m the year before. That's a two-year turnover growth rate of almost 80 per cent. Spectacular by any standard.

Where next? Will King is enjoying his new-found stability, but his thirst to progress continues. "I merchandised the product up. I remember sitting down with my wife and having a celebratory meal when we did turnover of £100,000 in a year. Now we'll have two months this year when we do a £1m in each month. That's alright." His ultimate target, he says, is to do $100m of sales.

Going public is not part of the plan. Much more likely is an eventual sale to a major. King claims to have had three approaches - the latest one was two years ago and valued KMI at $10m. But one senses that when the time does come to go off for an extended sailing trip, the price will have shot up dramatically.

KMI in brief
The protagonists are Will King, founder and CEO; Herbie Dayal, chairman; Ann King (wife of Will).
Offices in Buckinghamshire, New York.
Twelve employees.
The investors are: Will King 35 per cent; Herbie Dayall 35 per cent; 30 per cent friends and family, including Doug King (brother of Will) who gave £6,000 for a PR campaign in 1994 and got ten per cent of the company in return.

Year-end December
1999 sales £3.9m; operating profits £233,000.
2000 sales £5.5m; operating profits £55,000.
2001 forecast sales £7m; forecast profits £700,000.

Margins: a close shave
£0.65p Currently a tube of King's Original Shaving Oil costs Will King 65p to produce and put into its distinctive packaging. It claims to last up to 100 shaves.

£1.35p The product is then sold onto the retailers for about £1.35, giving King a margin of up to 100 per cent.

£3.19p Products then retail for £3.19 in the shops. You can see where the lion's share of the profits go.

My best idea: will king
King gives the impression of being a big-picture entrepreneur. But he knows his business inside out. Here he is on why his financial software package is so much better than Quicken or Sage:

"From 1993 to 1998 we ran the business on QuickBooks, when we only had seven product lines. We shifted to Encore due to the growing sophistication of the business. We spoke to Sage but could not understand it as it's designed for finance directors and not for owner-managers. Then we came across Anagram, which owns Encore, which wanted to tailor it for us and help. It is a good package.

"It helps us do all the normal stuff of keeping every picture possible of the business but also helps us build up our financial capabilities as we go along. It almost grows with us as opposed to being a fixed product that expects you to be up to its speed rather than the other way round."

Richard Rivlin works on the business development team at www.nothing-ventured.com, the online broker that acquired the financial news web site he co-founded last year. He was formerly European mergers and acquisitions correspondent at the Financial Times.

You can contact him at richard.rivlin@nothing-ventured.com

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