Recruiting the right employees and focusing on servicing current customers, while also attracting new ones, have been the key strategies for entrepreneur Mitesh Soma in growing his business, Chemist Direct.
Recruiting the right employees and focusing on servicing current customers, while also attracting new ones, have been the key strategies for entrepreneur Mitesh Soma in growing his business, Chemist Direct.
Soma launched the online discount pharmacy in November 2007 out of his garden shed with a personal investment of £100,000 and a bank overdraft of £150,000. He has since grown the business rapidly, transforming the start-up
into a major online retailer with a turnover in excess of £5 million and 200,000 regular customers. He now employs 50 staff who work from a 10,000 sq ft warehouse in Birmingham.
Chemist Direct sells more than 20,000 health and beauty products online at a discount. In March 2009, he secured a £3 million equity investment from technology venture capital firm Atomico, whose managers include Skype co-founder Niklas Zennström and Janus Friis.
Soma, a former executive at UBS, says his biggest learning curve has been discovering to invest more in the right staff, adding that initially he failed to recognise the value of hiring more experienced but costly employees over cheaper, less experienced ones.
‘In hindsight, I shouldn’t have tried to get costs down to a minimum – I didn’t get the ideal team,’ Soma tells the Business Startup Show. ‘Although someone is cheaper, the business can be slowed down by them. Experienced
employees tend to do things faster.
‘I have since paid more attention to human resources, and made sure that my people are trained and properly resourced.’
Commenting about the equity from Atomico, Soma says he wasn’t actually looking for investment at the time, adding that ‘it wasn’t my number one thing’. But he explains that the opportunity came along and he wanted to
have the backing to expand more quickly, although closing the deal wasn’t easy.
‘Shows like Dragons’ Den don’t show you how it is – I don’t think it is likethat in reality,’ he says. ‘If I was to go about it again, I would ensure that I had proved the concept better, made investors know that it works.’
Soma adds that accepting venture capital has had other benefits aside from the financial. He says since the investment he has been introduced to a greater network of investors, entrepreneurs and consultants, who have helped his business. Also, it has ‘professionalised’ his company and given it structure.
To continue to grow the business, he says he is ‘concentrating more on the customers already acquired’ by ramping up marketing initiatives, improving customer service standards and increasing the amount of offers for the website’s regularly users. He adds that the strategy will encourage more repeat business.
