When you realise that nearly half of all calls made from company landlines are to a mobile network, the case for Stuart Goodman’s L2MC business becomes compelling.

Goodman claims his company ­ and more importantly his GSM gateway ­ can halve the annual phone bill of a typical business. With zero up-front costs, he should be on to a winner, but the startup is now demonstrating the classic struggle of a young business needing to maintain cashflow while finding new business. Typical growing pains, if you like.

Smart start L2MC Ltd was set up at the start of 2006 to supply GSM gateways ­ in effect, black boxes with flashing lights and a series of SIM cards that can direct phone calls through the cheapest network. This can halve the cost of calling mobile phones.

F2M (fixed-to-mobile) calls now account for half of the entire call spend in many companies. Such gateways reduce the cost from between 10p and 12p a minute down to 5p or 6p for companies with an F2M call spend in excess of £150 a month. Goodman recently pitched for the business of a large chain of estate agents and calculated they could save £250,000 a year by using the gateways.

At the same time, Goodman began supplying mobile phones. ‘We found that in most cases we could also halve the cost of most company mobile bills,’ explains Goodman.
And there are added benefits of combining services. ‘When the company combines a GSM gateway and company mobiles on the same shareplan, they receive the benefit of free calls from their office to all company mobiles. Since up to half of all calls to mobiles can be to your “own mobile”, that means fewer charged minutes are used.’

Roam freeAnd it gets better for those whose staff spend time abroad. ‘We supply a roaming SIM, which eliminates roaming charges in 70 countries. It also reduces the cost of calling from other countries by half to two-thirds in most cases.

‘When you combine maxSIM with our combined solution, there is a unique benefit. The UK office can call their staff abroad, free of any additional charges, as long as they are within their minute allowance. This can save some companies hundreds, even thousands, a year.’

The GSM gateway business is self-funding. L2MC gets paid on the airtime contract from the mobile provider. This then pays for the GSM gateway equipment setup costs. The client pays L2MC a rental for the kit, which when added to the call cost results in 50% off their F2M call spend. The rental income is then L2MC’s profit on a monthly basis.

Clouds in the silver lining Mobile phone sales can be lucrative up front, but are all one-off payments. And this is where the problem lies.

‘Until very recently, we received all business from referrals via breakfast networking groups. While this was very effective, it had three drawbacks,’ says Goodman.

‘First, the referrals were usually for two or three mobile phones at a time, and we received no GSM gateway referral business. Second, most of my day was spent dealing solely with small deals, so I had no time to expand the gateway side. Third, the mobile phone sales, while profitable, were not building up my business and I was just earning enough to get by.’

L2MC has started using an email marketing company to push the gateway side. It has proved very effective in opening doors. ‘I am rushed off my feet handling the leads,’ says Goodman. ‘But as I am now concentrating on this side of my business, the mobile phone side (which was the company’s bread and butter) has almost dried up.’

This has caused a cashflow problem. Goodman admits he is being impatient and is keen to grow the business as quickly as possible. He now wonders what his next move should be.

The main challenges

• Maintaining cashflow
• Finding new business
• Managing clients while finding the time to follow up on new leads
• Growing the business at a satisfactory pace
• Ability to deliver huge savings and cost-cutting

Click here to hear how our experts from HSBC and others think Stuart should move forwards