04:21am | Friday, 08 February 2013

From a YouTube clip to global distribution deals

0 Comments | Growth | PRINT | | By Michelle Hammond

startupsmart-award-winners-3-thumbAfter winning the Best Green Start-up title at the 2012 StartupSmart Awards, John Cross quickly returned his focus to his product, the Plastic Bottle Crusher.


The point-of-disposal, volume-reduction machines can be used in cafés, restaurants, hotels, clubs, commercial kitchens, hospitals, schools, the mining industry and the marine industry.


Cross, who set up his company Recycling Solutions in 2010, has been busy negotiating with distributors in far-flung markets like Israel and South America.


“How I gained all the contacts was I did a YouTube video. I invented the product and patented it, and sold my house to do it,” he says.


“I did a YouTube video and got emails from all over the world. People loved the product and wanted to distribute it.


“I’ve got distributors in Israel and South America waiting for the product… [and] I’m getting a lot of interest from the US, and Asia and Europe as well.


“But it’s a slow, expensive process.”


Fortunately, Cross has managed to secure some government funding.


“I received a Commercialisation Australia grant – a $50,000 Skills and Knowledge grant. That will cover business development and paying for my international IP,” he says.


“It’s quite a big document to fill out. They appoint a case manager to you. I filled out the document four or five times before I finally got it right.


“Last year when they had the mid-year budget, they froze all the grants. I had no idea, for three months, [whether I would receive the funds]. It was a real worry.”


His advice, with regard to Commercialisation Australia, is to apply as soon as you can and, if successful, fully utilise the skills of your case manager.


“Because you get appointed a case manager, actually rely on that person and have as much contact as you can,” he says.


“I sort of felt like I shouldn’t be bothering him, but he’s been appointed to make things happen, so keep in contact and pester them if you have to.


“It makes the whole process a lot quicker. They will also give you their own idea of whether they think you’re going to be successful or not – whether you have a product with international potential or not.”


Cross hasn’t hired any additional staff since the 2012 StartupSmart Awards took place, preferring to outsource the bulk of the operation.


“Because I’m outsourcing, I’m finding that I don’t need to increase employees at the moment. Having manufacturing in China, everything’s taken care of there,” he says.


“I’ve got a company in Shanghai who’s coming to Sydney to have a talk about the Asian market. A partnership would give me access to one of the world’s biggest markets without having to hire one extra employee.”


In the 2010/11 financial year, Recycling Solutions’ revenue was $95,000. But that’s no longer the case.


“It has actually decreased because I was manufacturing in Australia and, with manufacturing costs here, they would double them without even warning me,” Cross says.


“I was getting caught and actually losing money. I stopped manufacturing in Australia and started manufacturing in China.


“The manufacturing cost is one-eleventh of what it was costing me in Australia.”


Looking forward, Cross hasn’t ruled out taking on a business partner, although he admits he enjoys being a sole founder.


“I prefer it that way, only because it’s an invention. When it’s your invention, it’s really hard to let someone else have it,” he says.


“A financial partner doesn’t know anything about what you’re doing and you’ve got to train them. Once you’ve done product development, perhaps then it’s time to take on a partner.


“I’m having a meeting with an investor. He only wants 10% of the business. He’s an Australian investor. He’s retired and he’s been quite successful in his business and he’s sort of bored.


“He sees an advantage in taking a stake in my business. My product benefits what he wants to do – he wants to create opportunities in third world countries.”


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