ABF Europe

ABF Europe knew that its innovative Kite table system would be of interest to the international market and decided to look into setting up a licence in the US. One failed agreement later, the company sold a licence to manufacture the product to a FORBES 500 company in Indiana.

Here, co-designer and managing director Darren Buttle explains why if at first you don’t succeed, learn from your mistakes and try again.

ABF Europe, based in Wetherby, North Yorkshire, knew it had an innovative product when it developed the Kite table system. The product won numerous awards and the company started selling it through various outlets including furniture dealers and interior design companies.

“We knew the Kite table was something special as it caters to every aspect of the conference/ training environment from comfort and viewing considerations to the psychology of where and how people sit in these meetings,” explains Darren.

“The innovative shape and construction of the table means it can be adapted to accommodate large or small numbers. It also offers the convenience of a speedy set up and compact transportation as it folds down to 30cm and is on special castors for ease of mobility.”

ABF knew the product would be of international interest and started considering the US market. Rather than exporting to the market, the company decided to look into licensing in the US. This was for various reasons, including the distance to the market, the lack of local knowledge, the size of the market and the financial risk that could be involved without a US partner. 

The idea of setting up a licence with a US company became a reality for ABF when they were approached by what appeared to be a suitable company at a local exhibition. The directors of ABF rushed over to the USA and proceeded to set up a licence with the company. Unfortunately the licence failed soon after.

Darren explains that there were several reasons for the failure.

“Firstly, we didn’t create any competition for the licence, and basically took the first offer we had,” he says. “Secondly the US company was too busy with its own product and therefore didn’t have the time to concentrate on ours.

“Thirdly, it was only really the sales director that ever bought into the product rather than the whole company and finally the company chose to ignore the UK market and the way that the product had been marketed and sold in the UK.”

The failure meant that ABF had lost out financially, through flights and expenses involved in travelling to the USA partner; had been distracted from its core business in the UK; and had made poor use of available time and resources.

Fortunately, the licence had been made on a temporary agreement of 12 months, which meant that it could be terminated as soon as this period had passed.

But ABF was not put off by this experience, and instead decided to learn from the mistakes that had been made. Darren signed up to UK Trade & Investment’s Passport to Export programme and was given valuable advice on setting up a licence successfully. He was also motivated by the experiences of other companies on the training course.

After completing the course, ABF exhibited again at the World Furniture Show, and received 538 enquiries about the Kite table system – from 38 different countries. Of these enquiries, 15 were from the USA. ABF set to work researching the US companies and narrowed them down to five.

Initial meetings were arranged with the five companies at a trade show in Chicago, where ABF narrowed the potential partners down even further to three. All three companies were turning over in the region of $2 billion – which made them all desirable partners, but was a relatively daunting factor for ABF, a self professed ‘small company from Yorkshire’.

At this stage, the company decided to employ a USA consultant. Darren explains there were several reasons for doing this. These were mainly: to remove emotion; benefit from local knowledge; to retain momentum following meetings; experience; language; and credibility.

“This product is my baby and I am very close to it,” he says. ”Therefore I was at risk of being too emotionally attached to it.

“Our company didn’t have the experience of sitting with mult-million pound business men and negotiating deals –the consultant did.”

Darren continues, “It may sound strange considering language issues when we were in the USA, but it is surprising how different the language can be. American business people use totally different terminology to what we are familiar with in the UK.

“Credibility was also a big factor when taking on a consultant. Even though we are a small company, the fact that we had employed a renowned consultant meant we were suddenly high flyers. Our credibility went sky high.

“Our investment was £10,000 for this man,“ says Darren. “It was the best £10,000 I’ve ever spent.”

ABF went on to agree a strategy with the consultant, prepare and submit a licence agreement to the three companies, receive recommendations from the consultant and finally identify the ideal licensee. The company chosen was Kimball International, a FORBES 500 company in Indiana – and the third largest office manufacturer in the world with an international turnover of £1.8 billion.

The agreement was signed and ABF received an upfront fee plus royalties. This put the company in a good financial position with stability for the future. 

ABF has subsequently found that as well as the revenue there are many other benefits to the licence. Darren explains: “We have a shared knowledge and have become friends with people in the US company – our designers now talk to their designers.

“We also have the benefit of international brand recognition. Through being associated with a multi-billion pound company we have had enquiries from other countries and now export to 17 countries. We also have further licence agreements in New Zealand, Australia and Sweden.”

As if this wasn’t enough, the licence also results in a ‘big brother’ style service to ABF. “Despite having patents, there are always people that will try to copy your product,” explains Darren. “Having chosen a world player who has penetration in these markets, they can act as big brother and make sure people don’t copy our product in other countries.

“Above all however, is the fact that ABF and our US licensee both continue to work together for the benefit of both companies – it is a mutually beneficial partnership.”

ABF has subsequently developed the company even further and now has both a French speaking and a Spanish speaking employee, who can help the business target additional countries.

“We had some problems understanding business terminology in the US, and that was in a country that speaks the same language,” says Darren. “Obviously this is even more prevalent in other countries and having a French speaking employee and a Spanish speaking employee assists us greatly in penetrating these markets.

“Employees with the ability to speak one or more foreign language are a great asset to any business and I am a big supporter of the use of languages within companies.”

 To find out more about ABF Europe visit the website at www.abfeurope.com