Behind the Business Plan: Sprout

When Michael Stausholm founded Sprout, he wasn't sure if there was really much of a market for pencils that could grow into plants when they were no longer usable. After launching a Kickstarter campaign, though, he soon realized just how profitable the idea was. As sustainability becomes more of a focus, Sprout aims to expand its product line to include more reusable, life-giving products. Stausholm discussed Sprout's journey in a Q&A with Business News Daily.

Michael Stausholm: Much more than just products; an experience of making a small difference in your everyday life. When buying our product, you don't need to throw it out once you are finished or tired of it, but literally give it new life by planting it. It's an item with two functions instead of just one main purpose.

BND: How long have you been in business?
Stausholm: Sprout was initially launched in Denmark in June 2013. Two and a half years later, it is in 60 countries around the world with headquarters in Denmark, as well as an office in Boston.

BND: Did you start with a formal business plan? If not, how did you lay the groundwork for your business?
Stausholm: Not really. Initially we had a hard time believing and actually understanding that there could be a market for pencils with seeds, but the Kickstarter campaign showed a great and diverse interest for the product and idea. We did a lot of PR and the story was quickly picked up by lots of different print, TV and online media, after which the interest from consumers went through the roof.

BND: How did you finance your endeavors, both initially and as your business grew?
Stausholm: We launched through the media in the early spring of 2013 with the message that we would launch the product in summer 2013. Following that we took orders and required pre-payment, which meant that we had a positive cash-flow from the very start. This made a huge difference and we avoided the trap that many start-ups face: the lack of cash and financing to get the project off the ground. Since then we have been self-financed and only took in an investor in the spring of 2015, solely to be able to grow the business even faster and invest more. The company has been profitable from the beginning.

BND: How much did you invest personally?
Stausholm: None, other than my time, which was also rather valuable. I went the first six to eight months without drawing a salary, doing the odd speaking and consulting jobs on the side, which had been my business before going all in with Sprout.

BND: Is your business today what you originally envisioned at the outset or has it changed significantly over time?
Stausholm: It has changed significantly. For a long time I saw the possibilities to be great, but also had my doubts about the size of the market. We have, however, been able to develop multiple sales channels, like retail, promotional/corporate, as well as with organizations and NGOs. The market has also turned out to be unlimited geographically, as everywhere people are looking more and more to sustainable and conscious consumption. Finally, we have been able to develop the original product into a whole range of products with more than one use, products that can be re-used or given new life after the original use.

BND: What are some lessons you've learned? Is there anything you would've done differently?
Stausholm: Our growth has come from many diverse markets. We have had the luxury of not actually spending much money on sales. Every day we get lots of inquiries from potential customers from all over the world. This is obviously amazing, but looking back, I would have wanted to look more strategically at each market, and do it step by step. Also we were a one-product company for a little too long — product development and extensions are vital to any business. We are getting there now, but I would have focused on this earlier.

BND: What were the most important factors that contributed to your success?
Certainly timing has been an important factor. Four or five years ago, people in general were not overly concerned with sustainable products. People thought it was a great idea, but seldom actually followed through when they were shopping. That started changing two to three years ago, when consumers started to be much more conscious of their purchases, realizing that even on a small scale in our everyday life, we as individuals, can make a difference.

BND: What are the next steps you want to take as a business owner? How do you see yourself achieving those goals?
I have a vision that the company should become a global market leader in sustainable green consumer products. This means we will spend a lot of resources on product development internally, as well as look for exciting products and ideas to add to our range. It means more focus on key markets, new revenue streams and e-commerce. We want our products to be available everywhere and to anyone, as well as reasonably priced. Sustainable products should not be much more expensive; we want sustainable to be affordable.

BND: What is your best advice to someone with a great business idea who is ready to give it a shot?
If you have a great business idea, do yourself a favor and do some market research. Find out what similar ideas or products may be out there, and if there is a market potential at all. Is your idea nice to have or need to have? If it's only nice to have, then work on the story. Storytelling is everything these days. People don't buy products, they buy an experience and a great story. Also, you cannot possibly be good at everything yourself. Make sure you connect with other people with skills you don't possess or don't feel passionate about. A great business idea is nothing without the right people to execute the idea.
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