CarHerd: Oliver Todd & Mark Heptonstall
A group discount buying service for purchasing new cars
Tell us what your business does:
CarHerd groups together new car buyers in order to achieve significant discounts that were previously unobtainable by the individual purchaser. Customers still purchase their new vehicle directly from a main dealership, the only difference being that a group discount has already been negotiated for them, by CarHerd.
Where did the idea for your business come from?
We studied the group buying concept after seeing it succeed in a variety of low value consumer markets, and considered applying it to high value assets. We tested the idea with a ‘high end’ vehicle and saw that there was potential to roll the idea out into the volume new car market.
How did you know there was a market for it?
We set up a one page website to test the idea by creating a group for the Audi R8 vehicle. After the success of this we tested the idea on mass market vehicles, which received a huge amount of interest. At this point we decided it was worth pursuing and employed a business development manager to establish partnerships with main dealers.
What were you doing before starting up?
Before starting up CarHerd.com we were running and growing our other businesses – C80 Solutions Ltd which is a Building Compliance and Renewable Energy Consultancy and James of England Ltd, which is a Sport Management and Asset Brokerage firm.
Have you always wanted to run your own business?
No, but we both had the realisation around four years ago that to live the life we wanted we must increase our income streams, and be in charge of our own time. To do this we needed to direct our own companies – as opposed to being employed by someone else who dictates our income and free time.
How did you raise the money?
We self-funded the venture from our other companies. We believe that too many companies look to raise large amounts of capital before the project has proved it can succeed. We are attracted to lean businesses that do not need a large amount of funding to prove they can be successful.
What challenges have you faced and how have you overcome them?
The concept of group buying had not been introduced to the UK new car market before we started to test the idea, so car dealerships did not seem to understand or want to partner with us initially. It took some time to explain and prove to them that customers would buy vehicles through the CarHerd system, but the initial market interest, coupled with our business development manager’s extensive industry experience, eventually convinced them to partner with CarHerd.com.
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Describe your business model and how you make money:
CarHerd is paid a fee by car dealerships, for each customer passed over who purchases a new vehicle.
What was your first big breakthrough?
Our first sale was obviously a big milestone for us, as we believe there is a big difference between people saying they would use a service and actually using it.
What advice would you give to budding entrepreneurs?
Don’t start a business on the basis that you have a good idea. Test it and let customers dictate if it will work and what needs to be changed – use the idea as a prototype. Think hard about whether the business should be created and keep the business as lean as possible. Try not to get too attached to an idea, as you will not be able to let go and wrap the business up if it is not successful. We also think it’s vitally important to decide at an early stage if you want to create a business that runs itself or just create another job for yourself. If it’s the former be careful not to get trapped into the latter – as this is easily done. If it’s the latter, you’re not an entrepreneur – you’re self employed. In this instance think carefully if the rewards are high enough.
Where do you want to be in five years’ time?
We both want to have reached our desired passive income streams and have a lot more free time to enjoy life.