Some people are so short of money, they're forced to set up their own business. Ron Hamilton, 67, wasn't one of them. The vice president of a multinational contact lens manufacturer, by 1990 he lived a pretty comfortable life in Hampshire, with a Jaguar in the driveway and a salary of well over £100,000 a year. But "I hankered after the freedom to do my own thing," says the restless Scot. In 1993, he got his chance.
The son of a Lanarkshire curling stone manufacturer, Hamilton reckoned that contact lens wearers were sick of monthly lenses, and that daily disposables were the future. His employer, CooperVision, which made money by selling lenses and solutions, wasn't as keen as it would have meant giving up the solutions business. "So it was make or break time stick to your guns or to your career. I decided to go it alone," he says.
Working from a makeshift laboratory in his back garden, Hamilton calculated he could sell daily disposables for £300 a year to the wearer, "about half the cost of monthlies". He secured a patent, and a £2.5m order over two years from Boots, after an old friend who supplied the high-street chemist put them in touch. "He liked the idea and so did Boots. That helped underpin the business, and meant I never needed a salesman."
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With a £300,000 grant from the Scottish government, he set up Award in 1993. Using £100,000 of his own capital, he took out a lease on a 6,000 sq ft factory in Livingston and bought equipment for his first lens moulding. Employing 100 people from the job centre, the equipment was the key element in the patent.
Instead of making and inspecting the lenses by hand, Hamilton's machines did it for him. Before, the industry would boast about how many times a lens had been inspected. "But the more you inspect something, the poorer its quality." Award "controlled the process, not the product", making sure it ran smoothly, rather than having to check each lens individually. It was "like taking a cottage industry-type of manufacture and turning it into a large scale... pharmaceutical-style of manufacture". By 1994, Award had sales of more than £5m a year, when Ray Ban makers Bausch & Lomb asked him to do an own-brand lens for them.
"They said they had tried to do what I did, but even with a bigger technical capacity, they had failed." Instead, he offered to sell the business to them for £20m in 1996, an agreement that also included a five-year non-compete clause. They agreed and in 1999 he sold the patent to his product for another £10m.
Many people would then have sat back and put their feet up but not Hamilton. Realising he could sell disposables more cheaply via the internet, he threw his hat back in the ring in 2001. "You can't take another penny off a lens. But you can take pounds off by distributing it differently." Starting up again in Lanarkshire, his new firm, Daysoft, made a £300,000 profit on sales of £4m last year, selling a month's supply of lenses for £6.99.
"The next best you'll get is £18," he says. The company is set for sales of £6m this year. "So as you can probably gather, I'm a pretty satisfied individual."
Jody studied at the University of Limerick and she has been a senior writer for MoneyWeek for more than 15 years. Jody is experienced in interviewing, for example in her time she has dug into the lives of an ex-M15 agent and quirky business owners who have made millions. Jody’s other areas of expertise include advice on funds, stocks and house prices.
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