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Business Observer Friday, Apr. 15, 2011 10 years ago

Outside the Box

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BungoBox has developed an earth-friendly alternative to using cardboard boxes for moving. But instead of promoting its 'green' credentials, the company plans to build a nationwide business by emphasizing cost and convenience.
by: Dan Ping Editor/Central Florida

Bob Cannon knew he had built a better mousetrap.


But without a strong brand name, he was afraid his company would be just another startup lost among thousands of new companies.


Cannon and his cousin, Tom Cannon, founded Move Green in suburban Orlando in May 2009. The company rents recycled plastic boxes to businesses and homeowners who are looking for an alternative to cardboard boxes.


Move Green was more of a default name the cousins used as they launched their company and honed their business plan. Neither cousin was pleased with the name because “being green” is a two-edged marketing tool: people like companies that promote earth-friendly practices, but most believe those products and services are more expensive.


Furthermore, Move Green did not accurately describe the business.


“Most people thought we were a moving company,” Bob Cannon says. “I wanted the word 'box' in our name, because that's what we're selling.”


The cousins kicked around names for about a year to no avail until a misunderstood cell phone call (see sidebar) led them to the perfect moniker: BungoBox.


“It's kind of a fun word to say - BungoBox,” Bob Cannon notes.


More importantly, BungoBox is a made-up word that provides the company a blank slate to create a unique brand.



In the beginning ...


The concept of renting plastic boxes to consumers is a new concept, though for years retail businesses have used the very same boxes to move inventory from the warehouse to individual stores.


In fact, it was while walking through a distribution center that Tom Cannon — whose background is in distribution and manufacturing — hit upon the idea of using the boxes after a buddy had coaxed him into helping him move. The boxes turned out to be so much easier to pack and transport than cardboard boxes that he saw a business opportunity.


The Cannons are a family of entrepreneurs. Bob and Tom's grandfather founded Central Florida Heating and Air Conditioning. And Bob Cannon worked for Trycon Inc., a real estate development firm founded by his father in 1980, as a project manager.


Trycon had sold most of its real estate holdings by 2008, so when Tom Cannon approached his cousin about starting a company, he was all in.


The pair used their savings to start the company, and Tom Cannon began working his network in the distribution industry to find a company to supply the boxes. The cousins bought from a middleman at first, but Bob Cannon, interviewed by the Business Review, says the manufacturer recently opened a plant in Kissimmee to handle BungoBox's needs.


Cannon's background in the real estate business provided him plenty of cold-calling experience, so he began meeting with moving companies, attending trade shows and sending out marketing flyers to generate business.


Although business was slow to start, Cannon says each month has exceeded the previous month's sales throughout the company's nearly two-year history.


He declined to provide specifics, but Cannon says more than $1 million has been invested in BungoBox. “A lot that has that has been ongoing revenues the business has generated,” says Cannon. “We've reinvested heavily into the company.”


After starting operations in Orlando, the company turned to franchising opportunities to grow the business.


Greg Steinig, a Gulf Coast resident, purchased the first BungoBox franchise in February that now operates in the Tampa Bay area.


Franchises are a key component of BungoBox's strategy, for they will provide the network necessary for the company to target the interstate moving market and expand nationwide.


In addition to Steinig in Tampa, Cannon says franchises have been sold in South Florida and Phoenix.


And just this week, Cannon closed a master franchise deal with a trio of investors — Darin McLean, Troy McLean and Raymond McFadgen — that wants to open up to 50 BungoBox franchises in Canada. The group plans to open a training facility in Halifax, Nova Scotia, this summer and add four locations by the end of 2011.


In the U.S., Cannon expects to sell 10 to 15 franchises by the end of the year. Cannon says potential franchisees from Washington, D.C., Dallas, Nashville, Syracuse and Los Angeles are flying to Orlando to see the company's operations first-hand.


Finding success nationally, Cannon believes, will require BungoBox to become the generic name for the industry.


“We want the name BungoBox to define the market,” Cannon says. “When people talk about renting boxes, we want them to immediately think of BungoBox, just like when people say 'Xerox' or 'Kleenex.'”


Cannon told the marketing team, Orlando-based Knight Images, to emphasizes the convenience of the boxes, not the environmental benefits.


“I told the designers to absolutely stay away from the color green,” says Cannon.


Knight Images created a series of cartoonish images that show the hassles of cardboard: fragile items falling from the bottom of a weak box; a person collecting boxes in dumpsters and alleys; and a mover tangled in tape as he tries to seal the boxes shut.


Those images are used on mailers, brochures, the company's website and on all of the large box trucks BungoBox uses to transport its product. “It's all in fun, but it also sticks out in people's minds,” Cannon says. “We want our brand to stand out so that our competitors have to work twice as hard to get half the recognition.”



The price is right


Although a similar company in Seattle, named Frogbox, aims to get that recognition by marketing the “green” aspect of the company, the Cannons believe the environmentally friendly aspect isn't enough to attract customers.


Steinig, the company's first franchisee in Tampa, agrees.


“The majority of the public doesn't make buying decisions solely on whether something is green,” says Steinig, whose franchise territory includes Hillsborogh, Pinellas and Pasco counties.


Cannon makes no bones about what drives new customers: price.


“I compete with cardboard,” says Cannon, who has set his rental rates below U-Haul's price for the brown boxes. “I have to convince them with the price first, then the value-added stuff gives them an extra boost to try us.”


The “value-added stuff” hits at the heart of what Steinig calls “the frustration of moving.”


He should know. Including his time in the U.S. Army, Steinig estimates he has moved 30 times.


“I know everything that is frustrating about moving,” says Steinig, adding that cardboard boxes are at the top of the list.


Steinig points out that you don't have to spend weeks collecting boxes from Craigslist, neighbors and local stores, BungoBox delivers boxes to your house or office and then picks them up at your new location in a week. Plus the sturdy plastic boxes can be easily stacked in any order regardless of what's inside the box.



What's next


Cannon says BungoBox delivered more than 100,000 boxes in 2010 to residential and corporate clients who include the Orlando Magic, JP Morgan Chase, Lockheed Martin and Sears. Those customers have said they will use BungoBox again.


“What we're finding is that people don't just become repeat clients,” Bob Cannon says. “They become raving fans.”


Cannon has built relationships with several of the national moving companies, and he wants to affiliate BungoBox with other organizations as well. The housing departments at universities would be a natural fit, as would apartment complexes, and contractors who renovate homes or offices.


And Bob Cannon is working on a deal to set up BungoBox in grocery stores. He says most grocery stores no longer keep boxes for people to pick up, but managers still get requests.


“If we could partner with a store, the manager could provide them with our brochure,” Bob Cannon says. “It's a win-win for everyone.”


Cannon sees plenty of opportunities, in large part because of the investments in time and resources he and his cousin have made. He says they've learned that no matter how much money or time one expects to invest in launching a company, it takes 10 times that to be successful.


There was no playbook to guide the cousins, and some of their decisions were nothing more than an educated guess. “We worked hard and tried to think of every angle,” Cannon says, “but at the time you don't always know what the right decision is.”


What's in a name


The name BungoBox was created by accident. While waiting in line at a store, company co-founder Bob Cannon received a call from his partner and cousin Tom Cannon.


Tom explained that he had found a Latin word — “pungo” — that was part of a phrase meaning “to move.” He suggested naming the company PungoBox.


“I'm listening on my cell phone, and I thought he said 'BungoBox,'” Bob Cannon says. “I went home and told my wife, and she loved BungoBox.”


A few days later, Bob realized he misheard his cousin, but at that point it was too late.


“When we came up with the idea to start the company, she was immediately on board. She thought it was a great concept,” Bob Cannon says. “We figured if she was right about the concept, she was right about the name, too.”


Franchise basics


Those looking to purchase a BungoBox franchise won't have to spend $1 million to get up and running. Co-founder Bob Cannon says depending on the market, it takes a $75,000 to $100,000 investment to launch a franchise. The investment includes 2,500 boxes, a truck, marketing material and $30,000 in reserve capital. Franchisees will also need a small warehouse space — about 1,000 to 1,500 square feet — to store and clean the boxes.


Cannon says new franchises locations will start with one employee, usually the owner. “It ramps up pretty quick once you get the business started,” Cannon says.


All orders will be placed through the BungoBox corporate office, either online or through the toll-free phone number. Cannon says the company is making a substantial investment — “well over six figures” — to develop a custom software package that will handle ordering, inventory management, scheduling and accounting.


“We want the franchisees out in their communities and focused on growing their business,” Cannon say. “The corporate office will take care of all the back-end operations so all a franchisee has to do is turn on the computer in the morning and see how many boxes need to be delivered or picked up.”


One question all potential franchisees ask: How do I pick up boxes if a customer moves out of my area?


Cannon's answer: “Almost all of your business will be local.”


The U.S. Census Bureau reports that in 2009, 67% of movers stayed in the same county, another 17% move to a county within the same state and only 13% moved out of state.

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