Calling time on the under-age lawbreakers

Serve Legal founders' intimate knowledge of pubs has created a £2m business employing 1,500 18-year-olds.

Charlie Mowat and Ed Heaver, sitting on cosy sofas in the trendy and noisy Mayfair Hotel lounge, would look at home propping up a bar anywhere.

The duo have an in-depth knowledge of nearly every pub, off licence and liquor-selling supermarket in the country. But they aren't travelling alcoholics. Their business is checking that the purveyors of booze and tobacco are not selling to under-18s.

Heaver, 41, and Mowat, 33, launched Serve Legal in late 2006 and now count Asda, Sainsbury's and many off licences and pub chains among their clients. They hire 18-year-olds to test whether staff are asking customers for ID. Their company is already the leading independent test purchaser in the country, and recently carried out its 100,000th visit.

So how did two guys who met playing rugby end up leading an army of more than 1,500 18-year-olds as they "snitch" on the shops and pubs that sell booze, fags, fireworks or knives?

Mowat founded his first enterprise Clean Space – an ethical version of his father's building cleaning business, offering evironmentally-friendly products – when he was 25. Seven years later, it employs 120 people, serving 450 clients across five cities and turning over £2.8m. "I went to university but I came from an entrepreneurial family so I really wanted my own business," he says. "Both my mum and dad had their own businesses. After working in management consulting, I decided to set up. I had no mortgage and no kids so I didn't have any risks."

While Mowat was growing up with vacuum cleaners, Heaver had developed a taste for beer, joining Allied Brewers straight from university. He was "known as a bit of a maverick" within the business, he says. "I came up with some different business ideas that others hadn't, but by 1996 I wanted to work in a small business myself." He joined pub entrepreneur Chris Hutt as part of the team behind Wizard Inns, which was sold in 2004. Heaver made a tidy profit.

It was while working in the pub industry that he got the idea for Serve Legal. He knew there was a market as businesses were paying for people to spot-check that their staff were asking for identification of anyone who looked underage.

Mowat and Heaver's timing was right. They first discussed the plan in 2005, and by 2006 the business was born. Over the past 15 years, governments have introduced ever more severe measures in response to increased drinking by young people – who can often be seen wandering the streets with bottles of cider or alcopops.

Today, if a company is found in breach of the laws, fines can be £10,000 and the individual selling the product can be fined personally too.

Sainsbury's and Tesco have responded with a "Think 25" rule, where all staff have to ask for ID from customers buying restricted products if they think they look under 25. Serve Legal tests whether employees are following the rules.

As a team, Mowat and Heaver had different skills and were able to work closely together without too many spats. Mowat says: "We have a great partnership. Our skill sets are different and we fit well together. We lead separate lives outside work. So although we are friends, we have time apart too."

One of the first and biggest tasks facing Mowat and Heaver was recruitment. They travelled the country looking for teenagers in shops and cinemas. "We were tracking people down – from family friends, to just getting on the phone and ringing up record shops and rugby clubs to hire people," says Mowat. The young investigators are employed on a shift basis, and are paid above minimum wage.

The pair used the same aggressive tack to win clients. "We sent out letters to Asda, Sainsbury's, to off licences. We put ourselves in front of people. At one supermarket we couldn't get hold of the person so we went down to head office and just asked to be put through to them from reception. We got the meeting."

Turning up off the street with an idea is one thing; being able to deliver on what you promise is another. But the ballsy duo seem to have that covered too. "Once we had meetings with people, we came across as credible as we had often done research on some of their stores already. At Asda, we came armed with research from 20 visits." The chain became their first client, and that success helped them when pitching to other big retailers.

The British crackdown on binge drinking has served Serve Legal well. The business is growing at a rate of 85 per cent year on year, and during 2010 has carried out more than 55,000 site visits on behalf of clients. It turns over £2m a year and is profitable.

But Heaver and Mowat didn't want to stop there. They realised that the resource they had created – the legions of young workers – could be used for other businesses. In January, they launched YAP – Young Adult Power – a network of 18- to 24-year-olds that can be used for staffing and market research. Once the teenagers get too old for the Serve Legal checks, they can move on to the books at YAP, where they can be booked for promotional work and corporate events.

The latest government figures show that 15.6 per cent of 16- to 24-year-olds are "neets" (not in education, employment or training). But Serve Legal's young adults are a great workforce. Heaver says: "We retire our people at 19, but they have a great work ethic and are perfect for lots of different kinds of work. We support them and can find them work."

So what's next for Mowat and Heaver? The company has already expanded into Australia and is investigating Sweden, Denmark and Poland, countries that, like Britain, have problems with underage drinking. Mowat and Heaver spoke on underage alcohol consumption at a conference in Brussels last month. An equity partner could help fund growth, but the pair are not in any rush to do find one.

"We won't be doing this for ever," says Mowat. "We will think about an exit at the right time, but the business is still young and growing." Heaver says: "Obviously we will have other ideas for businesses. But we would always want the ability to look our staff in the eye and say we did it for the right reasons."