My husband is a corporate guy. He works hard, very hard, but relishes the security of corporate roles. Ha!! The word security is a misnomer today. My poor husband, as many a person has been caught in several restructurings during his career. I see evidence of this upheaval caused by layoffs, mergers and restructuring almost daily. How? From my email delivery errors. ‘email address wasn’t found at the destination domain’; ‘User unknown’, ‘The following address(es) failed’.
So what do you do when the corporate job market dries up for you? Or if you have an entrepreneurial nature or want to somehow fit family into the work equation?
It’s the easiest thing to plant your flag in the ground, declare yourself self-employed professional and start your own business. There’s little capital risk and all you really need to do is find clients to work with. You’re selling your skills. Knowledge. Time.
But what if you want to start a business that sells something physical? A product?
Last August I had a meeting with James McLeod, head of business marketing for Spark. A few months passed, and on the 25th of November, this email arrived from James ‘I’m actually leaving Spark at Xmas to move into my wife’s business www.made4baby.co.nz that we started 7 years ago. It has reached that point where she desperately needs help so we’re taking that next step.
James and Rebecca graciously shared their tips and experience growing Made4Baby Natural Skincare with me for this column. Enjoy and take their top ten tips for start-ups
- Even with a product you believe in; heart, soul and passion are not enough.
Rebecca and James were based in Europe in 2001. Rebecca was working in Paris for the (OECD) Organisation for Economic Co-operation and Development converting toxicologists reports into plain English documents. Through this experience she learnt of the harmful chemicals in skincare.
Jump forward to 2006. Back in New Zealand, awaiting their first child. Rebecca not only wanted chemical free shampoo and skin care for her infant, she thought it was a superb idea for a business and the timing was right as the natural skincare market was in its infancy. Thus Made4Baby was born. Rebecca was exceedingly passionate about the product and getting it right so she persisted and persisted. The reward for this perseverance has been the amazing customer feedback the products have received over the years twice in the OH Baby Magazine Awards Top 10 Most Recommended Products by Parents and is the only skincare brand to be accepted into Australasia’s Sensitive Choice programme for those living with allergies.
James: ‘The Idea of a product is only a start. I don’t have a degree and while it may seem academic the Marketing Principles of Product, Price, Promotion (Brand Awareness) and Placement (Distribution) that I’ve read about over the years rings true with me in a practical application and we are forever tweaking all of these elements to find the right balance.
- Get good solid advice.
They sought out expert help and found people in their mid-50’s (baby boomers) who have been there before, done the hard yards, made mistakes and are more than happy to give back and share experience. ‘All you need to do is ask’ James advises ‘I think they see a little of them in you sometimes and are more than willing to offer up advice if you’re willing to listen, I jump at the opportunities particularly those who are still in business as I said I don’t have a degree so it is how I’ve always learnt’
They sort such advice starting out with how to brand their idea. An advertising executive stated the company name and way they appear is critical. ‘If you don’t have huge budgets to introduce the brand, you need instant recognition’. They devised a strong stripe design for brand recognition. The name was designed to both enable people to know instantly who the product is for and allows them to evolve and expand. As their children grew and had different requirements, Made4Baby added on Made4Kids products.
- Create a brand other people believe in
How do you get your brand recognized? It’s also touch. Feel. Back in 2006 natural care products came in small glass bottles, boring brown packaging and were difficult to use. How can you hold a baby and pour shampoo that was running down its head at the same time?
So they experienced until they came up with a practical and easy application method. They used a foam dispensing bottle so the product would stay where placed. This was unique, before the foaming hand soaps we have today. They wanted and worked hard on both function and a good user experience.
James mentioned with one of their launch products they started with a pump top however it was only tested in the summer, in the winter months the pump top wasn’t sufficient to pump through the product in the cold, so after customer feedback we changed very quickly to a tube’
James ‘You’ve worked so hard to get the right name, get the packaging looking great, don’t let yourself down with the user experience, constantly take feedback from your customers and be prepared to change if necessary’
- Pricing, Sales are key. You have to sell
James again reiterates the idea your product means very little to your success, it’s only the beginning. Pricing strategy is crucial – where is your product going to stand in comparison to the competition? You need to know your distribution channels pricing mechanisms too. For example the promotional activity of pharmacies. The percentage your distributors are selling to someone else. How much will the middle men take?
James ‘Even though to start with retailers, distributors or even 3rd party logistics may not be in your start up budget, plan that in the future they maybe and price your product to be able to offer back margin to fund this growth’
They thought long and hard about placement and felt a quality produced product in the mid tier range is Made4Baby’s place. Not niche which generally requires strong substantiated claims and not supermarket, where volume is maybe large but margins low. To date the range is sold in seven countries outside of New Zealand. They sell through:
- Baby retailers
- Health stores
- Department stores
- Their website
- Getting ‘in’ is relatively easy. Staying ‘in’ is hard.
Made4Baby was launched at the Baby Show. Rebecca next knocked on the door of Life Pharmacy. Timing was good. Not only were they at the cusp of growth in the natural product market; the buyer was a new mom, so testing was a part of the process.
James: In reflection getting into a large pharmacy chain was a baptism of fire and taught us a lot about the retail environment and set us up well as we progressed to other domestic retailers and international distribution.
- Getting the order is only the beginning
Cash flow and capacity is key. They got great advice early on when they were asked these two questions: What will happen when you get an order and you don’t get paid for 90 days; do you have the cash flow to finance, manufacture and wait? Can you fulfil a very large order?
- Spend more at the right time to go forward
Rebecca was going to rebook a small stand a few years into exhibiting at the Baby Show. Her mentor said ‘’why aren’t you taking the larger stand’? ‘It is double the price’ Rebecca replied. ‘What do you want people to think of your company’ was his response.
Rebecca: ‘We booked the larger stand and in fact the extra turnover more than paid for it, sometimes you just need to take the risk to move ahead’
- Stay at Holiday Inn before the Bellagio
The business had to be grown on small resources and in-between children. They borrowed very little to start up and ran the business very lean. It was a good learning experience.
James: ‘By doing many of the functions ourselves in the beginning largely because we didn’t have the funds actually allowed us to put a value on a job and as income grew we were able to invest back in business. 3rd party logistics. Xero accounting. Part time staff. Better Website’.
- Follow your instincts.
Every time they went against their gut feel, it didn’t work. Picking up distributors with passion for your product isn’t enough. They need to be established with contacts and stores. You don’t want to work with a ‘wanna do’. You must work with a ‘can do’.
James: ‘Internationally is largely where distributors play a big part in a small business’s export growth and many will find you and as flattering as it may seem challenge them as to their capabilities, make them give you a distribution plan and if you are serious about entering that country, check out other distribution options and if it is possible visit them before making a decision. As tempting as it is to enter quickly into an international market time spent on due diligence is worth it’
- Everyone has them. Not many accept the RISK
Not everyone is willing to accept the risk to move to the next level. The couple decided to take a leap with James leaving the corporate world to turn Made4Baby into something even more special.
James: The next step for Made4Baby is to move from a day to day operational business to a commercially streamlined business magnifying it to a higher level.