No matter if you are a retailer, or prospective entrepreneur looking for the newest concepts, or interested in starting  or growing a specialty retail business, or just an exhibitor seeking new sales opportunities, SPREE is designed with you in mind!

Come for the new products showcased in the exhibit hall, the educational seminar program, the opportunity to conduct business and develop ongoing relationships, the fun and entertaining social events
and all of the excitement of Las Vegas. SPREE offers all this and more!

Who should attend the show?  Inventors with “retail ready” products interested in…

1. Exhibiting their inventions / products for opportunities to sell in carts, kiosks and gift shops. (Reserve your booth in the Inventors Zone by calling Debbie Lahti at (800) 936-6297 x 20)

2. Educational sessions and networking events to learn more about the $12 billion specialty retail industry.

Exhibiting in the Inventors Zone-

Entrepreneurs ready to take orders for their products should consider exhibiting. Your product may be good for the specialty retail market if it a) requires an explanation and is easily demonstrated, or b) is a product that is already understood, like a t-shirt or food item.

Learn all about this exciting industry-

Time: April 12, 2011 to April 14, 2011
Location: The Sands Expo Center at the Venetian
City/Town: Las Vegas, NV
Website or Map: http://spreeshow.com/
Phone: 800.936.6297 x 20
Event Type: expo
Organized By: Pinnacle Publishing Group

See you all there….

Always DREAM BIG!

Kim Babjak

Kim Babjak, and her team at KimCo LLC, are a multi-faceted product development company that offers a wide range of consulting in the areas of  “Mind 2 Market” product & business development. We help companies with product development, prototyping, and manufacturing overseas. With our vast retail buyer relationships, we can then assist with the product being placed into electronic retail (QVC), and big box retail outlets like Wal-Mart, Target, Home Depot and many others.With over 10+ years of retail experience and sourcing overseas, Kim Babjak and her team of professionals can help create successful product creation and placement.

The site is one of the experiments I like to refer to as the “inverted news paper” - citizen journalism at its most raw. Every day, a wealth of local information is created — officials inspect restaurants, journalists cover fires and Web users post photographs — but who has time to sort through all of that? EveryBlock aims to collect all of the news and civic goings-on that have happened recently in your city, and make it simple for you to keep track of news in particular areas. They’re a geographic filter — a “news feed” for your neighborhood, or, yes, even your block.

If your business is local and serving the public, check out how you are being discussed in your communuty.

What items are required to be compliant?

All products that are marketed or could be perceived as being marketed to children under 12 years old.  This is NOT limited to toys.  It includes many items including clothing, jewelry, shoes, books, dinnerware, hair accessories, sunglasses, furniture, art materials, and musical instruments to name a few.

What does the testing require?

Lead content must be below 600ppm as of February 10, 2009 … then lowered to 300ppm on August 14, 2009… under 100ppm by August 14, 2011

Lead paint must pass a General Conformity Certification as having less than 600ppm for goods manufactured after November 12, 2008. Third party testing is required if the product is manufactured after December 21, 2008. These amounts will be lowered to 90ppm on August 14, 2009 and 3^rd party testing will be mandated

Phthalates in children’s toys and “childcare articles” are banned. Whether this includes children’s apparel items such as footed pajamas for a child under 3 years old is unclear at this point.  (Phthalates are used to make vinyl soft and flexible and can possibly be found in footwear or in this case, the rubber coatings on the non-skid bottoms of children’s footed pajamas.)

(More requirements here http://www.cpsc.gov/about/cpsia/cpsia.html )

What if I am not compliant?

As of February 10, 2009 non-compliant goods will be treated as Hazardous Materials and must be destroyed.  The civil penalty caps have been increased from $5,000 to $100,000 for each violation.

Why refer to February 10th as “National Bankruptcy Day”?

For starters, the legislation applies to EXISTING inventories.  Manufacturers commonly produce their goods 6-12 months in advance.  Any inventories that are currently in production or being warehoused now must be compliant.  If they are not compliant, they will be treated as “hazardous materials” and must be destroyed according to the Federal Hazardous Substances Act (FHSA).  For manufacturers (and retailers) of these goods, this could be devastating to companies already suffering from the current economic crisis.

Secondly, the 3^rd party testing is cost prohibitive for small manufacturers.  As the law is written, the finished product will need to be tested with separate tests done for each product variable.  For example, my company www.Glamajama.com manufactures embellished baby onesies, outfits, and t-shirts for toddlers.  Under the CPSIA testing requirements, I will need to test each design and clothing style that I offer.  With 20 designs each season on 40 different style combinations, that would equal 800 separate tests that need to be done at around $300-500 a test.  It would be an understatement to say that the cost of testing would be “cost prohibitive”.

Isn’t getting lead out of children’s products a good thing?

ABSOLUTELY!  I don’t believe any manufacturer in the children’s industry would want lead in their products.  After all, many manufacturers (myself included) started a children’s based business after having children themselves.  Why would we want to endanger our own children-much less someone else’s?  We can all agree that the CPSIA has many benefits for ensuring the safety of our children, however, there are flaws regarding how it is being written and implemented.  For manufacturers, the problem isn’t with producing a lead-free product; the problem is proving that you have a lead-free product.  .  These issues must be addressed before they inadvertently bankrupt small businesses in the children’s industry.

Where can I get more information?

The best advice I can give is to educate yourself regarding the new law.  There are many manufacturers out there that don’t even realize they are being affected.  Also, what about the retailers that carry these products?  Or the eBayers and Etsy artists? The publicists who represent the designers to the media?  The sales professionals who make their living selling these goods to retailers?  This legislation has many far reaching negative effects, many of which are being underestimated.  I encourage you to visit these following sites for more information as well.

http://www.cpsc.gov/ABOUT/Cpsia/cpsia.html  Official site of the CPSIA

www.thesmartmama.com , Site by Jennifer Taggart, a Mom, Attorney, and Consultant specializing in environmental safety standards for children

http://www.fashion-incubator.com/archive/cpsia-requirements/ Fashion Incubator

Please comment below or email me at heather@glamajama.com …I’d be happy to try to answer any questions you might have.  Also, you can follow me on twitter (www.twitter.com/glamajama )

Assigning UPC codes

A UPC, or Universal Product Code, is a generic term that refers to your 12 digit Global Trade Item Number (GTIN).  This number will allow your products or services to be uniquely identified when they are being sold, shipped, received, and invoiced in the marketplace. Your GTIN number can contain 14 digits, 13 digits, 12 digits, or 8 digits.  For the sake of simplicity, let’s focus on the 12 digit GTIN that is commonly referred to as the UPC code. 

Determining the UPC code for your products or services can be tricky and there are a couple of ways you can go about this.  The first is to become a member of GS1.  GS1 (formerly the Uniform Code council) will collect information regarding you and your company and then assign a GS1 Company Prefix to be used as a unique qualifier for your company. 

 Company Prefix + Item Reference Number + Check Digit = UPC number

The item reference number will be assigned by you to identify each of your products.  To assign an item reference number, first subtract the number of digits in your company prefix from 11 to determine how many you will need for your item reference number.  For example, if your company prefix number is 82234600 (8 digits) then 11-8= 3 digits needed for the item reference number.  The item reference number can then start at 000 and increase sequentially to 999.  The check digit is created by calculating other numbers in the string and helps ensure that the data is being used correctly.  To calculate, follow these steps:

• Step 1)   To calculate the check digit, write the 11 digits used for your UPC.  In our example this would be 82234600000 for our first item.
• Step 2)   Then add the numbers in Positions One, Three, Five, Seven, Nine, and Eleven. So 8+2+4+0+0+0 = 14
• Step 3)    Now multiple that number by 3.  14/3 = 42
• Step 4)  Then add the numbers in positions Two, Four, Six, Eight, and Ten.  So 2+3+6+0+0 = 11
• Step 5)   Now add the result of Step 3 and Step 4.  42 + 11 = 53
• Step 6)  The Check Digit is the smallest number needed to round the result of Step Five up to a multiple of 10. In this example, the Check Digit would be 7.

Got it?  This is where the “tricky” part comes in!  Don’t stress too much though, as there are calculators available on the GS1 website that can help you with these calculations and verify your numbering strategies.  You can even use their free “Data Driver” service to create the UPC’s.  After providing information regarding your product the software will create an appropriate UPC for you.  Once you have the number for your product, they can then be “tested” for readability and compliance.  This service is a lifesaver!   Becoming a member of the GS1 is the only way to have an official GTIN (UPC) prefix assigned to your company.  The cost of membership depends on your company size and the amount of UPC numbers you will need.  Expect to spend at least $1,500 to get started and yearly renewal will be about $500.  (Contact GS1 for an exact quote).    

Sharing the UPCs with your Retailer

Once you have assigned UPCs to your product offerings you are now ready to inform your retailer of the codes.  In your “New Vendor” packet you will have received an “Item Set-up Form” which will ask you various questions regarding your products including what their UPC codes are.  Once you complete and return the form to them they will perform a search to confirm the UPCs are valid.  This is the same type of search that you can perform on the GS1 website.  Avoid any potential problems during set-up by performing the search yourself while you are completing the retailer form. Once the UPC numbers have been loaded into the retailers system, your item will be tracked for sales performance, stock status, and to monitor any damages/returns. 

Common Questions….

What if the price seems too high or you only need a handful of UPCs?

There are UPC re-sellers available that will let you “buy a barcode” for $20 to $100 each.  These companies have become members of GS1 and then paid for thousands of UPC numbers that they are now selling to you for a fee.  While there are some scams out there, many of these are indeed legit and can save you quite abit of money if you need only a handful of UPC numbers.  However, please note that retailers such as Wal-Mart and Kroger’s require proof of a GS1 certificate with your company’s name on it.  A UPC re-seller will not be able to issue you this type of certificate as the UPC prefix will belong to the reseller only. 

Do UPC numbers expire?

No, once they are assigned there are permanently linked to a product.

Are UPC numbers valid only in the states?

No, UPC codes are recognized throughout the world and are the standard when transferring product information via barcodes.  (Except for books and magazines)

Can a product have different UPC codes associated with it?

Yes, if the product is packaged differently.  For example 1 widget will need a UPC code, as will a dozen widgets, and a case of widgets.  The “widget” would then have 3 different UPCs depending on how it was packaged. 

Stay Tuned for Part III, EDI

Questions? Comments?  Let me know!  Leave a comment below or email me at heather@glamajama.com

What do you think?  Have you launched a new product?  If so, what has been the response?  Are you a buyer?  If so, are you trying new products or sticking with the “tried and true”?

Below are the emailed questions I received from the producers in advance of my most recent appearance. They take this and turn it into what’s called a “rundown”, which is essentially an outline of the show with talking points, many of which end up on the teleprompter. I figured the process, as well as the actual advice, might be illuminating for you. Enjoy!
—

Financial:

What are the biggest financial mistakes that SBOs make?

·         Not prioritizing the spending

·         Not keeping track of available cash this month and in the months and year ahead

·         Forgetting that it’s easier to raise money when you don’t need it

·         Buying new instead of “used”.

·         Ignoring what I call the “2X Factor” which makes the point that things usually take twice as long and cost twice as much than you expect

·         Buying too much inventory or spending too much on advertising without testing out what works best

·         Not paying attention to building business credit

·         Accumulating “fixed costs” instead of “variable costs” which are far more flexible to changing status of the business

·         Receiving investment and not ensuring that there’s a unified plan and timeframe. This is called, “alignment of interests,” and is critical to create.

What resources are there for people when they are in a hole?

·         there are consultants who will help you build up your credit, personal and business

·         utilize an accountant. Don’t just check in at tax time – make it a quarterly check-in.

·         PR firms are helpful in managing any external-facing issues

Should they use their credit cards?

·         Credit cards are a last-resort solution to financial problems. More often than not, they simply dig a deeper hole for you.

Should they go to a bank for a loan?

·         Going to the bank for a loan BEFORE crises occur is always smarter.

Where do you turn when you can’t get a loan?

·         Your rich uncle

Friends and family? Pitfalls / pros?

·         Friends and family are a great way to go as long as you treat any loan or investment professionally and set expectations and communicate regularly and thoroughly about status of their investment

FYI, one of the most common laments we hear on our radio show is, “how do I get a loan if I don’t have good credit?” That’s a huge impediment and reality out there…

Legal:

What are the biggest legal pitfalls that SBOs fall into?

·         Not being protected or insulated from a lawsuit – this is easily achievable by moving from “sole proprietorship” to “LLC” or “S Corp.”

·         Ideas are copied by someone else b/c the ideas, known as “intellectual property” weren’t protected or enforced properly.

·         Non-compete clauses are not entered into with a partner or key employee at the time of engagement and when they depart they use their experience with you to become a competitor. They can poach clients/customers, too.

·         Not having people sign a Confidentiality Agreement whenever possible

·         Making representations that are too grand and unrealistic with investors, which can lead to shareholder hostility and worse

How important is an attorney to a small business?

·         Very. That’s why attorneys are so damn wealthy – they’re needed!

If a SBO finds themselves in a legal matter are there any resources they can go to for help?

·         Attorney is first stop. If no attorney, call around people who you trust and ask for a referral.

·         Internet is valuable but can be hit/miss in terms of reliable information

·         If a legal issue arises, I recommend making that your leading priority until you’re certain that it’s not a significant threat. Left untended to, a legal situation can drown you. This is one area where you always want to be extremely vigilant.

Insurance

What are the biggest insurance mistakes SBOs make?

·         Not getting coverage, especially basic liability coverage

·         For investors, it’s effective to indicate to them that you’ll have “Key Man” insurance. Helps them manage their “downside” in the event that you’re incapacitated.

·         Not getting coverage for a home-based business b/c you assume your homeowner’s insurance covers all your stuff.

·         Skimping on healthcare coverage. When a medical situation arises, don’t let it eat your finances. As pricey as it is, it’s better to bear the burden of healthcare costs over a longhaul than it is to get slammed all at once.

What is the bare minimum that a SBO needs?

·         Healthcare

·         Liability coverage

·         Short-term/long-term disability

Natural Disaster

Obviously, these are unforeseen, but how can SBOs prepare for them?

·         Have an emergency procedure in place for you, your team and customers who may be present/impacted.

·         Establish communication and rendez vous points

·         Sounds crazy, but each year thousands of people get blind-sided. You always think, it happens to other people, not me… but alas…

What resources are there for disasters?

·         www.Ready.gov – they provide both business and personal disaster planning advice and materials

Management / Employee

What are the biggest management / employee problems?

·         Most employee problems result from poor selection and management

·         Theft of intellectual property

·         Sharing of proprietary information

·         Stealing

·         Working under influence of drugs

·         Employee-employee discord

How do you handle a major employee crisis?

·         If there’s mutiny on the bounty or one bad apple, individual meetings complemented with group meetings are effective. Anytime something goes awry, it can be a great learning opportunity for everyone else as long as embarrassment is avoided.

·         If the employee has an emergency (is that what you mean?!), treat them like a family member.

I will still be designing, developing the technical specs and handling business administration but I have learned that I will need someone to make the patterns because having unprofessional patterns is just too expensive.  There are a few options as far as hiring a pattern maker.  First, I have looked in the local yellow pages and have come across a few pattern makers but nothing that makes me believe these people are able to make patterns for production.  I then checked out a website called Dobizo which is a actually a very good resource for startup designers.  There are quite a few links to pattern makers but the websites are rather intimidating and their clients include national chains such as Arden B., Bebe and Moschino.  Unfortunately, I don’t think I’m quite ready to step up to that level.  The last two options are on either end of the professional spectrum.  One is to contact companies advertising pattern making and production services in WWD and see what that turns up.  Second, is to place ads at the local sewing and fabric stores in hopes that some former industry professional will be interested in freelancing.  I keep telling myself there are thousands of clothing lines in this country and what one man (or woman) can do, another man can too.  I will figure it out, I just have to be patient and remember that I am working on my dream…things could be worse!

Kristin, Self Assured

How can you grow without an influx of cash?

The hardest thing for a company to do is start up with little money much less grow without a lot of financial backing. This was a position I found myself in from the get go. It is extremely hard to get loans on unproven businesses so “bootstrapping” ends up being the only option in most cases and was definitely the only option in my case. Not qualifying for startup loans and not wanting to give away any ownership in the company also placed me in a tight operating position. Most business experts will tell you to keep as much ownership as possible in case it does grow to be a multi-million dollar company and goes public; you want to have all the shares you can in order to maintain some control. Many, many startups end up with none of their business after investors and venture capitalists get a hold of it. In addition, if you ever do need an investor they want to know that the ownership is solid and with few partners to deal with, with sole proprietorships being the most appealing to a potential investor. Giving away my company after all this work was not something I wanted to do.

Therefore, it took some strategizing. First, I knew there had to be a high ROI (at least 500-700% markup from manufacturing costs to retail price) even though I was a few years from the major players that would eat up my profit, I knew this would give me a huge jumpstart in the business financially. Secondly, I could not incur large overhead expenses so I operated out of my house for the first year. Even when we started growing and added an assistant and shipping manager, they came into my house a limited amount. Having them out of the house and working with their own equipment kept them within the contractor guidelines so we were not obligated to pay outrageous employment taxes. Thirdly, I kept very good relationships with my vendors. Developing these relationships with the vendors was a great investment of time and energy. When I needed them, they were there for me. Fourthly, using stock bottles from suppliers alleviated the need for me to stock them, which freed up cash. Lastly, taking very little out of the company for myself, almost every dollar made rolled back into the company. My family had a meeting and decided to cut expenses so we could operate without my salary knowing this was an investment in our future. It was a family decision and we went for it knowing the first 2 years was going to be tough.

Do not get me wrong it was not all a perfectly planned bed of roses. There were still the 3 a.m. cold sweat, panic driven awakenings many nights but looking back, I can tell you it all worked out perfectly and would not have done it any other way. At every corner, I had no idea how the next step would be…would we end up ok or was this the big fall? Every move was risky and had to be done deliberately and boldly in order to achieve my goal of $1 million the first year, $3 million the second year and to sell out for $10 million in the third year. (Note: We are still in year two but we are on track so far, only time will tell). For instance, we had had average success in about month 6 of operations but the product was gaining ground. We still did not have enough dollars for inventory and we were approaching the Christmas season, which is the largest for most wholesalers. Knowing that our stores would not wait 4 weeks for an order to turn during the Christmas season nor would they pre-order a lot until they saw how the product sold, I had to do something to beef up inventory being against a wall of opportunity with nowhere to turn I looked to my suppliers. I called the manufacturer, which is the main supplier and explained the situation honestly asking if they could increase my credit line for the Christmas season (keep in mind I had no credit with them prior but had been nurturing the relationship for months now). They had a meeting and to my surprise, gave us a credit line larger than I could imagine! Not only did they increased the line, they asked if I could send extra bottles that they would make product and store it for me and not bill until they shipped it! This was amazing!

Feeling a bit like Rocky after a knockout, I used this information of the increased credit line with my other suppliers who also upped our limits and another vendor offered the same deal; if I committed to producing the goods, they would make the product and warehouse it, billing only after shipping! Our manufacturers were now investing in our company and that’s better than any bank!

Finally, we had the capacity to produce goods and sell them without a loan! We flew through a profitable and successful Christmas season. Then the January shows came and there was no way of knowing what was coming. We had the fortunate luck of one of our vendors standing up in front of 600 other store owners at a breakfast meeting in Atlanta. Little did I know this was to create a frenzy over the product like very few vendors have seen. Within a few days, we had over $200,000 in new orders and several markets still to go! The next dilemma presented itself: how could we produce the goods before we shipped (our customer pays when we ship) Again, I looked to my suppliers, which rallied up and started production right away. We successfully wrote and shipped over $500,000 of orders (to mom and pop gift shops mind you) in a 2 month period.

Next, we caught the attention of several international distributors, which is amazing being so young. All the international distributors wanted discounts and terms (up to 90 days to pay). After negotiating, I upped their discount for upfront payments and buying in volume by the pallet load, they had to purchase all marketing material at or above my cost; none was free. Also, remember with our markup we had the profit margin to negotiate and still maintain make money on the deal, this is why reducing costs is important from the beginning.

The next logical step was to strengthen the company financially. So while I was at the shows I spent a lot of time not just selling the product but also asking other vendors questions about things like how they carry accounts, how factors work, etc. During this time, I found a factorer and was able to work with them. They charge a flat non-recourse 4%. They buy the invoice and pay me everything when the customer shipped less the 4%. To some financial experts it is considered expensive money but to me, it cheap! I have 96% of the money upfront and remember we had the profit margins built in form the beginning…Beautiful! Currently I have looked into Purchase order funding just in case we get hit with the major vendor orders. Also in preparation of this next step we are looking into outsourcing fulfillment. This will enable us to ship large vendors. Major vendors are notorious for having very strict guidelines’ and your profit can easily be eaten up by errors in freight. Seriously most major vendors have shipping binders with guidelines that must be adhered to or you will be fined for each error on your bill. I have heard of nightmare stories where manufacturers invoiced $120,000 and ended up getting paid only $25,000 after all the penalties were figured. It can break you very quickly.

So my advice is to be strong, think positive, plan for the worst, hope for the best, be honest and aggressive and partner as much as you can with all your suppliers.

Below Suzy provides more of her advice.

In Suzy Batiz’s Words:

COVER YOUR BASES/PROTECT YOURSELF

Only once I got my manufacturing organized and costs controlled did I start with patents, trademarks, logos, etc.  At this point, I had spent very little money and had really only spent time, which freed me up financially to file for patents, hire a graphic designer, buy some stock bottles and produce my first run of 1,000 units.  We also paid $400 to do a patent search to make sure it was a patentable idea. Then we filed a provisional patent application which gave us a year to run and then file for the actual, full-blown patent.  I would recommend this to all startups as the upfront cost is much less.  Also we initially filed for trademarks through an attorney which have been very expensive. It’s very easy to do on your own, and we have filed all other trademarks ourselves through www.uspto.gov . 

The first patent attorneys we contacted were very pricey so we researched through the internet to find one that was reputable but had a much lower fee than our local attorneys.  It has proved to be a great relationship.  Do your homework and check backgrounds.  I always Google the words “scam” together with the person’s name or business name to see what comes up.  You will be amazed what you find. 

USE FRIENDS AND FAMILY TO FINANCE & MARKET

We had an initial investment of $25,000 to work with (which is not a lot in the grand scheme of things). Therefore, with limited resources I approached all my friends and family to help.  My husband designed the website and I asked many friends if I thought they even remotely had talents that could help.  You will find that people are very willing to help especially when they believe in what you are doing! 

We produced 1,000 units, this was a huge leap but I figured I could sell them out of the trunk of my car if needed.  Keep in mind the minimum from the manufacturer was 5,000 units.  I negotiated this down claiming that I did not want to produce that many until I had seen if the formulations would work and they could produce (turned the tables).

We emailed friends and family and asked them to email everyone they knew and to give a testimonial.  They did and to our amazement, web orders started coming in. One friend called and suggested that I send some to her friend that owned two retail stores.  I sent samples and he wanted to purchase wholesale.  I asked him for help.  He referred another store and then another until the first month I had 15 stores selling the product.  He then suggested that I contact a rep group and I asked him for referrals.  Armed with proof that it sells at retail (as I had 15 stores selling it already), I could confidently speak with rep groups about the product and the retail environment. 

KEEP GROWING & LISTEN

The rest is history.  We sold over a million dollars of product (wholesale) within the first year and are continuing to grow.  We keep hearing that the stores want more products to sell.  We increased the line in January and quadrupled our sales.  We are developing more products for this show season.  We listen very closely to consumers as well as stores to keep a feel for the market demands.

—

Go, Suzy!

I’ll post more of her experiences and advice soon.

Feeling inspired?

You may have listened to my podcast with Suzy to learn about how she did it. If not, take 15 minutes or so to get INSPIRED! Frankly, talking to her, in spite of all the effort and trials and tribulations, she kind of makes hauling down $1 million in revenue … well … easy.

So smart was she and so impressed was I, that I asked Suzy to share some of her smarts here in my blog.

Below, in her words, is some great wisdom for you to learn from:

Suzy Batiz:
First, how do you get from idea to having a product? Where do I start?

I say, STOP PLANNING & JUST GET STARTED: In my experience with businesses in the past, I spent excessively much time in the planning phase, and by the time it was ready for action, I was exhausted. Therefore, with this business I took on a completely different strategy: to get the concept developed quickly to see if it was worthy of my time and efforts. I contacted many of the experts in the field asking their advice without giving away the concept. I have found that one of the most valuable lessons is that there are many people willing to help you if you just ASK for help. Experts sent me their recommendations. Then I started making testers. Everyday I would send my husband the new batch and he would report the results. In less than 3 months, I had perfected the formula.

Normally at this point, I would have developed a business plan, filed for a patent, made business cards, logos, etc but I waited. I sent a few bottles to a few close friends for their testing and thoughts. They thought it was fantastic. Still the patent was not filed and business cards were not made.

Here are thoughts on RESOURCE MATERIALS & DETERMINING MANUFACTURING COSTS BEFORE FINANCIAL INVESTMENT: I started contacting manufacturers. The biggest issue a new concept faces is, “can it be produced at a price that people are willing to pay”? Therefore, I created a non-disclosure agreement and started working on formulations, bottling, etc., with manufacturers. It took much time for me to work out a price that the market could bear. For example, initially I wanted custom bottling and the turnaround was 4-6 weeks on that bottle. I knew that being new and having limited resources for funding that I had to turn quicker so I designed the product around stock bottles and sprayers. I had to sacrifice the look I wanted for a quicker production/restocking time. In essence, I was letting the manufacturer/suppliers stock the bottles for me. It was also important at this point to negotiate with the manufacturer on lead times as their normal turnaround time was 4-6 weeks. I contacted several until I found one that was willing to work with me while I was small and had “potential”to grow into the large company I saw this becoming. I was upfront about my needs and expectations, they were willing to help me out and I promised a long, profitable relationship with me if everything worked as planned. (Still, to this day, I send the entire factory cupcakes, and similar treats because I am so grateful for their help and our relationship.) They spend hours developing new products and scents for me now and it saves me a lot of time and they know it’s a good investment for them.

After all the raw goods were sourced and a manufacturer was found and I figured out a way to produce it at a price the market could bear to my surprise that it had to be at least 500% above the manufacturing total cost. You have to figure for mass market discounts, returns, etc. The time to do that is in the beginning, not in the end when it’s too late and you land a huge account but end up making no money because you were lazy upfront. I also knew that to grow quickly without investors I needed to be very profitable form the beginning, not after my production volume ramped to 1,000,000+ units. Again, I asked every supplier, “How can I cut costs”? and surprisingly, they brainstormed with me, resulting in great margins.

Suzy shares more in my next blog entry, including her approach to intellectual property (protecting her product line) and about how she got the key investment she needed to build her inventory early on. So, be sure to check back!