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by Nauman Farooqi
The Globe and Mail
April MacKinnon looked at the 2011 financials for her personal care products business, Sackville, N.B.-based Anointment Natural Skin Care Inc., and realized that the bottom line did not look good.
Ms. MacKinnon had a number of years of experience running a successful and profitable natural personal care products business, as well as experience in online commerce. Both of these experiences were in the retail sphere and, as she looked into the financials, she realized the huge effect that scale has on the profitability of a wholesale operation as compared to a retail business.
Not willing to decrease costs by substituting more economical raw materials, Ms.MacKinnon realized that, if she wanted to succeed in the wholesale market, she had to find the economies of scale that would allow her to erase the red ink. Scaling up meant finding more outlets to carry her product line. The challenge was how to accomplish this.
Ms. MacKinnon was born and raised in Sackville, and graduated from Mount Allison University in 1998 with a certificate in engineering. She completed a civil engineering degree at Dalhousie University in Halifax in 2001 and, after graduation, worked for six years in the engineering field in Halifax.
She became interested in natural personal care products around the time her first child was born. Later, at the end of her maternity leave and to spend more time with her newborn daughter, she decided to quit work and set up an online retail business selling natural personal care products.
This venture soon led to the opening of a retail outlet called Nurtured in Halifax. Building on her strength of making personal connections with her customers, she was able to grow the retail business. To complement the product lines sold at Nurtured, Ms. MacKinnon acquired Anointment Natural Skin Care in 2009 and continued to supply a small number of wholesale clients.
Although both businesses were doing well, Ms. MacKinnon realized that she was overstretching herself and unable to find the work-life balance she desired. With a third baby on the way, she knew that finding that elusive balance would mean making some tough decisions.
Despite living in Halifax for many years, she still had a strong sense of belonging in Sackville and wanted to move back to raise her family if an opportunity presented itself. That came in the form of a job transfer to Moncton for her husband. In 2011, she sold the retail business and moved to Sackville with a plan to take Anointment from a retail store concept to a wholesale operation.
To get sound advice, Ms. MacKinnon turned to her connections with other wholesale businesses in the region that advised her to scale up the business to allow her to take advantage of economies of scale.
To do that, she ramped up her marketing efforts by sending out brochures and samples to retailers around Canada, as well as boosting her online presence via social media outlets.
She analyzed her extensive product line and focused on volume leaders that could allow for the best scale-up opportunities in the short run. She knew that the new facilities in Sackville would allow her to easily scale up to the next level without any additional infrastructure costs except increased inventory and operating costs. Building on her personal communication strengths, she was able to make strong connections with new wholesale buyers and educate and advise them about her product line.
As of this month, the business has surpassed last year’s sales and is headed in the right direction. Her marketing efforts and a strong online presence through social media have resulted in several stores approaching her to sell the Anointment line.
Despite the success, there are new challenges that need to be taken care of, including completely revamping product packaging materials to better accommodate long-distance shipping and boutique merchandising.
Ms. MacKinnon is planning to produce short videos on YouTube to train customers as well as attend specialized wholesale trade shows to boost her marketing efforts.
Special to The Globe and Mail
Nauman Farooqi is a professor and head of the department of commerce in the Ron Joyce Centre for Business Studies of Mount Allison University.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Report on Small Business website.