Beauty Business Startup Case Study: Henry's Brown boxes
The September 11th terrorist's attacks made Tanya Ponton take stock of her life. Realising she was unhappy working in the City as a solicitor, she handed in her resignation and decided to go and 'find herself'. Tanya found that she wanted to start her own business and took the plunge six months ago. She talked to Startups.co.uk about setting up Henry's Brown Boxes.
Name: Tanya Ponton
Business: Henry's Brown Boxes
Type of business: Beauty product distributor
Start date: August 2003
When did you first decide you wanting start your own business?
I'd always wanted to do it. I was the kid with the lemonade stand, the university student who started a snack bar, etc. At the same time I felt drawn to the safety of a traditional career and so I became a solicitor and worked for a large firm, first in New York and then in London.
I was always very unhappy in that sort of environment, but stuck it out for a few years. After September 11th, I began to seriously re-think my life choices, especially my career. Within six months, I left my job determined to do something I enjoyed. I wasn't sure what, so I took some time to de-stress and just be open to any possibilities, exploring a lot of options.
Tell us about your business
We import beauty products from America and Canada, specialising in the so-called 'indie' market: young independent companies that are showing a lot of potential. We distribute them to high-end retailers like Harrods, Pout, Sephora and Relax.
Was it your first business idea and where did it come from?
Definitely not my first business idea I've had dozens of ideas, just not enough courage. But I was really unhappy with my suit and desk job in the City and took some time off to 'find myself'. Then I read an article about some women in America who were importing beauty brands from Europe to the U.S. I began to do some research into doing it the other way around.
Was your decision to start a business inspired by any other companies or individuals?
My grandparents - they are the Henrys of the business name. They had very little formal education but were incredibly business savvy. They had a very successful grocery store business built from absolutely nothing. People could order over the phone and a brown box tied up in string would arrive at their door. Our ecommerce site is called Henry's Brown Boxes, only now it's top quality gift boxes tied in blue satin ribbon and filled with high-end beauty products.
What makes you think there's a market for your business?
When I worked in the City, a lot of my female colleagues would complain about how hard it was to get the latest American beauty products. The UK beauty magazines would write about some great new product and then only list a US phone number. Whenever an American colleague went home, they'd come back with an entire suitcase of products that weren't available here.
Most e-commerce sites are focused on providing something cheaper, but few want to provide the same level of quality as a luxury brand shop. www.henrysbrownboxes.com is an online boutique, so it aims to give the customer the same experience and service they would expect at an elegant little shop.
Once you'd decided to start a business, what did you do first?
Research. Then I researched more. Lastly, I did some research. Then I asked all my friends to tear apart my idea and see if I could come back with a convincing argument.
OK, but what research did you do?
Some formal I looked at the size of the market, who the major players were, what their respective market shares were. Some informal flipped through American and Canadian magazines, asked friends in the States what they were buying.
What advice did you seek? Did you approach any of the government advice centres such as Business Link?
Absolutely sometimes I was afraid to give my name because I called so frequently. It's immeasurable how helpful it is. And most of it is free, so how could you not? I also looked at a lot of small business websites, including startup.co.uk, and read all the anecdotal stories as well as the formal articles on everything I could. I also read US sites since that's where my suppliers were based.
What other help did you get?
My family is incredibly helpful. My mother grew up working in my grandparents' business so she is without a doubt my single greatest resource. Your City resume may help give you credibility but the small business world is a very different animal, so her experience has been critical to our success.
I read a lot of books, including The Beermat Entrepreneur, Building Coffee Republic from Our Kitchen Table, Little e, Big Commerce and Lloyds TSB Small Business Guide.
Finally, I had enormous informal support from my friends. They are very much a part of my target market, and I rely on them to be honest. I know that if they start to wrinkle their nose at an idea, I can pretty much bin it because I'm talking directly to the customer. I don't make any big decisions about the brands without passing it by them.
Does the government need to provide more help to people trying to start a business?
The government could do more - not just financially (but that too), but just more public awareness of what is already available. British culture is not really an innovative one, like in America and parts of Asia, so entrepreneurs can find themselves quite the odd man out. When the government publicly recognises and encourages the importance of small businesses, that attitude affects the perception of entrepreneurs which is held by banks, customers and suppliers.
If I had one major suggestion it would be to create a mentoring program similar to one called SCORE (Service Corps of Retired Executives) in the U.S. The Small Business Administration is a US government organisation that matches retired professionals with new business owners by industry. I have one, and he's amazing. Even though he is in America and I am here, I can bounce ideas off of him, ask him strategic questions, just send an email to vent. There are a lot of people out there sitting on thirty or forty years of experience, and being an entrepreneur doesn't mean reinventing the wheel.
Talk us through the process of writing your business plan.
I couldn't afford software so I searched the web for sample plans, there are tons of them. I actually found the US small business administration (www.sba.gov) to have a great business plan outline. It's really detailed probably more than you need, but truly comprehensive. My bank, Lloyds, also gave me a copy of Lloyds Small Business Guide.
The process of writing a business plan was great, because it forced me to have a direction, not just a smattering of good ideas. I had to pull them together, eliminate the ones with the least merit and defend my choices. My friends, family and mentor all reviewed it. However, you do have to remember that it's a means and not an end and not spend too much time on it. The moment you perfect it, it will be out of date anyway.
How useful has your business plan been and do you think you'll stick to it as your business begins to grow?
The business plan was really important to getting a loan. You need to show that you have a well-thought out game plan, and also you need to acknowledge there are weaknesses (there always are) and explain what your strategy is to overcome them.
These days the plan is mostly for internal purposes. My plan is organic, I've learned to be more flexible and re-adjust my goals and expectations as things happen. My basic strategy has remained the same, but not much else! I also write a mini-plan at the beginning of every quarter just to update the current status and revise targets accordingly.
How much did it cost to start the business?
The initial investment was about £60,000.
How did you fund this?
About half came from family and personal savings. The other half is a loan from Lloyds, backed by the Small Firms Loan Guarantee Scheme. I read Building Coffee Republic from Our Kitchen Table by Sahar and Bobby Hashemi; it's unparalleled for describing the emotional experience of being an entrepreneur, particularly about high street bank loan officers. I literally printed two dozen copies of my business plan and started walking down the high street. Lloyds really has looked after me. In the end, trying for a bank loan is a bit like boot camp for start-ups. If you give up after one rejection, you may want to reconsider starting your own business!
How are you funding your running costs until the business takes off?
Fortunately, the business loan is still covering us. We have been quite fortunate to represent some strong brands and land some good accounts. Let's hope we continue that trend. We are looking at taking on a private investor, though, because we are now passing up some growth opportunities in order to remain conservative with funds.
Did you make any provisions for business not being as prosperous as expected?
They say that you should always put in a contingency fund for things to be 15% worse than you expected financially, so we've tried to stick to that, working off of a worse case budget, but shooting for best case sales targets.
When did you stop working?
I stopped working in March 2002. I took almost a year sorting out my next direction. My only job has been as a lawyer in a big firm, so it was quite surreal to go from my career overwhelming my life to having complete control. One day I was walking down the street on a Tuesday afternoon. I was totally calm and relaxed, a very Zen moment it was the first time in probably a decade where I had total control over my day, no one to report to. It really inspired me to look for an option to keep that control. It has made all the difference in my attitude.
Are you working from home or from premises?
We have a small warehouse for the products, but principally I visit buyers at their offices. I keep a home office to do all the paperwork. As things grow, we're going to have to get more warehouse space and perhaps a small office where our sales reps can check in. Right now it's all about counting the pennies and so we aim to keep overheads as low as possible.
How many hours are you working at the moment?
About 27 hours per day. Having not come from a lifestyle career, it's not so bad. However, it's a real adjustment to do everything yourself no secretary to field your calls, no mailroom to sort your post. Being inefficient with time is definitely a weakness I am trying to overcome. I won't work like this forever, but right now it is early days, very exciting, very hard to step back from it. I did take a week off around Christmas - the holiday season is the most important one for our clients so it was very important to take a break once it ended and get re-charged.
How are you managing your day and what steps have you taking to ensure you're able to get everything done without working around the clock?
As we get more accounts, it gets a bit more justifiable to contract out some of the non-essential, but time-consuming work. We have an answering service so there's less distraction from calls that are not urgent. We have a bookkeeper now and a part-time office assistant as well. We started with broadband, but we recently upgraded our computers and printers. It seemed like such an indulgence at the time, but it's saved so many hours due to faster processing and printing.
What about staff, is it just you?
I am the only full-time employee of the company. However I have a lot of contract help from sales reps to bookkeeping, which keeps costs down. My mother is in charge of all the buying it sounds like fun to just test a lot of lotions and potions, but it's actually quite stressful. There is only so much money and it's always a bit of a gamble which brands to take.My marketing director, Nana, is technically freelance but 100% committed which is fantastic. She is an absolute genius and looks after all the press relations and PR events at the stores. My father looks over operations, he's superb at watching the numbers and how they relate to the logistics of everything, very detail oriented.
My brother handles most of the technical stuff, I can't say more because I don't know more. But if the websites aren't working, I call on him and he seems to know what I've done to it and undoes it. Until I do it again.
Is the amount of red tape that comes with taking on an employee something that concerns you? If it is, what will you do about it?
Yes, I've been avoiding the issue by keeping everything contractual. For now, it's also economical but I have my eye on this issue as I think it's going to have to be addressed soon.
There are some courses coming up at my local Business Link. I also read the information on Startups.co.uk and other sites to try to get a grip on what I have to do. It's exciting, knowing you are reaching that level, but also a bit scary.
What marketing and advertising have you done so far?
Our B2C website, www.henrysbrownboxes.com, has been an important marketing tool. It gets the product information out to the end-consumer and we have been very fortunate that the press have taken an interest in it. It's great exposure for the company and the individual brands. As we've gotten more accounts, we've been redirecting our press contacts to our stockist clients. For example, our Lather brand is featured in InStyle magazine this month and it lists Harrods as well as Henry's Brown Boxes.
We also do a lot of in-store promotion. At Sephora, we had a leaflet campaign announcing the launch of our new Clean perfume. At Relax spa, we provided the store with samples of the product to give to the customer and a lot of product information at the shelf itself.
Where do you hope to be in 12 months' time?
Two or three full time employees, distributing ten brands to fifty stores.
What are the main obstacles to growth?
Money, money, money. Also, knowing which opportunities to take, and which to let go. It gets tempting to grab everything that comes along and then you spread yourself too thin.
How do you plan to overcome this?
When the time is right, we will probably look for an investor as some of our large scale opportunities look very lucrative but have substantial start-up costs. When we get that money, we'll immediately get some financial and business advice to make sure we spend it in the right places in the right amounts.
Tell us about your website.
We spent more money on the B2C website than the B2B site (www.henrysco.com) because ecommerce requires more bells and whistles. We had an outside company do the initial design, but we maintain it ourselves. The ecommerce site needed to look professional, secure and engaging. Since we work in the luxury end of the market, it needs to reflect a certain level of sophistication. But, it's also a bit tongue in cheek, a reminder not to take yourself too seriously our slogan is "No one should put you in a box. Except us."
What are your main ambitions, to make a lot of money or enjoy what you do?
I don't see why making a lot of money and enjoying what you do have to be mutually exclusive. I hope to make a lot of money because I enjoy what I do.
What have you found difficult about starting up and what do you wish you'd done differently?
I do wish that we had hired a proper website design company from the start, as it had to be re-done from scratch and took twice as long and three times the money. My personal experience is you get what you pay for, so keep that in mind when tempted by the lowest bidder designer. Also, avoid the Mate of Mine recruitment agency. When you rely on personal relationships for professional services, you can end up with neither.
What skills and personal characteristics do you need to start your own business?
I'm not convinced there are any universal skills it varies so much by industry, and even then, loads of people go into something new that's totally unrelated to their formal education. I do think certain personal characteristics help: stamina, optimism and a balance of the big picture and the little details.
So what advice would you give to anyone thinking of starting a business?
The only advice I can offer is someone else's: William James. He said, to change one's life: 1. Start immediately, 2. Do it flamboyantly, 3. No exceptions. William James
Thanks a lot and the very best of luck. Will you come back and tell us how you're getting on in six months' time?
Yes, would love to.
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