Outsourcing everything in a business has some clear advantages for a cleaning products business.
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Entrepreneur: Bex Gold, Director
Company: Cinderella Products
Business type: Manufacturer of luxury organic household cleaning products
Founded: 2004
Head office: Gold Coast, Queensland
Contact details: +61 7 5533 0295
The Cinderella Story
Being a clean freak and feeling disillusioned with her marketing role in the highly regulated finance industry inspired Bex Gold to come up with a new business idea in 2004. She says: "I had this notion of high-end, organic cleaning products. I spent an afternoon jotting down ideas in a notebook: names, formulas and characteristics - by the end I had a clear idea for the Cinderella range."
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Key learning points:
- Business model - How much does your business really need to do? Outsourcing can cut fixed costs and increase flexibility - but you need the right structure.
- Suppliers - How much is your business worth to your suppliers? Linking them financially to your success gives them a stake in your business.
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Gold was clear about the environmental impact of her product. "It had to be 100% biodegradable and cause no irritations." From idea to conception took about three months. "I had my samples made and then went on a pre-marketing mission. I'm pretty motivated when I want something."
Gold had commitments from designer homewares shops for Cinderella's luxury Super Fabulous range but the day before the cleaning product was due to be delivered the supplier's factory went up in flames. Gold says: "I shopped around for another supplier but I ended up sticking with them. In three weeks, they had hand mixed and delivered my order. They gave me 20-litre containers and I worked like a dog in my kitchen hand filling, hand labelling and despatching the orders."
The Challenge
Running a business model that relies on outsourcing.
The Solution
The Super Fabulous range was well received in the designer homewares market. But when Gold looked at her sales figures she had a choice: keep Cinderella as a part-time concern while working full-time or invest in her own company and make it grow. She says: "I decided to stop freelancing and turn the $15 premium product into a $4.99 product sold through mainstream distribution channels such as supermarkets."
Gold developed the Essentials range of cleaning products in late 2005. She says: "I took the best attributes of the product and repositioned the price point." Coles Supermarkets took on the range and it was on their shelves by April 2006. Business increased by over 1,000%.
Gold decided on a business model that outsourced conventional staff roles. She outsources: manufacturing, merchandising, administration, accounting and public relations. "I chose this model as it allows me flexibility with my cashflow, but one reason it works is that I work with great people."
Managing this model requires close networking with suppliers and a readiness to relinquish some control. Gold says: "There are key people [among my suppliers] who know my business inside out; there is enough structure - and systems - so that problems can be solved among the suppliers if necessary."
When Gold was sketching the idea for Cinderella she didn't know how or where to find a company that could make cleaning product to her specific brief. She says: "In the end, I rang up Big Kev's company and asked if they would do contract manufacturing. They didn't but they put me onto someone who did. They worked so hard after the fire to deliver my product. I was impressed by the effort for a new customer."
With each growth spurt, Gold has had to reassess her company structure. She believes there is capacity to keep growing with the current suppliers and structure. "I'm getting better service because these people get a percentage of sales and I get the benefit of their experience. I pay a premium but I get people who are committed and I give a lot of control to those I work with."
Gold says outsourcing gives her access to suppliers' expertise. "I worked with a bottle broker who introduced me to the correct pricing scale for the various components of my packaging." But the relationship ground rules need to be established. Being a small company has its advantages. Gold says: "I work with medium-size companies up to multi-nationals such as Amcor. It has helped that Cinderella has a PR-friendly, start-up personality."
The Cinderella business structure is unusual but Gold recommends it. She says: "There are fewer staff problems as people are working on the success of their own businesses; I have no water cooler gossip problems or pay disputes." She says a key to making her outsourced supplier model work is vision. "My role is to keep the vision of my company alive and have [suppliers] see that working with my business is beneficial to them."
The Result
Gold is expanding the Essentials range to include personal products. "We should end up with 15-20 luxury organic products across a number of categories within 24 months." Cinderella's first batch of cleaning fluid was 3,000 litres; it now distributes more than 21,000 litres a month.
In January 2006, Cinderella began exporting to New Zealand and seven product lines are sold through Woolworths. Distribution increased by 100% for the 2006-07 financial year. Gold plans to export the Essentials range to the United Kingdom and Asia within the next two years.