All Fired Up With the right marketing plan, your product will blaze trails across the globe.
By Don Debelak
Opinions expressed by BIZ Experiences contributors are their own.
The BIZ Experiencess: Joanne Johnson, 34; Marcel Sbrollini,42; and Rod Sprules, 33; founders of Robustion Products Inc. in St.Laurent, Quebec
The Product: The Java-Log is a fireplace log madeprimarily from recycled coffee grounds. Sprules, a mechanicalengineer, first learned of the high heat capacity of coffee groundswhile working on a heated cold weather suit for his formeremployer. When coffeehouses became popular, he thought ofconverting used coffee grounds into the Java-Log. Today, theproduct, which retails for about $2.50 per log and burns hotterthan traditional firewood, is sold through Home Hardware, a majorCanadian hardware chain; Home Depot in Canada; grocery stores; anda variety of smaller stores in Canada and the United States.Product sales via the company's Web site (www.robustion.ca) arealso growing.
Startup: $38,000
Sales: More than $1 million in 2003
The Challenge: Turning an unknown niche product into anational and international bestseller
Rod Sprules' java-log differentiates itself from traditionalfirewood in a number of ways: It burns with brighter flames, emitsless carbon dioxide and is made from a waste product. And althoughthis engineer-turned-BIZ Experiences developed the environmentallyfriendly product on his own, he needed help when it came togenerating interest among retailers and customers. Despite thechallenges, Sprules was able to turn his product into amillion-dollar success story.
Steps to Success
1. Make some progress on your own. In 1997, Sprulesdeveloped the idea, and experimental logs were tested in hisgarage. "The procedure to make a log includes separating thegrounds, drying [and] mixing them, then extruding the finishedproduct," says Sprules. "It took 10 minutes to make alog. By 1999, I had the equipment improved to the point where Icould make a log in 25 seconds. I started selling them at the localfarmers' market and to family and friends."
2. Choose a partner who complements your experience.Though Sprules and his wife, Joanne Johnson, had done well on theirown, they jumped at the chance to take on a partner with marketingexperience. "In 2000, we tried licensing the product. We hadsome offers, but they were not adequate," says Sprules."Through a friend of a friend, we met Marcel, who has years ofconsumer marketing experience at Procter & Gamble and then atPepsiCo. Marcel was the perfect complement to our skills."
Sbrollini explains the situation from his point of view:"When I left PepsiCo., I was looking for a small to midsizecompany where I could develop autonomy within the organization andmake a difference. I was with several other small ventures firstbut found the ideal situation at Robustion Products."
3. Set up a test market to generate the financing you need toexpand. Investors will scrutinize you before investing, andthey like to see that you have the skills to expand. When the timecame for a full market test, which was funded by an additionalinvestment from family and friends, Sbrollini helped Sprules set upa test market in Ottawa according to standards for consumerproducts. "We sold the product in our test market to grocerystores, hardware stores, a coffee shop, an art store and autosupply stores," says Sprules. "We wanted to [sell] to afull cross section of stores to understand how the product could besold."
"The results of the test were among the best I've everseen," Sbrollini adds. As a result, Sprules was able to land aCanadian investor to expand sales for the 2001-02 winterseason.
4. Find a creative way to get market exposure. Though hiscompany was growing at a rate of 400 percent per year, Sprulesstill didn't have the money needed for a big advertisingcampaign. So Sprules and Sbrollini came up with a strategy."We approached a major chain of hardware stores in Ontario fora one-season exclusive," says Sprules. "In return for theexclusive, [they] gave us a big beginning order and had anadvertising campaign on the Java-Log, which included TV spots. Thedeal turned the Java-Log into a national product."
5. Cash in on early success. During the 2002-03 season,Sprules and Sbrollini rolled out the product throughout Canada to avariety of stores, including Home Depot, Home Hardware, and otherhardware and grocery stores. Sbrollini used past success as a salestool: "We were able to use the success in the Ottawa testmarket to create traction. Our success provided leverage, [which]made the product sell."
A successful 2002-03 season helped Sprules and Sbrollini raiseadditional money from private Canadian investors, which they neededto approach the U.S. market for the 2003-04 season. The campaignwas a success: "We were just planning on selling in theNortheast United States, but we received so much publicity that wewere selling across the entire Northeast and Midwest. By December2003, we had sold most of our entire production for theseason."
Worldly Goods
Looking for a manufacturing source in Asia? Start with yourstate's commerce department. It offers import and exportassistance, and can help set up a manufacturing plan. If this isyour first time working overseas, use a sourcing agent to find aforeign manufacturer. The agent usually has an overseas office thatcan get samples, oversee production, and ensure you get the productyou expect.
Try these Web sites to find agents: Buy-Thai (www.buy-thai.com),GroupChina (www.groupchina.com), The China Manufacturer (www.the-china-manufacturer.com) and ProSavvy (www.prosavvy.com).Another great site for direct sourcing is BizEurope(www.bizeurope.com)-check out the opening page andclick on "Asia," located in the red bar under the map ofthe world.
Lessons Learned
1. Business savvy counts. It makes sense to partner with apro who makes great presentations to customers, gives investorsconfidence, knows the best deal you are likely to get, andunderstands how to close the deal. You want customers to deal withyou, but that can be a hard sell without a knowledgeable personinvolved on your end. If you're ready to find potentialpartners, try networking at BIZ Experiences clubs in your area orcontacting your local SBDC (www.sba.gov/sbdc). You can also place an ad fora partner in the "businesses for sale" ads in your localpaper.
2. Investors look for experience. Customers look forexperience, but not nearly as much as investors do. Investors arecautious about giving you money, and they will often back away froman investment opportunity if you lack the requisite experience. Asa condition of the loan, expect investors to insist on thelong-term presence of someone with experience on your managementteam.
3. Sometimes, you need to give to get. With an exclusivedeal, you lose sales opportunities-and possibly some profits-butit's still a great deal for an inventor if the retailer runs abig promotional program. So always consider giving exclusive orfavorable terms in return for positive placement or promotion fromthe retailer. Without an incentive, retailers are not likely tooffer you any promotional activities.
4. Nothing sells like success. Retailers don't likereturns; they don't want to take up shelf space for productsthat aren't moving, and they don't want to discount yourproduct to sell it. They're always looking for reasons aproduct won't sell. Counter retailers' worries by showinghow well the product has sold in the past. If your product soldwell at the local level with a retailer and you want to sell it tothe corporate office, get a quote from a local manager about howwell the product did. Leverage every moment of success to increasesales.
Picture This
Patent drawings are a big part of the expense of any patent.Inventors trying to hold down costs should investigate How to Make Patent Drawings Yourself: PrepareFormal Drawings Required by the U.S. Patent Office (NoloPress) by Jack Lo and David Pressman, patent agent and patentattorney, respectively. In addition to covering all the rules andgeneral standards for what a patent drawing must contain, the bookexplains how to do the drawings with just a pen and a ruler, orwith a computer or camera. The book requires some study time, andfollowing all the standards for reference numbers and thearrangement of figures takes a lot of checking back and forth. Butit's a worthwhile resource for inventors willing to learn howto do this costly step on their own.
Don Debelak is author of BIZ Experiences magazine'sStart-Up Guide #1813,Bringing Your Product to Market(www.smallbizbooks.com), and host of inventor-help Website www.dondebelak.com.