Just some ramblings, advice please?

[kate772]

This is somewhat a question but mostly just laying out my confused thoughts.

My family had a successful candle business that we sold in 2005. At the time of the sale we had a 14,000 sq. ft. factory and 3,000 sq. ft retail outlet in Ohio's Amish country. I am stating this to let you know that at one time we did know what we were doing. Now, not so much. We had a non-compete clause in the sales agreement that prohibited us from being in the candle business for a period of time. We never saw that as a problem because by the time we sold we were so burned out and beginning to struggle due mostly to the economy and a series of circumstances. Anyway, now we have decided we really miss the business and working for someone else really sucks! But, it seems things have changed a lot. For one thing the price of materials. The paraffin wax we used was costing us approx. $54.00 for 55# (I think; I didn't do the buying). Now the wax is about $100. So many people have told us we need to do soy this time and I like the "natural" aspect plus the lower cost of soy wax but we have been testing for about a year now and just are not happy with it.

Of course, now starting over, we are not getting the discounts we once did. The fragrance company we ordered from only sells in 25# cans with a very high overall minimum.

Our primary method of sales before was wholesale through a network of reps. Now we plan to go the internet route and hopefully back into wholesale also. But frankly, I am not sure the reps. will be interested. We were the original manufacturer and seller of the Muffin Candle which I thought was kind of silly but thankfully a huge seller. That got us in the door with the reps. because they were unique, very scented and price point was about $2.00 wholesale and then we sold the jars and votives too. Now, we really have nothing different that stands out.

And, those that are selling on-line, how do you afford the shipping? That has skyrocketed! UPS and Fed-ex used to trip over themselves enticing us with discounts. Now, no way. And it seems that free shipping is expected in some form. On top of that, of course, everyone wants a very low price too. How in the world can you be in business?

It seemed so much easier the first time. But, maybe that was because we were blissfully ignorant and didn't realize all the mistakes we made starting out. Can't afford those mistakes now. This will hopefully be our retirement.

Anyone have any good advice or thoughts on this rambling?

Thanks,

Kate

[chuck_35550]

This is the main reason I closed my small part-time business but also because I was so burned out and tired. I would recommend that you consider a parasoy blend. I used (and still have on hand) Clarus wax, you can contact their rep mailto:bford@clarussp.com and get more information. I use cdn wicks with their 70/30 blend and 1oz pp of fo with great results. You still have to order in bulk to get free shipping and some companies are easy to work with on getting the shipping down while other companies include the price of shipping in the cost of the product. The candle industry has a lot of competition these days and you really have to be diversified if you want to stay afloat. I found wholesale private label to be the most lucrative but a lot of work. Fund raising would be my best advice. You can look at the competition and there are so many organizations trying to raise funds for their projects. HTH

Steve

[kate772]

Thanks Steve. Some good insight. On the shipping, I was actually talking about shipping to the person buying from my website. Seems to be a lot of free shipping offered. I can't see how there is any profit left.

[David Fields]

Just my thoughts as I read your post. My heart goes out to you. Any business is tough to succeed in. But you have a leg up in having more knowledge about the candle business than do most chandlers. But I think that can also hurt you. You remember how nice it was to be big and have suppliers come to you and offer deals. Now you are unknown. So, in my opinion, you have to start small again, perfect your product, as you once did, find your niche and build your customer base , as you once did. Deals from suppliers and shippers only come when your revenue with them becomes a noticeable blip on their sales reports. Then they will start reaching out to you to get all of your business by giving you lower costs. Instead of ordering your FOs, wax and supplies from many sources, order from one or two. Then when you are a noticeable blip, ask for deals and special pricing. The bigger the blip you are to them, the more they will want to keep your business. Smaller profits from a customer is better than losing the customer completely. Tell supplier #1 what supplier #2 charges for a product and ask them to beat it. This works. See, the supplier gets the same deals for greater volume with their suppliers (or loses special pricing for less volume) as you are trying to get from them. It's a volume discount. As an example, we once ordered all of our paper and plastic supplies from one supplier and thought we were getting good deals because our price had been dropping. Then we contacted another supplier, told them what our yearly outlay was and asked what they would be willing to do to get our business. They sent a rep to visit with us. We now pay a lot less than before and get regular visits from our rep who brings samples. UPS is the same way, but you have to be doing enough business with them to warrant special pricing. I don't know if I have helped you or not. Oh, we produce paraffin candles, not soy, although we do have a small parasoy line to satisfy the tree huggers (no offense intended).

[kate772]

Thanks David,

Yes, you helped. Strangely, when we went into business before we never really thought about discount. They just started coming to us. I know it will happen again. We don't plan on going as big this time. At least we'll try not to. In our previous business we reached a point whee our reps, customers, etc. were all telling us that we needed to do more and grow. It was almost like if we didn't grow we would die.

I have so much trepidation about going into business this time. I need everything to be right from the start. Having a terrible time finding the right packaging. My husband on the other hand wants to rush full speed ahead and work out the kinks along the way. I feel you only get one chance to make a good first impression but I may just be wasting too much time in the planning.

Our markup was the standard double for wholesale customers but when looking at other candle manufacturers I wonder how in the world they are doing it. There just doesn't seem to be enough built into the pricing. And, like I said, selling online and offering free shipping. Seems to be generally expected but how do they do it? I suppose we could start out by making $1.00 per candle instead of $2.00. But then if there are unanticipated costs, what then?

Our prices before were pretty much middle of the road, not luxury candle pricing but not Walmart either. Most people that wanted a quality candle could afford us. Now, we are not sure if we should go the same way or maybe go the luxury candle route. Or maybe both but that may muddy just who we are. I don't even know who we are right now!

This is so frustrating! Maybe I just need to let go and do it.

I am not stuck on the idea of soy. Scent just does not seem to be there. I do worry that people now are so attached to the idea of "natural." And, paraffin is so much costlier. But it is something we know better than soy. Maybe both, like you are doing. We also considered doing a line of lotion candles (luxury) with soy and maybe parasoy or paraffin also. Do you sell online or another route?

Thanks for the input. It always is welcome.

Kate

[lovecandles918]

Im sorry I can't really help you as I am new to candle making, but one thing caught my attention. You said soy is less expensive than paraffin. I am perplexed because I thought paraffin is less expensive....

[David Fields]

A couple of questions, Kate. Is this going to be a hobby, hobby/business, part-time business, full-time business? Are you and your husband retired now? going to be retired soon? From my experience how much time and money you must invest depends on the answers. We have been doing this a long, long time. In my opinion the best, longest-lasting candle businesses grow only as sales dictate growth. You cannot force long lasting growth of your business. I agree with your husband. You need to get products into the hands of consumers; repeat customers will validate whether or not you are doing things right. Then start fine tuning your craft. As to packaging, get the best you can without sinking a lot into the product until you are satisfied with the quality. I can't even remember how many candle companies we have seen over the years come and go. They had beautiful business cards, websites, labels and packaging, but their products were not good enough to generate repeat customers - just one-time-only customers. Pretty can come as sales dictate. But, one rule of business...If it will not make you money, don't spend the $. Pretty can wait. Big companies get economy of scale purchasing. They buy large amounts of raw materials to keep costs low. You will one day be able to do that too. Oh, to answer your question, we have a mall retail store, we sell online and we sell wholesale.

[kate772]

Our business before was full time. We supported four family members fully for over 10 years. We had 40 or so employees at one time and needed them all. We always had a good hand on the business and watched costs carefully.

At that time we really didn't want to grow big but found that it was almost grow or die. We would like to have it this time also as a full time business to provide a nice retirement for my husband and I and allow our daughter and possibly son carry it on.

I tend to be very indecisive and want everything perfect which I realize is a problem.

Trying to decide if we want to go with a small retail store or not. It was always good for us before. Ideally, I would like to have a manufacturing space in an industrial type building and allocate a space in the front for retail. I think that gives the impression of being a nice sized business. And, sometimes impression does matter.

I am having a heck of a time finding the nice packaging for diffusers without having to order a large amount initially. Do you do diffusers? Good seller?

I feel melts are likely a good seller also. Probably won't do pillars this time around. Not even sure about votives. They were a huge seller for us before but I don't see candle companies offering them as much now. And, whenever I see a Yankee display in stores the votives are limited where once they were displayed in mass.

So many decisions...

[David Fields]

We sell reed diffusers and have the same problem as you. We sell a lot of them, but not enough to justify the cost of nice packaging made for them. So, we use what we can find. The melts, tarts (we call them snaps) are a big seller for us; so, we buy from a plastics mfg at 12.1cents each, including shipping. The minimum is 10,000 per order. We order three or four times a year. For us, having a retail store created word-of-mouth advertising. We started out selling retail at about twice cost (at the time we did not sell wholesale or mail order). Some products we sold for a higher margin, some less. Just depended. Once we had an established base of repeat customers, we slowly raised our prices to provide a margin for wholesale. We started wholesale three years ago and mail order one year ago. Both are growing (a little too fast) and are about 20% of gross revenue. We have outgrown our warehouse/factory (1250 sq feet) but don't want to relocate because of the added expense. We have five employees. You are right about grow or die; that's what we have seen. We have been going to Dallas Market twice a year for I guess ten or twelve years. It is a goldmine for us for new products, packaging ideas and meeting people like us. We love to find candle makers whom we can share ideas and problems with. For us, opening a retail store was key. Trying to establish your business and products on-line does not work. We have never advertised but have over 200 wholesale accounts just from business owners contacting us. The other key we found was having the time to devote to the business. We both retired twelve years ago. Prior to our "retirement" we never had enough time to develop, make or sell our products. We pour pillars, but they are not a big seller. Votives are, though; people use them in place of melts/tarts. So, we have expanded our offering.