How I Bought A Business For $3K And Grew It To $14K/Month Selling All Natural Soy Candles

Published: October 11th, 2020
Elise Phillips
Founder, Coco & Bubbles
$14K
revenue/mo
1
Founders
0
Employees
Coco & Bubbles
cocoandbubbles.com
from Atlanta, GA, USA
started March 2019
$14,000
revenue/mo
1
Founders
0
Employees
Discover what tools Elise recommends to grow your business!
platform tool-icon Wayfair tool-icon Walmart.com
shipping tool-icon Unishipper
social media tool-icon Pinterest tool-icon Instagram
inventory tool-icon Craftybase
wholesale tool-icon Faire.com
seo tool-icon Moz tool-icon Moz tool-icon Moz
other tool-icon HARO tool-icon Bold Commerce
Want more updates on Coco & Bubbles? Check out these stories:

Hello! Who are you and what business did you start?

Hi there! My name is Elise Phillips and I am the owner of Coco & Bubbles Candle Company. As the name suggests, we make and sell candles, specifically, soy wax candles which are our flagship products.

A Coco & Bubbles customer is someone who is looking for an eco-friendly alternative to paraffin wax candles. You see, most of the mass-produced candles you can buy at the store today are made from paraffin wax. Ever heard of Yankee Candle? Yep... the most beloved candle company in the world makes most of their candles are made from Paraffin wax. Paraffin wax is a by-product of petroleum. There is plenty of research out there that shows how harmful petroleum is for our environment. So, naturally, consumers are also concerned about using a petroleum-based product in their homes and therefore many are looking for non-toxic, healthier alternatives.

Our typical customers also tend to be gift-buyers-- this goes for the majority of the industry as a whole. Since our customers are largely gift-buyers our busiest time of year tends to be during major gift-buying holidays such as Christmas and Mother’s Day. Father’s Day is also usually a busy time for us since launching our Man Approved candle line. However, Fall and Christmas are the busiest on average where we’ll typically do 80% of our revenue for the year.

Wholesale has become the biggest opportunity got us, right now. Currently, we primarily use Faire.com and Tundra.com. In 2021, I plan to do more direct advertising in B2B trade publications, such as Gift Shop Magazine and Smart Retailer, as well as attending trade shows, such as The Atlanta Markets.

how-i-bought-a-business-for-3k-and-grew-it-to-14k-month-selling-all-natural-soy-candles

What's your backstory and how did you come up with the idea?

Coco & Bubbles came along almost by accident in early 2019 while I was working as a Sales Manager for a large financial company. I had become burnt out with the daily grind, long hours, and 3-hour commute. So, in my spare time, I started looking for business opportunities that I could start as a side hustle. One of the businesses/ industries I researched was scented-candles.

If you’re manufacturing your own product, source all of your materials directly from the manufacturer once you’re past the “prototype” and “proof of concept phase”. I cannot state enough what a game-changer this was for my business.

The primary reason I was interested in the candles was due to how inexpensive the raw materials are and that they are relatively easy to source making a relatively low barrier to entry. Many others have also realized the low barrier to entry, resulting in candle businesses popping up everywhere creating a crowded market. Thankfully, we were already established and had a decent customer base before the Indie Candle Market boom. Also, I thought making candles wouldn’t be that hard for me to learn since I was good at cooking and baking. Plus, who wouldn’t want to sniff candles all day for a living? It all just appealed to me.

Once I had decided I wanted to start a handmade candle business, I started researching name ideas, packaging, and label design on Pinterest. This resulted in me going down the rabbit hole of the internet where I ran across a picture of Coco & Bubbles candles. I was immediately drawn to the colorful label design and everything about the brand and company. It was so different from the minimalist, apothecary, or “farmhouse” look of many candle companies on the market today and really stood out to me.

Upon further research, I found the Coco & Bubbles website was down and there was no indication they were selling anywhere else online. There had been no activity on their social media pages for over 6 months. I realized this could mean that the current owner had moved on to another venture leaving Coco & Bubbles to fade away. I saw this as an opportunity and did something most people won’t do. Since it appeared the current owner wasn’t doing anything with the business anymore, I reached out to see if they might be interested in selling the assets to me. My thought was, this would save me the time of creating a new brand and starting from scratch. Not to mention, they had received some decent press mentions over the years and had been featured in major media outlets like Huffington Post, Hello Giggles, and Lucky Magazine which would give instant credibility and help with SEO.

After a few email exchanges, the owner agreed to sell the business to me for just $3,000. Which was a deal in my mind when I factored in the costs involved in creating a new brand from scratch, including the R&D and testing that would have to be done before launching. All that had already been done; saving me tons of time, thousands of dollars, and decreasing the time to market by 6 months or more.

With the purchase of the business, the former owner included everything I needed to run the business just as they had been doing successfully for over 5 years, including their secret recipes for making the candles, wholesale accounts receivable and contacts, 5 years worth of customer reviews, professional photos, media contacts, and marketing assets. It took me about 3 months to get through the learning curve of making candles. Of course, with candle making not being an exact science, there is always room to improve your recipes and processes. That’s one of the things that keeps it interesting. But, within 3 months I felt confident enough in my candles to re-launch the business. I re-launched the business using the previous owners existing email list of wholesale customers and within just 1 day of re-launching, I had over $2,000 in wholesale orders. This was a huge boost of confidence for me.

how-i-bought-a-business-for-3k-and-grew-it-to-14k-month-selling-all-natural-soy-candles

Take us through the process of designing, prototyping, and manufacturing your first product.

The benefit of buying an existing company was that the products were already designed and tested. I just ran with the previous owner’s recipes and manufacturing instructions since it had been working for them for 5 years. Plus, I really didn’t know any better at the time. However, as wholesale orders and demand increased, it became difficult to keep with orders. I had been single-handedly making the candles using two very old electric hot plates and a double broiler which the previous owner had given to me with the sale of the business. This is great for making a candle here and there but made it time-consuming and labor-intensive for large wholesale orders. It became so hard, in fact, at one point I was ready to throw in the towel.

Another bottleneck in our manufacturing process was how I was procuring supplies. Since I didn’t know any better at the time, I continued using the same vendors, equipment, and processes as the original owner for the first 6 months of re-launching. However, I quickly realized this wasn’t scalable or reliable and that the prices I was paying for raw materials weren’t going to allow me to scale the business to the volume it needed unless I jacked up prices per unit (a lot). I did try increasing prices just to test it, and I did see a decrease in sales almost immediately. To keep the same price point, and scale, I had to figure out a better, more cost-efficient way to manufacture the candles.

My first step was eliminating the double broiler method. I needed a wax melting tank so that I could melt a lot of wax quickly. After researching prices on buying a wax melter new, and gasping at the prices, I started looking for a used one for sale and I got lucky. I found 2, like-new, wax melting tanks on BidSpotter from a Pacifica Plan auction and ended up paying a fraction of what I would have paid retail. A word of caution with this is when you buy at auction; you are buying as-is. You also have to arrange for “rigging” and transporting your equipment. I use Unishippers for LTL freight.

The next step was to “cut out the middleman” and create direct relationships and accounts with manufacturers for all of the supplies I had been buying from distributors. There is nothing wrong with buying from distributors. In fact, you pretty much have to when you’re first starting. However, when you’re ready to scale unless you can charge $30 for an 11 ounce candle, you’re going to have a hard time scaling due to cost and sometimes availability. For example, I’ve had distributors retire fragrances that were best sellers. When you’re buying from a distributor, you have no control over their inventory, availability, or if they decide to discontinue a product you depend on.

Another disadvantage to buying supplies from distributors is you have to pay for your raw materials in advance versus using Net30, 60, or 90 terms. As a manufacturing business, this is a huge disadvantage since after buying your raw materials and paying for it all in advance, you still don’t have a product you can sell yet. That means, you’re out of pocket all of that money, but you don’t yet have a product you can sell to make it back. You can only manufacture a product to sell after you receive your raw materials. This is where trade credit terms are helpful in that with trade credit terms, such as N30, you’ll have at least a 30 runway to secure orders and/ or manufacture the end product before you have to pay for the raw materials.

Here’s how it works. There are several major candle suppliers or “distributors”. The most well-known is Candle Science. There is also Nature’s Garden Candles, Flaming Candle, and Lone Star Candle Supply. These companies purchase supplies, fragrance, wax, and other raw materials used in making candles from perfume houses and manufacturers. For example, most sell “Golden Brand” soy wax which is manufactured by AAK. Since these guys are mostly selling to hobbyists (think Etsy sellers) via their own direct-to-consumer/ eCommerce website, they can’t offer Net30 terms. To offer Net30 terms, most of your customer base needs to be B2B (Business to Business). You also must be invoicing your customers for your goods.

To offer Net30 terms, typically, the manufacturer, or company, will do what’s called “invoice factoring” which is where they actually “sell” your invoice to a finance company who takes on the liability and the manufacturer receives up to 90% of the invoice amount right away, even though you may not pay the invoice for up to 30 days. Once you’ve paid the invoice the company gets the rest of the funds from the finance company minus a small fee. That said, in addition to being considered a B2B company, you also typically need invoices that you can in turn sell to a finance company. Since the distributors mentioned above do not send out invoices and are eCommerce, they cannot utilize this accounting method, so they can’t offer Net30 terms.

Realizing these limitations of my suppliers at the time, I started reaching out to manufacturers, set up trade credit lines, and started ordering fragrance oil, wax, and containers directly. Now, I never have to worry about my distributor running out of what I need, I decrease my COGs (Cost of Goods) by over 30%- 50% which allows me to buy in large quantities, and I have trade credit lines which give me the runway to secure orders and make an end product I can sell before I have to pay for the supplies.

I also implemented SellBrite and CraftyBase to help monitor supply levels and COGs.

how-i-bought-a-business-for-3k-and-grew-it-to-14k-month-selling-all-natural-soy-candles

Describe the process of launching the business.

Since I had purchased an already established business, it was more of a “re-launch” then a launch. However, since the business had been dominant for over 6 months, it took some effort to get traction.

One of the first things I did was set up a website using Shopify.com. I then set-up a shop on Amazon Handmade, Faire.com, and Tundra.com. It didn’t take long for the orders to start coming in after that. Faire.com has by far been the biggest revenue generator for us. In our first year on Faire.com, we averaged over $3,000 per month in sales. Amazon hasn’t been a huge revenue driver for us, but I know there is a lot more potential there; I just haven’t invested the time needed into enhancing our SEO and using paid ads.

We also recently launched on Wayfair.com and will be on Zulily.com at the end of October. Our strategy, right now, is to be on any marketplace that shares a mutual consumer base. Next, we are also looking into selling on Target.com, Walmart.com, and Bed Bath and Beyond shortly.

Since launch, what has worked to attract and retain customers?

I know this is where most people will say Social Media is the biggest driver and their own website. Instagram, Facebook, and Social Media just aren’t in my wheelhouse, and I don’t have time. In the beginning, it was the email list I had inherited from the previous owner that generated business for us. Now, most of my sales are generated through email and off-site through other marketplaces such as Faire.com, Wayfair, and Amazon. While these sites do charge a fee, I’ve fractured that in our COGs and I view it as an advertising cost and a cost of doing business. As a result, I haven’t had to do very much PPC or paid advertising.

We’ve found that our typical conversion rate when it comes to paid ads is around 3% and that is because we target our key audience which is either gift buyer or wholesale boutiques.

You don’t have to start from scratch when you’re starting your business. No reason to reinvent the wheel if you don’t have too. If you lack the specialized knowledge or you’re struggling to come up with a viable business idea, you can always buy someone else’s business!

To drive more wholesale business, we will also be attending virtual and live Trade Shows as well as paid advertising with Retail Smart in their print and online publications. It’s going to be the biggest investment we’ve made yet into paid advertising, but given the audience, I think we will see a great return on investment.

How are you doing today and what does the future look like?

The future is exciting and full of possibilities now that we have the scale and more efficient processes. Over the next 6-12 months, we’ll be launching a new flameless line that will include wax melts, room spray, and reed diffusers.

By eliminating the middleman distributors we’ve been able to cut our costs significantly which not only allows us to scale but invest in productive expenses such as advertising and new product development. I think that moving forward our biggest areas of opportunity will be Social Media, especially Instagram and Pinterest. This will be more of a focus moving forward. Earned media using HARO, such as features in Holiday Gift Buying guides, like when we were featured in this article on Hello Giggles has been tremendous for us. That feature in Hello Giggles resulted in $3,000 in retail/ direct sales in just one day.

Through starting the business, have you learned anything particularly helpful or advantageous?

If you’re manufacturing your own product, source all of your materials directly from the manufacturer once you’re past the “prototype” and “proof of concept phase”. I cannot state enough what a game-changer this was for my business.

Secondly, once you’ve found the manufacturers for your product, you can often negotiate Net30 terms. Sometimes, you can even negotiate Net 60 or 90 terms. This is critical to a manufacturing business. This gives you the runway you need to manufacture the end product or sell it before you have to pay the supplier. Most distributors won’t allot Net30 terms or if they do are very stingy about it. That’s just because most can’t justify the risk or qualify for invoice factoring through a finance company.

Here’s a picture of me after unloading my first shipment of wax from the manufacturer! I remember having a brief “what did I get myself into” moment when the semi-truck pulled into our driveway. It was really worth it in the long run to have the flexibility and leverage to scale production.

how-i-bought-a-business-for-3k-and-grew-it-to-14k-month-selling-all-natural-soy-candles

What platform/tools do you use for your business?

What have been the most influential books, podcasts, or other resources?

Advice for other entrepreneurs who want to get started or are just starting?

You don’t have to start from scratch when you’re starting your business. No reason to reinvent the wheel if you don’t have too. If you lack the specialized knowledge or you’re struggling to come up with a viable business idea, you can always buy someone else’s business!

Think about it this way, if you’re buying a house would you build one from the ground up, picking a plot of land, clearing the lot, and getting the sewer connections, pipes, and utility setup. Not to mention building a house can take months, sometimes years depending on the size of the house. Wouldn’t it be much easier to just buy a house that has great bones and just flip it? The land is already cleared, the structure is there, it just needs tom TLC.

The same goes for starting a business. You don’t have to start from the ground up. It’s easier and faster to find someone who is already selling or willing to sell their business to you then it is to try starting from ground zero. You just have to keep your eyes open to opportunity. Look in places others won’t. Or, you can use websites like Biz Buy Sell, Flippa, or Marketplace Exchange to find owners who are actively selling their business. I personally recommend trying to source the opportunities yourself versus using a broker or website because you’ll typically be paying a lot more. It can take longer to uncover the opportunity yourself, but it’s worth it and my story is an example as to why.

Are you looking to hire for certain positions right now?

Operations/ Project Manager: I am on the lookout for a Virtual Assistant to help me with a little bit of everything from email management, responding to emails, customer service, purchase orders, light accounting/ bookkeeping, and scheduling social media posts. This individual will also assist with hiring and managing other freelancers as well.

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

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