story by Kim Souza
ksouza@thecitywire.com
Editor’s note: The City Wire has consulted with people closely affiliated with Northwest Arkansas entrepreneurial programs to compile a list of the five entrepreneurial startups to watch in 2014. Our goal with this effort is to document as much as possible about the ups and downs and other directions a new venture may take as it struggles to prove a product, service or both. We also plan to report within this series on the issues faced by business owners managing a new company. Link here for the initial story in the series.
Recent sales have grown 180% for Oh Baby Foods, and officials with EcoVet and DataRank report positive momentum as they work to grow their respective businesses. The three companies are among the five emerging or young companies The City Wire is following in 2014.
One of the common challenges reported by the entrepreneurs involve finding the right people to help push and manage the growth.
OH BABY GROWS
Fran Free and her all-natural baby food company are off and running after picking up 25 new stores while attending the Natural Products Expo West trade show in early March.
“We made the trip to California for this big trade show and also met with our suppliers out there face-to-face because we plan to expand our product line by this summer adding bite-size snacks for toddlers and squeeze snacks for big kids,” Free said.
Free returns to California late next month to meet with her manufacturer because the company has sold through its inventory more quickly than anticipated. She said Whole Foods’ sales per store have grown five-fold in recent months.
“Sales grew 180% from February to March and we continue to bring on new stores. While a large part of our business is in the West, we went ahead and expanded east because we were getting so much interest from the North Atlantic region,” Free said.
She said finding a broker for the Northeast region has been a challenge, because four out of the five she has interviewed already represent a baby food line.
“I continue to look for the right broker. We know we need one. We got into the stores just fine through one main retailer. But getting in is just half the battle. A broker on the ground is key to make sure our products are actually out in the stores and products get replenished,” Free said.
Small suppliers often have to carry the brunt of their manufacturing and inventory storage costs, which can challenge cash flows, Free said.
“It costs us about $250,000 for us to go to production. In the past we have paid on demand up front with no terms finance available,” she said.
Free recently secured a line of credit through Arvest for her production and storage expenses. She said the company is now getting some payable terms offered as they have been in business longer and continue to grow sales.
“It is very capital intensive to run a full production line and then have to store and transport that product across the country. We are picking up two additional manufacturers and sourcing more raw products because of the product expansion. This is giving us a little diversification, but it will also be more to manage,” Free said.
In the meantime, she has put her food scientist consultant to work at 20 hours a week formulating the new products.
“We go to so much trouble to win the loyalty of our customers we don’t want to lose that business as the kids grow older, which is why we are back to product development again,” she said.
ECOVET HITS THE ROAD
Inventory isn’t a problem for EcoVet. It’s finding the right retail channels to feature the company’s handcrafted wood furniture products that has co-founder Drake Vanhooser busier these days.
Vanhooser said EcoVet recently participated in a Sam’s Club grand opening event in San Antonio, Texas. EcoVet is working with Shopper Events on several road show opportunities hoping to sell its wares and find additional retail outlets for the handcrafted furniture pieces that are made from reclaimed wood products by U.S. veterans.
“We are learning as we go. Shoppers in San Antonio bought out our supply of cutting boards, but the furniture really did not fit that club demographic. One new club in Austin, Texas is on our radar when it opens,” Vanhooser said.
This week EcoVet is set up in the Fayetteville Sam’s Club. Joseph Forman, a supervisor at EcoVet told The City Wire he has sold about 20 of the cutting boards over the past two days. Forman said people who hear the EcoVet story want to help, most buy the cutting board as it’s the lowest price point at $17.58. He has been with EcoVet since June 2013 working full-time, while also pursuing his business management degree at University of Phoenix.
The other furniture on display at Sam’s Club this week is the company’s contemporary and farmhouse lines. Vanhooser said in recent days he has held several meetings with local furniture retailers, large and small.
“We are working on building some floor samples for several furniture stores and hope we can strike a deal for some of our handcrafted products. We have even considered sourcing other wood to expand the price points,” he said.
Last week, Michelle Gloeckler, senior vice president for home at Wal-Mart Stores Inc., blogged about an upcoming initiative to source U.S. made patio furniture and find suppliers who can also assemble patio furniture as part of the company’s commitment to supporting U.S. jobs.
Vanhooser said EcoVet was excited to hear about Gloeckler’s plan. He said becoming an assembly partner or fashioning new products are exactly the kinds of opportunities EcoVet is exploring.
DATARANK ON PAR
This week DataRank is attending the GigaOM big data conference in New York City, seeking out brands and retailers trying to cut through clutter and make sense of big data possibilities.
“We have an employee on the ground in New York now. He is representing us there. We attend these conferences looking for companies lost in the big data noise. Our job is to show them how our company can help them use the data they need grow their businesses,” said Ryan Frazier, one of the startup founders.
Frazier said DataRank recently added a couple of new clients. One of those is Foot Joy, a golf shoe manufacturer. The other is a consumer packaged goods supplier.
“Golf season is underway and we are working with Foot Joy and Calloway Golf at this time,” Frazier said.
Frazier said he recently hired another developer who will revamp the company’s website and mobile application. This brings DataRank up to 10 full-time employees, most are based in their office in downtown Fayetteville, but they also have employees based in San Francisco and New York City.
Frazier said he and the other founders continue work on maintaining their corporate culture as they are also expanding their team.
“Right now we are focused on getting our new hires up to speed, because business is growing a little faster than we projected,” he said.
On the horizon, he said the firm will have a redesigned website and mobile application will also continuing to grow its list of clients.
The City Wire will publish March 22 updates on Silicon Solar Solutions and Overwatch, the other startups followed in 2014.