From the October 1996 issue of Startups

Anita Roddick insists she never went into business to make millions. She simply wanted to earn a living for her family. As founder and chief executive of The Body Shop International Inc., the 54-year-old entrepreneur has done both on a very grand scale.

In two decades, Roddick and her husband, Gordon, have created a cosmetic empire of more than 1,400 retail stores selling natural skin- and hair-care products in 45 countries. Sales last year reached more than $950 million.

What's more, Roddick has expanded her concept of "family" to include the world's population. Whether she's using The Body Shop's profits to renovate orphanages in Romania, develop a domestic-violence helpline in England, or help clean up the world's polluted air and water, Roddick is adamant about The Body Shop doing its part to make the world a better place. For this hippie-activist-turned-entrepreneur, that's exactly what a corporation with a social conscience should do. "We work to narrow the gap between principle and practice," Roddick says, "while making fun, passion and care part of our daily lives."

Living with the Natives

Roddick's story begins in the sleepy seaside town of Littlehampton, England, where she often helped out at her mother's cafe, the Clifton. Influenced as a teenager by rebel idol James Dean and the works of F. Scott Fitzgerald, Roddick dreamed of becoming an actress, but listened to her mother's advice and took up teaching instead.

Roddick earned a teaching credential from Newton College, and, in 1962, won a scholarship to Israel for three months to complete her thesis. She enjoyed teaching, but loved hitchhiking through Europe even more. On one trip, she ended up in Geneva, where she landed a reseacher's job at the United Nations. She worked in the department of women's rights at the International Labour Organization, gathering information about women in Third World countries. A year later, Roddick booked passage for Tahiti, to see for herself how these native women worked and lived.

After several months there, she made her way to South Africa, where a visit to a nightclub on an all-black patron night resulted in Johannesburg police ordering Roddick to leave the country within 24 hours. She was ready for a change, anyway. "I had learned so much from my experiences, from all the people I had met, that I wanted to return home and take stock of my life," says Roddick in her autobiography, Body and Soul (Crown Publishers Inc., $14, 800-726-0600).

Back in Littlehampton, at her mother's new venture--a nightclub called El Cubana--Anita met Gordon Roddick. Although a farmer by trade, he preferred writing poetry and short stories. Like Anita, he was an independent thinker and world traveler. He'd marched in demonstrations and supported social causes. Anita had met her soulmate. They married in 1971.

After supporting a family of four on his writing and her teaching, the Roddicks gave commerce a try. In 1971, they bought a decaying residential hotel called St. Winifred's in Littlehampton, and turned it into a bed-and-breakfast inn. When the inn started to show a profit, they borrowed [sterling]10,000 from the bank to open a restaurant called Paddington's. Three years later, exhausted from working around the clock, the couple sold the restaurant, kept the hotel as their home, and started considering other income opportunities.

Gordon decided to take a break. He wanted to fulfill a boyhood dream: to ride horseback from Buenos Aires to New York. Somewhat stunned by the notion, Anita nevertheless admired Gordon's spirit and sense of adventure. While Gordon prepared for his trip, Anita set about creating a livelihood for herself and her family.

Roddick wanted a simple little retail shop she could run from nine to five, in order to be home at night with her children. What would she sell? Roddick, recalling her Third World experiences, remembered seeing Polynesian women rubbing cocoa butter into their hair to make it shine, and the women of Sri Lanka using a pineapple facial wash. "The women were polishing, protecting and cleansing their skin and hair perfectly well, all with natural ingredients," says Roddick, who decided she would introduce similar natural products to women in England.

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Asking the Right Questions

Deciding how she would bottle and present her skin- and hair-care products was all a matter of finding a solution to what annoyed her most about the cosmetics industry. "Irritation is a great source of energy and creativity," says Roddick. "It leads to dissatisfaction, and prompts people like me to ask questions," such as, Why should someone have to buy a large bottle of lotion when a small one would do just fine? Why bother with all that fancy and expensive packaging? She figured other women felt the same way.

Roddick used cheap plastic bottles, handwrote her product labels, and sold her products in five different bottle sizes. When she could afford to buy only a limited supply of bottles, Roddick devised an ingenious plan: She would refill her customers' empty bottles, or encourage them to use their own containers. Thus was born a recycling program that would later set The Body Shop worlds apart from Estée Lauder, Revlon and other cosmetic giants.

The stage was set for a totally new entrepreneurial experience. "It really gave me a wonderful canvas onto which I could write everything I was--an activist, a socialist," Roddick explains. "I was bringing all I was to this business."

But social issues don't always translate smoothly to the business world. She had to learn to play the game, at least to get started. To raise the [sterling]4,000 she'd need to open her shop, Roddick paid a visit to her local bank, dressed in jeans and a Bob Dylan T-shirt, with her two daughters in tow. The bank manager quietly listened to her presentation and declined the loan. Anita went home to Gordon absolutely crushed. A week later, she was back at the bank, this time accompanied by her husband; both were wearing business suits. The bank manager quickly reviewed Gordon's prepared presentation. Yes, the bank would lend the [sterling]4,000--with the Roddicks' hotel as collateral.

Playing the Game

Anita was relieved, but angry. Speaking only to Gordon during the second interview, the bank manager had cast her "in the role of the little woman who just happened to be along," she explains. She learned a critical lesson, though: "There are times when you need to be as anonymous as the people who work in banks, and to play the game entirely by their rules. If they want loan applicants to come in with shaven heads, you shave your head. And sadly, you will never get a loan if you don't have collateral."

After locating a chemist to mix her products, Roddick was ready for business. On March 27, 1976, she opened her 300-square-foot Body Shop in Brighton, an area with a strong student culture that supported alternative businesses. Passersby were curious about her Seaweed and Birch Shampoo, Avocado Moisture Cream, and other products. By noon, Roddick was so busy that she called Gordon to come and help. By closing time, the Roddicks had taken in [sterling]130--half of what the couple figured the shop needed to earn each week to cover family expenses. They were thrilled.

The Brighton store was an exemplary cottage industry. Friends helped write labels and fill bottles in the St. Winifred's kitchen. Roddick created little stories for customers about the origins of her products, which she wrote on notecards. She illustrates with this little ditty: "Don't worry about the henna shampoo. It might smell like horse manure, but it's wonderful on the hair. Women have used it for centuries." For the honey-beeswax-and-almond-oil cleanser that revealed little black specs when mixed with rosewater, she wrote: "Don't worry about the black bits, just scoop them out. They're the dirty footprints of the bees."

Two months later, with Gordon off to South America, Roddick quickly lost track of her nine-to-five workday. She did the bottling, ran the shop, handled the bookkeeping and relied on her mother to watch the children. While her shop's earnings were meager, Roddick was anxious to open a second store. "Obviously, the sensible, pragmatic thing would have been to wait for a few years and see how it worked out. I knew all that," she says. "But I wasn't the sensible, pragmatic type. I just thought, Wouldn't it be great, wouldn't it be cheeky, if I could replicate the Brighton shop somewhere else?" When the bank denied her request for a second loan, Roddick borrowed [sterling]4,000 from a friend who took a half ownership of the company. Her second shop opened in Chichester in 1977.

A year later, after covering 2,000 miles and losing a horse in Bolivia, Gordon cut his trip short and returned home to find an operation humming with activity. Anita immediately involved him in the bottling and labeling of her products. He moved the operation from their kitchen to the garage, and took over the payroll and bookkeeping. He also looked for ways to expand, even though the banks wouldn't lend any more money.

When friends asked about opening their own shops and using The Body Shop name, Gordon liked what he heard. The Roddicks could supply them with all the products they needed. "We were a mom and pop organization from a little seaside town, a place where no one ever came. We were so thankful anyone would sell our products," says Anita.

The first franchises were opened in England in 1977. During the next three years, others were opened in Europe, Canada and Australia as well. (The first U.S. shop opened in New York City in 1988.) The couple eventually formalized their franchise program by charging a licensing fee, then about [sterling]3,000.

Sales grew steadily and the business continued to operate on a shoestring budget, especially when it came to promotion. Why pay to advertise, Roddick figured, if she could get free publicity through editorial coverage in newspapers and magazines?

Opportunities abounded. When Roddick heard that many runners in the London Marathon complained about sore feet, she had her chemist mix up a lotion that would soothe tired feet and soften hard skin. At the following year's event, Body Shop employees handed out free samples to runners along the route. The media gave the story plenty of coverage, and the Peppermint Foot Lotion became one of The Body Shop's best-selling products.

Not every product was so well received, however. Their shampoo for greasy hair, simply called a "de-greasant," is one example. "It sounded like something you used to clean out an engine, and was a complete failure," Roddick admits.

Mixing Profits with Principles

By 1984, with 38 shops throughout the United Kingdom and another 52 abroad, including franchise stores, The Body Shop still faced a huge problem: convincing commercial landlords and leasing agents to give first-rate retail sites to this hip, yet somewhat funky, operation. A solution appeared when a friend approached the Roddicks with the idea of taking their company public. Initially hesitant, the Roddicks considered the potential benefits. "Retail trading is all about location," Anita explains. "We thought that if we were a public company we would be more respected, and better placed to get the best locations."

That year The Body Shop went public on the British securities market. During the next year, 50 new Body Shop stores opened, and profits more than doubled to [sterling]2.4 million.

The Roddicks formed a powerful team in managing their new corporation. While Gordon, as chairman, handled finances and negotiated franchises, Anita developed new sales and marketing programs and directed research and development activities. Times were changing for The Body Shop. "It ceased to exist, at least in my eyes, as just another trading business," says Anita. "It became a force for social change."

Roddick began channeling company profits into a wide range of causes, like saving the rain forest and feeding starving earthquake victims. The Body Shop launched The Big Issue, a newspaper for the homeless in London, which operates independently today. Roddick established the company's Trade Not Aid initiative, a program to provide jobs by directly sourcing ingredients from tribal councils and villages in Third World countries. The Body Shop's Brazil Nut Conditioner, for example, uses Brazil nut oil from the Amazon's Kayupo Indians; jute for its pots and terracotta foot scrub come from the Jute Works, a project to provide jobs for Bangladesh village women.

Her activist beliefs and well-publicized campaigns have the cosmetic industry buzzing. "We are consistently the topic of conversation," notes Roddick. "They're probably saying, `Why are they wasting time on human rights when they ought to be selling moisture creams?' " Still, she wouldn't have it any differently. "The biggest confusion with our company is that it reads like a nonprofit organization. Normal companies don't spend this amount of time and energy fighting for human rights or working to protect indigenous groups," says Roddick. "They don't turn their shops and offices into centers for action and social change. We do. That's why people want to work for us."

With the massive cosmetic empire she and Gordon have built, Roddick still finds her work incomplete. It's not about opening more stores, selling more franchises, or making more money. "We can do that with our eyes closed," she says. It's about being a good business citizen, and mixing profits with social responsibility. "I'd rather be measured by how I treat people than how great my profits are."