All Fired Up
The Entrepreneurs: 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 made primarily from recycled coffee grounds. Sprules, a mechanical engineer, first learned of the high heat capacity of coffee grounds while working on a heated cold weather suit for his former employer. When coffeehouses became popular, he thought of converting used coffee grounds into the Java-Log. Today, the product, which retails for about $2.50 per log and burns hotter than traditional firewood, is sold through Home Hardware, a major Canadian hardware chain; Home Depot in Canada; grocery stores; and a variety of smaller stores in Canada and the United States. Product sales via the company's Web site (www.robustion.ca) are also growing.
Sales: More than $1 million in 2003
The Challenge: Turning an unknown niche product into a national and international bestseller
Rod Sprules' java-log differentiates itself from traditional firewood in a number of ways: It burns with brighter flames, emits less carbon dioxide and is made from a waste product. And although this engineer-turned-entrepreneur developed the environmentally friendly product on his own, he needed help when it came to generating interest among retailers and customers. Despite the challenges, Sprules was able to turn his product into a million-dollar success story.
Steps to Success
1. Make some progress on your own. In 1997, Sprules developed the idea, and experimental logs were tested in his garage. "The procedure to make a log includes separating the grounds, drying [and] mixing them, then extruding the finished product," says Sprules. "It took 10 minutes to make a log. By 1999, I had the equipment improved to the point where I could make a log in 25 seconds. I started selling them at the local farmers' 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 their own, they jumped at the chance to take on a partner with marketing experience. "In 2000, we tried licensing the product. We had some offers, but they were not adequate," says Sprules. "Through a friend of a friend, we met Marcel, who has years of consumer marketing experience at Procter & Gamble and then at PepsiCo. 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 midsize company where I could develop autonomy within the organization and make a difference. I was with several other small ventures first but found the ideal situation at Robustion Products."
3. Set up a test market to generate the financing you need to expand. Investors will scrutinize you before investing, and they like to see that you have the skills to expand. When the time came for a full market test, which was funded by an additional investment from family and friends, Sbrollini helped Sprules set up a test market in Ottawa according to standards for consumer products. "We sold the product in our test market to grocery stores, hardware stores, a coffee shop, an art store and auto supply stores," says Sprules. "We wanted to [sell] to a full cross section of stores to understand how the product could be sold."
"The results of the test were among the best I've ever seen," Sbrollini adds. As a result, Sprules was able to land a Canadian investor to expand sales for the 2001-02 winter season.
4. Find a creative way to get market exposure. Though his company was growing at a rate of 400 percent per year, Sprules still didn't have the money needed for a big advertising campaign. So Sprules and Sbrollini came up with a strategy. "We approached a major chain of hardware stores in Ontario for a one-season exclusive," says Sprules. "In return for the exclusive, [they] gave us a big beginning order and had an advertising campaign on the Java-Log, which included TV spots. The deal 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 a variety of stores, including Home Depot, Home Hardware, and other hardware and grocery stores. Sbrollini used past success as a sales tool: "We were able to use the success in the Ottawa test market to create traction. Our success provided leverage, [which] made the product sell."
A successful 2002-03 season helped Sprules and Sbrollini raise additional money from private Canadian investors, which they needed to approach the U.S. market for the 2003-04 season. The campaign was a success: "We were just planning on selling in the Northeast United States, but we received so much publicity that we were selling across the entire Northeast and Midwest. By December 2003, we had sold most of our entire production for the season."
Looking for a manufacturing source in Asia? Start with your state's commerce department. It offers import and export assistance, and can help set up a manufacturing plan. If this is your first time working overseas, use a sourcing agent to find a foreign manufacturer. The agent usually has an overseas office that can get samples, oversee production, and ensure you get the product you 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 and click on "Asia," located in the red bar under the map of the world.
1. Business savvy counts. It makes sense to partner with a pro who makes great presentations to customers, gives investors confidence, knows the best deal you are likely to get, and understands how to close the deal. You want customers to deal with you, but that can be a hard sell without a knowledgeable person involved on your end. If you're ready to find potential partners, try networking at entrepreneur clubs in your area or contacting your local SBDC (www.sba.gov/sbdc). You can also place an ad for a partner in the "businesses for sale" ads in your local paper.
2. Investors look for experience. Customers look for experience, but not nearly as much as investors do. Investors are cautious about giving you money, and they will often back away from an investment opportunity if you lack the requisite experience. As a condition of the loan, expect investors to insist on the long-term presence of someone with experience on your management team.
3. Sometimes, you need to give to get. With an exclusive deal, you lose sales opportunities-and possibly some profits-but it's still a great deal for an inventor if the retailer runs a big promotional program. So always consider giving exclusive or favorable terms in return for positive placement or promotion from the retailer. Without an incentive, retailers are not likely to offer you any promotional activities.
4. Nothing sells like success. Retailers don't like returns; they don't want to take up shelf space for products that aren't moving, and they don't want to discount your product to sell it. They're always looking for reasons a product won't sell. Counter retailers' worries by showing how well the product has sold in the past. If your product sold well at the local level with a retailer and you want to sell it to the corporate office, get a quote from a local manager about how well the product did. Leverage every moment of success to increase sales.
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: Prepare Formal Drawings Required by the U.S. Patent Office (Nolo Press) by Jack Lo and David Pressman, patent agent and patent attorney, respectively. In addition to covering all the rules and general standards for what a patent drawing must contain, the book explains how to do the drawings with just a pen and a ruler, or with a computer or camera. The book requires some study time, and following all the standards for reference numbers and the arrangement of figures takes a lot of checking back and forth. But it's a worthwhile resource for inventors willing to learn how to do this costly step on their own.