Little Women

In industries dominated by giants, small companies must break the rules to survive.
Magazine Contributor
4 min read

This story appears in the April 2002 issue of Entrepreneur. Subscribe »

How does a woman with the vision to create pure skin-care products go up against the multimillion-dollar companies dominating the cosmetics industry? Very carefully.

Barbara Close, 40, the founder and CEO of Naturopathica Holistic Health Ltd., had been a massage therapist for years when she opened a holistic skin care spa in the Hamptons, New York, in 1995. The spa's initial product, an "herbal remedy chest," contained a selection of natural remedies.

Within a year, Close decided to launch a natural skin-care line "created by an herbalist and aromatherapist, as opposed to most lines that are created by celebrities or marketing departments of big cosmetics companies," she says. She found a chemist to produce her expanded product line in 1996.

The spa's location in the Hamptons attracted a high-profile clientele. When Martha Stewart fell in love with Naturopathica products and wrote about them, exclusive New York City department store Henri Bendels offered to carry the line.

For the dozens of alternative beauty companies launched each year, the road isn't easy.

What was starting to look like a fairy-tale success story quickly gave way to reality as Close struggled to keep up with demand. "I did not have a controller, so the company did not have proper [financial] controls or reporting," recounts Close. When she finally got a controller, it took a lot of work to decipher previous years' books and set up a proper accounting system. But by 2001, the company had rebounded, and Close projects sales of $2 million this year through spas and selling online.

For the dozens of alternative beauty companies launched each year, the road isn't easy. Angela Kapp, a New York City multichannel retail and CRM consultant, says tremendous consolidation in the industry means that "you need to be affiliated with one of the big guys-L'Oreal, Estee Lauder or LVMH"-to grow beyond a certain point.

Both Close and Gabrielle Machionda, the founder and president of Westbrook, Maine's Mad Gab's, can attest to the high costs of getting products made and distributed. Still, partnering with or being funded or bought by a larger company isn't in their plans for now. "I like the flexibility and the independence I have," says Close.

Machionda, 30, hand-mixed a lip balm for fun in college in 1991 and peddled it on the side for years, but it wasn't until she joined an informal incubator in 1995 and sought advice from seasoned businesspeople that she formally started her business. She got her first publicity (and sales) boost in 1997, when shopping channel QVC visited Maine seeking 20 businesses to promote on-air. "That five-minute segment sold more [product] than we had in our 1996 fiscal year," says Machionda. "QVC had me return three times." The profits enabled her to hire an employee and add a new product line, Elephant Lube body balm, in 1998. The publicity got Mad Gab's featured in magazines such as Vogue and Seventeen.

Today, Machionda is following Kapp's advice and creating a "multichannel brand." Mad Gab's products are sold in retailers as diverse as Anthropologie, Eastern Mountain Sports and Whole Foods Markets; online; and in spas. Machionda is also exploring college bookstores as a sales venue. Still, with revenues under $1 million last year, Machionda says she lacks funds to invest in promotional materials, formally launch her line or attend trade shows.

One thing both companies have in their favor: They're breaking the rules-something Kapp says up-and-coming beauty companies must do, whether by presenting an alternative viewpoint or using an unusual distribution channel. For Close, the ultimate success strategy is trusting your vision. "If you have a high-quality product that you believe in and convey that message, people will buy your product because it's not just marketing and hype."

Aliza Pilar Sherman is an Internet pioneer, netpreneur, speaker and author of the book Power Tools for Women in Business: 10 Ways to Succeed in Life and Work (Entrepreneur Press).

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