Strategic risks

One of the greatest challenges with trying to do a start-up on a tiny budget is that I can’t afford to take as many risks. In fact, as as my savings get smaller each month, my strategic risks taking has almost comes to a halt because of cashflow.

As an example, when I need to make a decision between buying 5k of shea butter or 10k of the same product, it would make sense from a unit cost perspective to buy the larger amount. However, not only do I not want to tie up cash in inventory, I don’t have the physical storage space to house much more than I have already.

And so, my margins are smaller because I’m making tactical decisions (instead of strategic ones) which is not good for the business when I have a much bigger vision.

A bit of courage

This past week or so though, things have started to change for me mentally. An opportunity for part-time government contract work has come up, and that potential for personal income has allowed me to think bigger again. So big in fact, that I’m finally advancing work on my recycled plastic ideas at larger scales.

Yes, I can make tiny things like jewelry, but I have greater ambitions than that. For how else will I really fulfil the mission for reducing plastic waste where it actually makes a difference?

Pin made from a recycled milk bottle lid
Example of what we can do at a smaller scale with recycled plastic.

Making recycled plastic furniture

Specifically, I’m looking at making furniture from recycled plastic.

Right now, there are some concerns that outdoor recycled plastic products from less qualified manufacturers are creating other environmental problems.

Some products are not lasting as long as promised, and/or resulting in degrading microplastics. Some of those issues are related to the beating these products take outdoors in the elements. Of course, the better manufacturers have overcome these challenges even so.

However, if the recycled plastics infrastructure in Canberra is getting a $25m upgrade, there should be cleaner plastics available locally for recycling – as well as a potential bottleneck with no demand.

I think that I should be able to take some of their less valuable plastics like PP (#5) and PS (#6) and turn it into something nice like furniture that will not have to stand-up to external environmental factors the same way.

Salvaged furniture bases
Salvaged furniture bases that I’m practicing with right now.

And I think there could be a demand for Australian made, recycled plastics indoor furniture too. Right now, most furniture of any kind appears to be imported and cannot be recycled. The supply chain bottlenecks from Covid are making these foreign dependencies obvious, and when local jobs are in need, more people want to support local businesses too.

So, with grant money readily available right now for business ideas like mine, I think it’s time to push forward and to take more strategic risks.

Am I overextended?

How do I know if I’m overextended? For me, it’s when I make too many dumb mistakes.

Yesterday for instance, I managed to drop off the wrong order to a customer. Then today I switched some items on an invoice and had to stop by a second time to give them the corrected version.

Last week, I managed to produce a whole batch of lip gloss with the wrong colour forcing me to throw it all away.

Discarded lip gloss
That’s not the watermelon lip gloss colour!

All of these mistakes cost me valuable time and sometimes money – both of which I am very short of lately. My challenge is that every time I look up to be more strategic, I tend to make more of these mistakes as the maker, account manager and admin person combined.

Forced refocus

I’m about to get a tiny break though – well, sort of. I have a supply bottleneck right now with the pumps for my aluminium bottles. Thanks to Covid, they won’t be restocked until late August/early September. This means that I have to actually slow down my new sales activities to ensure that I don’t run out of stock for existing Harvestcare clients.

So, for the month of August, I’ve decided to refocus on my recycled plastic work where there is no shortage of free, local materials. These products cost me so little to make (except for time) in comparison to the Harvestcare line. And therefore, if I can perfect the technique so that I can do things faster and more consistently, it can help from a cashflow point of view too.

Stretched across two product lines

With my making and sales activities ramping up for the recycled plastics products under The Refoundry logo now, I’m completely overextended at the moment as neither are at a business as usual state yet.

I’ve also just started doing interviews again for my podcast which has taken a break for the last month due to difficulties in scheduling guests during the end of the financial year. While that particular work does run fairly well now, it still takes about 8 hours of my time per episode (down from about 20 hours).

I’m afraid that something like the podcast might have to give soon. While my work capacity is far above most people, even I am struggling right now. And honestly, I just don’t have the time or money to make all of these dumb mistakes because I am overextended.

Who is my customer?

Now in our fourth month of selling the Harvestcare brand, I’m constantly being surprised by who is my customer. Of course, the original plan was target hotels and tourism places when I pivoted during the Covid lockdown to what I thought would be a direct to consumer model. That too has changed.

It’s proven to be hard to sell directly to consumers with a “Made in Canberra” brand without spending a fortunate on advertising and even that hasn’t been that great of a return on investment so far. Then there was the free delivery in the ACT offer which has also costed me a lot of time and petrol despite the higher margins.

So a while ago, I redirected my energy more towards growing my stockists. I thought that I would be able to target natural health stores fairly easily. However, they have actually proven to be the hardest ones to get into so far. One said that he didn’t think his customers would buy my products, and didn’t answer my question when I asked why.

As Covid lockdowns are again in parts of Victoria and News South Wales, potential retailers at gift shops are still being super cautious right now as can be expected. Some have told me that it’s also still quite slow even during school holidays.

So frustrated, I’ve been trying other channels over the last few weeks. I never pictured the brand getting into IGAs or Capital Chemist, but somehow it has happened, and I’m extremely grateful. They say that they and their customers want to support local businesses, and that’s why they said yes.

The good thing is that there are quite a few independent chemists and supermarkets that could say yes now that I’m targeting them.

It’s it funny. I guess I really didn’t know who my customer is. So, it’s good that I kept trying.

Rescue Mission: Styrofoam Box #3

It took me three times to try to get this styrofoam box out of the Molongo River, but the mission was finally accomplished this weekend.

The recycling bottleneck

This week, the Federal Government announced a major investment into recycling and waste management infrastructure – a promise that was made in the 2019 election campaign. It’s great to see this finally come to light, and yet I think it still ignores the coming recycling bottleneck.

There certainly are some gaps in the infrastructure in Australia – primarily in our ability to process separated materials into an useful form again. This has been done mostly overseas up to this point.

However, with the 2021 Waste Export Ban quickly approaching, many of us can still see the recycling bottleneck getting bigger, and it will NOT be fixed by investments into infrastructure.

The Recycling Process

Let’s think about the recycling process for a moment. For the average consumer, it may appear to end when they put something into their yellow bin. However, that’s only the start of the entire process.

Australia already has sorting facilities in most parts of the country. This is where the various materials are separated by machine (and often times people) into piles that can be bundled and resold to buyers – usually overseas.

The most valuable plastics are clean, single-types of polymers that come from the container deposit schemes and manufacturer off-cuts. The value of the rest of it to buyers depends on how well it can be sorted into individual plastic types and the amount of contamination in it from things like food, debris and even nappy poo.

At this stage, the material buyer needs to clean and then process the material. This means melting it down and then reforming it into flakes, pellets or something like this to become the base material for manufacturing again.

Current Capabilities in Australia

As mentioned, we do have plenty of sorting facilities in Australia – although some struggle to sort plastics efficiently into the different types. We also have plenty of plastic manufacturers in this country with additional capacity – especially after the auto manufacturing industries closed here. We do lack processing plants though, especially for food-grade plastics, and I can see the government investment being useful here.

Nevertheless, some of the current manufacturers are also able to process the plastic. Great companies in Australia like Replas, Closed the Loop and Plastic Forests can take highly contaminated plastics and make it into something useful. These are the companies that are using the plastic from Redcycle bins that you see in Coles and Woolworths, and they too have capacity to grow.

Processed mixed plastic waste
Processed mixed plastic waste

So, if these types of manufacturers already exist, why are we still sending so much of these materials overseas, and how will this government investment make a real difference?

The Recycling Bottleneck

The real bottleneck of the entire recycling process is the lack of demand of recycled plastic products.

Consumers can put their plastics into yellow and Redcycle bins. Council service providers can sort it into various types. Existing manufactures can process and make many products from this waste. But at the end of the day, someone has to buy it. Otherwise, it will just pile up on a warehouse rather than in landfill.

Essentially, there are not enough buyers of these products!

Where Government investment can make a real difference

It’s been an ongoing narrative at the Council, State/Territory and Federal level that they need to change their own procurement policies to help this recycling bottleneck problem.

After all, governments are some of the largest buyers of products like bollards, outdoor furniture and playground equipment, decking and fencing – all common products already on the market made from mixed recycled plastic. And yet, it has been in the “too hard” bucket up to this point.

There are precedents for how this can work in many other places. One that I am most familiar with is with US Government procurement requirement to purchase recycled office paper in all of the agencies. I was a procurement officer for the US Air Force at the beginning of my career, and this requirement showed me how the government could influence an entire marketplace to become more sustainable.

The Environmental Protection Agency issued the first guidelines to agencies in 1990 after they and others were successful in creating internal recycling campaigns for office paper. They quickly realised that they needed to help close the loop by buying the very products that they were collecting.

And because the US Government essentially bought 2.5% of all the office paper in the country, they instantly created a more sustainable, competitive marketplace for recycled office paper overnight – just with this one decision.

Did it cost more for recycled paper than virgin? Initially, yes. However, that quickly changed as the demand went up and more competitors started offering recycled options. That’s the power of government spending. It can literally change markets overnight if used in this way.

Recommendations for Government

Rather than using this modernisation fund completely on capital improvement projects, the government should also consider the downstream impacts that they are creating with the export ban and infrastructure that already has more capacity than demand.

Instead, wouldn’t it make sense to spend a little bit more on a longer-life, recycled plastic bollard now rather than wood? This investment will still create more jobs, but at least we won’t see stockpiles of processed material with no place to go in a year’s time.

After all, a more efficient waste management and recycling system will only create a bigger bottleneck until this material has some place to go.

Am I reducing plastic waste?

I was able to get into two new retailers this past week with the Harvestcare line. However, my brain keeps asking the question, “Am I really making a difference in reducing plastic waste with this brand?”

When I started working on a body care line, it was to replace the single-use plastic in hotels. Of course, most hotels are still in hibernation. And so the Harvestcare brand is a consumer pivot during Covid. While I know that it’s good for the consumer and the environment, I don’t really feel like I’m making that big of a difference on the plastic side.

In the meantime, while I was doing sales calls this week, I actually found a retailer that preferred my recycled plastic jewellery products over the body care line. It was just my words in passing as I could see that her interest was not there. So, I showed her some pictures of some things I did with recycled plastic. She said that she wanted the products right away in prep for Father’s Day.

So, on top of selling and fulfilling Harvestcare orders, I’ve been melting plastic again. I quit doing this a few months ago because I was so frustrated with the results, but now I realise that I need to push through the learning curve to really demonstrate recycled plastic’s value – that it can be used for far more than just outside furniture and bollards.

Plus, if I can pull this off, I can sell products that cost me little more than time to make – unlike my Harvestcare like where I have a lot of cash in inventory.

So far, I’ve made a lot of mistakes – again! But things are looking better as I experiment with a retailer customer and deadline in mind. I hope to have access to a friend’s shed while they are away on school holidays so that I can try out some of my bigger project ideas. I just need a place where I can make a mess first.

Cufflinks from recycled bottle lids
Newest recycled plastics experiments

So, back to melting plastic. If I only use these to show people that used plastic is a great resource, then maybe I can make a small difference in reducing plastic waste now that leads to bigger things later.

First active hospitality order

This has been a big week already. Not only did I get my first products that I have ever made from scratch to a customer, I also had my first active hospitality order.

I say “active” as I already had the hotel pilot scheduled for back in April, but that was is still on hold until their occupancy returns to normal. What I have found is that the smaller venues like at bed and breakfasts locations are already full again.

And so, I just received my first “active” hospitality order from my friends at Tallagandra Hill Winery. They have three stand-alone cabins on their site.

Tallagandra Hill Winery
Tallagandra Hill Winery

And while, I really want to eventually sell the single use, aluminium tins in the longer term, it’s not profitable yet until I can really get significant scale. So, I am glad they choose the big bottle option instead for the moment.

Here’s to more business as the Covid-19 restrictions lift and people start travelling again to boost the hospitality industry.

More mistakes

How many mistakes can I possibly make on the same products? Let me count the ways.

As this is the first product that I have ever made from scratch myself to resell (the others were designed by a contractor), I don’t think I could possibly stuffed up in more ways.

Some of the lessons this week:

1) If I’m going to use unrefined (raw) ingredients, I have to be able to expect variations.

If you can see the whiter bits in this block of unrefined shea butter below, you’ll know that I had to change my recipe to accommodate it. This also means I didn’t know that I had to adjust for this until AFTER I made a batch because it takes a while for the product to settle.

Long story short, more money, lost time, and lost ingredients, but this unrefined version is still better for you.

Unrefined shea butter
Unrefined shea butter

2) Not all boxes of the same size, are actually the same.

Below shows to bamboo boxes side by side. I bought them from two different retailers to act as display boxes for my new hand balm products. However, you can see the box on the left can easily hold six tins, while the other one can only hold five because of how they are made.

Two boxes of the same size cannot hold the same number of tins
Two boxes of the same size cannot hold the same number of tins

3) Yellow orange to you is not yellow orange to me

I have been struggling with getting the colour right for our peach flavoured lip gloss as it looks too much like the watermelon colour that I’m using. I hope that the third order is the charm as I reckon that their formulator must be coloured blind as they all look almost the same.

Can you see the difference below? I struggle to do so.

two lip gloss containers that are supposed to be different colours but are not.
Which is peach? Which is watermelon?

4) More mistakes with labels

The labels have finally come in, but the backs of the lip gloss are hard to read. This is my fault as I was in a hurry to redo them, and I squeezed the lines to make it fit with a 6 pt font when I had to reduce the label size to fit the smaller sized tins.

Unfortunately, it’s just going to have to be good enough. Luckily I only ordered 100 units, and I’m hoping that the new blank labels and laser printer will allow me to become less dependent on suppliers for these in the future.

New product labels are hard to read

Despite all of these issues, I managed to get my first order to a retail customer on Monday. It wasn’t without other mistakes, but it was pretty good for my first go as a product maker.

Mistake with product labels

I was really hoping to launch our new products last week. In fact I had a meeting already scheduled with a retail customer on Friday with the anticipation that everything would be ready by then. Unfortunately, I can’t because I’m waiting on labels – again!

When I’m dependent on third parties for my supplies, it really makes it hard to hit schedule especially when I made another mistake. Well, technically I made one mistake and a supplier made the other one. Either way, I had to reprint labels.

And so, I am still waiting on the revised labels even though I ordered them on Friday last week. I’ve tried to switch to a faster supplier, but I’ve found that many others can’t print the sizes that I need.

I’m so sick of the label issues – the time it takes to get them made, the lack of flexibility when I need to make changes or what to trial a product, as well as the expense. So, I bought a laser printer this week hoping that I have more options with water-resistant labels that I can print myself.

It took me a half day to get the printer set-up and for the labels to print properly, as the Avery templates never seem to be correct. Results? It worked out okay.

Pic on left is from my new printer. Pic on right is from a professional label company.

The only challenge is that I can’t buy blank labels in water-resistant materials in all of the sizes that I need. So, I’m still reliant on external suppliers for some of the circular tin sizes. However, I might just resize my labels for other products to fit the blanks that are available. That way, I can have that flexibility until I have a reason to order in larger quantities.

This investment into the new printer will hopefully result in less wasted time, money and plastic for future labels!

Postscript: I just realised that I could order these heavy duty labels from Avery directly in just about any size I want. Damn! Lesson learned again!

Lessons from Supply Chain Challenges

Going from a larger organisation executive to a small business owner is challenging in so many ways, but especially because you can’t really delegate many things. You just have to figure things out as you go.

As an example, in business school, you learn a lot about supply chain challenges. One of the most critical components is timing – making sure you order everything just in time to ensure that you aren’t carrying too much inventory, but also enough so that you don’t hold up the manufacturing process. However, it’s a lot easier to do on paper than in reality.

Most of my career has been in service based businesses or organisations. I did own a physical products business about 5 years ago called The Great Australian Tea Company. I can’t say that I learned enough from that business though as we were only market testing 2 SKUs, and I outsourced the product making.

Now with Harvestcare, and my hotel line, Notions – I’m learning a lot about supply chain challenges.

As I write this, I have plenty of inventory, but not necessarily the right things. And as I add more product SKUs, this seems to be a constant challenge too. I try not to order too much when I’m testing ideas, but sometimes I can’t get enough of what I need, when I need it especially for anything requiring to be imported during the Covid-19 crisis.

In the restaurant industry where I grew up, they tend to rely on just a couple of suppliers to provide most of their ingredients. And because most of it is perishable, they have to be an efficient supply chain. Furthermore, they can often substitute things like vegetables to make a certain dish.

I’m in the middle of creating my supply chain now, and it is NOT efficient yet. While my ingredients are perishable, generally I have at least a 12 month shelf-life or more. So, while I won’t often lose ingredients due to spoilage, it is still a waste of money if it’s just sitting around, and especially if I never use it. In addition, I can’t just change the ingredients without ordering new labels.

Challenge with Product Labels

Product labels in particular are proving to be a nightmare for my supply chain, but I can’t figure out a better, cost-effective solution at the moment. I’d love to get some recommendations for how to do this better.

It often takes more than a week to get them made even though I do the print-ready design work myself. If I don’t use all the stickers I ordered, like in the case where I change the ingredients in a product, the individual cost per label goes up significantly.

This has happened when I had to change the ingredients in my hand sanitiser products three times. Then the demand dried up as supply became more available. So, a label went from 30 cents each to over $1 each because I didn’t use them all.

I’ve found that paper labels with an inkjet printer won’t work because the ink becomes runny with water – obviously an issue for products used in the bathroom. There are more options with a typical laser jet (which I’ll need to buy – ugh!), but they don’t make blanks at the right sizes for some of my products like the 15ml round tins for lipgloss.

Also, I have found it difficult to line up the labels properly so that they print on the stickers correctly even when I use the Avery template.

I’ve already tried a Brother’s label maker which also costs about $1/label to use. However, I’m also limited in sizes and right now they are not printing with the right colour tone i.e. orange instead of yellow. The Brother’s support person was useless.

In the long-term I think I’ll either print directly on the aluminium packaging or buy a professional labelling machine. For now, I just need a more flexible, cost efficient yet good quality option. Any ideas to help me for now?

Bottlenecks

Speaking of lip gloss, I have a bottleneck with the tins right now. The tins are stuck with the carrier as it hasn’t moved since it was first picked up over a week ago in Melbourne. Normally, it only takes a day or two. I’ve been bugging the supplier to push the carrier as there’s no obvious reason why it hasn’t moved.

So, for the moment I’m reusing my current tins for trials and testing. It can be time consuming to clean them. My main reason for doing this is because I don’t want to recycle them when there still is good life for them. Still, I can’t reuse them for the purpose of selling which means I can’t launch the product as I had intended this week.

Reusing tins for trials and tests
Reusing tins for trials and tests

My lessons learned about supply chain challenges so far?

I’m still new to a products-based business, and the therefore I’m learning a lot as I build out the supply chain for these brands. Here are some of my lessons learned so far.

  • When you’re experimenting, order as little of an ingredient as possible until you’re sure that you’ll use it in a product – even if the per unit cost is expensive this way.
  • Don’t order ingredients unless you have a clear formula in mind where it could be used. I don’t have the budget for “nice to have” ingredients on the shelf right now.
  • Proper storage is critical to extend shelf-life – i.e. avoid sun and oxygen.
  • Shop around for prices. It might be easier to order from one supplier, but there can be significant differences in prices as you go up in bulk quantities.
  • For me, the origin of the product is also important. If it doesn’t say Australian made, it’s probably imported.
  • Beware of shipping costs which can significantly increase per unit costs especially in smaller orders.
  • Larger quantities doesn’t always reduce unit cost that much. Do the math first to decide as it might make more sense to order smaller quantities to minimise inventory costs.
  • Keep track of typical delivery times for each supplier. I know that I can get products within 24 hours from one company because they use Toll as a carrier and they always ship fast. Others are less consistent.
  • Give yourself an extra week minimum for a product launch knowing that supplies will come in later than expected.
  • A product in country is more valuable than a promise of a cheaper product coming from overseas.
  • Prepare to buy extra products (especially for non-perishable items) during end of year sales as the prices can be significantly discounted.
  • Don’t feel the need to remain loyal to one supplier if they are not meeting your needs – such as with delivery times in my case.
  • Sitting inventory is like cash stuck in a safe that can’t be spent. Use it, sell it or find another purpose like promotions as soon as possible.

What other lessons learned from supply chain challenges lesson do you have to share for a new business? I know that I have a lot to learn.