The baby’s bottom business plan
Entrepreneur Catherine Cervasio-Arfi founded AromaBaby 13 years ago, and now exports to 12 countries.
Catherine (pictured right) talks to Amanda Gome about how she started her baby products business, the barriers to exporting into Asia – and the opportunities – and lessons she learnt from her marriage break up.
Amanda Gome: What niche did you see when you started 13 years ago?
Catherine Cervasio-Arfi: Well, 13 years ago there was just an emerging trend with natural and organic skin care. Organic skin care was very little known, but certainly natural and aromatherapy were the latest buzz words in places like America, and there wasn’t really any choice in body care.
We had some of the pioneers such as Jurlique back then, but certainly no baby product was available that was natural and chemical free.
What was your training?
I actually went on to do training once I’d started the business. I had a diploma in aromatherapy so I did a lot of health science and adult massage and then I trained as an infant massage instructor. I went back to school 20 years after I left to get some qualifications that I thought were relevant to my industry.
And then you started the business. Where did you find the funds to start the business?
I was doing a little bit of accessory development for key clients, Katies and Sussan. The orders were sizeable and I used the profit from one order basically to fund the beginning of AromaBaby.
Did it take off, or was there a struggle at the beginning?
It was a struggle. I had difficulty in finding biochemists and laboratories that were prepared to go out on a limb and invest a bit of time and research on my ingredients and my formulations that were developed from scratch.
We develop our own formulas whereas a lot of companies just choose to use existing basic formulas that the laboratories or contract manufacturers own themselves.
And how did you find them?
I ended up actually stumbling across one of the chemists who’d been responsible for helping to develop some of the very early Jurlique products.
And in your early start-up phase did you put on people or did you try and stay quite small for a long time?
I actually had a baby, probably only six months after being retrenched and starting the business, which wasn’t the plan. So I was very focused on taking care of my baby and working from home as much as I could.
For about five or six years it was just myself basically doing everything, and then I had one other staff join us who’s still with us today, so she’s been here for about eight or nine years. We were very small for the first four or five years.
How did you go about exporting?
It was something that happened by accident, even though I had a global plan and a global vision. My focus to begin with was Australia, and to really establish myself in the domestic market first.
Then we were approached by a couple of entrepreneurial ladies in the Middle East. Their husbands had been sent to Dubai for work and they wanted something to do. They basically set up an importing and distribution business for AromaBaby and that was our first entry.
We had already spent some considerable money in securing IP and protecting IP in the US so that wasn’t actually necessary.
What were the barriers?
There weren’t actually a lot of barriers in that particular region. There’s a lot of money and highly skilled professionals that are in and out in transit through that hub there, so that was certainly a really good entry point for us in export. The barriers were later on.
We actually got approached by some people from Korea and that was a sizeable contract for a number of years and it required that we were very flexible with our packaging and bottling. We had two different looking bottles for the same size product. One specifically for Korea, so I think that took a lot of money and effort, so reinvesting in one extra new market.
Was it worth it?
Oh absolutely. It’s still one of our most lucrative and well established export markets and we’re quite well known in Korea as having one of the top natural baby products. Our marketing and our positioning and the way we’ve been flexible with that market has helped our longevity.
And which has been your best market?
We’re still at the tip of the iceberg. Looking at our website here, for example, at the moment we probably do about 150,000 hits per month, which is quite busy, and we’re finding that 40% of those are coming from the US and that tells us that there’s a really big interest in America. We do sell to America, but we’re looking at some more strategic planning on actually building different distribution outlets.
You’ve got five employees. What’s been the pattern of growth over the 13 years?
We have certainly grown and then contracted again. We’re at the stage now where we actually need operations manager to oversee our operations in despatch and warehousing. We need somebody else in accounts to handle in-house accounts and not have everything externally done, and we certainly need more marketing and sales people so…
So you’re building more internal infrastructure?
Why did you contract, and now why are you then expanding again?
A lot of our efforts were put into building the domestic market and we did kind of plateau and we found that we didn’t need... one or two of the full-timers that we had just left coincidentally and we replaced them with a couple of part-time mums so they were familiar with the products. Very hands-on.
We were able to be flexible with the working hours, etc. We found that we managed like that for the last 18 months-odd and were kind of getting to that point where we’ve got some other things happening independently of AromaBaby.
We’ve got other brands in the market as well, so to manage the different markets or manage the different brands that we own we need to expand again.
And where are you up to in your personal life with the business?
There was probably another reason for the change in the business structure (as) 18 months ago I actually separated from my husband of 12 years, and I think that that obviously had an impact on how I worked. My focus was then on raising my two children on my own, so just re-evaluating how much work I did from the office, and I’m doing a lot more work from home.
I find that a lot of my work is done in front of the computer. It can certainly be done remotely. I stepped back on travel and am at the stage now where we’re ready to basically do the travel again and build up some new brands and do some other things differently, but certainly having a business the size that we have and with the schedule that I have can impact on personal life and your personal time split, so I guess priorities and having a good family life balance with work is very important.
How do we get this balance and what have you found?
I think having been through something like a marriage breakup where you’ve lost... the loss of a support person, I think it really makes you refocus on what things are important, and I encourage people to have a look at their workload and balancing their personal life before it gets to a dangerous point.
You need to put a lot of energy into building and maintaining your personal relationships and friendships and make the effort to do the things that you can’t be bothered to do. As well as running your business you need to know when to say no and when to stop.
Do you find it’s hurt the business not travelling or putting other things first?
Probably not, and I think that’s probably because we’ve had 13 years of marketing and advertising. We’ve spent millions on advertising and brand positioning, education; we really changed the way that baby care was used and accepted, even (at) hospital level.
There were no natural baby care in hospitals certainly before AromaBaby was around, so I think we’ve been able to ride just a little bit on the expertise that we have and the reputation that we earned over that time. But we recognise that we’re at a point now where we need to just pick up and keep going with where we were.
And so what does the future hold now? What do you see and how are you going to balance that going forward?
Having my little boy who is six years old and he’s now at school. I’ve got another one that’s 12 so the older one’s obviously a fabulous help and support, and we have a very very close open relationship with the children. They’re heavily involved in what I do.
They understand, if Mummy travels, why. I take them with me when I can. So that’s really important. If I have to do a trip away when we might do one to make up together as a very special family thing so I certainly… I balance it and I work around the children and with the children when I can.
Having a support network in the staffing area means that I don’t have to physically do every single expo and thing myself any more, and going forward if I pick very carefully what trips I do and how I can leverage off those, the maximum outcome, then working smarter not harder, and that’s what we’ve been doing.
Is the face-to-face still very important, particularly in Asia?
Yes, absolutely. I think that we’re quite strong in Asia. I have a fondness for the Asian people. I’ve been travelling and dealing with Asians for 16 years and my children also have that same love, so it’s really lovely.
They each know different words in a couple of different languages just as a courtesy, and accepting of other cultures, so I think that’s really special, but certainly we are in Taiwan, Thailand, Indonesia, Singapore, Hong Kong, Korea, Japan and a couple of other smaller areas, so there’s a lot of Asian business and I think that most of those are established markets for us.
However, I feel it is still very important to do that face-to-face every now and then, and they have a relationship with you, they’re dealing with a person and not a voice on the phone. I think that’s important and it’s easy to forget about that with email and Skype and remote communication.
And do you see many Australians exporting to Asia? Is it something that’s difficult?
I think it is difficult and certainly there are wide open opportunities in lots of parts of Asia. But, for example, in Korea we opened the floodgates and there was quite a few of the cheaper copycat type brands being exported over to Korea, and some of those have already failed and are no longer available, so I think… look, the opportunities are there but if you’re not doing your homework and you don’t know your stuff… It’s a very important area.
Baby skin care is very serious. If you don’t own your formulas and you’re not qualified in something to do with neo-natal skin care or aroma therapy and your end user is not your focus of your business, like the infant, then you’re always going to go in as a sales and marketing person.
And it’s not just about selling; it’s about providing a service and information and knowledge to those markets as well as a really beautiful and respect product.
And just going forward, what do you want to do? Do you want to grow this even further or exit it at some point, or what are your plans?
Both. So yes. Look there’s lots and lots of things that I still want to do and one of those is the flagship retail store that has just been a passion of mine that I’d like to do in the future, but as I said we’ve got other brands that I’m working on.
What other brands are you working on?
We also own Pure Spa. I just returned from a trip in the US and our Pure Spa men’s cream was given to George Clooney, Robin Williams…
Did you get to rub it in?
No, unfortunately I didn’t. But I had a very long gaze at those faces.