Online perfume micro-business: struggling to make ends meet…

It is not easy to be an artisan entrepreneur! It always strikes me to realise that most governments in the world do not consider micro-businesses in their reforms for entrepreneurship. Although on 1st January 2005, a new definition for ‘micro-small and medium-sized enterprises’ has been incorporated in the EU legislation , advocating the Member States to use it as a reference and make the measures taken to support such enterprises more ”consistent and effective”, I still fail to see how this acknowledgement fulfils my needs as a business-minded woman with plenty of ideas for creativity and expansion and running a micro-business

” A microenterprise is an enterprise which employs fewer than 10 persons with an annual turnover and/or annual balance sheet total not exceeding EUR 2 million”

This is according to the EU definition. In my quest for support through such government bodies as Business Link and other similar useless schemes, I was received with indifference and at the most, despise. In order to bring my perfumes on the UK market or export them, I need to join a scheme at a cost of £1000 and in exchange, I would be able to accompany delegations in countries of interest against meeting 50% of the costs!!

As an artisan perfumer whose mission statement is to help people ‘rediscover the essence of Nature and travel through scents’, £1000 will be spent on costly and precious essential oils (some of them worth the price of gold!). What I need from these so-called ‘development and business support agencies’ is financial support. In all my discussions with the various advisors, this aspect seems to be a taboo topic. You see, when you run your business however small it is, people you talk to think you are successful and making plenty of money so the money aspect is not something to discuss. The advisors are here to advise: and they do so by advising me – well – to spend more money in packaging, lab testing, marketing. No wonder why only the major corporates can impose their products in the economy!

 Lets take a look at such costs in the UK (these are minimum costs quoted to me so far):

– Rebranding and redesigning: £3000
– Blending and bottling of the natural perfume in factory (2000 bottles) ex-raw materials costs: £2250
– Packaging (recyclable): £5000 for 2000 units
– Marketing: to place perfumes on the shelf for 3 months  in departments stores such as Boots: £15 000 (publicity to be carried out by the business)
– Laboratory testing to comply with EU regulations: £500-£1000 per product
– Hiring a public relation agency to promote your products in magazines such as Marie-Claire: £1500 per month i.e £18 000 for a year

So in total and at the minimum, I need to raise about £45000 if I want my natural perfumes to be more visible and in my crusade to bring a 100% natural perfume product on the shelves. Like many hundreds perfumery micro-business owners, I have not been able to pay myself a salary for my hard work in the last 5 years; every penny is reinvested in freshly extracted raw ingredients, needed to keep the ethics and business integrity alive.  I must say that I am loosing heart at being an entrepreneur in view of the lack of support out there… If to the financiers’ mind, I am a small potato, what about the VAT I pay on each order of raw materials I buy and what about the dozens of suppliers for whom my regular small orders allow them to carry on with their businesses…. There is no small profit, is there?

”In the 1960s up to the 1980s, starting without capital was a real possibility”

I am questioning the essence of ‘entrepreneurship’ and whether rather than a global economy, we are not going to be left with the 1% catering for the 99%, just like what’s happening with the banks mergers at the moment. Besides, whereas in the 1960s up to the 1980s, starting without capital was a real possibility when new products were not popping up every day and anything new or not trendy could make its way on the shelves, since the end of the 20th century, many brands have been acquired by the likes of L’Oreal, Estee Lauder to name but a few with the founders’ original philosophy being truncated and compromised in order to cut costs on quality and increase profit margin.

So far, I have been able to carry on thanks to the Internet. My business revenues are mostly generated from online sales which means I have cut a lot of costs such as physical and marketing ones… But running a perfumery with a computer screen as a shop window can turn out to be restrictive. And it does not remove the issue of storage place and production which involves an injection of capital…

So I am left with the decision of whether I want to carry on trying to make ends meet with my passion, how I can expand by setting up a more ‘small business’ structure or if I should go back to perfume-making as a hobby only…

Disclaimer: The views expressed in this article are solely the opinions of the author and do not necessarily represent the opinions of businesses or institutions affiliated with the author. 
 

 

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Categories: SOCIETY | Tags: , , , , , , , , | 18 Comments

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18 thoughts on “Online perfume micro-business: struggling to make ends meet…

  1. Hi Isabelle,

    Just discovered your blog. I think you should try selling at fairs, shows, markets. Find some cheap ones to start out with. Doing markets is a learning curve, don’t waste money while you’re still learning. I’ve been selling natural balms and fragrances in past two years at shows. I think you really learn a lot from customer feedback, so that you can improve on products, get new ideas, BEFORE you re-brand, re-invest in anything, so that you can it done right, there are always improvements to make. Also dealing direct with customers, you learn the art of selling, there is a real art to it. If you sit at your stall all day not talking to customers, you won’t make sales. You have to explain the value of your products, how its made, where the materials come from, how rare it is, etc. Though demographics at certain markets are to be considered, it is not necessary to take it too seriously, you will encounter all kinds of customers at markets. The key is to try to have “something for everyone”, various price points, products, etc.

    I know exactly the type of frustration being in similar situation. It would be great to be selling at department store, etc, but it’s just not possible for a micro-business. I decided not to let this get in the way. I rather deal direct with end customers and grow from there. Being a one -person business, I’ve had to learn how to do everything myself. That’s ok, it save a TON of money. There are so many resources out there to learn from luckily!

  2. My country isn’t in EU yet, which is good (still no IFRA regulationsh haha) and bad (customs + vat of 23% during customs check) for my perfumery… I don’t think i will ever make perfumes for living… but is it possible to expect from yourself to work 2 jobs non-stop? It must be difficult and it could cause health problems as well…

    Do you think that prices have anything to do with success? (Cheap and very expensive, but nothing in between)

  3. I understand your frustrations, Isabelle. Many niche businesses spend years pouring any earning back into their business. Maybe the only way to make serious money in this game is to become one of the Forbes-listed top bespoke perfumers – some of whom charge US$75,000 for a single service! Not sure who is paying that money, but I can tell them their money would be mostly better spent trying the wares of an amazing natural perfumer like yourself, or Charna, or Anya, for example.

    I have 2 tips for you (from experience) – social networking can benefit your business enormously. Use Facebook, Twitter, Linkedin and any other means of social networking to boost your business profile. Its worked wonders for my business in the past 12 months.

    Also, packaging is, unfortunately, the key to success or lack of it for many micro perfumers, especially if you want to be seen in stores. As much as we hope customers will buy based in the actual product alone, aesthetics helps to form their initial connection with your brand. If that isnt right, you have less chance of convincing them to but. (PS I havent yet looked to your packaging, so I’m speaking in general terms here!).

    By the way , the time has definitely come for niche perfumers to take it to the next level – we need to seriously look at forming a group that buys ingredients regularly to service ourselves. Who can afford to by buying kilos of these extracts from suppliers?? Not I on my own!

    Best of luck x

  4. Perfume is big business. Trying to compete with the big companies requires a HUGE investment in advertising and start up costs…
    Same as any other business.
    Thank god for the internet though…
    but at the end of the day you need a presence, and a reputation to get people to buy your wares. So you can either invest a lot of money in advertising, or do it the hard way by sheer leg work, going to fairs, and sharing your scents with the public.
    A large business ALWAYS requires a huge amount of work and advertising in one form or another, and we are creating luxury goods that sell on their reputation and the buyers percieved view of their worth and how they enhance their image of themselves. The scent itself is merely secondary…..

  5. Many thanks to all of you for sharing your views. Somehow it soothes me to realise that many of us, artisan perfumers, are facing a similar dilemma. The last thing I want to do is discourage my colleagues! If anything, by sharing those points, some solutions can appear.

    We all seem to agree on one thing here: the more micro-businesses there are, the more direct and indirect jobs we help retain. Imagine! 100 similar businesses ordering 1000’s of $ of products each time! It allows producers in developing countries to sustain themselves respecting sustainable prices (unlike big groups that buy the whole production in advance at the lowest cost possible).

    I think part of solving the problem is to work more collectively and initiate group buys on a regular basis. Anya did it several times but I think we should have a website dedicated to the deals each of us finds all over the world. The beauty of this would be that we would probably deal more with producers directly rather than suppliers.
    Recently, I have found that many suppliers have increased their minimum quantities to 1 kg or 1 liter so it leaves us struggling even more to source ur ingredients. To me, it does not make sense that in this period of economic uncertainty, companies increase their prices. The logic would say that they need to reduce their profit margins and try to weather the storm until better days come.

    So I believe that one way to fight back is to go against the flow rather than with the flow…

    Isabelle

    • Kelvin

      Isabelle ,

      I feel your pain too, because I’m in a similar situation as you.

      I have tried starting my own online perfume business with 2 partners years ago but that didn’t bear fruit. So I’m back to the drawing board and planning for my next online fragrances and fragrance products business, which hopefully, can be proudly all natural.

      Like you, I face the same frustrations of the lack of funding (start-up capital), lack of interest (more like none) from fellow entrepreneurs to go into the fragrances industry and the indifferent attitude from government agencies (reflected in the total absence of funding & support schemes).

      I have also spoken with a few friends who have their own businesses or who are accountants themselves. All of them said the same thing: There’s no market for fragrances. I’m not totally convinced by their comments/conclusions since they didn’t show me the numbers.

      I’m contemplating to start selling fragrances of the mass market brands and/or negotiate arrangements for affiliate marketing/sales with fellow independent perfumers who are more established and build up sales & profits from there.

      Although to some and myself to a certain extent, mixing synthetics and naturals isn’t a wise move for branding and positioning, I would think of how to survive the bad economy first. As revenues and profits pick up in the later stage, you (we) can split the business into separate divisions and sell off the synthetics fragrance division if it’s feasible.

      Perhaps the obstacles I face may be more than yours, considering there are no such micro-business here in my country yet.

      After reading your blog post, I found I’ve been thinking almost the same issues as you. Here’s what I’m contemplating for myself and that may work for you?

      Funds: Work part time, invest the savings as capital / cashflow for the business. Continue searching for partners to inject capital, divide workload and bring in more networks & valuable contacts

      Raw ingredients: Do group buys to save on costs or ask around for swaps whenever possible. Work on perfumes which use cheaper ingredients first, then gradually scale up production volumes of perfumes which use more expensive ingredients when cash flow allows.

      Storage space: Utilise self-storage solutions. There are companies offering self-storage or mini-warehousing spaces with different areas, which you can rent on a monthly basis for most plans.

      Marketing and sales: Online first, then gradually build up more physical presence and marketing via flea markets, bazaars and distribution to push carts/retail stores in malls. I would hesitate to distribute through departmental stores since they charge shelving fees, always want to negotiate for steep discounts and we don’t have the capacity to produce the number of bottles they’ll stock anyway.

      Blending and bottling: Here’s something I’m still trying to figure out too. Is it possible to piggyback or tag on with another business and share the costs in the hope of lowering it? How about doing the blending and bottling yourself? I’m totally not familiar with the health and safety regulations, so please pardon me if this is illegal…

      I’ll share more of my thoughts as I continue to draft my business plan. Your blog post has certainly brought attention to a few areas I have to look deeper into

      – Kelvin

      • Hello Kelvin,

        Thank you for sharing your own personal experience and I want to reply to some of your points –

        Re. funds, I started my perfumery online by working and reinvesting. I have looked for partners after the Cranfield University helped me draft a sound business plan but fragrances is not an investment business angels are looking for. Usually they want to invest in growth companies involved in IT, new technologies or renewable energy. They are also aware that the fragrance market is now the playground of approximately 4 big corporations incl. Estee Lauder, Givaudan, L’Oreal and that marketing costs are extortionate particularly if you are using distribution channels.

        Raw ingredients: The group buy is by all means the option to look into for all natural perfumers. I did reduce my collection to the perfumes using cheaper ingredients. I also did not increase my prices when raw materials costs were rising. So reducing my profit margin to the limit and with the view that survival was the name of the game rather than profit making in the current economy.

        Storage space: It is true that it is easier to negotiate self-storage space now in the UK because everyone is so desperate to keep their lease. So you find more flexibility on the part of warehouse owners… This is one positive point!

        Marketing and sales: My perfumery business was 90% online and has been so for the last 5 years. Ambrosia suggested the markets and bazaars too. And it works depending on which one you attend. For our kind of perfumes that are high quality, you need to hire a space in one of the posh markets dare I say. In Mayfair, London, it costs £2000 for one day! It is surely if the visitors are the Mayfair type. Unfortunately, there are many lookers and few buyers!!

        Blending and bottling: I have been doing the blending and bottling myself like most of my colleagues around. All your suggestions are the correct ones if you are happy with remaining at the artisan level and you can sustain with small volumes of sales. This is where I am faced with a dilemma and this is why I shall carry on as an artisan hobbyist and not spend my 70 hours a week struggling to make ends meet. In other terms, I am kind of getting back to square zero as I did start as a hobbyist in 2006 and converted as a business because of the sucess….

        Isabelle

      • Isabelle, what will you do for living? Was perfumery in last few years your first job or?

        The other day I ordered small amount of ingredients (100 euro) and I paid extra 40% of customs… very discouraging 😦
        + all this what you just explained to Kevin…

        I just wonder who are those who succeed?
        Those who invest 10.000 $ in PR?

      • Hello Ankica,

        Well perfumery was my first job in the last few years but I had to combine it with translation and interpreting in order to be able to keep it going. As a result, I was working over 70 hours a week, no weekend and no holiday. Right now I am abroad on a mission but it seems it will end quicker than planned because of the lack of investment! I probably will go back doing translation and interpreting full time and look for a job…

        I know what you mean about paying customs… It makes ingredients even more expensive doesn’t it? In the UK, not only you do pay customs but you also very often end up paying VAT which currently stands at 20%! How is this sustainable I wonder?

        As for those who succeed, my answer to that would be that most perfumers are persevering but I know many who juggle with another job and some (rarer ones) who can afford doing it for pleasure…. I think that if you have $10K to invest in PR, it probably can help…. provided though that you are with the right PR agency because there are many bad ones out there! You know, it could be that I have not quite found the recipe for success in this business. My clients and the businesses I deal with think I am successful and success is not necessarily measured in terms of money but I get to the point when I think that hard cash is required to move on….

      • … by first I meant “primer” job… like something you did to “pay your rent”.

  6. Everything you write about is symptomatic of over-regulation that has run rampant in the EU. Americans love to look across the pond and pine for legislation that would regulate cosmetics in the US the same way, but they fail to realize that it would not make products safer, but ELIMINATE micro businesses like yours in favor of huge, corporate entities who can afford to pay all those silly fees (which are then passed on to the consumer). What a shame. I see this has happened in the food industry as well. Farewell locally produced artisanal food, hello industrialized crap. Farewell herbal medicine, hello pharmaceuticals.

    You need to take a stand and continue doing what you are doing, following your passion, selling online and building your business until you can call the shots. Don’t give up! Your perfumes are beautiful!!!
    Maggie

  7. Thank you Isabelle,for sharing such an interesting view point that all of us who have small artisan businesses can relate too. I wish you only the best, may your business thrive and do carry on.

  8. It makes me sad to read this… especially ’cause I am planning to go into perfumery business as well… maybe less ambitious but still, my raw materials are equally expensive (if not more, since I can’t afford larger sizes).

    I really hope you will find a path to follow… I don’t know which one it is … higher prices? PR person? More proactive networking? No idea… but some folks managed to live out of perfumery. Why can’t we? 🙂

  9. We are fortunate in that such horrible regulations have not hit the US. You’re to be commended for all the research, heart and soul you pour into your perfumerie. I wonder if there is a work-around to the typical bureaucratic/marketing conundrum you have experienced. We’ll keep in touch, dear friend, and I think you have a sweet time in Mauritius right now, and you can plan and plot how to circumvent the $$ problem

  10. Isabelle,
    I feel your pain more than you can imagine. Thank you for eloquently describing the conundrum facing many micro businesses. I wish I had greater words of support for you. I do hope you are able to continue your business despite the lack of support, funding and crazy regulations. It’s such a shame a talent such as yours would be regulated to a hobby.
    Charna

  11. Denise Smith

    You certainly convey your frustation, it is not comfortable to sit
    on the fence while trying to decide what to do. I do not currently have a perfume business, but when
    I do I never thought that I could give up my day job. Just cutting
    back a day is scary. I hope you find support even if it is not money.

  12. Margaret

    How your comments ring true. I have experienced exactly what you describe and have the same frustrations and questions with no answers ….. at the moment. I say ‘at the moment’ because if I think the same as you there must be others too. An answer or way forward will show itself to you somehow. That’s my belief and keeps me going. I’ve also found it quite isolating to try and ‘battle’ these problems so it’s helped me to read your views. Keep going.

  13. Laurence

    Dear Isabelle,
    Hello from London.
    Thank you for this very interesting comment.
    If micro businesses were more helped they will definitively create great an sustainable wealth.
    I hope you are well.

    Laurence

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