I get asked all the time if you have any business regrets, I honestly don’t. But I do have several noteworthy mistakes I’ve learnt from over the years. Yes, it would have been better if I didn’t make them and had the know-how to navigate these challenges more efficiently. But for me, it’s more satisfying to celebrate the wins when you’ve learned the hard lessons.
My biggest business mistake was the first major scale up in manufacturing. Rewind to 2016, we were making all of the Tailor Skincare products in our small Lyall Bay facility. It was time to scale up production and we kicked off by launching a new product made by a contract manufacturer! This was the big time for us and this newbie was New Zealand’s first ever probiotic skincare – Tailor Renew. The good news is Renew remained one of our top sellers in the Tailor Skincare range, despite this blunder.
At the time, we could make about 300 units by hand in the Lyall Bay office / factory. We were limited by our tiny 20-litre batch sizes because of the equipment we had on hand. The quickest and cheapest way to scale your business is to contract someone else who has the equipment and capacity to do it for you. So that’s what we did.
We moved from batches of 300 units, which took us two weeks to procure the materials (including packaging) to contract manufacturing 2,000 unit batches, where we had to purchase 5,000 units of each bottle at cap to help account for the margin we’d lost by paying our manufacturer. By working with a manufacturer and purchasing larger amounts of packaging materials and bulk ingredients, our supply chain lead time increased from a rapid two-week turn around to a 12-week minimum. A huge challenge was to build predictive models, which could tell us how much stock we’d need to make in six months’ time. This would become more important than ever as we launched into Farmers because you’re dead in the water if you go out of stock in a key retailer like Farmers. Luckily, our modelling mixed with clever prioritising of inventory for retail channels held up and we never did. This was a win, rather than a big mistake.
My biggest mistake was when we got our first ever shipment of Tailor Renew from our manufacturer. I decided to use a dropper cap rather than the sexy serum pump you now see adorning the Renew bottle and all Tailor bottled products. I chose a dropper cap because Renew was a lightweight water-based serum and the droppers were about ten cents, whereas we were paying $1.45 for the serum pumps. A major difference when you’re making 2,000 units.
We celebrated the arrival of our first ever Renew shipment with the cheap dropper caps and had no idea what was going to happen, so we sent out all of our retail pre-orders and made our way to Auckland for our first ever media and influencer launch! We invited everyone to the launch and sat down to breakfast with all key beauty media in New Zealand along with an evening event with the who’s who of social media. I was so grateful to have everyone join me for the launch and the events were a success. Until… about a week later when I received multiple complaints from retailers, media and social influencers about the caps bursting open! I was mortified!
We promptly completed a stock take of the remaining units we had on hand and discovered that 15 percent of the caps had popped open after just one month. Meaning the chances of the remaining lids popping open at some point was inevitable. Literally ticking timebombs!
I called my original packaging supplier and asked if they had enough pumps on hand, shipped all of the remaining stock back to Christchurch to be recapped with the expensive (but reliable) pumps. Then replaced all defective stock with our retailers, sent new samples to the media and any ecommerce customers who needed a replacement.
We had invested a significant amount of our working capital into scaling up, so we didn’t have a lot of cash on hand to help solve the problem. It nearly broke the business both from a cash flow angle but more importantly, a reputation perspective. But it didn’t, we managed to negotiate flexible payment terms with our suppliers, recap the bottles in good timing, replace all defective stock and maintain our reputation with key media, simply by being honest about what had happened.
My take away from this blunder was to never cut corners and compromise on quality. If you cheap out, you pay twice, somehow, someway.