Today’s blog post is from ANA founding member and 2016 ANA President’s Award winner Fiona Ward from Darlings Downunder (specialising in reusable nappies since 2003) and is for all those out there (you know who you are!) dreaming about opening a cloth nappy shop, but are not sure where to start.
I reckon a huge proportion of mums who use cloth nappies on their kids think about starting a cloth nappy business – not because they want to make heaps of money (even the most basic of research shows that nappies have some of the smallest profit margins in retail), but because they want to share the awesomeness of reusable nappies with other parents in their community. And I totally understand that!
If the idea of your own cloth nappy retail shop has started to move from fantasy to possibility, but you’re not sure where to start, here’s some information for you, based on the best advice (with the benefit of hindsight!) from several cloth nappy retailers. It’s mostly questions, because you are the only person who knows whether a cloth nappy shop will be the best fit for you.
Why do you want to start a cloth nappy shop?
Umm, because who doesn’t want this?
Seriously, though, if you want to start a reusable nappy business with the aim of making money while you work from home, the reality is that most cloth nappy retailers do not make a profit from their business for at least a year, and many are still investing most of their profits into the business (rather than paying themselves) by the time their children start school. Many reusable nappy retailers have a ‘real job’ as well as their ’nappy job’.
If you start a cloth nappy shop, you will be working for the love of it to begin with. You (and your family) need to be OK with this. Putting your heart into a business for little financial reward or recognition (especially if it takes time away from your babies or you don’t have a lot of support) can be soul destroying. Can you cope with this?
“I have never been great at setting tangible goals but I do believe it is important to know why you are doing what you are doing and to let that guide you in your vision, your marketing and the decisions you make about your business. Be yourself and stay true to your “why”, from the very first moment.” Naurelle – Tots and Toddlers
Is running an actual business for you?
You have to be self motivated and disciplined to succeed in your own business. If you find managing money difficult, hate the idea of having to learn skills that don’t come naturally, or just don’t have much spare time, then being an entrepreneur may not be the best fit. Working for yourself can also be incredibly isolating (I would not have lasted this long if I didn’t work with my sister!). If you work best when you can bounce ideas off others, prefer being accountable to someone else, are naturally risk averse, or really dislike problem solving, then running your own business will be much harder.
“Running a bricks and mortar cloth nappy shop puts you face to face with your customer – something that happens rarely when you run an online store. Seeing your customers in person, on a regular basis, allows you to build a strong relationship with them. You see them early in their pregnancy and then at intervals throughout. You get to meet their precious little person when they arrive, watch that little one grow and meet their younger siblings too. You will have times when a customer arrives in your shop and you just know that all they need is a cuppa, someone to hold their baby and a good cry (I have lost count of the amount of tears the chair in my shop has seen). That relationship can, at times, turn into friendships. Being face to face with your customers also means that you have to be prepared for the bad. When you get an email complaint, while running an online store, you get the chance to walk away from the computer, take a breath and then come back and respond later. When someone comes into your shop to complain, you need to be able to respond on the spot, with a smile, no matter what!” Vashti – Nest Nappies
Retail Experience & Business Knowledge
You don’t need retail experience to start a cloth nappy business (I used to be in insurance/risk management and my sister and business partner Catherine was in aged care), but it helps if you have experience with how a business operates, know customer service, understand margins and cashflow, and have a working knowledge of accounting. If you want to start a bricks and mortar shop, there’s a whole lot more knowledge you need – from negotiating leases to fit outs. There are also legal responsibilities and requirements to meet, from warranties to business policies to liability. This can all be learned – but it’s better to learn it before you start than from your mistakes!
And be prepared for boxes! Lots and lots of boxes… The kids love them, but we take a car load to our recycling centre every couple of weeks.
Cloth Nappy Experience
Are you the go-to ‘cloth nappy expert’ among your friends? Have you enough personal experience with using reusable nappies on babies of different ages and needs, as well as with a good proportion of the nappies available in the market? If not, do you have a wide circle of other long term cloth nappying parents that you can call on to help troubleshoot customers’ issues and respond to queries?
“If you have a shop at home and kids at home be prepared for real life demos… such as the toddler learning to remove his velcro nappy right after doing a (thankfully solid) poop in front of customers.” Amanda – Booty Crawl
And sometimes your little one and your precious stock just need to be kept apart!
Many people think about starting a cloth nappy business because they’re passionate about reusable nappies and want to share them in their local communities. But a shop is not the only option to share the cloth nappy love. If you feel it’s more like a hobby or a passion for you, is there another option for you that doesn’t involve the legal or financial side of a business?
You could chat to your local council’s sustainability department or your maternal child health nurse about starting cloth nappy workshops. The ANA’s Get Into Cloth Kit is a resource you can point them to.
You can organise get-togethers through local parenting groups where you can demonstrate cloth nappies and answer questions people have about them – we used to call them ’nappycinos’ – and meet in a park or cafe. If you need some guidance on running workshops, then a great resource is the ANA’s Workshop Information Pack.
You could also get involved in events like the Great Cloth Diaper Change – organising and running an event like this (whether by yourself or with friends – and it can be super casual so don’t be intimidated that it sounds like a big thing) is an awesome way of finding out about your community and what it needs. So if you ARE thinking about a business, it’s an excellent way to research and lay some groundwork. Visit the Australian Great Cloth Diaper Change Facebook page and ask how you can host an event in your area this April. The Australian coordinator has written a useful blog post for us here which we recommend reading.
Several Australian manufacturers also offer advocate or consultant programs where you can demonstrate and sell their products in your community, which is like running a business, but with the backing and support of a big brand. These include Baby Beehinds, Cushie Tushies, and GroVia.
Or how about a personal blog? There used to be a few cloth nappy blogs around, and it would be great to see more parents sharing online. Check out Kim from Dirty Diaper Laundry as a great example of a blogger who’s educating about and advocating for cloth nappies every day.
“Starting a cloth nappy store was not even on my agenda when starting Apikali. We just wanted to run a nappy library, but the industry at the time did not allow for such a narrow endeavour. An online cloth nappy store seemed to be a natural step, however the competition was, and still is, enormous in the cloth nappy industry. Just loving cloth nappies is not enough to maintain a successful store. To consider entering the retail market in cloth nappies is no different to any other business venture. A careful analysis of the existing market, your point of difference, business plans, finance, insurance, storage, etc. may not be truly necessary to start, but it is essential to success. Don’t enter the industry without considering your own personal exposure financially, and the risks that come with any new business endeavour. If you are unable to reconcile that risk, consider other avenues that can benefit the parents you so want to help, such as advocacy or promotion. Social media now offers amazing opportunities for people to spread a message without investing thousands in stock and storage. Perhaps it’s product reviews, or savvy graphic design to other retailers by someone who shares the passion. There is a massive range of ways to spread the word beyond the retail segment.” Tennille – Apikali
If you’re itching to be an entrepreneur, though, then the next step is…
Planning is the most important stage of starting up a business. Some big things to consider for a cloth nappy shop are:
This is key as it will determine what your business will look like. Research the state of the market, potential customers, your competitors, and if there is a market for what you want to offer. Ask yourself why people would buy from you rather than anyone else. You HAVE to have an answer to this question (and it can’t be to sell nappies cheaper than anyone else by regular discounts and sales – with narrow margins this is a surefire way to an unsustainable business model). Will you be filling a gap, do you have a point of difference, is there demand for a cloth nappy shop in your area? Will you market to the same people all the other businesses do (highly competitive and hard to stand out), or are you going to do something that will attract new customers (less competitive, but requires more ingenuity)?
If you have an idea that seems completely new, double down on the research: if no one else is already doing it, there may be a really good reason why. Speak to someone who’s been in the cloth nappy industry for at least 8-10 years to see if there’s any history that may be relevant. High turnover of business owners and customers in this industry means that it’s easy to be unaware of something that may impact your decision making.
Running a stall at a local market or organising cloth nappy get-togethers in your community can be a great way to test the market in your area before committing further.
“Selling nappies does not have to be as simple as online vs. Bricks and Mortar. Thinking outside the square and considering your goals, demographic, time and money can make for some really interesting ideas.
“For example, you could apply to sell nappies as a representative/consultant, rather than having to keep stock. There is the option of holding “nappy parties”, where you could give some information and a demo, followed by the option to buy, or you could get together with some like-minded locals and create a co-operative shop. The Shop Local Co in Seymour is one example of this, where nappies and other products for families are sold alongside clothes, handmade wares, vintage items, jewellery and even furniture.” Naurelle – Tots and Toddlers
How much money will you need to invest before starting up? Not just the cost of a website and registering a business name, but fixed expenses like insurance or rent. Fitting out a shop can be expensive. You will also need to (initially anyway) pay up front for stock. Many suppliers will have minimum order amounts of at least $200-$500 and some require regular large orders or a total spend per quarter.
Imagine your dream business and try to work out how much money you’d realistically need to start it. Then determine what your business will look like on your actual budget and where it’s important to invest your money.
And at some points you may wonder whether you’ll ever realise your vision:
[See the after pics from Little Green Footprints a bit further down the page!]
It’s not only how much it will cost to start (and maintain) your business, but opportunity cost – including the possibility that you could work less hours, spend more quality time with your children, and earn more money if you picked up a casual job a couple of days a week rather than being business owner.
Be wary about borrowing money or redrawing on your mortgage if that money will need to be paid back in the short term and you don’t have a back up plan. Having savings to fall back on during the start up period is invaluable.
“I was surprised at how long it took to become profitable – for me it was 2 years. I also think it is important to note, that although you work your own hours, it’s not necessarily working less hours. I have to work hard at managing my time working and with family. I love how much I have learned running my own business and think that these skills can take me lots of places in the future too.” Alice – Nappy Lane
How much time are you willing to put into the business? Can the business be a success with the amount of time you can afford to put into it? Building awareness of your business in the early stages (leaving aside the actual day to day jobs of a retail business) can be a hard slog. If you have small children and/or another job you will have to be really smart with the available time you have.
You’ll need to research and establish a really solid marketing strategy. The barriers to entry for an online retail business get smaller all the time. You (and anyone else with the same idea) can get a pretty good website up and running nowadays for very little, especially if you have the skills to do it yourself. But the days of ‘if you build it they will come’ are long gone. How will people find out about your business? And what will make them buy from YOU specifically? You need to know the answers to these questions!
“Well, if I had have known that I would make more money per hour working at McDonald’s as a junior, I may have thought twice about starting a bricks and mortar cloth nappy store… especially being a retail novice and not really sure how to do anything required to set up a web store, let alone a shop front!
“However, over the past 4 years I have learned so much about myself, running a store, sustainability and people in general, I have had the opportunity to work along side some of the most committed and selfless women I have ever met, and I love each of my customers as if they were my very best friend.
“Luckily, I ran another business which allowed me to not have to rely on my store financially for the first few years, otherwise I think it would have been impossible (being a single mum of two with no other financial support). And I may never live like Bill Gates but I am, after 4 years, able to support my small family and all the countless hours are worth it because I love what I do.
“The many, many unforgiving hours trying to implement the right systems, manage staff, source new products… inventory (which alone is a full time job), marketing etc make this not a great choice if you are looking for a job that you can put down at the end of the day. But it’s an awesome challenge and a great choice if you want a change of life and believe whole heartedly in what you are doing. Be prepared to eat, breath and sleep for your business, making your hourly rate look pretty dismal, but personally it has been one of the most rewarding (and also sometimes not so rewarding) experiences of my life and I wouldn’t swap it for anything! The one thing I often struggle with is the work/life balance as I always have one eye on my phone/emails/shop/kids but my goal this year is to learn how to be more organised and make the most of my business without it being at all at my children’s expense.” Elissa – Little Green Footprints
If you aren’t confident in the skills you already have, then a great way to build those skills is by doing a short business course. I recommend everyone who’s thinking about starting their own business invest in at least one professional general business course. You can find business courses on everything from business planning and marketing to financial management and website creation. Your State government Small Business organisation is a great place to start (we have Business Victoria here), but universities, TAFEs and adult education centres are all places to look.
A mentor who has experience in small business and in similar industries can be invaluable in the start up phase if you’re not feeling confident enough to do it all yourself. If you have no experience in running a small business, then someone who can guide you through can help save you time and money instead of trying to work it out yourself.
You can even find help from people who have run successful Australian cloth nappy businesses in the past and now provide guidance and support for other businesses in their new careers. Australian Nappy Association founding member, Salena Knight, is now a retail business strategist who helps retailers create strong and successful businesses, and (another ANA founding member!) Cath Langman is a business coach focused on helping female entrepreneurs with product based businesses. (PS. ANA members – past AND present – are just awesome!)
“Running my own bricks and mortar business (heck, any business) was the last thing on my mind, especially with three children and a partner who was constantly away for long stints at a time with work. Having worked in the business for three years prior gave me a head start. I knew the front of house inside out, I knew the customer base and they knew me, I even knew the ordering and inventory control. What I had no idea about was the behind the scenes stuff. Stock take, supplier relationships, lease management, insurance, fixtures and fittings, stock sourcing, pricing, accounts, payroll, super, taxes, GST, accounting, the list goes on. There was so much more than I ever imagined and the time it took was time away from my family or time away from sleep. While I’m still learning, the sleepless nights are getting less and the learning curve is no longer as steep.” Vashti – Nest Nappies
Yep, this point is the last one, because – to be honest – it’s all the stuff that comes before you pick a business name and build a website that will determine if your business will start off with the best chance of success. Once you’ve done the research, put together a business plan, and decided that opening a cloth nappy shop is the next step for you, then you can start the process of the official start up phase. This will include things like:
- registering for an ABN and your business name
- creating (and maybe trademarking) your logo
- registering your domain name, arranging domain hosting, setting up a website (either DIY or expert)
- setting up a bank account or Paypal account under your business name
- if you’re opening a ‘bricks and mortar’ shop, then finding a premises, negotiating contracts, fitouts etc
- arranging for insurance to cover damage/loss to stock, and public and products liability insurance
- deciding how to managing your financial records
- locating professionals you can outsource to – like a graphic designer, bookkeeper or accountant, website designer etc
- contacting potential suppliers (if you haven’t already) to discuss stocking their products in your shop (see this article for some tips on deciding what to stock)
- set up social media accounts
- creating a marketing strategy and calendar
- and a host of other things including joining the Australian Nappy Association!
Owning a cloth nappy shop is incredibly rewarding, mainly because you’re selling a product you love and would be promoting even if you weren’t getting paid for it. It can be hard work, especially if you have small children (though the value of having test subjects for your products and photos is huge!). It’s not a goldmine. The number of people who are in this business for more than a few years is not high. But your suppliers are usually parents just like you who started out at their kitchen table. They can become friends and a support network too. You deal with a product that makes a difference for so many families, both environmentally and financially. You make a difference. And that counts for a lot.
If you do decide to take the plunge and start up a shop (or some other way of sharing the cloth nappy love), let us know! We wish you all the very best.