A SCRIPT WORTHY OF THE DEN
I WATCH DRAGONS’ DEN RELIGIOUSLY AND KNEW THERE WAS NO WAY I COULD COMPETE WITH THE LARGE BATH AND BEAUTY BRANDS HEAD ON, SO I WOULD HAVE TO BE CLEVER. — LESLIE SCOTT, FOUNDER, WALTON WOOD FARM WOMEN SMELL PRETTY/MEN DON’T STINK PEOPLE WANT TO START BIG, THEY DON’T WANT TO HUSTLE.
Each week, Financial Post contributor Mary Teresa Bitti revisits CBC’s previous week’s episode of Dragons’ Den. She captures what the cameras didn’t and in the process provides a case study for readers, zeroing in on what pitchers and dragons were thinking and what the challenges for the deal are going forward.
The pitch On the Shop the Den episode Leslie Scott pitched her lines of Women Smell Pretty/ Men Don’ t Stink bath products as a means to save barns and revitalize farming.
Leslie and her husband Peter Scott are passionate about preserving Ontario’s rural landscape — specifically, saving barns while providing much needed, nonagricultural revenue streams to family farms.
Walton Wood Farm, a former dairy farm in Bailieboro, Ont., between Port Hope and Peterborough, sits on nearly 60 hectares and has buildings from the 1850s. Nostalgic about getting back on a farm, Leslie, who grew up on a cherry farm, and Peter, a retired farmer, purchased the property, which had not been properly farmed in about 20 years and was in disrepair.
“We are stewards of the land. The actual farming will only pay the maintenance and the taxes. There’s no business case to be made for saving these barns, which cost hundreds of thousands of dollars to repair,” Leslie Scott said. “If we can figure out a way to save the barns and convert them into modern day uses, like yoga studios, or antique shops, we’ll be doing two things: helping reinvent the family farm and saving barns so everyone can enjoy them.”
Scott took her inspiration from the one-time dairy farm — coming up with the idea of putting bath salts in a vintage milk bottle. She bought books on personal care recipes and aromatherapy and started testing blends. “I watch Dragons’ Den religiously and knew there was no way I could compete with the large bath and beauty brands head on, so I would have to be clever.”
She put her years of screenwriting to create pack- aging that would get people laughing — Week from Hell; Me Time, Party in the Bath; Winter’s a B* tch. “I thought about my own difficult childhood and teen years, terrible marriage, career issues; the only thing that saved me was … locking myself in the bathroom and taking a bath,” Scott said.
The products are sustainable and made responsibly with high quality ingredients. The distribution plan was simple: Scott made the products all week and on Tuesdays drove across Ontario, selling gift store to gift store. Within a month she had a gourmet food/gift distributor out of North Bay who helped put the growing line of products — 40 when she appeared on the Den and now 65 — in stores across Canada.
In 2015, at the end of her first calendar year, sales were $ 318,000 and the women and men’s products were in 250 stores across Canada and 250 across all 50 U. S. states. When she entered the Den, sales for the previous 90 days totalled $ 268,000 and Scott was on track to do $ 1.2 million for the year.
The deal Scott asked for $ 50,000 in exchange for a 5 per cent equity stake, valuing the company at $ 1 million. Offers came from Joe Mimran, Mike Wekerle and Manjit Minhas, who’s deal of $150,000 for 12 per cent of the company, Scott accepted.
“She ( Minhas) will help us create efficiencies and she has the resources we need to develop a new product that I can’t speak about yet,” Scott said, noting the deal is set to close.
With Walton Wood Farm bath products now in 750 stores, Scott is working with a Business Development Bank of Canada coach on a fiveyear growth strategy to that will see the company hit $25 million in sales. “There are about 60,000 gift stores in North America. There is a lot of room for growth,” she said.
She’s also in talks with a distributor of grooming products in South Africa and the Middle East, who found the company on Instagram. “The fact that our products are alcohol free is a key selling point in the Middle East. We are putting together purchase orders right now,” Scott said. She is also creating a crowd- funding campaign: Save the barn, shop the farm, to help deliver on the company’s driving mission and vision. A dragon’s point of view The business and the new product are “right up my alley in terms of distribution and packaging. I’m excited,” Minhas said. And her excitement starts with the entrepreneur: “She is captivating, likable, smart and what she’s doing is working. She seems to have thought of everything and has built an amazing business from nothing. And she wants to help others.”
Minhas also likes that she targeted gift stores rather than going after large retailers. “When we started, we went after rural areas because they were easier to penetrate. She’s done the same thing. Most people want to start big, they don’t want to hustle.” An expert opinion John Cho, partner at KPMG Enterprise, is impressed with the growth achieved to date but points out that getting products in stores is one thing; keeping them there is another.
“It’s a highly competitive market segment. Her decision not to go head to head with the big brands and instead go after the gift store network is a good one. How she manages the cash conversion cycle as she grows that network and the number of SKUs is critical. She will have to have a handle on what’s moving and what’s not and be able to replenish fast moving products quickly.
“Distributors are great getting products into stores but they can be challenging when it comes to payment because they get paid directly from the retailers and if products aren’t selling that can be a problem. She should make sure she has the right terms agreed upon upfront with the distributors.”