“Don’t just sit around imagining things…get in there and see for yourself!” – with serial mompreneur Banu Khurana, 3 Sprouts
And so…we’ve reached the final interview in our current business planning interview series. It’s been a fascinating series filled with amazing insights on entrepreneurship from really talented and successful entrepreneurs; if you missed any of the interviews, check them out here. The next series of interviews will start in a few weeks, so check back regularly. Or better yet, subscribe to our RSS feed or email updates.
In Part Six of Fireside Chats with Fiery Entrepreneurs™, we welcome Banu Khurana, serial entrepreneur and owner of Toronto-based 3 Sprouts, a highly differentiated children’s accessories design and wholesale company with eco-friendly product lines that include hooded towels, canvas storage bins, placemats and art smocks. While Banu was an MBA student at the Joseph L. Rotman School of Management at the University of Toronto in 2001, she was also building the foundation of Khurana Inc., a luxury lingerie label she co-founded in 1998. After this successful stint in the fashion business that included clients such as Bergdorf Goodman and Holt Renfrew, Banu co-founded 3 Sprouts in 2007. Read on for Banu’s insightful thoughts on business planning, along with her story about how 3 Sprouts tackled some serious challenges during the ongoing recession.
Faheem Moosa: Banu, thanks for taking the time to join us for the ‘Fireside Chats…’ interview series. In your opinion, what are the best ways an entrepreneur can research and understand his or her market?
Banu Khurana: One of the ways that has really worked for us is attending trade fairs. You get to see a lot of brands all in one place, so you can get a sense of what the marketplace looks like, who the big players are and perhaps maybe where some openings exist. We visited trade fairs before we entered the market in order to learn about the market. Now since we’re in the market, we exhibit regularly at them. They’re great opportunities to learn more about what’s new in the industry when all of the players get together every few months.
We attend two specific types of trade fairs – trade fairs that are specific to kids’ products, or gift shows which are more general where you have vendors who sell all kinds of gift products, whether they be kids or pet products, home accessories, stationary – all kinds of stuff that you would find in specialty stores. One that’s very good is the New York International Gift fair, a very big trade fair for our industry. We attend another one in New York called the Children’s Club Show. It’s a bit narrower in focus, but still if you have a baby or children’s store you’ll be going there at some point during the year.
FM: When there are several growth opportunities ahead of you, what criteria do you use to analyze those opportunities and place your bets?
BK: For us, the opportunities mostly pertain to new product introductions. When we’re thinking of introducing a new product, we look at whether or not anyone else is dealing in the product category. How big are these players, how much can the product expand our business? The other growth for us includes increasing the number of distribution outlets we can reach. And the most successful route to that in the U.S has been through trade shows. In Canada, it’s through sales representatives. So then it’s a matter of choosing the right show or the right sales rep. And sometimes that takes time because you don’t know until you do it or work with them. Sometimes it’s not a matter of sitting here and imagining things. You kind of have to get in there and see for yourself what works and what doesn’t. There are several shows that are advertised very well but there really is no traffic coming through them. So there’s no possibility of increasing the number of outlets you sell to through those shows. You get better with it through experience, not just because you have an extra sense for it, but because you’ve just done it, so you know it’s not worthwhile.
FM: Do you think it important for young, entrepreneurial companies to have a well-defined competitive position, target market and value proposition? Why?
BK: Yes. Well-defined, but flexible too because as you go along, things can change. But it definitely helps to define your strategy in the beginning because it keeps you focused. Our idea for our line is that we always wanted to make children’s products that were eco-friendly, whether we use organic cotton or eco-friendly plastics, non-toxic, etc – that’s how we are positioned in the market. We’ve always wanted to provide a green product but at a good price. That being our value proposition since so many green products tend to be so much more expensive than non-eco products. That’s something that stayed with us from the beginning. But once in a while you have to alter some other things, – target market for example – because we were too narrow initially. You can have a well-defined target market but you don’t want to get rigid with it, because the marketplace can change very quickly too. For example, initially we were looking at just parents as our target market. We figured that we were actually very good at packaging our product with the extras that come with it (how they looked), so there was actually a gift customer you could go after – a customer that’s not necessarily a parent but a grandparent, aunt, uncle, etc. who is looking to buy a gift for a baby. So we expanded our target in that sense, in the way we packaged it. Initially we were very parent-focused and included a lot of like practical and safety information in the packaging. Turned out we weren’t really great at that sort of thing. We had it covered but it wasn’t our strength. Our strength lay more in making the product look pretty and keeping it simple. That way we could expand who could buy it – a parent and so could a gift-giver.
FM: What is your philosophy with regard to raising awareness about your company? How do you recommend entrepreneurs approach and plan this task?
BK: We had a lingerie line in the past where we were really all about using free press to raise awareness about that brand. We had a PR strategy that helped us get into the fashion magazines, celebrity magazines, etc. The same applies to children’s products too. However, we have less opportunities now, especially with print magazines because there aren’t that many specific to children. So, our focus has shifted to using blogs to raise awareness. Lots of mothers are tuning in to see what certain blogs are saying about certain parents, and that has really helped us raise our brand’s awareness. There’s a blog called Celebrity Baby blog in which they have new pictures every day of various celebrities and their children and what they wear and what they like – they do product reviews. So when we had a product review on that blog it was very good for us, we got a lot of interest from retailers and customers alike. In the children’s category, it definitely helps being connected to the blogs and somehow get traffic to your website. Because in this category, people can go to your website if they’re a retailer, see it and feel comfortable ordering – they don’t even have to see your product at a trade show. In women’s wear it’s different because there’s sizing issues, price is so much more so no one really does that – they don’t place wholesale orders based just on browsing your website.
One thing that we haven’t gotten into yet is social networking – we’re probably the last dinosaur to not do it. Personally, I’m not really convinced yet – and that could be some famous last words – but I wish someone could explain it to me. You hear people say that your customers are on social networking sites and so should you, but I’m not necessarily sure that my customers would want to hear me tweet about some nonsensical 140 character messages, which is what I often find a lot of brands do. We’ll have to wait and see on that – that’s something that we’re looking into.
FM: What are the key success factors for running and growing a profitable children’s accessories design and wholesale company?
BK: In our business, a key factor for success is good inventory management. We design our lines, but most of our stuff is made in China or India. When you order goods, you don’t actually receive it for 120 days, so you have to be good at forecasting, which is one of the most difficult things. Traditionally, buyers would see you at a trade show in the Fall where there would place orders for the Spring. It’s no longer like that. You need to have stock all of the time and replenish their stores. And they want to take it as low as possible and pass on the risk to you. You warehouse all of the inventory and supply them on an as-needed basis. That’s why you have to be good at managing that inventory. You don’t want to have too much because you’ve paid for it up-front, because then you have cash flow issues, and you don’t want to have too little because then you miss out on sales. The most difficult thing for us is that we’re growing and sometimes it’s hard to predict how fast you’ll grow, in this economy especially. Things pick up and then they slow down again and pick up again. There’s a lot of adjusting and we’re new and don’t have a history to work off of. So, there’s a lot of guesswork involved. We try and do that in a way that is seamless to our customers. That’s a really tough challenge.
FM: What do you feel is an entrepreneur’s biggest challenge when it comes to implementing a strategic plan / business plan? How can entrepreneurs be successful at implementation?
BK: When you have a business plan, you have an idea that you will do certain specific things and hopefully the outcome will be this or that. The most difficult thing sometimes can be that conditions keep changing. We started in 2007 and in a way the market started to go south. The ideas we had in 2007 didn’t seem so relevant anymore in 2008 when the economy contracted. I think that’s our biggest challenge. When you formulate a plan, things can change drastically and you have to capture that. Initially when we started our focus had been to sell to the United States, so we had committed ourselves to do a lot of trade shows there. We pursued this strategy, but started noticing in the Fall of 2008 that traffic was really low. It was a huge difference from what was happening 6 months before that. We really had to try and pick up our Canadian business, since we noticed that it was still maintaining itself. So we tried to find sales reps that could service Canada because there aren’t many trade shows in Canada, believe it or not. It turns out now that our Canadian business is doing well (we do an equal amount of business in US and Canada now) and that’s really helped us when the US economy went south. We hadn’t anticipated going after Canadian business – that was short-sighted on our part. It was based on what we used to do in our last business – lingerie – where 90% of our business was US-based, so we didn’t realize there was a big chunk to be had in Canada. My point is that things change, so you need to constantly review and revise your business plan – that’s the key to implementation.
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