March 04, 2013

To Be or Not to Be

To Be or Not to Be

"To be or not to be?" In order to keep a newsletter completely dedicated to candle making worth reading every month, we have gone in many directions. We've compared candle making to producing an Oscar winning movie (Song Christmas Carols), referenced White Castle burgers, and now we're quoting William Shakespeare's play Hamlet, although our reference may not be as dire as his.

All candle makers have different aspirations when they make their first candle. Some enjoy making them for friends, family or just for themselves. Others enjoy making candles to help supplement their income, and then there are those that wish to take candle making to the "next level." The question is always: what is the best way to get there? But the answer is not always the same for everyone. Each individual's situation dictates the answer.

For those that are fortunate to recall the tremendous growth of the candle market from 1995-2002, it seems that any type of candle that was produced found a home with minimal effort. Many candle companies grow with leaps and bounds and many started building a fairly substantial infrastructure to support the organization. In some instances new buildings, new equipment and personnel were added. But then 2001 and 2002 came, and the market started to turn downward. Many people learned very quickly that it's very difficult to reduce any organization and fixed cost in a very short time period. The analogy many will use is that it's like slowing down a boat, and there is not a true break to quickly stop the "fixed" cost side of the business.

If companies or individuals are fortunate enough to see the next growth of the candle industry in the very near future, it is a good time to develop a plan that can not only help support this growth, but also not jeopardize the business if things turn bad quickly. When looking for business, always factor in what size order you would be willing to take.

There are very few things more exciting to a business owner than getting that call from a large potential customer that would double or triple your current business overnight. Who wouldn't want this scenario? While on the surface it seems that anyone serious about their business should do this without question, there are other essential factors to be considered before doing this.

The inclination for many would be to look at their current best price and then discount a little more off that. Usually, the next step is to do whatever else may be necessary to ensure they get the business. This may be the right thing to do in certain circumstances, but in most instances, when an order is such a big departure from your normal business, you need to spend a great deal of time assessing if it is right for you. The same logic/calculation applies even if you are making candles in your kitchen/basement, and sometimes even more factors need to be considered.

While the following will not guarantee success at the end of the transaction, we hope it will help you make an informed decision when you come across these business-changing opportunities:

  • Ask yourself: Is the new account going to require you to purchase more molds, equipment and add personnel? This could require additional funds to be expended and needs to be calculated into the cost of how long or reasonably long they can commit to you. The longer the commitment they can give you, the more you can amortize the new cost. There are very few companies that will guarantee purchases past a fairly short time period, so you should try to get as much of a commitment as they are willing to consider. Be sure to get as clear of an understanding as they can give on the arrangement.

  • If you are a home based business, is the size of the new order going to require you to produce somewhere other than your existing location? If so, be sure to know all of your expenses, including your own time in terms of travel, wear and tear on vehicles and if you have to utilize child care or make other arrangements.

  • What type of payment terms are they asking for? If it is 60 days, then you will need to identify the cost of carrying that type of receivable. Keep in mind that the few vendors giving terms these days rarely are more than 30 days, so whatever you sell them in the additional 30 days has to come from somewhere (it is even a great cost if the large customer wants 90 days). Lines of credit, bank loans and other traditional financing all carry costs, so be sure this is part of the equation. Even if the profit is healthy (which is not always the case if the order is very large) it will still take awhile for the profit to cover the cost of taking on the new receivable. In addition, you are continually going to be building inventory which requires you to outlay additional funds. The inventory number can become deceivingly high with labels, glassware, fragrance, wax and the need for storage.

  • If the order is an ongoing proposition, you need to prepare to receive a notice that they wish to stop purchasing from you. Larger orders will take longer to produce, but your customer will want product in a shorter time period, so you will constantly be building inventory. If they end the arrangement on very short or with no notice, you will be "stuck" with a great deal of inventory.

  • What is the financial strength of the customer to whom you will be selling? The worst outcome for any transaction is when the company you're selling to shuts down, at any point in your transaction process. In today's business environment few companies, if any, can survive a large hit on receivables.

  • If the customer is already purchasing candles, try to find out why they are considering changing suppliers. Getting a good answer on this inquiry is going to be the difficult area to access. The information you are able to secure may help you understand if the situation is right for you. Maybe their current supplier went out of business or is unwilling to make a certain shape design they desire, or perhaps they did not like the quality of the product. A large order is how companies grow rapidly, so it will always be a part of the economy, just be sure it is the right decision for your specific situation.

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CHANDLER'S CORNER

Should I consider making tarts and/or clam shells?

The interest in tarts and clam shells may be at an all time high and it is now becoming a must for any candle company to consider. What is great is that they are easy to make, are a great use for your extra wax and they require no wick because they are used in tart warmers. They can also be used as a way to sample your fragrances. The tart molds have the advantage that if you wanted to make floating candles, the same mold can be used. The clamshell molds are easy to use. Just by merely pouring wax into the clamshell and closing the mold, you have a finished product.

We recommend using the CBL-129 and the M-112 tart mold. Add about 5-7 percent fragrance and pour it around 180°F. Within a couple of hours they should pop right out of the mold. What is nice is that you can actually use this same mold to make floaters.

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March 2013

Featured Project:
Summer Sand Candles

Despite our continued cold spell here in the Northeast, summer will soon be upon us. As you plan your summer vacation, be sure to also plan for those possible rainy day activities. Sand candles have been around for a very long time and can make a memorable gift from your summer vacation. The other thing to consider when making this candle is to use up "scrap wax" you may have recently generated. Since each candle can be of a different design and shape using different color waxes will not effect the finished product.

Materials

Instructions

Fill the tub/bucket up with sand. Add water (you will have to experiment with the amount of water since sand texture varies) and try to pack the sand as tight as possible. The tighter it packs and the less water you use, the more consistent the outside shell of the candle will be.

Once the sand is packed tightly, take the cup or object and form a "cavity" in the sand. Once the cavity is formed, take your wax and pour at around 195-205°F. The wax can already be colored or you can now take color blocks and swirl them on top.

Once the wax gets a film on top, place the wick assembly into the wax. As the wax gets a little harder you may want to add shells and other non-combustible decorations.

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