Miami mom Karen Rappaport had been on the go, trying to juggle wiping her baby's bottom and searching for a diaper when she came up with an idea -- create a diaper bag with a wipe holder built in.
Within months, she and mom friend Denise Goldman quickly discovered the road from idea to thriving business is paved with challenges.
"We thought that manufacturers would be happy to get our business,'' Rappaport said. Instead, the moms discovered their small order drew little interest. "It was difficult to get a manufacturer that would give us the time of day.''
Today, the two women have changed manufacturers several times. Yet, their business, My Royal Heinie, is expanding and their diaper bags are in more than 70 stores. They are among the increasing number of parent entrepreneurs whose children inspired their business -- moms and dads who have found voids in the marketplace and navigated the challenges to become successful in business.
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"There is a great opportunity today with the downturn in the economy,'' says Tamara Monosoff, founder of Mom Inventors, a website and handbook. "Entrepreneurship is the key. People have to dive into themselves, pull out their creativity, and think about ways to make money you normally wouldn't think of.''
Though the challenges for these parents mirror those of other start-ups, what sets these entrepreneurs apart is their motivations and target audience. They form businesses from their homes to gain more control over their schedules. They hang around their focus group all the time: That is, they are parents and know what other parents need. They're also around kids and know what kids need.
Most parent entrepreneurs say trade shows such as the ABC Kids Expo are an important venue to promote their products. Rappaport's My Royal Heinie debuted its original diaper bag at the Expo in fall 2006, catching the eye of a variety of merchandisers. But continued demand comes from marketing products on mom blogs and parenting websites.
The Center for Women's Business Research estimates more than 6 million moms have started businesses that invent or sell kid-oriented products, services and entertainment concepts. Many are making serious money, with annual sales in the $100,000 range and some in the millions.
Monosoff, author of Secrets of Millionaire Moms, advises parents to understand what type of business they want to build and their goals. "Is it a side business or a full-time job? Do you want to be a millionaire or just earn a little extra income?'' After that, write a plan to support your goals.
People with a parenting-inspired product nowadays have a choice: They can manufacture or market it on their own, or they can go the licensing route, selling the idea to another company that will make it and market it.
Rappaport and partner Goldman handle their own distribution and marketing for My Royal Heinie. Rappaport calls it more than a full-time job. "It's everything. It's my life and my kids' lives, too.'' She fills orders for the diaper bags from her home, makes conference calls from her car and does market research on the playground. Juggling parenthood and entrepreneurship means late nights. "It's not unordinary for me to run to after-school activities and then be up until 1 or 2 in the morning.''
When forming my Royal Heinie, Rappaport and Goldman projected they would break even in 2008. Rappaport says they are on target to reach that goal.
Like Rappaport, Eva Wingerhad a great idea for a product aimed at parents: a way to adjust waistbands in kids' clothing without sewing. Instead of forming a business to make the product herself, Winger created a prototype and then licensed her Cinch-Eaze Waistbands to an agent who took over getting the product to market. She gets a small portion of proceeds (3 percent to 5 percent). She says licensing was the right choice for her: "To bring a product to market takes a lot of money. I wanted to put that money into my kids' college savings.''
SAVINGS AND CREDIT
Parent-entrepreneurs, particularly moms, still tend to rely on savings accounts, credit cards and borrowing from friends and family for start-up expenses. Ana Furnissdug deep into her pockets and her family members', too, to start Kreativa for Kids, a children's furniture and room decor store in Miami's Bird Road Arts District. Inspired by her search to decorate her teenagers' bedrooms, Furniss refinanced her home for the seed money.
Five years later, Furniss says she has poured all profits back into the business. But now, she's established enough of a track record to secure a bank loan for a second location in Coral Gables. "I didn't listen to the people who told me I was crazy,'' Furniss said. "I believed in what I was doing.''
Barbara Boxer, an investor in several women-owned business, says it is key for entrepreneurs to create a business plan. "A good business plan has eight to 10 pages with the executive summary,'' she says. "You can be successful but you are limiting your success without the discipline of having done a business plan.''
Even with a plan, one of the biggest challenges for parent entrepreneurs is growth. Lorena Cedeno hatched her business plan when looking for unique baby clothes for her sons, now 6 and 1. She came up with the idea to become an Internet retailer of specialty kids' products such as an environment-friendly diaper and trendy wipe holders. "My concept is to give moms a more fashionable alternative to everyday baby stuff,'' she said.
A year ago, with a small business loan, she launched Benini Bug.com. Within months, she found customers asking for items in various sizes and colors. "It became harder and harder to stock everything. I was growing out of my home.''
Earlier this month, she opened a retail store on Sunset Drive in South Miami to complement the website, this time using her own funds. Like most parent entrepreneurs, she plans initially to put all profits back into the business. "The challenge now is going to be time management.'' says Cedeno, who is about to give birth to her third child. "I hope to be able to hire somebody.''
Small businesses like Benini Bug are a bright spot in the economy, according to a new study of more than 1,100 small businesses by Hiscox USA. While big companies are reducing workforce, seven out of 10 small business owners said they plan to expand or take on new staff this year. Brian Thornton, a vice president at Hiscox USA, says 50 percent of thriving small businesses are started from homes in the suburbs. He says 69 percent of these small-business owners prefer to invest money back rather than take profits out.
But while they are pouring their profits into expansion, one of the big mistakes parent entrepreneurs make is trying to be too big, too fast, experts say. For some, getting a product on the shelves of a national retailer such as Wal-Mart seems like a major coup. But Wal-Mart advises starting small and creating demand.
Wal-Mart's Theresa Barrera, vice president of supplier diversity, says her company likes to find new suppliers with innovative items. "But we want to be cautious for them and ourselves'' she said.
Barrera suggests entrepreneurs attract the attention of one local Wal-Mart store manager. If the product sells well, the supplier can slowly introduce it into more stores -- first locally, then regionally, then on the division level, then nationally. "We work with suppliers to help them understand what they are getting into. We want to prevent them from overcommiting to how much they can supply.''
The entrepreneurial moms behind Baby Abuelita are considered a Wal-Mart success story. On a school field trip, Carol Fensterand Hilda Argilagos-Jimenez came up with the idea for grandparent dolls that sing Spanish lullabies. The company won second place in the Miami Herald Business Plan Challenge in 2005 and was featured at Cuba Nostalgia in Miami.
The women started the company from their dining rooms with a two-doll product line. They initially introduced their dolls in four Wal-Mart stores in Miami-Dade. Today the dolls are a family of four on the shelves of about 950 Wal-Mart stores and about 2,000 additional retail stores, including Kmart, Target and Toys R Us.
Fenster says their success came from a deep understanding of their target market -- Hispanics. She credits a mentor, who eventually became their distributor/investor, for suggesting the company's best business move: getting certified as a majority-owned women company. The certification helped Baby Abuelita to do business with the big retailers.
Along the way, one of their initial mom partners asked to be bought out. Now, Baby Abuelita has a new capital infusion from JDM, a Miami investment and advisory firm. The investment allows the business to expand further with new products, such as books, DVDs and plush slippers that hit Wal-Mart stores in the fourth quarter.
Fenster says the company has grown the old-fashioned way: by demonstrating a demand for the product in one market at a time. "It's easy to bite off more than you can chew,'' she says.
Facilitating business success for parent entrepreneurs is an increased level of communication that has helped to create demand. Whether they're networking on the Internet or meeting in the park for play group, parents are exchanging ideas and information as they seek services and products.
Even more, parent entrepreneurs have formed organizations and websites to share resources and tips. Rappaport says she often seek out other mom entrepreneurs for joint business opportunities: "I know that they are in a similar mind-set,'' she says. "They have the same work style and ethic and most are successful.''