Sales Strategy Shake-ups
April 13, 2012
By Isabella Mindak
Heather Holbrook never imagined that her cookies and cupcakes would earn six figures in sales.
Heather Holbrook never imagined that her cookies and cupcakes would earn six figures in sales. When it happened, she and her business partner/husband Bruce walked away from it all toward a new way of doing business for years to come.
|Heather Holbrook and her daughter Mckenzie Isobel in the family’s Ottawa bakery. Photo courtesy Isabella Mindak.
Ottawa’s Isobel & Company was born more out of love than profit in in 2004. Holbrook used her baking skills and natural ingredients to create homemade butter cookies for her growing daughter, Mckenzie Isobel, after whom the business is named. In no time, Holbrook’s sales-savvy husband was marketing her hand-decorated, preservative- and nut-free cookies to local mom-and-pop stores in the area. Business swelled.
In those early years, Holbrook worked weekdays at the reputable French Baker in Ottawa while Bruce worked full time as a sales executive for an electronics firm.
“I’d come home from work and we were actually doing everything out of our kitchen in our house,” says Holbrook.
As business grew, they installed a commercial kitchen in their basement and with a bit of trepidation, Holbrook quit her job to give the cookie business her full attention. Eventually her husband followed suit. They rented their first commercial space in Nepean, Ont., and began higher-volume production.
Then Bruce decided to pitch the treats to an upscale store in Ottawa.
“He packed up all of his samples and he went into Holt Renfrew and found the general manager,” says Holbrook.
The store agreed to sell the cookies on consignment and they flew off the shelves. Business owners who frequented Holts also ordered the delectable cookies.
The domino effect continued in 2005. Bruce sold the cookies to Pusateri’s, a reputable fine food chain in Toronto. Then a buyer from U.S.-based Williams-Sonoma visited Pusateri’s and tried the cookies. The spell was cast. He wanted the delicious treats in his stores.
“To me that was the biggest moment in our business because I absolutely adore Williams-Sonoma!” says Holbrook.
At first, Isobel’s cookies were only available online and through the Williams-Sonoma catalogue. But after formidable sales and the development of a positive business relationship with the company, all of that changed.
“Usually you have to put in a couple of years in the catalogue. But we got picked up for retail within a year, which is quite unusual.”
But there were challenges ahead. The exciting business relationships that grew Isobel’s profits when the Canadian dollar was low also choked profits when exchange rates inflated.
“By the time we did the exchange rate at the bank, we were losing 20 per cent,” says Holbrook. This left Isobel’s with no choice but to increase prices or jump ship. Holbrook and her husband jumped. “We attempted to raise our price and get paid in Canadian dollars instead of American, but Williams-Sonoma refused the increase.”
But other lucrative offers were on the horizon. In 2006, a large national wholesale retail store enticed Isobel’s into doing big business – the minimum order was $100,000. Isobel’s had to expand and move into a bigger facility.
Over time, the large retailer’s growing and sometimes expensive mandatory requirements and its desire for static prices resulted in an increasingly uncomfortable relationship.
“They still wanted the cookies but they wouldn’t allow a price increase and yet everything was going up,” says Holbrook.
The national retailer’s enormous orders monopolized Isobel’s production, eliminating smaller retail clients, and forcing Holbrook to rely on one buyer
for an increased percentage of their revenue. Over time, the husband-and-wife team realized this was not where they wanted to go.
“It ended with us not doing business together,” says Bruce. “It just wasn’t working for us.”
“We had to scale it all back to a smaller facility,” adds Holbrook. “We also had to lay off really great staff so that was very hard.”
But during those turbulent times Isobel’s carved out a new business model. The company is planning to stay diversified and deal with other small businesses that share their interest in growing, rather than deal with larger retail outlets.
Although profits have temporarily slumped, Holbrook and her husband are optimistic about the future. Bruce has secured new butter cookie business with local and international entrepreneurs. Their successful cupcake bakery, Isobel’s Cupcakes and Cookies, opened in 2009 and has recently expanded, moving to Ottawa’s trendy Hintonburg area. The husband-and-wife team are hopeful that a national franchise cupcake bakery might be in the cards someday.
Looking back, they both believe their experience with big business has given them a clearer direction.
“We understand what a large-scale business is and we don’t want any part of it. It taught us a lesson,” says Bruce. “We’ve grown as a business.”
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