The Soap Business - Running the Numbers

So this is the post that I really wanted to do for last Saturday, but I hope you enjoyed the back story.

A Great Opportunity

While we were preparing to make lots of soap, we went by Scentsations, a local store that has tons of things that smell good. As we were smelling all the fragrance blends they had on hand, the owners heard we were making our own soap and wanted to know more about it. Turns out, their soaps are very expensive French bars that are a real pain to import. Over the course of discussion they said it would be great to have a local company supplying them since their clientèle are the type to go gaga over locally made artisan souvenirs.

That got our entrepreneurial minds rolling! Surely there's enough profit margin to make a fabulous living off of mixing hazardous chemicals in your own kitchen.

Preliminary Research

Our first stop was an Etsy search for handmade soaps. This told us that a bar of soap is, on average:

• $5.50 on the retail market
• 150 grams

From searching various soap making hobby sites, a very popular recipe is composed of:

• 40% olive oil
• 40% coconut oil
• 20% palm oil

We used mostly lard in our recipe, but the artisan soaps tend to shy away from animal fats because labeling their product as "vegan" is a nice buzz-word that helps establish why you're paying an extra quarter for your morning shower.

Run the Numbers

Once we had a bar size and a recipe we could reverse-engineer how much of each kind of oil is used in a bar, and therefore the cost of raw materials. After shopping around industrial suppliers online, we found that we could average $0.74 per bar. Selling them wholesale to Scentsations or another retailer, the bar would go for $2.63.

$2.63 (wholesale) - $0.74 (materials) = $1.88 per bar

We set an income goal of $1,000 per month, which is a nice cushion in the budget if it's coming from a hobby business. In order to reach that goal, it would take 531 bars of soap every month. Each batch we made would yield 30 bars,so even pumping out a batch of soap every other day, we'd still be making less than our goal!

But you forgot...

Remember that this is still looking at just the cost of materials. To do a real analysis you would also include:

• labor
• warehousing space
• equipment
• energy costs
• labor
• packaging
• office overhead (phone, envelopes, computer time)
• shrinkage (bad batch of soap, loss, theft by your own bathrooms)
• advertising
• labor
• etc.

Now do you see why hand-crafted soap is most often sold at farmers markets? The profit per bar jumps up to $4.51 and the bars sold per month drops to 222.

It's still an unholy amount of soap for one person to sell in a month.

Disclaimer

These numbers are very much the "arm-chair quarterback" estimates coming from wild guesses. I'd love to hear from somebody who's actually in the soap making business to confirm or deny.

The Soap Business - Story

How it came about

For this past Christmas, we wanted to do a home-made gift that was small, not too expensive, and had a nice personal touch. It was decided that it was time to break out the old soap-making supplies and make a whole bunch of soap!

A bit of background... my parents have a friend who makes soap, and she taught my dad a few tricks back in 1999 or so. The first time my dad and I made soap together was on a construction trip in a motel room. Between the jars of crystal lye, the giant pots and beakers and such, the gallons of oil, and the horrific smells coming out of the room I have to look back in shock that we didn't get kicked out for making a meth lab!

We made a half dozen batches or so, but never really got our technique perfected. There were lots of books, but everything we read was geared toward the super high-end artisan soaps with oils, butters, botanicals, and everything to make your skin feel like it's being prepped to be deep-fried for a side dish in a six-course meal. Our simplified recipes worked just fine, thank you very much! The final recipe settled somewhere around 50% olive oil, 30% coconut oil, and 20% palm oil.

New age, new tools!

Fast-forward a decade, and the amount of information available to the experimental soap maker is nearly overwhelming! Where before we had to debate when we were at trace, now you just go to YouTube and watch endless examples. How awesome is that?! We fired up the equipment and tried the old recipe and... it was soap! But it didn't have the right texture. The lather was alright, but not really comparable to a commercial bar. It was soft, too, feeling mushy in the hand.

So, it was time to find a new recipe.... We found a lye calculator that had a lot of great tips on what qualities the various oils impart to the finished product. After playing with the numbers for a few hours, I came up with what I thought was a good balance. Firing up the equipment again, the water in the recipe was replaced with goat milk to give it a nice (and inexpensive) scent. The benefit of hot-process soap making is that you can cut and use the bars within a day, so we were able to test it out almost immediately. The end result was a nice bar with a smooth and bubbly lather. Success!

Getting it out the door

In the end we made up four kinds of soap: goat milk, fig leaf and Italian bergamot, lemon verbena and acai berry, and "invigorating mint blend". We used cardboard boxes and tubes lined with freezer paper as molds, and I built a jig to help us cut the bars evenly.

My wife made bath salts, and her sister made salve and lip balm. Together they cut out and decorated name tags for all the items. There was a big night of putting together the packages with my wife and her mother, and then we split up the prizes between all the sisters who contributed to the project. Christmas presents were ready just in time!

p.s.

On a personal note... I do realize the delicious irony of having this blog post be two days late; right after I posted about my commitment to following a routine for my posts! Drat, I broke the chain! Part of the trouble was collating information about model-driven development for some upcoming posts. This post was a backup plan, but it grew into (hopefully only) two. I'll finish the story tomorrow with the business numbers that I'd originally planned for this one.

Apologies for the purely factual, very dry tone of the post. I'm not very good at weaving a story, and that's part of what this blogging exercise is all about!

Don't break the chain!

As I was preparing to commit myself to regular blogging, I looked for different ways to help me stay on target so that I wouldn't run out of steam once things got hard. The best thing so far has been to make a recurring task in Outlook, since my personal organization goal is to use the task list regularly.

There are lots of goals that people have that have to be done every day. Personal development goals like prayer or meditation, diets, quitting smoking.... They each have to be done every day. In my reading I discovered Jerry Seinfeld's productivity system!

He said the way to be a better comic was to create better jokes and the way to create better jokes was to write every day. But his advice was better than that. He had a gem of a leverage technique he used on himself and you can use it to motivate yourself—even when you don't feel like it.

He revealed a unique calendar system he uses to pressure himself to write. Here's how it works.

He told me to get a big wall calendar that has a whole year on one page and hang it on a prominent wall. The next step was to get a big red magic marker.

He said for each day that I do my task of writing, I get to put a big red X over that day. "After a few days you'll have a chain. Just keep at it and the chain will grow longer every day. You'll like seeing that chain, especially when you get a few weeks under your belt. Your only job next is to not break the chain."

So there you go! Don't break the chain.

Don't break the chain.

But what happens if your goal isn't a daily activity? My goal for blogging is Tuesday, Thursday, and Saturday. You'll end up with a series of lines on your calendar, and I've been a bit annoyed at how that would look.

Until I found this!

At first I just thought it was a cool calendar, but then I realized I could use this as my "Jerry Seinfeld Wall Calendar" to keep track of when I've done my tasks. Instead of boring old stripes running down a page, picture filling in a series of concentric circles! If you miss a day, it'll show up as a hole in one of the rings and you'll be extra motivated to make sure you get the next target dates so that you can keep those rings perfect.

It would be cool to have multi-colored markings for different tasks, but that would probably get unwieldy to update. Nope, just do a separate one of these for each non-daily task you're keeping track of.

Greeting Cards and Business Models

My wife and her mother run a greeting card company called Any Horrible Occasion. It's a great line that has divorce cards, cancer cards, lawsuit cards, and cards for any occasion. Check them out sometime, they're hilariously funny!

It all started when they were running a company for LDS-themed greeting cards, that then got buried under when a large corporate entity took over the market with some pretty shady business practices. Yeah... no bitterness here! Since my mother-in-law is a twice-divorced single mother of 6, she's had some ideas over the years for real-life cards that make people laugh at the situation. She'd talked with various artists to brainstorm it, looked at all kinds of photography, and somehow settled in on the idea of fine art gone bad.

My mother-in-law has found a great niche. There are lots of cards that look at situations in life in a mean-spirited tone, or that resort to easy punchlines that are crass or rude. Any Horrible Occasion cards talk honestly about the difficult situations in life while retaining the receiver's dignity.

It's been a great little line of cards! Everybody that sees them has an emotional reaction-- either they love them, or they hate them. Apparently that kind of reaction is a very good thing! It's okay to offend some people because you need to break out of the Zone of Mediocrity that comes from trying to please everyone.

That brings me back to market niches. In the religious market especially, you're never going to please everyone. While you may be wildly popular among your target denomination, everyone else is going to call blasphemy on you. Run the numbers for a minute. In the US, the LDS faith takes about 1.9% of the population. That means you're almost completely guaranteed to never sell to 98.1% of the market!! Who in their right mind would try to sell a product that 98% of the population would never buy?!

Any Horrible Occasion targets a broader niche. I can't really back that up, actually, since its sales numbers have never been what Twin Peaks was, but we think the target audience is broader. At the National Stationery Show in New York, Any Horrible Occasion has won 2 LOUIE awards in two years. Since the award is based on sendability, quality, price, etc., I have to assume that there's some segment in the broader world that appreciates AHO's unique brand of humor.

Whatever the niche is, it's the reaction that people have that's been most important. We've been called everything from genius to prostitution of fine art, but it's incredibly rare to find someone who just says, "Meh." It's this visceral reaction to the product that's going to drive sales. People who love it are passionately showing (and sending) cards to their friends.

People who hate it are also passionately showing cards around. Ever notice how when you're at a restaurant and somebody gets bad food, the first thing they do is say, "Oh my gosh, this is SO NASTY!! Here... try it!" That's the kicker. Even if they hate the product, they're advertising it for free!

Turning that passion into sales is easy enough once people see the cards. For the moment we need to work on getting them out to be seen.

ORM v. O/RM

When I was doing my undergrad in computer science, I spent a lot of time with Terry Halpin doing Object Role Modeling. We refer to it as ORM (think the "ohmmm" mantra, with an "r" thrown in!), though in industry the acronym usually refers to Object Relational Mapping. Whenever I think of Object Relational Mapping, or O/RM, in my head it's "The Dark ORM", just like The Dark Side of The Force.

In true ORM, you're taking a conceptual model of your business, or "domain", and using that model to help drive development. It's a very top-down approach to software development. This is great for when you're talking with business owners, trying to figure out how to build a system to support their needs.

In The Dark ORM (O/RM), whichever relational mapping system you choose (and there are many for general use, Java, or .NET) will look at the existing database and try to generate objects from the tables and fields. There are some very legitimate criticisms of O/RM out there, some even calling it the Vietnam of Computer Science (summarized here). This bottom-up approach is very popular among programmers because it lets them start building the system immediately. Once they have the data structure in place, they're able to generate large amounts of code; and, let's face it, that gives people very warm fuzzy feelings!

One of my side projects has been a local modeling agency, and currently I'm migrating some VERY ancient code that I wrote to a new system. In the next few posts I'll detail some of the procedures I've used to create the new site using both ORM and O/RM together as part of a model-driven development methodology.

What do I think?

Among all the social news sites that I read, I found this gem of a post. To sum it up, he says that the reason people aren't great at writing is because they're not great at thinking. It's tough to come up with an original bit of prose when one's not had an original thought.

Harsh!

But oh, so true.... I've noticed in my day-to-day that while I'm impressively well-read on a variety of topics, I don't have much to contribute to the discussion other than regurgitating anecdotal stories and apocryphal factoids to which I've long-since lost the reference.

One of my goals for the new year is to get myself a bit more organized, and as part of that I've started using the task list in Outlook. For a guy who used to work at Franklin Covey, this is sinking pretty low!

So I just set a recurring task for myself. Every Tuesday, Thursday, and Saturday I'm going to post something to this blog. Something that I've found interesting and can expound on, or maybe something I've done. Maybe something I have a question about. In fact, it may be a good chance to string my thoughts together on a few different things.

The tough part of everything is, of course, doing it. So I'm using my task list this year. I'm writing in the blog. Yep. Just doing it.

Cloning a Virtual Machine

There's a great write-up on how to clone a virtualBox hard drive. It's a bit wordy, but here's the summary:

Unmount the drive you want to clone.

1. Right-click on the machine and go to "Settings"
2. On the left menu, select Hard Disks
3. Under "Attachments", select the drive to clone and click the "-" on the right to detach it from the virtual machine

Next, release the drive from the media manager.

1. File -> Virtual Media Manager
2. Select the drive in the Hard Disks tab
3. Click the "Release" icon at the top

Finally, clone the drive from the command line using the VBoxManager tool.

"c:\Program Files\Sun\Virtual Box\VBoxManager.exe" clonevdi source.vdi destination.vdi

So there ya go. Good times!