Futon Store Owner Buys Her Own Cotton Factory and Improves Bottom Line
“You have to absolutely love what you’re doing,” says entrepreneur Terri Treat. The owner of Cotton Cloud Futons in Portland, Ore., is so passionate about her business, she bought the Seattle factory that made the batting for its mattresses, futons, and other goods. Now Treat is a manufacturer as well as a retailer.
“I’ve always made everything I sell in my store, and I was the only customer they had left,” Treat says, explaining that the factory’s going-out-of-business sale in 2010 prompted her purchase. “So I bought them. I bought all their machinery.” Natural Felt Co. was born.
“I was not forced into it,” asserts Treat, who launched her first company, Cotton Cloud in 1981, when she was just 18 years old. “I could have chosen to get my materials from Texas or Vancouver, B.C. There were a few suppliers in the U.S., but none of them specialized in organic [cotton], and I was really particular about the organic materials that I used.
“[Now] I take the batting that I make, which is organic cotton, conventional cotton, wool, and recycled pop bottles, and I make it into natural mattresses, latex mattresses, natural futons, wool comforters, toppers, and pillows,” she says.
Fundraising in the Face of Recession
Buying the factory wasn’t an easy financial move. “I bought that business when the U.S. was in a big recession,” Treat notes. “At the time, the banks weren’t doing any loans.”
“I bought three businesses and they were kind of a fire sale,” Treat says of the cotton batting mill, recycled soda bottle fabric label, and futon tufting machinery businesses she combined to turn into Natural Felt. She financed the purchases by investing over $20,000 she had saved for retirement and reaching out to her network for loans of $5,000 to $10,000. “I did my own private Kickstarter. The last four years, banks have not been loaning money. I paid 10 percent interest because I would rather give the money to my friends.” Treat says she just paid off the last $10,000 loan.
“All the equipment in the business was in Seattle,” she recalls. For the first two and a half years, she commuted from Portland to Seattle every week. When the factory lost its lease in Seattle, she moved the whole operation to Portland, where she leased a larger space not far from her store and her home.
Owning the factory has actually been good for her bottom line. “If I had to outsource my cotton batting and pay shipping — shipping has really gone up — Cotton Cloud would have gone out of business.” Treat says. “Cotton Cloud, my retail store, made a lot more profit, which offset the startup of Natural Felt, which is now up on its feet.”
The reduction in her cost of materials also allowed her to keep retail prices steady at a time when the recession was taking a bite out of her customers’ wallets, she says.
Rapidly Growing the Business
“I absolutely think [buying the mill] was a great decision to make,” she says. “Four years later, the biggest ramification is I’ve been having so many growing pains because our business has quadrupled.”
In addition to selling mattresses and futons through her retail store, now that she owns the factory, she wholesales both finished goods and cotton batting. Her batting is used in everything from furniture upholstery to cat toys.
“We private label, and we sell on Overstock and Amazon. We sell in lots of mom-and-pop shops all over the U.S.,” Treat says. The factory, which started out with just two workers (three if you include Treat), now employs 20 people.
“My advice for new entrepreneurs is to really see if you have a market that would buy the product,” she says. “Then I would just get to work.”
Laura McCamy is a freelance writer based in Oakland, California. She writes about small business, real estate, and development. An avid urban bike rider, she also loves to cover bicycling, urban planning, and the intersection of bicycles and business. Follow her on Twitter @lmcwords.