November 13, 2019 Growing & Complex Businesses en_US Learn how these two women entrepreneurs generate over $7 million in annual sales. https://quickbooks.intuit.com/cas/dam/IMAGE/A4ve6E4iD/MIXED_CHICKS_HERO_0728_R3-min.jpg https://quickbooks.intuit.com/r/growing-complex-businesses/mixed-chicks/ How Mixed Chicks tapped into a niche market and became a global brand
Growing & Complex Businesses

How Mixed Chicks tapped into a niche market and became a global brand

By Loni Klara November 13, 2019
  • Founded in 2004, the hair product company now generates over $7 million in annual sales.
  • Since its inception in 2004 to 2011, its sales grew 100% year-over-year. Then in 2009, actress Halle Berry self-endorsed their product in InStyle magazine, as well as a few other lifestyle publications, bringing them even more business.
  • The company currently has ten full-time employees, five of whom use QuickBooks to run their operations.

If you were a curly-haired woman growing up in the 70s, hair-care was probably a struggle. Walk into any shop selling hair products and you would’ve seen exactly zero suitable options for your hair texture.

That’s how Kim Etheredge and Wendi Levy, the founders of the hair product company Mixed Chicks, came to start their own business. Since they couldn’t find their desired product in the beauty aisle, they had to create one. “Even just embracing your natural curls wasn’t very popular at that time … You had to go to two different aisles to actually create something that could moisturize your curls but not make it crunchy or greasy,” Wendi remembers.

And, as it turned out, so did millions of other women with similar hair types.

When Wendi first came up with a homemade remedy she liked, however, she had no intention of selling it. It was a purely personal effort driven by necessity, a result of years of experimenting with different ingredients and products, some of which were discontinued and had to be replaced. But after meeting Kim, who complimented her on the well-maintained curls in her hair at a barbecue in California, things changed rapidly for good.

The two women ended up bonding over their individual struggles with finding suitable hair products. Wendi shared her own mixture she was currently using but they both knew that they would be on a lifelong journey of experimenting with different mixtures, relying on some of their favorite products for ingredients, unless they came up with their own proper formula at a lab. So within six months, Kim found a space and they worked with a chemist to get the formula just right, looking up various ingredient properties on Google.

Once they created a viable product, it was a matter of loading up their cars with pillow pack samples and handing them out to their friends and family, or people they’d meet on the street. The reaction they got let them know immediately that their product had a lot of potential to be a hit.

The hustle that led to 100% annual growth

Neither Kim nor Wendi had any experience running a business, and for the first four years, they bootstrapped the business out of Wendi’s garage. They would hand out flyers on the street, make trips to the post office to ship product, and even launched a barebones website with the help of Wendi’s husband.

Graduating from the pillow packs to bottles wasn’t easy either. Everywhere they looked, the minimum quantities for ordering bottles were in the tens of thousands when they only needed 1,000. When they finally managed to get them, they realized they had to order the caps separately. And not just any cap. A custom-made cap to fit the bottles they already had in their inventory.

To solve unexpected problems like this, their only recourse was using their communication skills and charm to connect with people over the phone. “Be nice to the first people you come in contact with because you’re going to need them,” Kim advises. “Making friends with the receptionist really helped us go a long way.”

On top of making remote connections, they also attended trade shows to build in-person relationships and boost sales. Wendi explains, “When you start off, the trade show sales matter and you have to do a lot to get your brand out there.” To help speed payment processing, they used the QuickBooks GoPayment feature, which enabled them to process sales on the spot.

With their grit and determination, they reached their first $1000 sales day within six months. In their first year of operations they did about $30,000 in sales. But then something happened that dramatically changed their trajectory. In 2009, actress Halle Berry mentioned their product in her top five must-have beauty products in InStyle Magazine.

“She shouted us out and it really legitimized our company. We had incredible growth,” says Wendi. Along with the growth they were already experiencing from the start as one of the forerunners of the natural hair movement, the endorsement helped to establish them as a leader in their market.

This continued growth and success meant they needed a new strategy to manage their accounting and inventory.

Gathering new business insights with QuickBooks

Just like other aspects of their business, Wendi and Kim started simply when it came to accounting. They were writing invoices on Word––a name, address, quantity, description, and total––and adding the items manually.

“It was sloppy and there was no way for us to get quarterly reports that were accurate. We were basically using deposits as our income,” Wendi explains. This method worked when they only had a couple of products. Currently, they have around 35 different SKUs. “That would be impossible to manage [with Word].”

It was clear they needed another way to manage operations, so they turned to QuickBooks Enterprise. With all their accounts in one system, Mixed Chicks have the ability to look at each individual account’s history, financial reports, and overall finances.

Then, this year, Mixed Chicks started to take advantage of QuickBooks Enterprise’s inventory management features. The software helped them to identify hidden costs from third parties and get full control of their inventory by showing them the precise costs for each individual component within an assembly.

Getting this data has enabled them to increase their profit margins because they can now see the exact cost of goods sold for each SKU, how much profit each product generates, and where there’s an opportunity to bring down costs.

“We realized there were so many hidden costs that our supplier was not mentioning,” says Wendi. “The cost of goods was going up and up and we weren’t aware of it because we didn’t have a price sheet.”

In addition to attacking hidden costs, they can now get granular data on each SKU. Clicking on a single product, like their 6.7oz leave-in, displays all inventory activity, including when a cap was ordered, a bottle added, as well as every invoice for that item. “Before, to do that research, I would have to open every single purchase order until I found that inventory part,” Wendi explains.

Based on this data, Mixed Chicks are planning to make big decisions on which products to emphasize in the coming year.

What to do when you’re going up against the big brands

After years of 100% growth, sales inevitably began to slow as behemoths like P&G, Johnson & Johnson, and L’Oreal have recently entered the market after seeing the success of smaller brands like Mixed Chicks. E-commerce competition also heated up on Amazon, and the market is now oversaturated with competing products.

But Mixed Chicks has a competitive advantage over these big brands––the owners are their brand. With so many different beauty brands in the market, building personal relationships with retailers is crucial. “You have to find the incentive for retailers to push your brand,” Kim says. “When we walk into meetings with retailers or attend trade shows, face-to-face connection is really valuable because that means they take what we say seriously.”

Another advantage they have is their strong alliance with their customer base. Kim and Wendi both make sure they’re always available for their customers through multiple platforms from email to social media. That helps distinguish them from the larger brands that can be impersonal and not as readily accessible to their customers.

Additionally, the customer insights Mixed Chicks gleans from QuickBooks plays a big role in driving opportunities for growth by evaluating sales per customer. “You can pull up a report by customer,’” Kim explains. “I am able to go in and see who hasn’t ordered in a while, find out why, bring back a customer that may not be ordering anymore, and make that sale.”

And that’s exactly what they’ve been doing. Thanks to their care and diligence, they’ve been able to bring some old customers back and sales are growing again. “We’re experiencing a little growth spurt for the first time in three years. We believe it’s got a lot to do with the decisions we made based on what we learned [through QuickBooks],” says Wendi.

Data and organization are key to sustaining a business for 15 years

When they created their first product back in 2004, Kim and Wendi didn’t foresee that their niche market would explode into the mainstream. Competition from the biggest companies in the world have forced them to up their game, but thanks to some useful data and smart decision-making, they’ve been able to keep growing.

“QuickBooks can show the history of your sales and also your potential by identifying your drivers and where there’s room to grow,” says Kim. Because it has been so essential to Mixed Chicks’ success, Kim has recommended QuickBooks Online for her fiancé’s business. “I think it’s good because a person can be pretty darn organized, knowing everything that’s gone out and what’s supposed to come in, so they’re up-to-date. It’s great for anyone.”

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Loni is a freelance writer whose contributions have appeared on Atlas Obscura, Screen Rant, Culture Trip, Buffer, and Tech in Asia. She writes about tech, HR, marketing by day and is a screenwriter by night. Read more