SCORE Mentor Helps Candleworks Gain Financial Backing
Born out of the struggle to survive was Candleworks, a company producing natural home fragrancing and aromatherapy candles—and dedicated to employing the economically disadvantaged and disabled. Candleworks, now located in Iowa City, IA, is a unique company—its slogan is "Providing Light through Social Responsibility."
This unique business, or perhaps life philosophy, paired with Candleworks' success, earned the business and owners the U.S. Small Business Administration's Welfare to Work Small Business of the Year Award in 1998. Candleworks earned $800,000 in sales in 1997.
According to owners Lynette and Michael Richards, Candleworks began as an idea with no capital. Facing already difficult circumstances in New York, Michael found himself out of work when the restaurant he managed burned to the ground. To survive, Michael and Lynette decided to produce hand-rolled, beeswax candles in their one-bedroom apartment. They needed no special tools to do this and approached local businesses about selling the candles. One emerging retail business agreed to test market their products.
When that business, The Body Shop, began to franchise and conduct franchisee training in its New York store, interest in the candles boomed. Soon, Candleworks candles became approved for sale to all existing Body Shop franchises, by then numbering over 100. Michael and Lynette spent three exhausting weeks in November producing enough to meet The Body Shop's demand to stock all of its stores by Christmas. Needing extra labor, Michael went to area soup kitchens asking for people who wanted to work for the day—and found many willing workers. The Richards entire apartment became a production plant and empty apartments in the building became the warehouse. After three weeks, the group had hand-created 10,000 candles.
The Richards approached the franchise Urban Outfitters to carry their beeswax candles. The store declined the offer because previous candles did not hold up well in their stores, so Michael asked, "What do you need?" Urban Outfitters had been talking with a Mexican distributor about purchasing lanterns cut out of recycled tin. If the Richards could beat the price, they would get the contract. Within three days, Michael had shipped Urban Outfitters a prototype, but he knew they would never be able to afford to pay for production and warehouse space in New York.
The Richards moved back home to Iowa where they had both lived what seemed a lifetime ago. They set up a one-year time period to phase their New York employees out of their jobs and established Candleworks in 2,000 square feet of space in an abandoned building in Iowa—for the low price of $150 per month. The business began to take off, but was still greatly undercapitalized. Michael approached SCORE for help.
At full staffing levels, Candleworks employs 24 people—the disadvantaged, disabled and those coming off welfare at its new headquarters, a 10,000-square-foot warehouse. Community agencies help the business with referrals, and Candleworks takes employees through a 30-day training program to make sure the job is a fit. Job training spans more than just the task of creating the candles and lanterns—it reacquaints candidates, who have been out of the employment market for up to 15 years, with proper work habits.
Candleworks is now producing the first all soy-based candles on the market today. According to Richards, Candleworks' soy-based wax is the first real innovation in the candle industry in the 150 years since paraffin wax came into use. This has opened up the business to more customers seeking trendy, all-natural products such as Aveda cosmetics and Biolage/Matrix hair care products.
Michael is also trying to work with the SBA to launch a welfare-to-work initiative, "1000 by 2000." This program calls for Candleworks to recruit and train an average of 20 former welfare recipients in each state to operate their own small businesses distributing Candleworks' products. The program is called, "Light Up a Life," and more information about this program can be found on the Candleworks Web site. Richards also has written a book about forming Candleworks, Light One Candle, which shares his dream of success and helps others form action plans for success and learn how business can be a catalyst for social benefit.
SCORE Mentor King Herr, an advocate for rural development and small business, worked with Candleworks. According to Michael, obtaining a small business loan in Iowa City, where the presence of a major university has made the banks complacent, was very difficult—especially when the business owner lacks collateral. Herr introduced the Richards to a private, small business funding company called Start-Ups Unlimited. So impressed was Start-Ups Unlimited with Candleworks' early success and mission, it co-signed a bank loan authorizing a $100,000 line of credit for the business. "That loan saved our business," says Michael. Candleworks was able to repay the note in three months.
Michael says, “Since we first worked with our SCORE counselor King Herr, we’ve gone through some difficult times. He has served as a sounding board for us.”