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Tote-bag firm Gigi Hill is thinking bigger
It started with a $10 tote.
Soccer moms Monica Hillman and Gabrielle DeSantis-Cummings, passing the time on the sidelines at their kids' games, had been brainstorming ideas for a business they could run from home.
The conversation turned to Hillman's tote and their frustration over finding a decent bag that could handle a busy mother's needs.
They wanted function. They wanted fashion. And they didn't want to mortgage the house to pay for the perfect combo.
"We kept looking at this bag and saying, 'There has to be a better way,' " says Hillman, 42.
They were convinced that women would snap up a better bag, one that could haul soccer snacks in style as easily as beach towels, diapers or work files.
After a year of tinkering with samples, they launched Gigi Hill in mid-2006 from Hillman's Yorba Linda living room with $5,000 in savings and $23,000 in loans and investments from friends and family.
Today the company is turning a profit with $85,000 in annual sales, and DeSantis-Cummings and Hillman are laying plans to recruit a national network of independent salespeople to sell their collection Tupperware-style at home sales parties. They're also wooing potential investors.
"If we can get an infusion of cash, we can anticipate our sales will grow," says Hillman, a former senior compensation analyst at Washington Mutual Inc.
The bags range from a $17 cosmetic case to a $175 weekend satchel. They include jewelry rolls and garment bags in mod awning-stripe prints, sweet toiles and pop-art polka dots on cotton canvas, oilcloth, faux silk, micro-suede and leather.
To corral the items typically jumbled in the bottom of their totes, the pair designed most of the bags with interior pockets, including ones for water or baby bottles, and a key fob. The line, which is updated in spring and fall, has been popular at the home sales parties, the women say.
They were inspired to use the direct-sales system in part after reading Pampered Chef founder Doris Christopher's book on how she used the method to expand her basement-based business to $700 million in sales before super-investor Warren Buffett acquired it.
"You can launch a business with one party and it can grow exponentially," says DeSantis-Cummings, 45, who was happy to avoid having to sign up multiple retailers to sell the goods.
"It can produce huge profits. That's not us yet, but we're keeping our eye on that ball."
Gigi Hill works with about 10 independent salespeople. These "stylists" buy packages of products and party supplies from the company. The salespeople, sometimes with the help of the company, recruit party hosts who get product discounts for hosting the sales parties.
DeSantis-Cummings, who has launched businesses twice before, researched the setup for two years but is still learning how to successfully operate it.
She and Hillman hired consultant Nicki Keohohou, founder of Direct Selling Women's Alliance in Kailua, Hawaii, to help them modify their business model, including the incentives and bonuses that are crucial to the success of a home sales party plan.
Their focus now is on recruiting independent salespeople rather than selling bags themselves at parties. To do that, they have brought on an advisor who will work on commission to help meet their goal of 200 salespeople and party hosts nationwide by the end of this year.
They want to build a quasi-virtual organization, keeping corporate overhead and corporate staff small and using independent contractors to scale up rapidly.
They are tapping their contacts at women's networking group Ladies Who Launch to find a public relations firm to help get the message out. They had already located the designer of their website, at www.gigihillbags.com, through the group.
DeSantis-Cummings and Hillman are working with the Web designer again to rework the site to reflect their shift in emphasis to recruitment. They want to use less text and more photos of the sales parties to give potential recruits a flavor of what it's like to work with the company. They plan to make the site more dynamic, with a slide show of products on the home page.
They are also experimenting with moving production out of the country to cut costs.
As with many small-business owners, their to-do list is long and their funds are short. They've operated as many entrepreneurs do on the pay-first, earn-second system, whereby they cover costs with credit, then earn the money to make the payments.
Yet they know that won't get them to their goals, especially if sales don't pick up. The company didn't meet an earlier estimate of $92,900 for 2007 sales.
Hillman and DeSantis-Cummings don't have an updated formal business plan but say $200,000 to $300,000 will start the company on the aggressive growth they envision. They'd like to buy an expensive direct-sales software program and publish a catalog.
Two weeks ago, they met with a potential angel investor -- one of their original investors who told them to come back when they were ready for serious money, DeSantis-Cummings says.
The two arrived with their past financial information and spoke of their goals but didn't have financial projections or a written strategic plan.
Last week they were told their request was under review. Not waiting around, the two are also preparing to pitch their business to investors at the Growth Capital Conference in West Los Angeles in April.
After a year of "throwing things against the wall," they say they have proved their concept but need help with the actual steps needed to safely expand the company to the next level.
Says DeSantis-Cummings: "We need someone to say, 'This is how you execute without making mistakes. Here's how you get the biggest bang for your buck. Here's how you avert danger.' "
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