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Making It in Business, Naturally

In the early 1970s, Larry Freeman spent about three days a week on the golf course while money flowed in from his family’s successful Los Angeles cosmetics distribution firm. Then, around 1975, he became intrigued by natural ingredient cosmetics--those fruit-flavored shampoos and creams that became popular a decade ago--and created one of the first acid-balanced shampoos at the request of a Honolulu distributor.

Inspired by initial sales in Hawaii, Freeman began devoting more time to selling his own shampoo and less to selling other people’s cosmetics to local drugstore chains.

“The people we were representing began to fire us because they felt there was a conflict of interest,” Freeman recalled. “I took a very successful brokerage business and destroyed it.”

But, from the ashes rose Freeman Cosmetics, a maker of hair and skin products containing ingredients ranging from sea kelp to papaya and apple nectars. The small, family-run business has found a place in the shampoo market. Its sales are expected to reach about $30 million this year.

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Freeman, 50, said he knew he was going up against the industry giants--Revlon, Proctor & Gamble and Gillette, but he was sure there was room for his products in the $3-billion- to $4-billion-a-year hair-care industry.

Higher-Priced Products

“He’s come a very, very long way because he’s forced his products in by hook or by crook,” said Jeff Davidson, sales manager for Cardinal Laboratories, an Azusa private label cosmetics maker. “He is very entrepreneurial and stands behind his products.” Others who have worked with Freeman in the cosmetics industry said he has a reputation for insisting that vendors sell him products at the lowest possible price. “But, that’s part of being a good businessman,” said one vendor, who asked not to be identified.

Freeman said the lessons he’s learned can apply to any small business competing against larger companies. He believes that you can succeed if you target a specific area in the market and make sure your product offers something different to consumers.

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You must also be convinced that what you are doing is right in order to withstand the pressure and negative comments when people tell you “it can’t be done,” Freeman said.

Instead of competing head-to-head with the shampoo leaders, Freeman created a line of higher-priced specialty products designed to appeal to younger women. He added fruit fragrances and an international cachet by calling one line “Gardens of the World.”

Freeman also added a personal touch, appearing in most advertisements and serving as a beauty counselor for women who write to him for advice. Freeman, who worked briefly for Clairol, said his greatest obstacle was persuading retailers to give shelf space to a tiny, unknown company whose motto was “From our family to yours.”

His persistence won over a few retailers. But they were unwilling to take any financial risk and forced him to meet certain demands. For example, one retailer agreed to accept a shipment of shampoo only if Freeman paid $2,500 for advertising and was willing to wait six months to be paid.

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“I was just stupid enough to say OK,” Freeman said during an interview in his Century City office. “I took these risks because I believed if the consumers could try it, it would sell.”

His major break came in 1976 when a veteran cosmetics buyer for Thrifty Drug took a chance and bought Freeman’s shampoo. Now the products are sold in the United States and in several countries, including Canada, Finland, Australia and parts of Central America.

Determined to Survive

Buoyed by his early success, Freeman began to fancy himself as the Vidal Sassoon of natural hair care products. He admired Sassoon’s television commercials but decided to go a step further. In 1981, Freeman produced and starred in 50 episodes of a beauty news show called “Larry Freeman’s Women’s Page.” The syndicated show aired for six months in 43 cities, but the business suffered and Freeman decided to give up his television career.

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Between 1980 and 1984, Freeman cashed in on the hot trend for natural cosmetics, but then the fad waned. Just as sales began to drop, Freeman found his company heavily in debt from expansion and the cost of the TV show.

“I had to make it work,” Freeman said. “I hadn’t worked for anybody else for 25 years. Who would hire a self-employed failure?”

He dug in, determined to survive. He developed new products and turned to his children for ideas. He brought in his son Mark, 27, to boost international sales and his daughter Jill, 24, to work in marketing. In 1987, as sales picked up again, Freeman bought the manufacturing facility in Long Beach where much of the cosmetics were made and hired his own team of cosmetic chemists.

Freeman introduced new products exclusively for beauty salons and recently introduced a line of “crystal clear” hair-care products to cash in on that new fad. Freeman Cosmetics still spends heavily on advertising--about 15% of total revenues, compared to the typical 6% to 8% spent by other cosmetics marketers.

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Today, with the company’s health restored, Freeman said he is exploring options, including a public offering of stock. But, like most entrepreneurs, he admits it might be difficult for him to give up control of the business he created.

Biodegradable Bags Wins Venture Award

A proposal to create a company that manufactures biodegradable plastic bags won first prize in the 1989 UCLA Venture Proposal competition, an annual contest to elicit ideas for new businesses. Michelle Barefoot and Robert Wunderlich came up with the idea for the plastic bag company. Second place was awarded to Daria Kurkjy for her plan for a community child-care center. The winners are students at the John E. Anderson Graduate School of Management. Their work was judged by a panel of venture capitalists and entrepreneurs. The winners will share $5,000 in prize money donated by the Price Institute for Entrepreneurial Studies.

Summer Classes for Business Owners

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Everywoman’s Village, a nonprofit learning center in Van Nuys, is offering several summer classes of interest to all business owners. The 15 classes starting the week of July 17 include information on how to invest in the stock market, how to plan for retirement, how to start a business and how to run a personal computer. Class fees range from $20 to $72. For a free catalogue write: Everywoman’s Village, 5650 Sepulveda Blvd., Van Nuys 91411, or call (818) 787-5100.

Class to Teach Starting a Business

“How to Start a Home Based Business” will be offered at Los Angeles Pierce College on Saturday, July 22 from 9 a.m. to 2 p.m. The program provides information on all aspects of setting up a business at home. For fee information and other details call: (818) 719-6425.


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