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Gene: Hi, everybody. Welcome back to Small Biz Ahead. My name is Gene Marks, and I am here with Tim Barklage who is the CEO, co-founder, owner, and master of Better Life, a natural cleaning products company based here in the St. Louis area. Tim, thanks for coming on the show.
Tim: Yeah, thanks for having me, Gene. I really appreciate it.
Gene: Tim, I’m going to ask you to introduce yourself so that you can give a little bit of background. Tell us your name, your title, and the name of your company, and we’ll get into it. Go ahead.
Tim: Sure. Hi, my name’s Tim Barklage, and I am the co-founder of a company called Better Life. We are a company which sells natural household cleaning supplies. We sell directly to the consumer through our website, but primarily most of our sales are done through retailers like Whole Foods Market, Target, and grocery stores around the country.
Gene: That’s very cool. Tim was on our panel. We had a really great discussion. We were talking about some stories. You brought up a little Shark Tank experience that you had. Can you tell us about that?
Tim: Sure, yeah. We were on Shark Tank in November of 2013, and it was a great experience for us. We were able to really make sure that we were … What we did is we put a lot of preparation into getting on there before we went in. What our goal was was to try and control the conversation with the sharks so that the conversation wouldn’t go sideways and we would end up being shark bait, which we definitely didn’t want to do. We spent a lot of time where we would actually watch old episodes, and we would write down all of the questions that the sharks would ask of the people. We had this whole database of questions, and we had our whole entire team watching episodes of Shark Tank, writing down. What we did is we distilled that into about 12 topics. Then from those 12 topics, what we were able to do is look at how we were going to be able to answer our questions.
We took what those 12 topics were, had discussion points about each of those, and that’s how we were able to control the conversation. The outcome worked out really well for us. We actually had the sharks in a bidding war over us. We had multiple offers from all 4 sharks, and it really was a fantastic experience because you get to expose yourself to millions, and millions, and millions of people and have a little fun in the process, too.
Gene: I always thought when you’re getting in a bidding war, I’m terrible at math even though I’m a CPA. I was thinking when they get into these bidding wars and they start talking about percentage of equity, and “We’ll give you this upfront and that upfront,” I was always wondering, do these guys get overwhelmed with these questions? Are they not thinking straight? Were you keeping up with the conversation?
Tim: Yeah. To be honest, that was the most exhausting part of the whole entire presentation because were in the studio for about 2 and 1/2 hours before the whole thing ended. The first, I would say, 2/3 of it were just fun. You do your 2 minute pitch and-
Gene: All’s going good because you’re not getting any questions, right?
Gene: This sounds great to me.
Tim: Yeah, so you go off your script. You memorize what you’re going to do. You do your demos, and then the questions start. We felt like at this point we pretty much knew what we were going to talk about. It’s like a presidential debate. They ask you a question, and you give an answer that you had already premeditated despite what the actual question was.
Gene: Right, right. You turn it all around to something else, right?
Tim: Yeah, yeah. Then when the numbers started happening, again, we had prepared for the types of deals that they normally would do, but then they threw us a couple of curve balls. They proposed some deals that they hadn’t done before or at least that hadn’t aired before. That’s when things started really getting confusing because some of the sharks we actually had 3 offers, some of them we had 2, and we were trying to keep these things safe because you don’t have the advantage of having the teleprompter like you do on TV …
Gene: Of course.
Tim: … when they do it …
Gene: Of course.
Tim: … of like, “Well, Lori made an offer of this much.”
Gene: The reason why is if you were going to in real life, not on Shark Tank, if you’re going to get an offer for your business, you have time to think about that offer and do some due diligence and whatever. It seems like on the show it’s like, “Here’s the offer. Make your decision right now.” Was it really like that?
Tim: Yeah, it pretty much was. We did take a few minutes to consider it, but you can’t leave the studios, the cameras are still on you, so we were whispering in each other’s ear so that the microphones couldn’t pick up what was going on. At the end of the day, the nice thing about the way the show works is that you’re really making a deal to have further conversation. The obligation isn’t that you’re signing X% of your business away right there on the spot, so the pressure’s off from that standpoint even though you still feel it because you’re trying to get a deal done.
Gene: Right, that’s right. You also told me your deal actually never got done in the end. Is that right?
Tim: Right, so we had the deal done, and then afterwards, once you start getting into the actual due diligence, it was one of those opportunities where both parties decided there was a match here, but it just doesn’t make sense to consummate it.
Gene: Do you think though it did better prepare you for if one day you wanted to bring in any outside investors to the business, just the whole process?
Tim: Definitely. I think that’s one of the things about small business owners and first time entrepreneurs is that that whole area of investment, and investment banking, and private equity, and all these things that are happening we really aren’t prepared for.
Tim: It’s like going to school, right?
Tim: You go to school and you study finance, but it doesn’t mean you know how to balance your own checkbook when you get out.
Gene: Yep, that’s exactly right.
Tim: That’s one of the things where in small business, you just don’t ever get that education of how to deal with investors, how to take them on, what this all means. I think it’s an area sorely missing in small business ownership.
Gene: I remember when I went to college, I took accounting in college and graduated from college, took a job at an accounting firm. I remember my first job they sent me out and said, “Ask the client for their general ledger.” This was back in the days where it was like [crosstalk 00:06:23].
Tim: Right, books.
Gene: I didn’t know what a general ledger was. I had an accounting degree from a pretty good university, and I was like, “I don’t even know what a general ledger is.” Just sometimes the schools don’t prepare … You got to learn it in real life. Better Life, natural cleaning products is what you do. How many products do you guys have approximately?
Tim: Right now we have about 2 dozen individual products that we’re selling, and it ranges anywhere from surface cleaning like an all purpose cleaner to specialty cleaning, like a granite cleaner or produce wash, and we also have a suite of laundry products, dish products, and then some personal care as well like soaps and lotions.
Gene: This sounds a little bit like Jessica Alba’s company, isn’t it, like the Honest stuff? I don’t think she does cleaning products, though, but it’s the same concept?
Tim: No, they do have some cleaning products …
Gene: Do they?
Tim: … in that lineup, so yeah, they’re a competitor of ours.
Gene: Right, they’re a competitor.
Tim: That’s one of the areas that … I shouldn’t say that’s one of the areas. Better Life, we focus on the cleaning areas. Where some of our competitors have gone into things like diapers, and paper towels, and other types of consumables, we’ve really focused on the cleaning at this point.
Gene: Don’t you think if you’ve got a competi- … Most of us when we have competition, we hate them. That’s a natural human reaction.
Tim: I don’t see Jessica Alba movies anymore.
Gene: Yeah, don’t see any Jessica Alba movies. They weren’t really very good to begin with, between you and me. When you look at that, in some way it is a validation of what you’re doing. If you’re all alone out there selling a product without any competition, then doesn’t that say there really doesn’t seem to be that big a market for this product anyway?
Gene: Then you’ve got other companies and even high profile ones now like hers that are selling all natural type products. It almost tells you that you’re onto something. It’s a growing field.
Tim: Yeah, absolutely. Overall in the United States, the cleaning industry is pretty much flat, and if you look at the natural cleaning products or people that are marketing themselves as natural, that industry is skyrocketing or that part of the industry’s skyrocketing right now. While the traditional multinational conglomerates are just gaining market share extremely slow or even losing market share, the people that are focusing on natural ingredients are experiencing just amazing growth.
Gene: Now you got into this business in a pretty crazy way, right?
Gene: You were telling me earlier. What was the story there? This is not … For listeners, please, do not take any of Tim’s advice when you’re about to hear this story. Don’t do this.
Tim: This is not a blueprint for success.
Gene: No, it is not. What did you do?
Tim: The reason why we started the company was because at the time my wife and I had a year and a half year old daughter, and we were buying what we thought were natural cleaning products. We have a neighbor who’s also a formulation chemist who ended up becoming our business partner. He also had a year and a half year old daughter. We were having dinner, and we were talking about cleaning products because the kids are crawling around getting into everything. He said, “You know those products that you’re buying really aren’t that safe. You still need to lock them up.” We were scratching our head, and we were thinking, “Well, what’s the point? We’re spending more money, they don’t work as well, and we still have to lock them up.”
Gene: It is true when you think about it like, geez, in this day and age that you still have poisonous products around. There has to be some better alternative, right?
Tim: Yeah, and that’s what we were saying. It made no sense. At the time, everybody was marketing their products as green, and that really didn’t mean any … It doesn’t mean anything. What we did is we wanted to focus on safety and efficacy, and that’s what our company’s still based on: making products that are completely safe but also more effective than the conventional brands. Kevin, our business partner, came to our house one day with a mason jar, had a mysterious liquid in, and he’s like, “This is all from plants. It’s an all purpose cleaner. Try it out,” and so we did. That’s really when things changed. I’m not kidding you. 6 months later, I quit my job on Friday the 13th.
Tim: Exactly. In 2008, mind you, right.
Gene: Yeah, great timing.
Tim: In June Friday the 13th of 2008.
Gene: Wasn’t it true that some of the greatest companies in American history were founded during recessions? There you go.
Tim: Yeah. That’s one of the few things I remember from college is that while everybody’s retrenching during economic downturns, that’s the time to really go after something because you’ve got an opportunity, where everybody else is really just trying to hold on to what they have, to grow. We just went all in because it was all about passion. Kevin quit his job, I quit my job.
Gene: What was your job at the time?
Tim: I was doing IT hosted infrastructure services.
Gene: Yes, excellent, excellent.
Tim: It was …
Gene: Very exciting.
Tim: … a perfect segue into cleaning.
Gene: Of course half our audience just fell asleep while you were naming what your job was. You quit that job altogether, your wife did … Without any other … Did you have savings at the time? Did you at least, please tell me at least you looked ahead and said, “Okay, we’ve got enough to live off of for the next 6 months or so”?
Tim: Yeah, kind of.
Gene: Oh, no.
Tim: You said we’re in St. Louis. One of the really great things about this town is that you can live here affordably. We were living below our means, and so we had focused on saving money. We didn’t know exactly what we wanted to do, but I was always thinking about maybe we’ll start a business someday. We had been saving money, so yeah, we had some savings. To be honest, Gene, we didn’t pay ourselves for 3 and 1/2 years. When I say not paying ourselves, I’m talking 0 money was coming …
Gene: Yeah, I understand.
Tim: … from the company.
Gene: Right, that makes complete sense. Whenever you start up a company, you really have to budget yourself that you’re going to be broke while you’re building it for a good couple, 3 years if not …
Tim: My wife, Nancy, she was working 20 hours, 30 hours a week in the business, and then we would care for the kids, and then she’d go to a restaurant and wait tables until 2 in the morning doing another 25 or 30 hours a week. We were basically living off of savings and her tips.
Gene: First of all, what were you thinking? What did you know about cleaning products to go into … I can even understand you would leave your job for something else that’s technical or in the IT world that was maybe a modicum more interesting than what you were doing, but what kind of skill set did you have that you could bring to this company? It seemed like your neighbor, no offense, it seems like he was the brains of the company, right? He formulated the products. Did you do the science, or were you a sales guy?
Tim: No, I really focused on the development of the business itself and the sales and marketing. What we were able to do is combine 2 talents. He had the development side on the products, and I really worked on developing the branding, the marketing, the overall business structure. That’s where some of my corporate experience really lended me to doing things smartly and efficiently, if that makes any sense. One of the mistakes that a lot of small businesses make is that they don’t know where to spend their money. They don’t know how to spend their money wisely. They think that they need all of these things to get their business off of the ground. We did your typical bootstrap approach, and it was just basically a lot of naïve idealism and just passion for what we were doing, and figuring out a way to build a business without having capital behind us.
Gene: When you say without having capital, this is a business that needed, not only you’ve got the salaries of the people putting that aside, you have to have space. You have to make the product at some point. Even if you’re just making samples of it, it’s got to be made somewhere, right?
Gene: You have to have a phone system. You have to have at least an ability to communicate. Did you have the capital to do that as well? Can you tell us a little bit about those first few months? Where were you working out of?
Tim: Sure, so we were working out of our house, and we did partner with a local company here that made janitorial cleaning products. They had equipment and capacity to be able to make the products, and we were very fortunate to have a person that was really more of a mentor than a vendor and was able to run our products at very small levels, which was a total pain in the rear for them because they had to stop their lines, switch out labels, do all this stuff for us to make a couple thousand bottles of products which to us was an immense amount of product because we had no customers.
Gene: Why did they do this for you? What was in it for them?
Tim: Good question.
Gene: No kidding. The lesson is finding that mentor to work with is huge. Some of this is just based on luck. Did you stumble into these guys or …
Tim: Yeah, Kevin had some relationships with, or he knew of some people in town, just vendors that he had worked with in his previous job that said, “Hey, you might want to talk to these people or these people,” and just really doing a lot of research. I spent a lot of time just doing Google searches on how to be able to find things. You had mentioned phone systems. We never bought a phone system.
Tim: We still don’t have a phone system [crosstalk 00:16:15].
Gene: Neither do I. We have a virtual phone system.
Tim: Yeah, exactly.
Gene: Do you use Grasshopper? We use Virtual PBX is the one we …
Tim: We use RingCentral, which is …
Tim: … the same idea. The business that I was in, we were really innovators on developing the infrastructure for the Cloud-based computing back in the mid-2000s, and so I had a lot of knowledge of how to leverage things without servers, so we’ve never had a server. Everything we’ve done has all been virtual, and so even as we continue to grow, the technology just continues to improve so much that you really don’t need all of these things that cost a lot of money and a lot of maintenance.
Gene: It’s amazing. I always wonder if companies like yours and mine could have even existed 30 years ago, even 20 years ago, without the technology that’s around us.
Tim: Certainly not in a heavily bootstrapped way …
Tim: … that we can … That’s part of what makes us still successful or that continues to fuel our success is we still look at ourselves as bootstrapping.
Gene: A bootstrapping company. Do you believe that companies should always have that mindset?
Tim: No, not at all. Like you said and like I said, ours is certainly not a blueprint for success. I didn’t have the credibility or the reputation to use other people’s money. I could have spent 2 years that I could be out there developing the brand trying to get somebody to believe in me to get some money from them, and we just thought to ourselves, “You know what, let’s just quit our jobs, believe in ourselves, and success will find us if we have a good product, we know what we’re doing, and then we can figure it out after that point in time.” Now, since I’ve already built somewhat of a successful company, I’d be able to go out there and raise money in a much easier manner. At that point, we just thought, “What’s the point?” It would be really hard, and we’d be giving away a tremendous amount of equity for not a lot of money.
Gene: That makes sense. Better Life, how’d you come up with the name, and how have you worked on building that brand?
Tim: Yeah, so Better Life was really based on lots, and lots, and lots, and lots of Google searches and test searches on the United States Patent and Trademark Office and trying to find something that wasn’t taken that really resonated with what we were doing. That was probably, and I’m not kidding, a lot of the first 3 or 4 months of when we were developing our business before we actually got it off the ground, was actually trying to find a name for the business.
Gene: Really? Wow.
Tim: Just one day, Better Life popped up in our heads.
Gene: It’s a great name.
Tim: It was like …
Gene: It’s a great name.
Tim: … it wasn’t taken. We’re just like grab that, and that’s where we started developing the brand from there. It was always about creating a better life for the planet, our families, the people who use our products, and so it was just a natural fit.
Gene: Do you guys budget and plan? Do you have a business plan?
Tim: Uh …
Gene: Right, right, right. It’s funny that you say that because you get … I get asked that question sometimes as well, and my response is like, “Well … ” You have objectives, right, and certain things you’re focusing on?
Tim: Yeah. We definitely do have financial budgets, and targets, and projections of …
Gene: Better than us.
Tim: … where we want to go. When we’re in such a high growth phase, you get one huge customer and it just blows your projections right out of the water, or you lose one big customer, and it’s the same type of thing. We’re at a point now where we can forecast pretty accurately, and that’s an important part of making sure that we can intuitively spend money in the right places.
Gene: You talk about big customers, so are you guys reliant on any 1 or 2 customers?
Tim: We’ve been systematic, lucky, fortunate, whatever you want to call it in making sure that we really do have a broad and diverse revenue stream. Our largest customer is less than 10% of our overall revenue stream. That’s an important … When you talked about investors before, and if you do partner with investors, that’s one of the big criteria that they’re going to look at. Even banks look at it that way, is they want to make sure that you’re not highly leveraged with any one customer.
Tim: We’ve really tried to make sure that we do that. For instance, our online business just selling directly to the consumer, it’s about 15% of our overall business, which is great. Then we sell through other Ecommerce channels like Amazon, and then we, of course, sell through the brick and mortar retailers, but we really try and make sure that we’re diverse.
Gene: Yeah, we’ve got about 600 clients in my company, and I’m just so grateful for that because you’re going to lose some. It’s just natural.
Tim: Oh, absolutely.
Gene: I have some clients who 40% of their business, 50% is one customer.
Gene: You’re like, “Oh my God, how are sleeping at night, man? That guy leaves you, you are in serious trouble.”
Tim: A lot of advertising agencies and service-based industries …
Gene: Yeah, exactly.
Tim: … are so dependent on one big client, and if they decide they are going to sell out to another company, guess who’s going to get cut out of the …
Tim: … equation. It’s happened here a lot here in St. Louis.
Gene: The rule of thumb is, at least the accounting rule, is you have to disclose in your financials if more than 20% of your sales is from a specific customer. That’s like that rule that people follow. I have a couple of other areas, and then we’ll wrap things up. You had mentioned before about partners and getting finance. Kevin, is your partner, …
Tim: Yeah.Gene: … correct?
Tim: Mm-hmm (affirmative).
Gene: Do you have any advice that you have? For example, my wife would never let me take on a partner. She never did. My firm, we’ve grown, but she does not want anybody having equity in my business which basically means equity in our lives, right?
Tim: Right, exactly.
Gene: I got to imagine there are other people that have the same concern about going into business … I realize Kevin’s a neighbor of yours but still relative strangers. What have you learned from that experience? Do you guys know … I’m going to let you answer, but it’s almost like if Kevin next door sees you guys buy a new car, you know what I mean? Is he like, “I can’t believe this guy’s buying a new car, and we’re trying to get this business going”? What sort of challenges have you had with having a partner?
Tim: Yeah, I think I can answer that in a couple of different ways. When I look at the way a lot of entrepreneurs are … I’m involved in EO here in St. Louis which is Entrepreneurs’ Organization.
Gene: Great organization.
Tim: I’m around a lot of entrepreneurs, and when people talk about getting investment, bringing on private equity, and this and all that sort, it gets people really excited. To me-
Gene: They’re reading Forbes Magazine like, “Oh, my [crosstalk] is going to be valued at $1,000,000,000, and I’m going to … ” Right.
Tim: I think they get so excited in the aura …
Tim: … yeah, and the romance of it that they don’t realize they’re bringing on a partner in their business. This partner’s most likely going to have really tough financial goals. If you bring in private equity especially, in many cases, they want to flip your business in 3 or 4 years. I just get so confused on the whole aura of this thing. Now if you’re going to use it grow your business, and you’ve got some really set goals on how you want to do it, then great. You know what you’re getting into, but I see way too many people just getting involved with people that they don’t understand that you’re bringing in a partner that’s going to have divergent goals than you are. I think whatever partnership you’re in, A, you have to establish the expectations upfront of what you both want at the end of the day. Again, it’s advice that isn’t new by any means, but it’s so true. You’ve got to know, what’s the end goal, what are the expectations, and who is this that you’re going into business with?
Gene: Yeah, it’s a tough decision because you really are throwing all of your assets together, and it’s a big risk that you’re taking. All right, so we’ll wrap up. I know [inaudible 00:24:44], but I do … Final question for you before I let you go is mistakes that you’ve made. Always like to talk about that. Not that you’ve made any mistakes the past few years, right? If you were to go back and tell your younger self 5 years ago like, “Don’t do this and don’t do that,” what are some of the most glaring things that you’ve done that you’re like, “Ugh, never again.”
Tim: I’m really, when I say this, I’m not trying to avoid your question …
Gene: It’s fine.
Tim: … because I am someone who embraces mistakes, and I know that sounds cliché, but I really, I don’t dwell on them.
Tim: I don’t beat myself up, and I don’t have regrets. I know that sounds like a bunch of nonsense, but there’s nothing that I dwell on, because I think the path that we’ve gone on has taught me so much, and I’ve learned so much from it. I know there’s things that I would have done over, but I have to actually sit down and think about it. There’s just nothing that pops into the top of my head, because I really truly believe that mistakes are inevitable, and they’re the best learning experience that you can possibly make. It just forms who you are. I just integrate that into how I just make decisions on a day to day basis.
Gene: It’s funny, if you talk to teachers that’s a big issue in the education system in this country is that you reward kids for succeeding and moving ahead grade by grade, and God forbid if they make mistakes whereas, how else are you going to learn if you fail and you make mistakes? It was Michael Jordan, right, who said, “I failed, and I failed, and I failed, and I failed until I succeeded”?
Gene: I get that. I’m sure you’ve made tons of mistakes just like we all have, but I think one of the natural things of a successful business person is you’ve got that air of optimism about you. You’re like, “Alright, so I made mistakes. That was in the past. Let’s move forward from there.”
Tim: Yeah, I think that anxiety is the absolute killer of productivity, and when you dwell on the past, it causes anxiety because you’re dwelling on what might happen in the future that’s going to be bad. I think that I look at the past as something that has been in the past, and it’s given me the tools that I have today to succeed. I don’t think about it a lot. When I think about the future, it’s I set my goals, and I have my goals, but at the same point and time, I don’t focus on those so obsessively that it gives my anxiety. I really try to be in the present moment and make my decisions based on what’s going on here and now, knowing that I’ve got something to look forward to and that I’m trying to get there. Whether I take a left or a right to get to that destination, it might change on a day to day basis. I really try to make sure that you look at the present moment as the key to success versus obsessively focusing on the past …
Gene: Makes sense.
Tim: ..or the future.
Gene: That makes sense. Speaking of the future, where do you want to be 10 years from now?
Tim: It would be amazing to say that we’ve taken this company from literally 0, starting with-
Gene: A jar of cleaning fluid, right?
Tim: Yeah, and then 6 months later with 2 stores and thinking that those 2 stores are enough to support 2 families. By 2 stores, I mean 2 retailers who are buying our product, and saying that, and so that would be 18 years that we’ve taken that into a $100 million company, I just think it would be amazing.
Gene: That’s awesome.
Tim: Then at that point and time, my daughter will be almost graduating from college, so maybe-
Gene: Taking over the business.
Tim: Yeah, yeah!
Gene: Moving on. Time to play golf. All right, Tim, thank you. This is Gene Marks. We’ve been talking with Tim Barklage, owner, CEO, co-founder of Better Life. Is it A Better Life or just Better Life?
Tim: Just Better Life.
Gene: Just Better Life. Why not A Better Life?
Gene: No, I’m just curious.
Tim: Maybe there’s some there.
Gene: No, I like it. Better Life is great. I want to thank you very much for coming on. This podcast has been great.
Tim: I appreciate the opportunity, and thanks for listening.