Rebels Refinery co-founders, from left, Eric Fallon, Justin MacLean and Elan Marks, and COO Jared March.Jeff Dalgleish
As a business catalyst, CBC's Dragons' Den has put its fair share of aspiring companies on the map.
However, it can often push aspiring entrepreneurs out of their comfort zones, and into a business mode for which they may not be ready.
That was certainly the case for Eric Fallon and his partners when dragon Arlene Dickinson thought Rebels Refinery, their men's skincare line, had serious potential.
"We did a deal on Dragon's Den before we really had a [fully fledged business] business," he says.
But while one month of good sales of their moisturizer, soap, lip balm and other personal-care items had created something of a whirlwind, the business then started to drop off.
Together with his partners, Elan Marks and Justin MacLean, Mr. Fallon locked himself in Ms. Dickinson's basement for about two years, developing a marketing strategy, website, online presence, and so forth, "until we had a business."
At the end of the process, the trio decided they wanted to branch out on their own, so they approached Ms. Dickinson about buying them out of their contract. She agreed to sell, for what Mr. Fallon says was an "insane amount of money," and suddenly the three of them were operating the company on their own.
Rebels Refinery is very much a Canadian company, with almost all of its products sourced from around the Greater Toronto Area, and a head office in downtown Toronto. But the three partners, who all hail from Dundas, Ont., were tempted by the lure of greater sales and brand awareness in markets outside of Canada's borders.
Mr. Fallon says his father – also an entrepreneur – always taught him to look at Canada and the United States, never just at Canada, so the company decided to target specialty stores in many of the major U.S. cities.
"Our brand seems to resonate more with the urban populations, especially with a lot of young, male professionals," he says.
But while the company managed to create a loyal following in places like Boston, New York, Chicago and Los Angeles, Mr. Fallon's goal was to have their products available "absolutely everywhere."
While he initially discounted the impact of trade shows in spreading the word about Rebels Refinery, that way of thinking changed after one fateful encounter.
"I had sort of thought trade shows were dead when I started out," he says. "I didn't realize how important they actually still are. I grew up in the digital age where [I thought] a lot of smaller boutiques just find all of their products on Instagram, so that was my line of thinking."
While some of the company's flagship products – such as its lip balm, which is packaged as a human skull – helped it achieve traction with bigger companies, such as the Hudson's Bay Co. in Canada, they eventually created a ripple effect south of the border.
Shaun Neff, a Los Angeles-based serial entrepreneur who co-founded Neff Headwear Inc. and now appears on the CNBC show Adventure Capitalists, happened across the skull lip balm and was immediately taken with the look of it.
"I guess he was on a flight somewhere and a broker who deals with Walmart Inc. had one and he saw it on the plane and said, 'What is this? I need to get in touch with these people immediately,' " Mr. Fallon says.
Mr. Neff reached out to Mr. Fallon via LinkedIn, and after a number of conversations over the course of a year, helped Rebels Refinery to broker a deal with Target Corp. to appear in about 1,800 stores across the United States.
That Rebels launch takes place tomorrow with nine products, including a few that have not been available elsewhere.
The company – now up to eight full-time staff – recently moved into a new 4,600-square-foot facility in Toronto, more than eight times bigger than its previous space. This helps to accommodate the Target orders, which take from six to 18 weeks to fulfill. Those orders have helped Rebels Refinery surpass last year's revenues in January alone.
Jared March, the company's chief operating officer, says Target has a reputation for introducing new brands to the American public.
"I think the idea for Target is that they've found this smaller brand that has great products … people are going to gravitate toward them," he says.
While the company doesn't scream "Canada" in the way that Roots Canada Ltd. might, the company plans to keep its bilingual packaging.
"Some people will like it because it's a differentiator, some people won't like it as much because they want Made in America," Mr. Fallon says.
That uniqueness could help in the long run. Vince Guzzi, managing partner of Watt International Inc., a Toronto-based retail strategy consultancy, says that by virtue of setting themselves apart from the rest, Rebels Refinery should be able to build a larger brand following in the United States, particularly in the beauty and cosmetics sector.
"People don't want to buy what everybody else buys and you see that in the clothing, the fashion industry," he says. "… There are a lot of [people] out there that once they start to feel that they're shopping where everyone else shops, they go and find that next unique and different [thing]."
By initially targeting men in big-city centres, Rebels made the correct call in strategically staggering its market entry, he says, adding that the Boston and Chicago markets, and even smaller ones, such as Minneapolis and Cincinnati, are a bit more worldly and quick to become early adopters of new trends.
"You don't want to swing big, you want to swing small but really hard hits that build one on top of the other and get you that market momentum without blowing your wallet right out of the gate," Mr. Guzzi says.
He adds that trade shows can also help to build that market momentum, something borne out by Mr. Fallon's experience: The Rebels lip balm that Mr. Neff happened across was one that a broker had received from an expensive trade show called the NACDS (National Association of Chain Drug Stores) Total Store Expo.
"They are very effective," says Julie Pottier, who heads up a small- and medium-sized business team at Export Development Canada. "It's one of the best practices we talk about when people are interested in starting to look at certain markets to export [to]."
Ultimately, though, Ms. Pottier says that any small or medium-sized business looking to grow its market needs to look at mitigating financial risk. This meaning finding a buyer who will reliably pay for goods or services, and finding the funds necessary to cover a big order.
"Make sure you understand the potential market, make sure you understand who the key players are that you want to sell to," she says. "But after that comes, 'Do you have the necessary working capital?' and, 'Are you managing your risk properly?'"