Organic cloth diaper company takes off
Smart Bottoms in Grand Rapids has retailers from the U.S. to New Zealand.
Even a serial entrepreneur like Christy Malone can find valuable help at West Michigan organizations like the Small Business Development Center.
Malone is the founder of Smart Bottoms, a specialty cloth diaper company she started in her basement. She filed the paperwork to launch Smart Bottoms in 2010 but then spent a great deal of time on careful research, the market and potential suppliers. She didn’t actually begin producing and shipping her diaper products until 2012. Sales have tripled in the two years since then, however.
Smart Bottoms is an organic cloth diapering system that is 100 percent made in the United States. Organic cotton inner layers are enclosed within a washable, waterproof, polyester fabric that has an adjustable fit.
Two American factories produce Smart Bottoms for Malone under contract, the main one being in Arkansas. Originally, they were produced in a West Michigan plant “but we outgrew them after six months,” she said.
“We have over a hundred retailers and we’re selling in nine countries,” said Malone.
Not bad for a business still operated from the basement of the Malone home in Grand Rapids. She has a few part-time employees who help with key matters such as bookkeeping, order fulfillment and packaging, and she has some sales reps, but it’s basically a mom-and-pop business — mainly just mom.
If Smart Bottoms lasts, it will be the second small business successfully launched by Malone. In 2008, she led the launch of the West Michigan Mom’s Sale with a group of local women who had infant and child apparel and toys in good condition for the resale market. Modeled after the popular Mom-2-Mom Sales in southeast Michigan, it quickly became the second-largest sales event of its type in the state and now is held annually in DeVos Place.
Malone sold the rights to the West Michigan Mom’s Sale name to Kohler Expos in 2012.
“Smart Bottoms was starting to take off and I needed to be able to focus on that because I saw much more opportunity,” said Malone.
“Very pregnant at the time” with one of her two daughters, Malone and 40 other moms with used baby stuff to sell were allowed to set up their nonprofit sale in a school facility in September 2008, with just word-of-mouth advertising. Her husband, Geoff, who owns a small IT consulting business, and two of her friends helped her manage the first West Michigan Mom’s Sale that day.
“It was very stressful,” she said. “I was expecting maybe 100 to 200 people.”
She said several hundred people were waiting in line for the doors to open that morning; she estimates about 1,200 shoppers browsed the tables that day. After that, the sales were held at the DeltaPlex “and just grew and grew.”
It never occurred to the Malones to buy old-fashioned cloth diapers for their babies, even though they eat organic food, try to limit their food to locally grown produce, and avoid using cleaners and personal care products that contain chemicals. They were buying disposable diapers, but then she noticed some sort of residue was sticking to her infant daughter’s skin, which Malone’s research indicated might be a chemical compound linked to toxic shock syndrome in women who used certain types of tampons.
“The idea of a diaper being potentially dangerous to our child never even crossed our minds,” she said.
So they tried cloth diapers, but those caused a rash. Some, advertised as “organic,” were made in Egypt and China, which she did not trust because “organic” doesn’t necessarily mean the processing is organic. Eventually, she found an American organic cotton company that was able to supply her budding company with materials for her own brand of cloth diaper. The “Made in the USA” label has proven to be important to young parents who want the safest products for their babies.
Malone, 33, holds a degree in political science and philosophy, and has worked in top management for a couple of nonprofit organizations. She also has worked for the state legislature.
West Michigan natives, Christy and Geoff Malone both come from entrepreneurial families that are drawn to business opportunities — families that have owned small businesses. They both are frugal and cautious — a key approach in any serious, carefully planned effort to start a small, innovative business.
“We lived below our means so that we could do stuff like this,” she said, regarding their personal investment in Smart Bottoms. She does not reveal how much they invested, but the scope of their new business certainly indicates it has required significant financing.
The Michigan Small Business Development Center at Grand Valley State University helped Malone locate key support “in areas (of business management) where I was not as knowledgeable” as she should be, she said. Examples are accounting and planning how much in raw materials to order.
“Brooks (Kindel) over there has been great,” she said. “He’s really helped us to clean up our books.
“When you start a small business, you can get by with very little for a long time. You don’t have to have everything completely perfect. You focus on the most important aspects; then as you start to grow and add people to your business, there are certain things that need more attention.”
Right now it appears Smart Bottoms will be approved for a line of credit at a West Michigan bank, if success and growth potential lead to the need for additional financing.
“We’ve grown about 300 percent in the last year. If we continue on that trajectory, we’ll most likely need additional funding, so Brooks has helped us along that path,” said Malone.
“My husband and I want to keep as much of the cost down as possible,” she said. “I could literally see (Smart Bottoms) staying in our basement a couple more years. It’s probably more effective to outsource distribution rather than get a big office.”
“It doesn’t bother me that we’re working in our family room,” she added, and while “lots of (small business owners) want a nice office, to me that’s not important.”
Malone still ruefully recalls her first big effort to start West Michigan Mom’s Sales while she was pregnant.
“You learn quickly from your mistakes and learn how to improve,” she said.
She also adds that a successful entrepreneur has to know intuitively if it’s a good business idea to start with.