Making something from nothing is hard work, especially when you set up a manufacturing business in the UK, from scratch, with no engineering or production knowledge. Sarah Brown, CEO of organic skin care manufacturer Pai Skincare, tells Jane Gray how she did it.
“I was never short on ambition,” says Sarah Brown, Pai Skincare’s founder and chief executive.
That’s just as well, because without huge amounts of drive coupled with a self-confessed tendency to “big dreams”, the PR girl from Ealing might never have quit her successful career, taught herself cosmetic chemistry and launched the first range of certified organic salon skin care products, now available internationally.
“Looking back, I was crazy,” admits Mrs Brown. “I had no knowledge of cosmetic chemistry or manufacturing.” What she had was a growing frustration with the treatments she was prescribed for urticaria, or hives, a sensitive skin condition that flared up in her mid-twenties with no known cause.
“Competition is what gets me out of bed in the morning and I need other people to be making products that challenge us and bring greater sophistication to this sector”
Researching what might have triggered her condition, Brown was shocked to discover that many of the sensitive skin products she had been using to treat it, even the so-called natural and organic products, contained as little as 1% natural ingredients while harbouring a host of synthetics and irritants.
“The belief that I could do something to counter this came on very slowly,” says Brown. “If I’d analysed it, I don’t think I would ever have taken the first step.”
That first step was to start experimenting with organic ingredients and take classes in the principles of mixing oil and water to make an emulsion. Working from a garage in Ealing, it was only after she got her first product to market that Brown recruited a qualified cosmetic chemist to help her understand how to tinker the formulation to allow larger scale production and longer shelf life.
Six-years on, Brown runs a company which turned over £1.5m last year, double the previous year and the growth trajectory remains positive. She employs 10 permanent staff who work from a factory in West London where all production and formulation of new products is carried out in-house. Her equipment was bought from a closing factory’s auction.
“The last few years has all been about grooming the products and creating brand awareness through the online business,” says Brown. “I am completely indebted to the people that I have been able to hire for how far we’ve come. My team is what I am most proud of in the business today.”
Unlike many manufacturers, Brown says that getting the right people has been relatively easy. In part, she says this can be attributed to her location. “London gives you access to the crème de la crème of talent,” she says.
Furthermore, the entrepreneur’s own PR expertise means that the Pai brand started doing the recruitment for her. “Three or four members of staff were taken on simply because they wrote to me with such passion and enthusiasm for the business that I made space for them. I need technical skills, precision and a methodical approach, but I will rate passion over qualifications any day.”
Fingers in Pai
But gambles on passion were not to be taken lightly. Brown set Pai up using £15,000 of personal savings and received no bank finance at all until three years after she began trading.
“Aside from the technical challenge of certifying the products to an organic standard, the biggest challenge to getting Pai off the ground was undoubtedly access to finance,” she says. “That is not unique to manufacturing. A lot of entrepreneurs are struggling to get buy-in from banks. For me, the main issue was that I had no assets. So I had nothing to guarantee a loan against.”
Brown says this early finance drought has stunted Pai’s growth. “We would certainly be twice the size we are now if I could have secured a loan early on,” she asserts. “As it is we’ve had to grow very slowly. But on the plus side we have become extremely resourceful.”
What finally put Brown in touch with the funding she needed to grow was the Enterprise Finance Guarantee, a government initiative which underwrites 75% of bank loans to viable SMEs. “It gave the bank greater confidence to offer us a loan, but although it helped Pai, I don’t think the scheme has been as effective as it should have in general. With that level of guarantee in place from government, the banks should be lending far more than they are.”
Taking a bigger slice
Going forward, Brown maintains that sense of ambition which has got Pai where it is today.
“I aim to see Pai become the premium sensitive skin care brand in the world,” she says. “Having established the brand through the online business we now have international exposure and our London base means we can be responsive. We can do next day delivery to customers in LA [Los Angeles].
“The next step is to break into department stores. I’d love to see Pai products on the shelves in Liberty’s for example.”
“With that level of guarantee in place from government [Enterprise Finance Guarantee], the banks should be lending far more than they are”
The firm has consciously held back from in-store retailing so far because Brown believes there is little point in being on shelf until you are certain people will recognise the brand. “If you go in too early and fail, you will never get back.”
Located on an industrial estate, scope for capacity expansion at the factory is high. And with size comes supply-side benefits.
“As production scales up, materials and ingredients sourcing is also, fortuitously, becoming easier,” she says. “There are far more suppliers now than there were eight years ago when I first started trying to source. Being certified organic means our pool of suppliers is very limited. If there is one person making an ingredient organically in the world, we have to buy from them.” This has obvious implications in terms of security of supply – especially when certain key fatty acid-rich vegetable oils are prone to crop failures.
“But there is more choice all the time. It also helps that there is a growing pool of efficacy data for natural and organic ingredients. I’d love to push forward with more research in this area to help the market mature and assist our own new product development.”
What might disrupt this rosy outlook? Regulation, says Brown. “Until now there has been relatively little regulatory red tape for developing beauty products in the UK. But as of July that will change. The testing that will be required before a product can be sold will increase significantly, to a point where it will be prohibitive for people to do what I did,” she says, alluding that regulation raises barriers to entry.
But while Pai has just reached a size where it will be able to cope with the regulatory requirements, Brown does not welcome the barrier to competition. “I don’t fear competition. It’s what gets me out of bed in the morning and I need other people to make products that challenge us and bring greater sophistication to this sector. But I know that if these regulations had been in place eight years ago, I would never have started down this route.”
“Being certified organic means our pool of suppliers is limited. If there is one person making an ingredient organically in the world, we have to buy from them.”
Another, no less daunting challenge for Brown will be realising her ambition for global brand pre-eminence for Pai in balance with a new arrival. Jack Brown, the CEO’s first baby, was seven weeks old at the time of writing. “At the moment there is no balance,” she jokes. “But I will stay very closely involved in the business. I sometimes tell people that Jack is my second baby – because Pai was my first.”
Does this businesswoman have a role model to guide her as a new mother and an entrepreneur with big commercial ambitions? “A boss of mine when I worked for Gallo Wine was like Super Woman. She had three babies on three continents and sometimes took her children with her on business trips when they were very young, but stayed up through the night with them in different time zones so as not to disrupt their routine. If she could do all that with three children, I am sure I can try!”
Brown is generally dismissive of barriers to career success for women. “People say that it is hard for women in business, but I have never found it so,” she states, summing up her philosophy for business success as being down to “sheer graft” regardless of who you are.