Atlanta Friday May 4th 2018 - Visit HSCG Show Exhibit Area
Cocktail Party at Georgia Aquarium - ROOM at Hilton
DH: Okay guys, good manufacturing practice. CM: This is what I’ve been waiting for all day. DH: As I said, five year old company, right now we’re up to shipping about, approximately 1000 units a day of the products that we sell. We switched about 6 weeks ago, you may have noticed our site was down for 5 days while we were redoing our inventory. How many people noticed that, I’m really interested? Okay, well, the good news is, in the 5 days after we took the site down, we did more revenue than the previous 5 days before we took the site down. So, but it is tough to implement good manufacturing practice. Good manufacturing practice started back in England, actually. About 1902, with the British Standards Organization, they’re still headquartered on the river Thames in Cheswick, I know a pub right underneath where they’re headquartered, it’s a great pub to have a good drink. But the funny thing was, the ISO standards come in, the British Empire waned; Switzerland kind of took over, and the ISO standards came in about 20 years ago out of Geneva, Switzerland. The whole goal of all these standards is to try and make sure that your production is uniform, that you have quality control, that you can track back if there’s errors. If somebody gets hurt by a product, you can go back and find out who the manufacturer was, which was what happened with some of the products that Wal-Mart was selling from China recently. But basically, Essential Depot, our goal for the next five years is to get ahead of the regulation, because trust me, the regulation is coming. Even you guys are going to need good manufacturing practice within the next five years. I’ll tell you what happened in Europe, is, we went into Europe, the ISO standards kicked in, the product regulations kicked in. When my nieces were 5 and 7 years old, my sister’s a beautician, she operates from her house in England. My nieces were 5 & 6, Josie and Emily, and we were there for Christmas, I said, hey guys want to maybe make some extra pocket money? I’ve got all these natural bars of soap that my customers make. Let me get them and I’ll ship them to you, put them out, keep 50% of the money and give me the rest when I come over for Christmas, then we’ve got some beer money. Josie and Emily, right in tune, put the basket out by my sister’s beauty room, they were making £20, £30 a week pocket money, because the customers loved the natural soaps. It was amazing. My sister, being European and very cautious, went online and found out that I was causing her daughters to break the law of the land. Because the law of the land in England is that every product has to be certified by the EEC standards, every single skin care product, whether it’s soap or not, has to carry an EU registration numbers. Which is why I’ve hired two people in England three months ago concurrent with this effort of Essential Depot, to allow us to show European soap makers how easy it is to actually get certified. Because with all this stuff, you learn about accounting, you learn about regulations; if you’ve got someone that will help you over the hump, and knowing what you can do, it’s really not that difficult. It’s just a bunch of paperwork. So my goal for Essential Depot, as those regulations that are heavy in Europe start to apply here in the States, is to allow our soap makers to access GreenerLifeClub.com, get all the answers of what they need to do, and have all the forms they need to fill out, and stay certified. Whatever that might mean. There’s a bill that the soap guild has been lobbying against, but it will come. So right now, what did I do at Essential Depot? I hired a great team of people; we worked together, Mike was instrumental, Susan has been instrumental, Britney has been inputting; and we implemented, we read the ISO 9000 standards, we read the ISO 9001 standards, there was no way I wanted to spend the $5,000 to $50,000 a year that I would have to pass to my customers at this point when it wasn’t a requirement. But I wanted to get what I considered as ISO 9000 capable as possible. So what we all came up with, and it was a joint effort of about two months, lots of input; we decided that every product in the US has a UPC code. Now if you want to sell on Amazon, you can’t sell anything on Amazon without a UPC code. How many of you guys have UPC coded product, right now? The lady in the back with the goat milk soap. She’s a very advanced soap maker. And we’ve had some great talks here. But trust me, and right now, you go onto Amazon. Do a search on goat milk natural soap. Or just natural soap. You’ll find between 2,000 and 10,000 people who are ahead of you guys, who’ve got UPC codes, selling natural soap, and they’ve got between 25 and 200 reviews. I know exactly the proportion… when you go to Amazon, they ask you to review the products you buy. Only about 1 in 200 people actually leave a review. So, when you see a natural bar of soap being sold there with a hundred reviews? They’ve sold a lot of soap. Basically, you can multiply that out, and they’ve sold 20,000 bars of soap. You guys are all missing out on that opportunity. What we’ve done at Essential Depot, we are listed on Amazon, about 40% of those quantity units I said sell every day for us, are on Amazon. Everything’s UPC coded. For the good manufacturing process, we decided to take the UPC code… If you take the bottle of Ylang Ylang that was in your gift basket, you’ll notice it’s our UPC code, embedded also is an “F” for the flash point of the product, and then a unique serial number. So that allows us to keep track on our system. This is the label. So right here, this is the UPC code, 81284… up to the 77, the 14 is 2014, the flash point is 89, and the serial number of this Ylang Ylang is 0854. That provides an awful lot of automation for us. If Mike goes to good manufacturing process, and we go to, how we use it… the other thing that’s happening in the market is Google. I’d always thought Google was going to fall flat on their face, unless they do something different other than advertising and pay for clicks. And behind the scenes, they have done something quite remarkable. They have set up a set of tools called Google for Business, and only about 1% of businesses in America are using those full-time for now, because they haven’t looked into them. Those tools include a fantastic spreadsheet, form-filling, back-end processing, analyzation… So we decided, because we like to be revolutionary, ahead of the game, to do everything with Google for Business. So we have three elements of our good manufacturing process. The first element is the product has a label with a UPC number which is unique. So all we have to do from a manufacturing point of view, is ask Britney, who’s our production manager. She has to allocate the task. I want 1000 bottles of Ylang Ylang done. I tell Britney, and Susan, I want 1000 bottles of Ylang Ylang. Our marketing department generates 1000 labels. I spent over $100,000 on the technology, the printing technology. We have two sets of printers that do 1200 dpi printing, so we’re able to print these labels. We use a 4x2 label and we use a 2x1 label. We’re standardizing on those two label sizes, and we also, for the bigger products, are phasing in the 6x4 and the 8x4. But for the products that you guys will be selling, the 1x2 label or the 2x4 label on your soaps will be good. So, I tell Britney I want 1000 Ylang Ylang. She has to generate, first of all, a work order. Now, how that’s generated is with a script. Mike wrote the script, this script is quite a complex piece of code. Behind this, when Britney’s in there, she clicks down, assigns herself as the manager, decides which of the guys at the warehouse is going to do the job, who are the four technicians, up to four technicians that are going to assist her… She presses the button and it generates a pdf work file that is basically not changeable. That gives us an order history from the point at which Britney prints that and she passes it to the primary technician. The primary technician goes off, gets the guys that Britney has allocated, and they do the job. Up comes 1000 bottles of Ylang Ylang. On the form, that they fill in, this is the form that they fill in. Technicians, were there any problems, was the right safety equipment worn, was the right environment there, was it food grade, was everything right. The task manager has to sign off on that, and then when he passes the completed form back to Britney, she has to sign off on it. Because what happens when these forms, which is basically … and this is a great way to manage a business because it allows all your employees to know what’s going on, and to understand that we have a record of how many bottles they did, how long it took to do, were there any issues? So the back end of this system, the pdf file is generated, the back end is basically a data entry person putting it in the system, and then the Google analytic program is to analyze the data. We can to find out how many products shipped with this manufacturer’s product, how many products shipped where there were problems, because we’ve got problem fields. If we have a problem, as we did recently, we had a customer, a $3000 vegetable glycerin order went out the door, Susan’s department is the customer service front line, they then passed the issues back to Britney. We had burned lids. The induction seal lids had melted the plastic, they were brown, they couldn’t use $3000 worth of vegetable glycerin. We were able to go back into the system, find out who the task manager was, find out who the technicians were, find out that they knew we had a faulty induction machine, but nobody had told Britney. So there went about $1000 of their Christmas… we do quarterly bonuses at Essential Depot. That’s how I run the business. Every quarter I hand out bonuses based, if there’s a problem like that, there’s a loss of bonus. But it’s all tracked through this system. So the great thing about the system is we’ve got a serial number, we can put into the back end analytics. Let me show you the staff doing it. Now we did this this week. I always, I’m much better than I ever used to be. But I always used to get accused of leaving things until the last minute. Susan would still say I do. But I can tell you what, in order to grow our business the way we are growing our business, you don’t really have a choice. Catherine was going to get me stuff by Monday, we’re all busy. We’re opening stores. We’re doing things, you never manage to do everything perfectly. So I told Mike, quit the work you’re doing on our new shopping cart, which incidentally is going to be launched on January 27th, we’re spending $71,000 to move our old-fashioned pedestrian Essential Depot shopping cart to one of the best shopping carts you’re ever going to see on the Internet, which is tied back into our good manufacturing practice. When you guys come back, I’m going to take you through our new shopping cart, you’re going to have a preview of our new shopping cart right before we release it. There’s a whole bunch of things you’re going to see at the next retreat. We’re piloting with Catherine, a lot of the stuff with these labels. We’re going to offer you the ability to do labels for you, to help you with the barcoding. Because barcoding costs you upfront. I also get carried away sometimes, I have a lot in my head that I want to get across. Let’s come back to the people at Essential Depot. A week ago, I said Mike, quit that work on that shopping cart, you’ve got a week to build a new website. I went out and I bought goodmanufacturingpractice.com from sedo.com, it’s a great place you can buy a domain. Our goat farming UPC coding customer who’s now a lead edge customer, based on the conversation we had, she’s already registered a new domain name that’s going to get her a better google rank. So Mike, you’ve got a week. I want you to build a site of good manufacturing practice. But I also want a prototype of what we’re going to do at this retreat. Because I want to take pictures of everybody that wants to come back. I want to give them a soap cutter, I want to take their $500, I want Susan to be taking pictures. I don’t want videos. I want a high quality picture and I want high quality audio behind it. We bought this wonderful, who makes this audio system? Phillips, we bout a super duper audio system so we could record everything that goes on. Trixie has been duly licking people’s ears, and we got pictures. And I saw Susan doing interviews. But we needed a prototype to make sure it would work. So let’s look at what happened at the warehouse, when was this? Thursday! Nothing like leaving things to the last minute! Susan went out to the warehouse Thursday, this is Britney, who is the manager who assigns the task to the task managers. And I hope Mike’s got the audio working. Because we’re going to hear Britney saying what she does, I hope. Kevin, I know what it feels like now. DH – Let’s go back to the manager on duty. I wonder who that is, let’s see what she says at the end here. DH – And then we come down to the data entry operator who is taking that auditable, ISO 9000 auditable form that we keep on record, should we ever get audited, should I ever decide to spend the money, and it’s entered into the system which we can then do analysis from using the Google for Business platform. Now let’s go to the final picture with the handsome group of people in the warehouse involved in this process right now. This is our warehouse team, the people involved in our good manufacturing practice. And, this has been implemented in the last six weeks. You guys are going to have, if you’re going to have a business in soap in the next five years, I would bet any one of you right now $1000 that you’re going to have to have certification. Anybody wants to take that bet, you’re welcome. Now, what can we do to bring you along and be our friends, and we can help you and you can help us. You can sign up for the next retreat, knowing that when you come, we’re going to have a whole new section built up on this section. Catherine’s going to be doing some labeling stuff. We’re basically going to keep pushing the way we’ve been pushing and try and do the right thing to grow our business, explain to you all the things we learn along the way, and help you with your business. Especially at GreenerLifeClub.com, if Mike can go to GreenerLifeClub.com. This site was launched six weeks ago. I’ve launched, I have over 1200 websites, I’ve launched a few hundred websites. This is the fastest growing traffic website I’ve ever launched. That’s because a thousand units a day are going out with the fyi101 logo on them, and people are coming back to it. So, if you do decide to come to the next retreat, we’re going to take a video of you, and we’re going to list those members as a button at the top that say our repeat retreat members, our platinum retreat members. We’ll think of a right name. And we’re going to have the audio of you, with your picture just like the ones at the warehouse, featuring you, linking you back to your website. I’m announcing to everybody, if you do this, don’t come saying it’s any intellectual property; as a group I want you to know, you’re giving us that video, we’re using it to promote us and you and build a business. Other companies would get you to sign a 20-page release right now. I’ve been around long enough I know that all I need to do is tell you all. This is generally what we’re trying to do. It’s a hard job to grow a business as Paul will tell you. You do have to keep accurate accounts. You have to do all this good stuff. So, I’m hoping you, at the end of this weekend, feel like you want to come back, because I really would love to see all of you again at the next one of these. And this is the schedule for the next retreat, these are the retreat schedules, this is also a comment form. So we want to collect your input after the retreat. I’m hoping that Kevin will come back as a repeat lecturer at all of our retreats going forward. Obviously, he can’t give us a commitment on that right now. DH – He’s in! So now, I think, with the team we’ve got, and I’m going to negotiate with Paul, I’m going to try and get Paul down to less than a hundred dollars. And I’m going to include that accounting thing in the next retreat. So it’s not going to cost you anything, you’ve just got to get here Friday morning, spend four hours with Paul. And believe me, I’m a good negotiator. So, we’ll get you fully educated on QuickBooks, because I’ve used QuickBooks, I know it’s the best platform. I know that with the download from SunTrust, I use SunTrust for my business. Essential Depot’s payroll all goes through SunTrust. SunTrust payroll costs you from $50 to $150 per month is the level we’re at right now. We’re at 20 employees and it’s only costing $150 per month. And it’s all automated on the SunTrust download into QuickBooks, it’s fantastic. So, if you have a SunTrust where you are, I would very much recommend it. Catherine, did I miss anything you wanted me to talk about? CM – Yes, I don’t know if this is the proper time to talk about it. But could you touch briefly on those that live in the state of Florida and making cosmetics vs making soap? DH – Yeah, absolutely. There’s a big misunderstanding that the FDA regulates soap makers. They don’t. And that applies to Florida, too. Florida doesn’t regulate soap makers. They only regulate you if you claim medical benefits of the soap. Then you’re regulated and you fall under the FDA. But if you’re just making soap to clean the body, you don’t have any regulations anywhere to worry about that I’m aware of, anywhere in America. Certainly in Florida, and certainly federally. Which means you can sell the hell out of soap which I think is a fantastic business right there. That’s where you should get started. It’s costing 20 cents a bar, you sell it for $3, $4, $5 a bar. That is a pretty good markup. Even when you buy refill kits for our soap making, you’re making bars of soap for less than 50 cents. That’s us with our profit in there too. You start buying our gallons, in bulk, you’ve got a great business. So, soap – no regulations to worry about unless you make medical claims. Now, cosmetics, as I’ve said in Europe, they’ve applied the skin care/cosmetic laws to every skin care product including soap, which is what got me into trouble with my nieces and my sister. In America, there is no Federal cosmetic law. There is no, this is right now. Make hay while the sun shines. DH – I don’t know the answer to that, do you? CM – Absolutely, bar soap is the only soap that you can make in Florida without having the state of Florida come give you a certification or regulate you. CM – At your home. I do believe… you say you know more? SJ - It has to be made with sodium hydroxide to be considered soap by the FDA, if it’s made with potassium hydroxide, which would be liquid soap, it is regulated. As far as your home, I’m not sure what that issue is. CM – So if you wanted to make bath bombs, you wanted to make lotions, if you wanted to make lip balms, that is outside the realm of soap. DH – Yeah, it’s going to come down to that next. There’s a handful of states that have cosmetic law, they’re ahead of the federal government. Just like the marijuana states are ahead of the federal government. But there are, and Florida, unfortunately is one of them. So one of the motivations that I have, and Catherine knows that, for wanting to do the labeling with her is the potential I see for the perfume products. I have to wait six months for the state of Florida to approve me to sell a bottle of jojoba with a precious oil, which is really frustrating because we had spent a lot of money and were ready to launch it, when I did my due diligence and I found this Florida cosmetic law. Which is actually just tagged onto the drug law. All they did was take the Florida pharmacy law and bolt on cosmetics. So, if you make, any of you make a lotion from home, you are actually committing a criminal offense. It’s not a civil offense, it’s a felony. And Arizona’s the same? You need to check it, you need to search in Google for regulations in your state. CM – I’ll actually look tonight and see if I can get an answer on what states have the cosmetic laws. There’s a handful of states, but for today, you guys need to know, Florida is one of them. DH – I don’t know and that’s why… CM – Right, you can. You just need to make sure that you’re regulated or certified. CM – Right, you have to have a dedicated area outside your home. Except for soap. So someone asked about liquid soap. Liquid soap, which I hope that we can do for the next retreat, is made with sodium hydroxide and potassium hydroxide. So, because you add the potassium hydroxide, it takes it out of that field of being bar soap. So, it would be considered a cosmetic. I think. CM – Now did that answer the question that was asked about the liquid soap? DH – I’m hoping to bring an attorney on as well, for another speaker so we can cover this. Because we can’t give legal advice. What I was going to say is, check your state, get a copy of the regulations, and follow the regulations in your state. In Florida, all I can tell you, and I’ve been verified, hard bars of soap are not regulated. CM – One more thing you were going to touch on was the shipment of molds, how you sold out? DH – Oh, we’ve sold out, we’ve got 3,000 molds… Dave and Nancy are heading down to the Port of Miami on Monday and picking up 3,000 more of the molds. So, we’ve sold out of the natural molds. Catherine, last night at the hotel, I think… CM – No, it was here, I ran my mouth and I was wrong, so he’s going to clarify. DH – We’d like to ship you the samples that you make with Catherine, and one natural soap mold after the conference, so just make sure we have all your contact details because we are going to ship you a few bars of the soap, Catherine’s going to do a really interesting session with you where you’re experimenting with different things, and you’re going to get the results of that, and the soap you make tomorrow, you won’t be able to take tomorrow. So we’ll send you the natural mold with some soaps in it, boom, boom boom. CM – And I thought that you were going to be able to take it with you, that’s what I said. But because they don’t have any, we can’t. DH – And we are going through them, that was a product that took us a lot of research and development, trying to get the size right, get the baskets right, get the soap cutter right. We’re also bringing out new products with SoapEquipment.com at the Indiana show which will be just as revolutionary. And I always want to preview at the retreats the new products coming when they’re within a month of coming. I don’t want to do it now, but I’m excited about what we’ve got coming up for Indiana next year. CM – And I’m excited too because I know what it is. CM – I can be bought. DH – Especially after two drinks. Okay, we have a survey. It will be great if you can fill the survey in, I’m taking Kevin back to the airport after breakfast at the hotel tomorrow. So we’ll be leaving about 9:15, 9:30. I will be back during the lunch area, and I get accused of being a hell of a salesman. But I really, basically, say what I believe is a good thing. And I’d love to have you all come back. I’d love to have you sign up. Take a cutter with you. We’ll be able to firm up some of the things with Paul. Because I really want you to have that 4-hour session as an option for not any extra money for you, because I want you all keeping your books, I know QuickBooks is the right thing. I know that Catherine and I are going to finalize the label options that we can offer you, the UPC codes… right now, if you want to get a UPC code, you’ve got to spend $500 to get registered with this GS-1 organization. But I can issue you any number, we have thousands of UPC’s. I can issue any one of you a UPC code for a product you want to list on Amazon, which I would strongly recommend you do. Okay, I want to finalize that program with Catherine. I view Catherine, with her business background, and knowing the US market, we’re going to bounce it off and we’ll present what we come together with at the next retreat. And, by then, Susan will have the extra employee that she needs. Where’s Susan. Basically, our marketing and sales department is on the cutting edge of this, so, uh, have I missed anything? Britney, have I missed anything? DH – Okay, anymore questions? DH – Oh, if you already have a cutter, I want to give you a $200 credit that you can use for product now, you can use any time you want, and Paul’s not here – I want to check with Paul – the young lady who spent the money for this, I want to see if we can refund you and then we can trust you to pay us again when you set your business up. In the new year, I don’t see a problem with that, myself, but Paul keeps me honest. And Paul sees problems I don’t even think about, which is why I need him. DH – Yeah, so we’ll have that discussion tonight. But the deal is, you have to come to the next retreat, and we have to start the QuickBooks process and we have to get you going. That nursing enema stuff has got to stop! CM – And we do want to stress that, each retreat is going to be different. You’re going to have different, it’s all going to be about soap making, but each one is going to be different. So, if you come back in January, you’re going to learn something totally different. DH – But it might not just be soap making, who knows? Catherine might be set up so she can do private label perfume stuff for you, and I don’t know. You never know. You never promise more than you can do and you take a step at a time and you try not to wait until the last minute and do it right. So Catherine and I are going to have some fun because I think there’s a bigger potential for these perfumes, jojoba is a very interesting, I mean, yeah, it is a wax. But did you know out of the 350,000 botanicals around the world, it’s the only one that when you crush it, you get an oil that has no triglycerides in it which is why it’s a wax. It’s heavy and it’s great for the skin. If you’re using perfume from Sacs 5th Avenue, it’s alcohol based, it’s bad for your skin. So, our little perfume, do you have that, that little roll-on, we sell those roll-on bottles for a 50-pack for $19.99. You can put a bit of product in that, the jojoba with some jasmine or some civet oil, you’ve got a wonderful perfume, you can tell your friends your body becomes your canvas for your perfume, a bit of this on, a bit of this on. It’s better for you, and you can sell that to them probably to them for $5.95. DH – No, that’s the problem, that’s why we might need Catherine if we need to private label this and I haven’t even seen her operation up in Kentucky yet. CM – Come on up. DH – I love going to Kentucky, last time I went I got chased by a pit bull dragging a kennel down the country lane. CM – It might happen again this time! DH – And I’m going up to Indiana, to where the soap guild conference is next week, I’m meeting with Ron, Brandy’s stepfather, Ron and I, see we’re jointly sponsoring - I’m considered kind of crazy at the soap guild conferences because I spend $30,000 to $50,000 at every conference. I sponsor the dinners, we’re sponsoring a dinner with SoapEquipment.com which is where we’re going to be announcing in probably a black ballroom to give you a little bit of a hint – it’s going to be totally dark in the ballroom, and we’re going to cut the lights up and see all these new products. So, that’s the night before the awards dinner. And Ron, we’re going to have a chat with Ron, and we’re going to plan it and I’m going to be up there. I’m looking forward to seeing the hotel. Any more questions? DH – Yes. CM – Survey tomorrow and then, we’re going to make.. DH – But we are going to run out of time, if a lot of you want to do, come back to the next retreat, Susan’s doing the interviews over here because we want to put you at GreenerLifeClub.com. So I really encourage you, if you’ve made the decision to come, grab Susan and have that made. CM – Or even if you’re on the fence, on this side of the fence, do it. Get with Susan and do it.