Small Michigan business struggles with inflation but not its social mission
PONTIAC—John Simmons is ready for shoppers at EveryBody Inc., where he’s stacked handmade soy candles on some shelves and displayed body products like his favorite Michigan Cherry soap on others.
It’s a quiet afternoon at the store on Saginaw Street, so it might be a while until Simmons, 39, gets to do one of the things he likes best about his job: ringing up an order on the cash register. He never makes a mistake.
“You're really good at math,” CEO Jenny Brown tells him.
- Bacon, labor, materials: Inflation pounds Michigan businesses
- A northern Michigan restaurant survived the pandemic, but not inflation
- Borrowing is getting more costly: What interest rate rise means for Michigan
Simmons shrugs off the compliment, but not the high-five from Brown, who started the business just before the pandemic in January 2020, selling natural bath and body products the company makes in the same building.
EveryBody, like many small Michigan businesses over the past two years funded with little capital, simply tried to survive the pandemic’s upheaval: government restrictions, health risks, supply shortages and now inflation.
“The challenges were so, so severe,” Brown says.
Yet while the workforce shortage adds to the pressures of business across the state, that’s not the case at EveryBody.
EveryBody is a social enterprise, an L3C low profit limited liability company, set up as a hybrid between a nonprofit and typical business. The structure allows the business to continue to provide jobs for workers with severe autism, Down’s syndrome and other cognitive impairments and support the job training at Dutton Farm in Rochester, a nonprofit also run by Brown.
Disabled staff like Simmons and Brown’s sister, Becca Smither, work side by side with neurotypical employees in most aspects of the business: production, packaging and sales.
The business structure is generating overall sales growth of 15-20 percent per year, reaching a half-million dollars in sales in 2021. Now it plans to expand, even as the lean operation with about 15 workers runs without a large cash reserve and faces escalating costs.
Brown said the staffing diversity is not just the business’s mission, but also its strength.
“People see employment of people with disabilities as charity,” said Brown. “And we have to kind of rewrite this narrative that it's good business.”
In Michigan, the labor force participation rate of individuals with a disability was about 26 percent in 2018, the most recent year available. The unemployment rate for this group was about 11.4 percent, about four times higher than the state’s overall rate at that time.
Among the state’s disabled population, about 6 percent have a cognitive disability. Brown said she wishes she could hire more of them.
EveryBody now averages 15,000 hours of employment per year. More orders will mean more work for staff, which are paid by EveryBody and their job coaches, who are funded by Medicaid. The chance to increase payroll is driving every decision Brown makes, she said.
“I cannot fail,” she said. “No business owner wants to fail, but if I do, where are they going to go?”
EveryBody is a small player in a saturated body products market, Brown said. But it’s finding a niche through its all-natural ingredients and regional marketing at about 35 stores — including the Busch’s Fresh Food Market grocery chain, based in Ann Arbor, and more recently through on-site selling at events, like the recent Novi Home & Garden Show.
After a slow March, April sales are topping budget, in part due to limited spring fragrances like candied pear and citrus agave.
A key business principal is to conserve as much cash as possible, Brown said. Risks are weighed by whether she’ll be able to make the next month’s payroll. Sometimes that means not buying ahead, even if she’s projecting price increases.
The pandemic has forced other businesses into that position, too, said Brian Calley, CEO of the Small Business Association of Michigan. The ones that navigate it well are surviving.
“When conditions change, it really does require some (business) change in either the way they're managing cash flow, keeping reserves or keeping inventory,” he said. “EveryBody Inc. is there. …It's an exquisitely well-run organization that is very, very sustainable.”
However, the supply challenges that started within months of opening haven’t abated.
Fragrances and essential oils can be hard to find. Lavender was unavailable for six months. A candle wax shipment was delayed for six weeks.
“We're just sold out of a lot of things and there was nothing we could do about it,” Brown recalled.
But the struggle that really stands out to Brown was the glass candle jars: Her supplier warned it couldn’t send more for eight months, just as two international companies — Facebook and LinkedIn — wanted a bulk special-order in time for corporate gifts at year-end 2021.
It took 48 hours and conversations with at least 10 companies, one based in Saudi Arabia, to find what she needed for the candles.
Shea butter has been in short supply, too, raising questions about what to do when products run out. The choice between waiting and maintaining a vegan product line or switching to goat’s milk base would have solved the production issue, “but change the integrity of our product,” she said.
Brown said recent gas prices increases are, like at other businesses, causing increased shipping costs. A recent order from the West Coast for $3,000 in jars cost $700 to reach Pontiac. A year ago, that would have been $250. The difference is about 20 hours worth of work for one of her employees.
“It could go towards something so much more important,” Brown said of the extra expense. “But you’ve got to do what you’ve got to stay alive. Stay competitive.”
Passing costs to consumers is hard, Brown said, and she’s trying hard to avoid it. The bath and body product market was easy to enter, because there is room for smaller producers. However, she added, there is price sensitivity among consumers who can switch easily to a similar product from a larger producer who hasn’t raised the price.
So far, the company is just absorbing the increases, helped in part by Brown paying some of the bills herself, like gas for deliveries and internet service.
And the company benefits from philanthropy. Its retail store and production center are based in the McLaren Oakland administrative building, where the hospital leases the company’s retail and nearby production rooms for $1 per year.
But other costs keep increasing.
“We don't want to jeopardize losing a customer to a different company because we've increased our prices so much,” Brown said. “So we're just trying to figure out how to cut costs where we can and stay really lean.”
At the same time, EveryBody is ready to grow. A branding upgrade is planned by summer, with a new logo and overhauled logos being designed to make the store appear more like a regional brand.
New products are coming too, with body wash recently introduced and a children’s line expected to launch soon.
The changes at EveryBody are taking place as Dutton Farm also grows, said Brown. Its budget is now $2 million, and there’s a wait list to get into the program.
Brown said she hopes that is a sign that other businesses will expand hiring of disabled workers. But, as someone also running a manufacturing and retail business, she recognizes the economic volatility in which many are operating.
She fears rising prices and what that could do to her budget.
But she said that won’t change her plans: She’ll keep making her products on a 30-day timeline, keeping the operation as lean — and sustainable — as possible so that it accomplishes all of its goals.
“What's exciting me right now is really the opportunity to use business to tell a really important story,” she said. “We're a business that is trying to change culture and the way that we think about our employees.”
Covering the intersection of business and policy, and informing Michigan employers and workers on the long road back from coronavirus.
Thanks to Business Watch sponsors:
Support Bridge's nonprofit civic journalism. Donate today.
We’ve been there for you with daily Michigan COVID-19 news; reporting on the emergence of the virus, daily numbers with our tracker and dashboard, exploding unemployment, and we finally were able to report on mass vaccine distribution. We report because the news impacts all of us. Will you please support our nonprofit newsroom?