Sep

17th

2010

'Shopaholic' Finds Small Business Niche - Business Edge


Discount wholesaler's CEO has made the most of her childhood dream

By Monte Stewart - Business Edge Published: 10/17/2008 - Vol. 4, No. 21

Jody Steinhauer's small business has come a long way since she started it from her apartment with  $1,000 two decades ago.

The Bargains Group, a Toronto-based discount clothing wholesaler, sells about 5,000 clothing products to retailers, as well as providing branded promotional items to other small and medium-sized firms and charitable organizations.

Steinhauer, who mentors and often speaks to women entrepreneurs, has also garnered numerous awards, including Canadian Woman Entrepreneur of the Year (innovation category) and Canada's Top 40 Under 40.

"I was a huge disappointment to my family because of my education," the company's president and CEO says. "I have a whole family of doctors and lawyers and I was a 98-per-cent (average) student. When I said I was going to fashion school, they all kind of looked at me.

Brennan O'Connor, Business Edge
Bargains Group founder Jody Steinhauer has been recognized nationally for her entrepreneurial skills.

"It took me a long time - especially my grandparents - to convert them, to make them understand that I went to fashion school, I graduated No. 1 (in the class), I had the pick of jobs and within three years I was making double or triple than my cousins, who were doctors and lawyers. In my speeches, I talk a lot about that passion."

1. What do your parents do?

"My father is actually my controller. He was the (vice-president) of finance for a large (company) for many years and took early retirement and couldn't sit still, so we hired him on. He's been with us for many years. My mother runs and created an international foundation called The People Bridge Charitable Foundation, which fundraises and finances (programs) for people in poverty all around the world."

2. What early lessons did you learn that help you in your business today?

"Early lessons are: Think of those who don't always have what you have, and give back. My mother was a stay-at-home mom, but did a lot of volunteer work. It taught me at an early age how important it is to give back to your community. And, truly love what you're doing. I looked at my father and family members for many years and saw (some) people that had good jobs that they were really passionate about and loved, and those that didn't - they made a lot of money (but) were miserable. I realized that happiness is something you can't put a price on. The other big thing is, reputation is absolutely everything."

3. What kind of career did your family have in mind for you?

"They always knew that I was going to be in some kind of business, but I really think they thought I was going to be a lawyer, because I liked to argue a lot as a child ... or, because I'm good with numbers, some kind of commerce."

4. What was your childhood dream?

"Just to find something I really liked to do. At a very young age, I realized I was an awesome salesperson. I had various sales roles. I worked at Fairweather, the chain of clothing stores. I was 14 years old and I was their top salesperson and I only worked 20 hours a week. That was just one of several jobs I had and I made a lot of money doing them. I realized I wanted to do something where I could interact a lot with people, where I could make people happy and I could make lots of money based on the (amount) I worked. But I really didn't know what that (career) was. I also loved shopping and I loved fashion. So I didn't have a big aspiration, other than to make sure that I made lots of money, lived in a nice house and had a good family life and was happy."

5. Who were your early mentors?

Jody Steinhauer

"Some great business people and family. My grandfather (had) a very tough immigrant life and really excelled and persevered in a very tough environment where everyone said he wouldn't do well. He really taught me the pure value of doing the right thing, and if you work hard it will all happen for you. Early in my career, I saw mentors in a different way - negative and positive. I made very sure that I didn't want to be like the negative mentors. That's a really important thing that I talk to people about. Nobody talks about negative mentors."

6. Can you give us some examples of negative mentors?

"Without naming names, previously people that I had worked for.

I saw ethics and work habits and business practices that weren't above the table. I saw those kinds of things and (told myself): 'I do not ever want to be a business person like this ...' As far as positive mentors, when I first started out, there were a couple of key businessmen that took me under their wing and taught me how to do business. Then, later on when I started having children, I was looking more for female business mentors ... I always look for people who have been achievers but also have a whole balance in their life of family, business and good ethics. I've got lots of mentors in my life right now."

7. How did you get involved in the discount clothing business?

"At a very young age, I recognized I love to shop. I'm a shopaholic - and I'm really cheap. I took my passion for that and I went through school for fashion. Realized within 12 months that that end of the business was not for me.

"It was too artificial and phoney and wasn't fast enough. Twenty-five years ago, I was introduced to a gentleman who had 30 discount stores in Ontario, and I was brought on to head up a wholesale division to complement his retail division. There wasn't a whole lot of them out (West). He went out and bought up inventories of merchandise from factories, and he would put a portion of the inventory into his stores and sell it retail and give me the other portion and have me sell it to other retailers. As time grew on, my division of the company became the big division. He'd buy up and I would sell 80 per cent of it wholesale and he would sell 20 per cent of it through his stores, because we just started increasing the volume. I'd built a network of stores across the country that needed deals. The only reason that ended was because he made a huge acquisition into another business that, basically, he shouldn't have done. It took the whole company down ... He came to me and said: 'Lookit, the whole company's going to have to go down, but I've already set you up. I'm going to set you up next door in a new building, because you're the one who makes all the money. But for the next six to 12 months, you're not going to be able to afford any support staff, because you've got to rebuild it. But you've done it once; you can do it again.' " 8. Why did you go on your own instead?

"At that point, I realized, if I'm going to do it, I might as well put my name on the door. I wasn't married at the time, I didn't have a mortgage, I didn't have children, and I basically left on great terms. I started two days later, and all of the big suppliers that used to supply us got wind of this and, through my reputation, they all called me and said: 'We'll send you stuff. Start selling it and when you get paid, just pay us.' Back 20 years ago, I didn't understand how huge that was. These people were sending me hundreds of thousands of dollars of merchandise because I said I sold it, and they told me to pay them when I got paid. Now, when I talk about and I look back on it, I say: 'Wow, they wouldn't have done that if they didn't trust me.' They knew I have a lot of integrity. That's how I started my company with $1,000, because they financed it."

9. How did you start?

"I started in my two-bedroom apartment. Suppliers called me and started sending me samples. I would go out during the day and show them to stores, they would place orders and, in time, I would fax my orders in and the company would then ship me the merchandise and I would get it delivered and then I would get a cheque within 30 days and I would pay the supplier back. I then went to somebody I knew who trusted me, and said: 'I need space. I'm choking. I'm growing.' They said: 'Take the back of my warehouse. Here's a key. You can come and go.' They gave me 200 or 300 sq. ft. to use. Within another few months, I ran out of space again... . eventually, we got our own offices. But I always grew very carefully and never got the big office, hired staff or big fancy car. I grew as I needed to grow and invested everything back into the business.

We are in our seventh facility in 20 years. We purchased this building.

We are in mid-town industrial Toronto. We own about a 20,000-sq.-ft. building, which was also a great business decision, because it's doubled in value. We've already grown out of this space. We have three other leased warehouses across the country where we just rent and store merchandise. But, essentially, everything is run out of this (Toronto) warehouse."

10. What was the turning point, when you knew the company was going to go where you wanted?

"When I started the company, I was 22 years old.

"If anyone had asked me where the company was going to go, I would have said: 'Well, I'm going to work towards having my own offices, getting a couple of people to help me out, and build this network of great places to buy deals.' Within one week, I realized that wasn't going to be a problem to do. I was just going to need some time to do it properly. I'm an accountant's daughter, so I do things pretty safely. I'm not a huge risk-taker. I'm very methodical. We've had increased growth every year, but there's a reason, because I don't take crazy, way-out-there risks. When Wal-Mart announced it was coming into Canada, I realized that Canadian retail was going to have to pick up their socks, because the Americans are awesome merchants. We can learn a lot from them. If we weren't going to be able to really do better at what we were doing, then retail was really going to be going out of business, left, right and centre. Right now, and I think you'd agree, that's definitely happening. So, I recognized that I was going to have to look at different avenues of expansion for my business if I was going to continue to grow like I wanted to ... A big success factor of my growth is, I look at everything around me and say: 'These are opportunities.' " 11. Where are your products manufactured?

"Everywhere. I try to do as much as I can in Canada. But, daily, mills and factories are closing up. So Canada and overseas - China, India, Europe, wherever there's a deal. We don't manufacture onsite. We have strategic alliances with our screen printers and embroidery (people), who are local people."

12. Given the concerns about sweatshops in other countries, how do you practise corporate social responsibility?

"We're very careful. When I tell you we're buying goods all over the world, we're buying them from networks that I've done business with for years. I can go to all the factories and see the conditions. Also, if we're buying overseas, I try and stick to players that are dealing with the major people. For example, Wal-Mart is fantastic at the policies they put in place in regard to social responsibility. If they're dealing with Wal-Mart, believe me, (Wal-Mart officials) have scrutinized them backwards, forwards and upside-down (to check) the kind of business they have to have to get their stamp of approval."

13. What personality traits does a small-business owner need to succeed?

"They have to be flexible, because things are changing in today's environment, faster and faster every day. They have to have an incredible nose to sniff out opportunities, and they have to be fantastic with people, because people are your biggest asset and your biggest resource."

14. What unique challenges do women business owners face?

"Although men are much more supportive in the family environment than they were when I was being brought up, we are still the mother, the wife and the business owner. I might put you on hold because my nanny calls with a problem from school. She's not calling my husband, she's calling me. We still have to make sure that all of these different areas of our life are running smoothly, because if they're not, as a woman, we're usually going to put our relationships with our families and our spouses before business. If we don't, we're not going to have a family or a husband. We may have a great business, but it's very hard as a woman. That's one of the reasons I have a hard time finding women mentors ... There are very few successful women who have it all. They get to the top of the ladder and then they get that pink slip. Then they don't have that massively paying job, they've got no one to share their life with and they've got no children to look after them if they get sick. As a woman, you're always told that there's no glass ceiling and that's absolute B.S. That ceiling is definitely there. The other thing women have challenges with is, they take a lot of time off to have a baby ... If you miss three months of work now, it's like missing three years of work. I've got people that I meet on the playground coming to me and asking for jobs."

15. How do you balance everything?

"My life is micro-managed to the minute. I don't watch television. I've made that choice. I've got to book everything in my life off. You've got to be incredibly organized to be able to do it all."

16. Do you have a full-time nanny?

"Yes, I have a full-time (live-in) nanny. I've only had two of them in 10 years. She does it all. Cooking for me is something that I put in a microwave for 30 seconds. I'm proud to tell you that I do not do that well."

17. What is the most difficult part of your job?

"As an entrepreneur and visionary kind of person, I get offered so many amazing opportunities daily ... and there's just not enough of me, because I'd be pulling away from my family. I work long hours and there's only so much I can do and do it well. The other thing is bringing the right people into my organization ... I hate managing people. I'm great at it, but I hate it."

18. What is a typical day like for you?

"I wake up at 6:30. I exercise for about 10 minutes. I try to get ready and organize my day before my nanny gets up and then I get the kids up. I start getting ready for work, I take my daughter to school and I head to the office. My assistant briefs me on anything I need to have. I put on a (telephone) headset (and spend) the majority of my day helping clients. I'm actually involved in every sale. By six o'clock, everyone starts leaving and I spend the latter part of the day returning phone calls. My kids go to bed pretty late because they wait a long time to be with me ... and then I sleep for about four hours. From Friday to Sunday, business is turned right off."

19. What's your advice to other people who are thinking of starting a small business?

"If you like to do something and you know what you want to do, then you just go for it. Don't listen to what anybody else says. I know a lot of miserable doctors and lawyers who make a lot of money. I truly believe that you will make money if you find (what you love to do)."

20. What would you do if you weren't running the Bargains Group anymore?

"I don't know. Right now, I'm developing two other companies ... I do plan on talking (to women's and business groups) more and developing my public-speaking business more."

Jody Steinhauer

* Title: President/CEO and chief visionary officer of Bargains Group.

* Born/raised/age: Toronto /42.

* Education: Steinhauer has a fashion merchandising diploma from the Toronto-based International Academy of Fashion Merchandising and Design (now the International Academy of Design and Technology).

* Family: Married to Lorne Simon, nine-year-old daughter Spencer and four-year-old son Dawson.

* Career: After graduating from college, Steinhauer headed up the wholesale division of a Toronto-based discount clothing store chain. When that company collapsed, she launched the Bargains Group in 1988.

* Moonlighting: Steinhauer sits on advisory boards and committees of several charitable organizations, including the Salvation Army, Raising the Roof, which raises awareness about youth homelessness across Canada, Windfall Clothing, a national clothing bank that operates like a food bank, and CrimeStoppers.

* Awards: Steinhauer has won several awards, including Canadian Woman Entrepreneur of the Year and Canada's Top 40 Under 40.

* Passions: Connecting people based on their needs, shopping, travelling, working out, biking.

The Bargains Group

* Brass: Jody Steinhauer, president, CEO and chief visionary officer; Larry Steinhauer, controller (father of Jody).

* Profile: The Bargains Group is a discount clothing and promotional-product wholesaler that caters to small- and medium-sized retailers, department store chains and not-for-profit organizations.

* Stats: The company has 30 employees. It does not disclose revenue, but Jody Steinhauer says it is under $50 million.

* Corporate Structure: Independent private company.

* Website: www.thebargainsgroup.com * HQ: 890 Caledonia Road, Toronto, M6B 3Y1 * Phone: (416) 785-5655 (Monte Stewart can be reached at monte@businessedge.ca)