Candle Wax + Rising Fuel Costs = Zero Profit

image010.jpgFor the past 4 years, I have had  the pleasure of turning my hobby of candle making into a full time business.   Kiski Valley Kandles was born from my own desire and need for  highly scented candles that not only smelled great but looked great also.   Let me tell you, it is not a cheap hobby to have.    However,  after  many trials and tribulations, I was able to begin offering my candles to customers locally and online.   I prided myself in being able to offer great candles at reasonable prices.  

Everyone is aware that when  it comes to your supplies, price increases are bound to happen at least yearly.   That, unfortunately, is an expected aspect of business we cannot change.   For my business, the most expensive part of candle making is the wax.   Within the past year, the rising cost of raw materials combined with the gasoline prices for truckers to provide us with these supplies has caused wax prices  to skyrocket.   Combine that  with increases in glassware and scent oils and my profits quickly dwindled to nearly nothing.   Forced with the decision of either raising my candle prices sky high or temporarily closing, I chose the latter of the two.

I’m not going to complain too much because I actually got away cheaper than a lot of my fellow candle makers.   The wax I prefer to use is a soy & paraffin blend.   Being that my wax is made with a smaller portion of petroleum based paraffin, my prices didn’t increase as much as my competitors who use straight paraffin.   Those using straight petroleum based paraffin saw their cases of wax increase 25% – 30% compared to my 10% – 15% increase.  

Small home based businesses like mine really don’t stand a chance in the current market.   Besides the rising costs of supplies, consumer  spending is down; “June Inflation Drags on Shoppers“. Hopefully within the next year or two, things will turn around and I can continue using my creativity to  make  great smelling candles.   But one thing’s for sure – I’ve learned a valuable lesson here; always expect the unexpected.

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About The Author:   Amanda Stillwagon started her career as an office manager for a 4 doctor veterinary practice but her love of candles and her entrepreneurial spirit led her to launch her own business, Kiski Valley Kandles.   That business introduced her to the online world where she now appears as the assistant editor here at smbceo.com and author of her own blog myfindsonline.com.  

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13 Comments Candle Wax + Rising Fuel Costs = Zero Profit

  1. Dan

    I’m a little confused by your blog entry. Did you close your business or raise your prices? You say you chose to close your business as opposed to raising your prices, but then you say your prices didn’t increase as much as your competitors’. You also mention that you only had two options…closing and raising prices. There are so many other options – including selling more of your product, introducing new products, negotiating with suppliers, and changing your business model altogether. Of course, your two options are the easiest, but I wouldn’t limit yourself. Be innovative!

    Dan

    Reply
  2. Anita Campbell

    Amanda, thank you so much for sharing your situation with us all so openly. I am quite certain other business owners out there are in the same boat. Let us know if we can help.

    — Anita

    Reply
  3. Amadou M. Sall

    Amanda, on top of the options suggested by Dan, another option might have been going global i.e. exporting, for example to the European Union, Japan, China, Australia, even… Canada, just next door!

    Small business should be aware that going global is not just for huge companies. Anyone has got a chance!

    Reply
  4. Rene

    Amanda, Thanks for sharing! Know that all things happen for a reason and at each turn in life, opportunities lie ahead. What a change in your life from say 6yrs ago. With that in mind, stay open to the possibilities coming into your future. They will come!

    Reply
  5. david

    My condolences on the setback — but as noted above, I too am a bit confused. It seems to me that selling online would actually be cheaper than hauling yourself and your candles to fairs, farmers’ markets, etc. Would it be feasible to sell ONLY online?

    Reply
  6. Techrat95

    Wow! Yes, we’ve had our own bouts with this because we offer field service to our customers. We have been able to curb this partially with half of our staff by simply compensating based on the federal mileage rate of 58.5 cents per mile, but for our company vehicles which we fuel internally, the cost has really come against our bottom line!

    Reply
  7. Kenneth

    Amanda
    I think you are very brave even to be in manufaturing these days, precisely for the reason you have described, escalating raw material prices.
    If you cannot achieve a margin at the level of Price less Materials there is little option to either increase prices or stop production. I suspect your comments about your ability to keep your rising costs lower than competitors is your first salvo in the fight back. Let customers know how much you would have had to charge,they may well support you.
    Some of the most powerful businesses use the “retreat tactic”. Live to fight another day and all that!
    Good Luck

    Reply
  8. Steven M

    Sorry to hear that Amanda. I have started and lost several businesses over the years as well. And yes I was “innovative” and tried to increase sales with new ideas and approaches. I put in more hours, met more customers, streamlined operational costs, and every other guru or textbook related cure. It boils down to this and it cannot be refuted: small business is risky and the owner will never anticipate all fatal business or regulatory threats. Small businesses fail at alarming rates and no amount of perseverence or innovative dreaming will change that fact. My advice Amanda is to use your creative impulse for something that pays and does not subject your life to the unnecessary risks of small business ownership.

    Reply
  9. chris

    One point I’d like to mention that I think some are not taking into consideration here is that – candles are HEAVY. Shipping is costly. Selling online and buying a candle for $10 and then paying $8 to have it shipped really isn’t justifiable in this current economy.

    Another point I’d like to make is that given our current economy, people are making cutbacks in their spending. And unfortunately, having candles in your home is one area that people can afford to live without right now.

    It’s an unfortunate situation. And as far as going global, you’d pay twice the cost of the candle just to receive it at your door. It’s not enticing to buyers and it sounds like she wasn’t running a factory. Most likely, this was a home run business situation. Not that it couldn’t be taken to the next level, just that for a home run business to go “BIG TIME” – that’s an awful lot to overcome a poor economical situation right now.

    I understand why the biz is temporarily shut down and it sounds like some price increases took place prior to making that final decision. I’m sure in the near future, you’ll have another shot at it.

    Maybe it was for the best, too. I know many people probably would’ve tapped into personal assets, savings, etc. in an effort to avoid closing the biz. And that probably would’ve landed them in hot water for many years to come. So I think you did the right thing.

    Wait it out – this too shall pass.

    Reply
  10. Nancy Forsyth

    Amanda:

    We are also in the soy candle business and in the same boat as you because of the flooded soy crops in China last year, this year in Iowa and commodoties speculation driving our prices therough the roof. Our costs tripled in the last year. We have stopped all wholesale production and are only selling at retail cost now at about 10% of previous volume. We started the business so that one parent could be a stay-at-home, while not taking a huge loss in income. We sympathize with you and are actively searching out other alternatives, but the enjoyment that making our candles provided can’t be replaced. Our best wishes in your endeavors.

    Reply

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