Friday, June 23, 2006

Veterinarian Makes $3 Million A Year With A Crazy Pet Fountain Idea

Mary Burns Story

Dr. Mary Burns, 49, is a former veterinarian and the founder of Veterinary Ventures Inc. based in Union, Kentucky.

The Drinkwell is a pet fountain with free-falling water, a one-gallon-plus water reservoir, a pump and a charcoal filter for removing bad tastes and odors. Burns initially got the idea because her cat, Buckwheat, would only drink running water from a faucet. Tired of getting up during the night to give Buckwheat a drink, Burns created the Drinkwell after observing a decorative desktop water fountain that seemed to offer a solution for faucet-drinking cats.

The initial investment was less than $3,000 for a vacuum-formed mold, some initial inventory and an ad in Cat Fancy magazine

The sales really took off, with just over $3 million a year. Most sales are made through pet superstores such as Petco and Petsmart, and through independent pet stores, as well as specialty and pet catalogs nationwide

Pets can be an important part of people's lives, so it's not surprising that every year, individual inventors come up with dozens of new pet inventions. But the days of the independent pet store are over--and nearly all small shops have been replaced by category-dominating stores like Petco and Petsmart. Inventors can enjoy big-time success once they learn how to penetrate the big pet-store chains.

"I knew the key feature on the Drinkwell was the free-flowing water," says Burns. "I started by reading the book Patent It Yourself by David Pressman. I wrote up much of the patent description myself, but I had an attorney write up the actual claim to be sure I had strong protection." Burns' protection paid off--she sold the product without competition from 1995 to 2001 and, even after a competing fountain was introduced by a major pet-products company, the Drinkwell held its sales level because she had the market's only free-flowing water fountain.

Burns explains her sales success: "I started out in December 1995, selling directly to consumers through small ads in Cat Fancy, Cats and I Love Cats magazines. Then, in 1996, Hammacher Schlemmer called and wanted to carry the product, and Alsto's Handy Helper catalog picked the product up at the end of 1997. In 2000, I started to promote the product in trade magazines like Pet Age and started to pick up independent pet stores." Burns didn't just have some initial success; she had $2.2 million in 2002 sales, which also included Petco sales of her product.

Burns started with a functional product that was not stylish. "My initial vacuum-formed tool was very cheap (less than $1,500), but the product didn't have aesthetic appeal," she says. "In 1999, before approaching pet retailers, I decided to convert to an injection-molded product, which had a six-figure tooling cost, but which also provided a professional-looking product. That look was essential to Petco and Petsmart."

Burns' growing business was starting to overwhelm her in 2000. "My investment counselor suggested I contact Howard Consulting [a business management consulting firm in Reno, Nevada, now called Meridian Business Advisers], who initially provided help with my financial books," she says. "But they came to my rescue when dealing with Petco and Petsmart. I didn't know how to fill out vendor qualification forms, deal with allowances and discounts, or negotiate final agreements."

Howard Consulting helped Burns get the initial orders, and Burns went one step further in 2002. "I ended up selling the company to [Meridian's parent company] for an upfront fee and ongoing royalties. I felt that I was out of my league negotiating with the big retailers, and was also overwhelmed by the concepts of producing the product overseas and dealing with a major pet-company competitor," Burns says. "I felt turning the company over to experienced businesspeople was my best choice."

Big retailers will want at least a 50 percent discount from the suggested retail price, and they will also want allowances, which are a percentage of their purchases--typically 2 to 6 percent--to cover the costs of damaged products and advertising. You won't make any money if your manufacturing costs are greater than 30 percent of the suggested retail price.

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