The Better Scalp Company grew so fast that owner Michèle Marchand felt she had little choice but to sell. And so, on Feb. 3, she sold the bootstrapped business to a Mississauga-based company. Talking to OBJ this week, Marchand said the company was seeing incredible momentum – momentum she could not afford to push further. […]
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The Better Scalp Company grew so fast that owner Michèle Marchand felt she had little choice but to sell. And so, on Feb. 3, she sold the bootstrapped business to a Mississauga-based company.
Talking to OBJ this week, Marchand said the company was seeing incredible momentum – momentum she could not afford to push further.
“We have such a loyal customer base that rely on these products. So we were seeing a lot of growth, month-over-month and year-over-year. I started thinking about the future of the business, because it is such a niche product,” Marchand explained.
Marchand was diagnosed with allergic contact dermatitis in 2022. It was then that she realized that most shampoos and personal care products used fragrances and harsh ingredients that aggravated her condition.
And so she sought to create the solution to her problem by building her own shampoo business. The Better Scalp Company makes fragrance-free hair care products for people with skin sensitivities. Over the past few years, Marchand has grown the company by adding several Ottawa salons to its roster of clients and launching her products on Amazon last fall.
The success was almost more than she bargained for. When she considered her options, she saw two that made the most sense: look for investors or sell the company.
“To allow the product line to have more reach and knowing that I was a bootstrapped business, I felt that the best thing would be for it to fall under a portfolio of brands,” Marchand told OBJ.
With little knowledge on how to initiate a sale process, Marchand reached out to other entrepreneurs who had been in similar situations.
“I know a few entrepreneurs who have sold their business in the past and I asked them what they did. Everyone has a different story, but someone recommended I use this brokerage service, where a broker essentially helps you find a buyer,” Marchand explained, adding that she did her own research through YouTube videos and Reddit threads.
So, at the beginning of this year, she reached out to Flippa, an Australian firm that specializes in selling e-commerce businesses, to help her sell The Better Scalp Company. “I was very happy to see that there was a lot of interest, which was a great feeling as a founder.”
While it was difficult to put a price on something she herself had created, Flippa helped her make the right decision. “The people at Flippa help you come up with a valuation and they guide you through it based on your financial reports, assets and everything you have. And, of course, they have all this data on comparable businesses to come up with a valuation.”
With more than one interested buyer, Marchand said she went through an interview process to get to know each prospective buyer and what they brought to the table. It was imperative that the new owners were aligned with her own values, she said.
“That’s how I was able to narrow down who I felt was the most qualified, who had the best resources, best experience and who I felt would be in the best position to help the business grow,” she said.
Ultimately, she chose the Mississauga company.
“I sold it to this parent company that encompasses many brands. They are a Canadian business based out of Mississauga. That was really important to me, because I wanted the business to remain fully Canadian. Also, from an operational perspective, everything is already made in Canada,” she said.
While she didn’t disclose the dollar amount of the transaction, Marchand said it made her proud of what she built. “It was a nice bonus. I’m not retired by any means, but it gives me the boost of confidence, (knowing) that I clearly built something of value. This was my first attempt at business and it was a good outcome.”
Still, the feeling is bittersweet. “I built it from nothing, from a personal pain that I had myself, and was able to find people that related to it. Being able to solve issues for other people, there’s nothing more rewarding. But you want to see the business live and grow and have those resources for the customers.
“But, also, it feels so weird to be fully removed at this stage because I was touching on every single aspect of the business daily, from stakeholder relationships to manufacturing and financials.”
The decision to sell The Better Scalp Company rather than look for investors was based on what was easiest for her.
“I was open to doing either one. I think exploring the path of selling was an easier path to explore first, just to see what the demand for it would be. Then, because it went so well, I was like, ‘Okay, I guess I’m not going to go with investment.’ Finding investment would be a whole other set of things to do, people to reach out to and things to learn.”
Still, she isn’t completely out of the loop with The Better Scalp Company. A condition of the deal was that she remain available for post-sale support, allowing her to transfer three years of knowledge and lessons learned to the company’s new owner.
“Even though the business is sold, I’m still involved. I’m still available for questions, for guidance. There’s always some loose ends that need to be tied up. And, of course, I want this to be successful, so I want to make myself available,” she said, adding that there isn’t any strict timeline, but the goal is for her to transition out of the advisory role.
Marchand said the past three years have offered endless lessons on entrepreneurship.
“Doing it yourself and truly starting (a business) from nothing is something that I would highly recommend to anyone that has ever thought of dipping their toe in entrepreneurship. It’s so surprising how lucky you get when you really just put in all that effort. If I do it all again, it’ll take me a lot less time (to figure out) because of all the mistakes that I made and learned from.”
Though she has a background in business, it was the day-to-day operations of The Better Scalp Company that showed her what running a business was like. “It’s really been a crash course in entrepreneurship. It took three years, so I don’t know if that’s really a crash course, but I still feel really well set up.”
Marchand said her greatest success was tapping into the salon market. “I wasn’t sure how this product would fare in a salon environment, but (after) meeting with stylists and salon owners, I was surprised to see how much it resonated. It filled a gap in what they were offering, so I was able to see a lot of growth.”
Looking ahead, Marchand admits she’s been bitten by the entrepreneurial bug. “I want to continue on this amazing momentum that I have and all the lessons that I’ve learned. I know that if I wanted to do something else, I could do it bigger and better.”
One month removed from the sale, she’s considering which path to take next.
“If I were to start something else, I would probably look for some investment and I’m not even sure if I would go into consumer products again. I’m open to a lot of other industries, even in the business-to-business space. I’m also thinking about potentially getting some investors together and purchasing an existing business that I could help operate. All of these things are still on the table. We’ll see what the future holds. Who knows?”
