The hot public markets smell lovely to skin and hair care entrepreneur Deanna Wallin. So lovely she’s positioning her business, Naples Soap Co., to capitalize on the investor demand for growth companies.
Naples Soap Co. recently executed on a reverse merger and its shares, under the company GNS Group Inc., debuted on the over-the-counter markets June 30 — trading under the symbol GNSG. GNS Group is a shell company, a former furniture distributor. It's now the parent entity of Naples Soap Co. and its 10 brick-and-mortar stores in tourism-driven markets across Florida and strong e-commerce business.
The move sets up Naples Soap Co. on a path to what one consultant says could potentially be a $500 million brand. It’s also a look into the challenges and thought process a privately-held business goes into when seeking to raise capital to fuel growth.
Wallin, 51, remains CEO and the largest shareholder of the $10 million company, which sells soaps and skin care products for the body, face and hair, including products for people with sensitive skin. Naples Soap Co. products are also sold in more than 300 boutiques, spas and stores nationwide through the company’s wholesale division.
Using a reverse merger, specialty acquisition purpose company, or in some cases, a traditional IPO, can be both financially rewarding but a costly and long process. That makes it even more unusual for a small, yet growing, niche retail operation.
But Wallin, a Business Observer Top Entrepreneur in 2020, has long been something of a business maverick. That’s partly why forgoing banks and private equity firms to go public fits her well. “To be able to come out of the pandemic with such a bold move like this is a tremendous and pivotal moment for us,” Wallin says. “It’s absolutely exhilarating.”
Not to say it was easy. And Wallin stresses there’s more work to do to hit the next goal: meeting the qualifications to be listed on the Nasdaq exchange. A big one is to raise at least $4 million in new capital. Other requirements include board composition, having at least 300 shareholders and having shareholders’ equity of at least $2 million.
“We just did it our own way,” says Wallin, a nurse in a past career who founded Naples Soap Co. in 2009 after she, and then her young daughter, struggled to find good products to treat their eczema. “I’m sort of like water. I will find a way to flow around the rocks if I don’t find an answer. I always look to find another way to get there.”
That determination shines through in Wallin, say several consultants and business leaders who know and have worked with her. Naples-based turnaround expert Paul Fioravanti, with Qorval, says Wallin’s passion for the company — and its products — is an important element in its success. “The core of the brand is taking care of people, taking care of customers,” says Fioravanti. Naples Soap Co. offers a variety of natural and organic soap products in a variety of scents and sizes, some 250 products in total. “And that’s really resonating with people, especially in the pandemic.”
Destin-based consultant John Hall, who helps the firm with e-commerce and hiring and retention, adds another key to the success is Wallin’s it-takes-a-village ethos. Wallin, he says, can often be heard saying, to any and all of the company’s 75 employees, ‘if people believe in themselves, it’s amazing what they can accomplish.’
“Deanna is an outstanding leader,” says Hall. “She goes out of her way to boost the self-esteem of her team.”
Wallin started to think about raising capital long before the pandemic, as much as four or five years ago. Those long-term thoughts only gained a sense of urgency as sales, especially in e-commerce, surged. Through the first six months of 2021, for example, online orders increased 3% over 2020 and 253% over 2019.
Store sales, meanwhile, are up 40% through June over the same time period in 2019 and 100% over the first six months of 2020. At least half the company’s 10 stores are in Southwest Florida, and there’s also locations in St. Petersburg, the Panhandle and central Florida. Two more stores are in the plans for later in 2021.
The company is also readying to move into a 20,000-square-foot industrial-flex facility, on Jetport Loop in Naples, which will be nearly twice as big as its current 11,000-square-foot space. The facility, Wallin says, will also “allow us to get more efficient with our e-commerce.” Naples Soap Co. did about $10 million in sales in 2020 and Wallin expects to hit $11 million in 2021. It plans to move into the space by the fourth quarter.
Wallin initially considered going the bank route for capital. Naples Soap Co. has had a relationship with Synovus Bank, which Wallin says is strong. But as Wallin shopped around to different lenders, in Florida but also as far as California, she discovered banks weren’t too keen on lending to specialized retail businesses. Either terms were too high or the answer was a flat no. “It was very hard to get banks to look at us,” she says.
Next Wallin considered targeting private equity money. With a good sense of what that requires, in addition to strong sense of self, Wallin balked at that option. “I’m way too independent and I hate to say it, but controlling, to have a private equity group breathing down my neck,” Wallin says. “A lot of times that doesn’t go so well when you bring in outsiders and they start telling you how to run the business.”
'Deanna is an outstanding leader. She goes out of her way to boost the self-esteem of her team.' John Hall, consultant
So Wallin, though some consultants and advisers, investigated the reverse merger process. There were several advantages, including not taking on as much debt as she might have if she got bank financing. Also, going public could allow Naples Soap Co. to provide stock options to employees — a nice benefit in the wars to recruit and retain strong talent.
What’s next? Wallin is focused on both reaching Nasdaq targets, including changing the name from GNS Group to Naples Soap Co. and getting the new facility running as efficiently as possible. And even on a sweltering late July Monday morning, Wallin and her team are preparing for the holidays and Christmas. “Being in retail that’s typical,” she says.
What’s not typical, says Fioravanti, the consultant, is Wallin’s uncanny ability to multitask and see the bigger picture in retail while also keeping little things in mind. That goes from making decisions like pursuing the reverse merger to designing store layout. “I’ve never really seen anyone like her,” says Fioravanti, who has worked with some 60 companies in 35 industries. “She’s adept at product development and understanding the marketplace.”
Fioravanti says Naples Soap Co. can become a $500 million brand — and Wallin can lead the company there. “I believe she can be a very effective CEO at that level,” Fioravanti says.
With all the activity buzzing around her, Wallin also plans to make time for one of her main Naples Soap Co. passions: product development and product improvement. In a 2020 interview, she called that the fun part of the job and that she tries every Naples Soap Co. product — the last stop in quality control. “There’s a lot of momentum,” Wallin says. “There’s still a ton of opportunities out there for us.”