Saturday 20 January 2018

Your Business: Toy industry is serious business

Sean Gallagher with Ian Harkin of Arklu in Co Donegal
Sean Gallagher with Ian Harkin of Arklu in Co Donegal
Sean Gallagher

Sean Gallagher

Former accountant Ian Harkin sold his house to realise his dream of developing educational dolls and toys.

The practice of young children playing with dolls is a tradition that has long been established. Considerable research has been carried out that supports the positive psychological benefits of dolls where children get the opportunity to expand their pretend play as well as developing their cognitive and fine motor skills. Although toys, dolls can provide children with opportunities to practice their speech and language skills as well as helping them develop their social skills by using their imagination to role play social situations in a safe environment. By simply carrying, holding and playing with dolls, children also get to practice, among other things, being loving towards others.

Last week, I visited Ian Harkin who, along with his business partner, Lucie Follett, set up Arklu Ltd in 2011 -the company now specialises in the design, development and distribution of children's toys and books and stationery.

Having developed their first doll to celebrate the wedding of Kate Middleton to Prince William in 2011, they now have their own range of branded dolls, called Lottie. With 18 different styles in the range, these are available in more than 3,000 stores across 30 different countries. Now based in Letterkenny, the company employs eight full- time staff and has a turnover of more than €1m.

"Our dolls are aimed at children from the age of three to nine years," explains Ian. "We create them specifically to serve as positive role models for children and to help stimulate their imagination, inspire learning and be fun to play with," he adds.

It is impressive too to learn that 95pc of all the dolls they produce are exported, with the US and UK representing about 40pc of sales each.

Each doll has her own sense of character. There's Muddy Puddles and Autumn Leaves who love to be outdoors in nature, Pony Club who loves to go horse riding, Kawaii Karate who is active an sporty, Butterfly Protector who cares about wildlife and their habitat.

And there are others too such as Snow Queen, Festival, Pandora's Box, Lighthouse Keeper, English Country Garden, Spring Celebration Ballet and Pirate Queen. And there's even a doll called Finn for young boys. Each style comes complete with a pack of accessories such as changes in clothing, pets, ponies and fishing equipment.

"Many of our dolls have also been designed by children from all around the world," explains Ian. "We regularly run competitions where we invite children to submit designs for new dolls and their outfits," he adds.

Six of these have already been put into production. There's Stargazer, for example, who was designed by a young girl, aged five, called Abagail, in Canada, and is focused on teaching children about the solar system. Others include Robot Girl and her Busy Lizzie Robot, Gone Fishing, Super Hero and Fossil Hunter - each with their own distinct message. The dolls' clothes are vibrant in colour and the attention to detail is amazing. Each doll also has a sort of strength and independence about them.

"We undertook considerable research before going into development which included working with children, parents, retailers, industry experts, child psychologists and child nutrition experts," says Ian. "This generated over 100 key points which we then incorporated into the design and development of our Lottie doll range. Paramount among these was the importance of protecting a young person's childhood and not seeking to have them grow up too quickly. Based predominantly on the scientific proportions of a nine-year-old child, Lottie is designed without jewellery, make-up or high heels. While we embrace the colour pink... we do use it judiciously alongside other bold, bright colours too. It is about allowing kids to be kids and enjoy their childhood, in all its facets. Lottie's motto is 'be bold, be brave, be you'," he stresses.

Ian and Lucie have also given considerable thought to the design of the packaging in an effort to lessen the use of excessive plastic blister packaging and tricky wire ties that we often find annoying and time-consuming to open. Each doll box is themed and designed with a cute handle to encourage reuse and doll portability.

The pair have also established an online Club called Club Lottie, to which more than 4,000 parents have signed up. Members get access to educational content for their children such as spelling competitions and puzzles. There's even the opportunity to identify where Lottie has gone on her travels, with children being invited to submit photographs of Lottie and themselves in recognisable landmark locations around the world. Every aspect of the business has been incredibly well thought out, and this is not surprising given Ian's background.

Ian Harkin grew up in Ballybofey in Co Donegal. After school he studied business in the Institute of Technology, in nearby Letterkenny, before going on to become a chartered accountant. He also held a number of accounting roles both in Ballybofey as well as in Galway, where he specialised mostly in auditing. After a year working in Australia, also in accounting, he moved to London where he spent the next five years working for a large family-run business.

In 2005, Ian left to join a friend in his new venture - someone he had met during his travels in Australia. A qualified product designer, his friend had started a business designing toys and novelty gift items.

"During the first 24 months there, we managed to raise significant private equity and to open offices in London, New York and Hong Kong - it really was a very exciting time," explains Ian. He sold his shares in the company at the end of 2010 and went on to co-found Arklu Lottie Dolls with his new business partner, Lucie Follett. Their first product was a Kate Middleton doll which they wisely launched in the week leading up to the royal wedding.

They drew attention from media outlets all around the world including the New York Times, People Magazine, the Wall Street Journal and Hello! magazine. During the week of the wedding, they had 15 separate TV crews visit them to discuss their novel creation and were even interviewed for the acclaimed Today Show in the US.

"With the coverage we received, the 10,000 dolls we produced all sold out within the first month - at a cost of £35 [€48.50]," he adds with a satisfied smile. They followed up their initial success with a doll designed to celebrate the wedding itself. This time it cost £100 [€140]. Again, the dolls sold out and quickly became a collector's item. As a result of publicity they received, parents began contacting the pair to encourage them to start designing and producing a broader range of dolls. And so after considerable research the first six Lottie dolls were launched.

However, with no significant event around which to promote their new creations, things got off to a slower start this time. Struggling to raise external funding, Ian sold his house in London and invested everything in the new business. Lucie too re-mortgaged her home. From there the pair continued to bootstrap the business until it became cash generating. "It was a high risk gamble," admits Ian. "But thankfully it's been rewarding personally, and now the business is really beginning to take off," he adds.

Their first big break came in early 2013 when they exhibited at the Nuremberg International Toy Show in Germany. With up to one million products displayed during each show, including approximately 70,000 new products, it's the place to be if you want to get noticed. There, they picked up eight international distributors. Later that year Ian returned to Ireland and with the help of Enterprise Ireland set up the company. "I really wanted to prove that you could build a successful global business from Donegal and thankfully that's what we are now doing," he adds proudly.

It's also been a very exciting time for the pair who've begun working with the European Space Agency to help promote interest in the solar system through the use of their Stargazer Doll. They see this as an important part of encouraging interest among girls in the STEM areas of education (Science, Technology, Engineering and Math). He can't tell me what it is, but says they are soon to make a major announcement in this area and insists that it will literally be 'out of this world'. "You'll have to watch this space," he says with a laugh.

For further information, see

Company: Arklu Business

Business: Toy company

Set up: 2011

Founder(s): Ian Harkin and Lucie Follett

Turnover: €1m

No of Employees: 8

Location: Colab, Port Road, Letterkenny

Ian's advice for other businesses

1 Get to market quickly

In launching any new business or product, it is important to firstly carry our detailed research of your planned target market. Once you have proved your product, you then need to get it to market as quickly as possible. Don't over plan and don't wait too long - someone else might just beat you to it.

2 Bootstrap as much as possible

Many people in preparing business plans have as their end point the possibility of securing external investment. Where possible, try to bootstrap the business and focus more on getting products to market and looking at securing traditional trade financing instead of debt or dilution of equity.

3 Think big - but plan well

Despite what some people might tell you, it is good to think big. Start by thinking about where you would like to be in five years and then write down the detail of where that is. Next, take steps each day to get you there. Success doesn't happen overnight, but rather, one step at a time.

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