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Adventure begins with Elkhorn toy company thanks to SBA financing
It's a day spent hosting some 60 children for a photo shoot for their newest catalog. Kids play with blocks, puzzles and even high-tech spy toys as the camera snaps. Outside, it's a nondescript location in an Elkhorn strip mall nestled between a physical therapy practice and an orthodontic office. Inside, it's where a thousand adventures are hatched.
And it fits that a 10-year-old suggested the idea of the company.
Couldn't find the toy online? How about we start our own web site to sell it?
Fat Brain Toys develops and sells games and toys with the idea of challenging kids as they play. The company enjoys a brick-and-mortar store at Omaha's Village Pointe South and a print catalog complementing the business' online presence, through which it receives most of its orders.
Office desks at the Elkhorn HQ are divided by walls of decorative blocks, giving the place a feel of a boy’s fort, which fits, since the founder and owner of the company used to build those--and the occasional raft--as a youngster growing up along the languid Elkhorn River in tiny Scribner.
Mark Carson brims of quiet energy with an entrepreneur’s excitement. Seems he was destined to start and run his own business; his father owned the local car wash and laundry in town and his curious brother was always sending away for mail-order stuff to see what he'd get, and eventually started a company out of college selling mail order goods. And maybe Carson was destined to start a toy company--his mother was a kindergarten teacher, after all.
About eight years ago, Carson's son, Adam, got a magnetic building toy set for his birthday. Armed with some birthday cash, Adam hopped on the internet to find a larger set but soon was frustrated in his search. So he turned to his father, a web developer by trade, with an idea. Why don't we create a place where we can sell this toy?
"We didn’t have a plan or a mission," Carson said. "With the first holiday season we treated this as a family hobby, maybe sell a few things, learn about the business, and who knows where it would lead."
They had a name, which Carson said came out of looking for a "clever, left-handed way of saying smart toys." Now they needed a plan. A few months later, Carson and his wife, Karen, went off to a toy fair in New York, where he was immediately struck by the clear difference in specialty toys and mass produced toys.
"The latter is so ever present," Carson said, "so if I go to most stores I shop at, I’m not seeing other options. You have to look harder to find them. So I thought, let’s build an online site and make them more accessible. Really good toys are hard to find."
So Fat Brain began by shipping toys out of the family basement, and after moving the operation several times, found the warehouse in Elkhorn where they're located today.
Needing to finance inventory, SBA helped provide Fat Brain Toys with a deal to grow
Seeking a season line of credit for inventory purchases in time for the annual holiday season, Fat Brain Toys was approved in Oct. 2005 for SBA-backed financing through Pinnacle Bank.
"To help grow the business, it’s all tied to inventory," Carson said. "We have to have enough of every product for every niche."
Since the loan approval, full-time staff has more than doubled from eight to 20, and part-time employees from 12 to 20.
In 2006, they spun off a developmental company, Fat Brain Toy Co., to develop their own line of educational toys now sold at gift shops at the Smithsonian in Washington, D.C., and the Metropolitan Museum of Art in New York, as well as high-end children’s toy retailers.
"So as our business grows and product line grows, our mission to get to a broad selection of toys," Carson added. "Our magic number is 6000 products."
Carson opened the retail store three years ago, fulfilling the ardent wishes of parents who wanted a place where they could touch and see more than 1,500 toys and games up close. "We focused on building a clean, parent-friendly store rather than a kid-friendly destination," Carson explained.
And last summer, Fat Brain Toys rolled off a bright, picture-filled direct mail catalog with hopes of exciting the faces of thousands of potential young customers. But their marketing efforts haven't stopped there.\
Breaking out into the big time
In July, Fat Brain Toys was named by the social-media site Facebook one of five winners of the Big Break for Small Business contest; the level of support by their fans during two weeks of online voting gave them the second-most votes in the country. The prize: a two-day social media makeover and $20,000 for their social media marketing budget.
The company also hosts game nights, even working with different schools in the area to align educational goals with Fat Brain's toys.
"We bring our staff in with our products to show the kids," Carson said. "It's not only a way to show what we sell and to demonstrate how to play the games but it's for the benefit of family interaction for all ages. Increasingly game manufacturers target a very narrow age but you end up losing the interest of parents. So we broaden the night to all ages." Last winter, they hosted eight and plan several for this school year.
Carson admits that he's concerned independent toy stores are on a decline because of economic forces. In fact, one notable nationwide chain which specialized in smart toys went under a few years ago.
"From 2005 to 2007, we were seeing 60 percent growth year-to-year," Carson said. "But that was when we partnered with (online retailer) Amazon in their toy category. By 2007, 2008, they were making up a large percentage of sales, but as so many other merchants piled in as well, it all became a big price war."
So in the company's last two years, they've backed away from that channel, focusing on higher margin orders through its own site.
"We're up 10 percent for the year, and we see that accelerating despite a tough retail environment," he added. "We’re seeing success and we're finding a receptive audience. There’s still a market out there."
And that magnetic building toy set Carson's son wanted to find online? Fat Brain Toys is now one of the largest online retailers of it in the world.