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Entrepreneur Jenny Hughes has been manufacturing her environmentally responsible reusable shopping bags in Vancouver. But as order sizes increase, should she consider looking elsewhere?

Ben Nelms/The Globe and Mail

Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.

Jenny Hughes took a hard look at her company before she stood in front of that modern-day inquisition, CBC-TV's Dragons' Den.

Ms. Hughes, who has a background in graphic design and branding, had set up her Vancouver company, Me & You Inc., to design and sell reusable shopping bags produced from recycled textiles and organic cotton.

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The bags are subtly feminine yet pleasingly attention-grabbing. They've been photographed over the shoulder of a few minor celebrities (as seen on the company's website). And they are much more durable than the flimsy $1 bags offered by some retailers at checkout counters. Ms. Hughes's bags cost $5 to $10.

Earlier on, she had been designing a range of bags each year and selling them in batches of 20 to stores here or there as well as directly to customers. "I was doing fall/winter and spring/summer collections, like a little fashion line out of Vancouver," she said.

But as she pored over her company strategy before the Dragons' Den appearance, she came to realize that custom, bulk orders made up her main business. These minimum orders of 100 bags, often running into the many hundreds or thousands, are typically for retailers and event organizers. Lush Fresh Handmade Cosmetics Ltd. was one prominent buyer, ordering special bags for the opening of a new Lush outlet.

Custom bulk orders used to make up about 40 per cent of her business, Ms. Hughes said, "but I've definitely noticed that over the last three to four years, it's almost 90 per cent."

When she started her business in 2005, "I definitely saw a void in the market for manufactured, local, reusable shopping bags. And there wasn't much out there that was stylish and trendy. I saw an opportunity to create some slogan bags with some catchy sayings and some pretty prints, not realizing how much it would take off.

"About six months later, all of these cities started banning plastic bags. So we rode that wave for a while."

Using local Vancouver manufacturers has given her a big advantage, she said, ensuring high quality and the ability to turn around orders quickly. But as bulk orders have grown, she's had trouble keeping up with demand.

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"I didn't think I would be at a point where I could do a 5,000-bag or 10,000-bag order. I was talking with a company about doing a 30,000-bag order," Ms. Hughes said.

If she wants to grow, she might have to seek additional manufacturing capacity in Montreal and Ontario, she says. "I don't have my own manufacturing plant, but that's definitely a dream of mine one day."

Yet owning a plant can be prohibitively expensive. This is the conundrum she presented to Dragons' Den, although her segment ultimately never aired. The producers told her, she said, that they had shot too many sound business pitches. The show needed more bad ideas for entertainment value. Hers was yet another positive story.

And it remains so. "Business is good right now," she said, but the limitations of local manufacturers is a problem as the orders keep growing in size.

"Sewing is a dying trade. My sewers are not young. People coming out of colleges and universities, they're not learning how to sew anymore. That is a concern of mine."

The Challenge: How can Me & You continue to expand as it outgrows local manufacturing capacity?

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THE EXPERTS WEIGH IN

Bob Kirke, executive director, Canadian Apparel Federation, Ottawa

For many years, people have thought that sewing in Canada is on the way out. But I can assure you that companies are doing it. They are really challenged, however, because people are retiring, and it's been hard to secure younger people to come into the profession.

Companies like Canada Goose are setting up training programs to train sewing machine operators. You used to be able to rely on an immigrant pool, but that's just not possible any more. The real question is whether Me & You can blend the sources of their production, and if they can work hard enough to find those other producers elsewhere in the country.

Nicole Bridger, ethical fashion designer, Nicole Bridger Designs, Vancouver

We bought our own local manufacturing operation, but we had to stop because of the expense. I really like local manufacturing because it's close – I can visit the factory, we can manage the quality. But a living wage in Vancouver is $21 an hour. The clothes would be so expensive if I ever got close to that.

So, we do a mix of local and international. There are factories in other parts of the world that are trying to do it differently, in a way that is responsible, and workers are paid fair wages. And the dollar can go so much further over there.

Marianne Pemberton, retail sundries buyer, Lush Fresh Handmade Cosmetics Ltd., Vancouver

It requires a close partnership. We use organic cotton, and that organic cotton has to come from somewhere. The supply chains are often longer than one anticipates. So with every vendor that we work with, it's about relationships, partnerships and transparency. We'll want to know what they need in order to deliver what we're looking for. Having a local partner allows us to turn on a dime.

It helps to have a local partner who is transparent and which we can work closely with. What's vital is for Me & You to keep doing that for us, no matter where they do their manufacturing.

THREE THINGS THE COMPANY COULD DO NOW

Look elsewhere for skilled workers

Consider looking across the country for available skilled workers and possibly training new ones.

Look at a possible mix of overseas and local production

Search for overseas factories that could supplement the production of big orders.

Keep a close collaboration with buyers

Even as big orders come in, maintain a close working relationship with buyers, particularly those who insist on fast turnarounds and high-quality, eco-friendly bags.

Interviews have been edited and condensed.

Follow Report on Small Business on Twitter at @globesmallbiz.

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