Special K

With a starting budget of $3000, Kristina Karlsson now runs an empire with annual revenue of $30 million. Amy Birchall reports

In 2001, 24-year-old Kristina Karlsson convinced her partner to sell his house to finance the opening of her boutique stationery store kikki.K in Melbourne. It was a risky move for Swedish-born Karlsson, who had no retail, design or business experience, and spoke English as a second language.

The gamble paid off - kikki.K now boasts more than 80 privately owned stores worldwide (the company doesn't offer domestic franchise opportunities), 500 staff during peak retail periods and annual revenue estimated at $30 million.

"I've always set high expectations. I'm very straight about that," says the company's founder Karlsson about the rapid success, which has earned her a swathe of Australian and international awards, including 2007 Telstra Young Business Woman of the Year.

"From day one I had a clear vision, and I used that to empower people around me. Everyone was always working towards the same goal."

Hiring for growth

Karlsson is credited with igniting Australia's fascination with high-end fashion stationery, but she says there is more to her success than "innovative products and world-class service".

She listed hiring for the growth she wanted to achieve as one of her smartest business decisions.

"We probably didn't need to hire a [chief financial officer] as capable as the one we did until much later, for example, but we knew that as we grew we would need someone with his skills. We're so grateful for that now," she says.

Importance of mentors

Gillian Franklin, entrepreneur and founder of cosmetic distributor Heat Group, says she was impressed by Karlsson's tenacity when they first met 11 years ago. Karlsson approached Franklin after watching her speak to a group of businesswomen and asked to meet to discuss her business ideas.

"She turned up to coffee with a huge folder under her arm and said, 'This is my dream. I want to own my own stationery business. Can you help me with it?'"

Franklin says Karlsson owes her success to curiosity, determination and willingness to learn.

"She's a sponge - she just absorbs everything that you tell her. I've watched her from when she started out, knowing very little, and now she's doing some incredible things. I'm very proud."

Karlsson says mentors played an important role in developing her business. In kikki.K's formative years, she tirelessly attended networking evenings and business events and asked people she met to be her mentors.

"It was important for me to have mentors across a range of areas. Gillian was my mentor when it came to distributing my products because she had experience with that.

"When I needed help with retailing, I approached Craig Kimberley (founder of Just Jeans). When I had cash flow issues I spoke to an old boss at a travel agency."

Rather than viewing her inexperience as a disadvantage, Karlsson saw it as a challenge.

"In some ways it was great to not know it all. I had to keep asking and learning all the time," she says.

"When you're young you don't have the knowledge, but you have the energy to find out."

Managing people

While Karlsson lets others deal with managing staff (regional managers are responsible for looking after stores), she has a few ground rules when it comes to new hires.

"I'm attracted to people who are passionate for the product. You can't train for that. When you're passionate it's easier to sell. In the head office, while you need different skills, passion helps too," she says.

Karlsson says if she were to start a company from scratch again, she would hire a senior management team much earlier to give her time to focus on her strengths. She is "fortunate enough to have an amazing team" that frees her up to work on product design, but this hasn't always been the case.

"As a business owner you need to be so involved with every aspect of the business, and having a strong management team means you've got the time to step back and do what you're passionate about."

Economic pout

Unlike other Australian retailers, who are struggling because of the strong Australian dollar and gloomy economic forecasts, kikki.K "is thriving".

Karlsson says selling high quality products and introducing new items every three weeks is key, but the business is also buoyed by being in what she calls "the lipstick category" - most products have a low average sale value, but a high "feel-good" factor.

She says global markets or poor consumer confidence don't appear to be hitting the lipstick category as hard as they are affecting other sectors.

"It's a tough climate, but we're doing well," she says.

"Being in the 'lipstick' category means people can walk in, spend $40 and leave feeling great. You don't need to spend a lot of money with us to be happy."

Makings of a stationery empire

Before founding kikki.K, Karlsson dabbled in hospitality and worked for a travel agent but knew neither were long-term options.

"One night at 3am I woke up my partner (now husband and kikki.K CEO Paul Lacy, with whom she has two children) for what must have been the fifth time that night, and asked him 'What am I going to do with my life?' He suggested I make a list of everything I wanted from a career.

"I wrote that I wanted to love driving to work on a Monday. I wanted to own my own business, I wanted it to be Swedish, I wanted it to have something to do with design and I wanted to earn $500 a week."

With her career goals mapped out, Karlsson set out to furnish her home office. She discovered, unlike in Sweden where stylish office stationery and organisation tools were commonplace, Australia's options were limited.

"I thought, 'If I'm going to have a home office, I need to have a beautiful one', but I couldn't find any products. It was all price-driven. People were basically stealing from their work offices," she says. "I'd identified a gap in the market and found an opportunity to start my own business."

With a budget of $3000, kikki.K began life in Karlsson's one-bedroom apartment before opening her first store in 2001. A cash injection from an equity investor helped expand the range, employ more people and open more stores in 2005.