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Picking out a nit niche

By Molly Selvin
January 03 2007;  The Los Angeles Times

For M. Evan Parker and Frank Campos, business is pretty lousy these days and that's just fine.

The Pasadena pair started their in-home lice removal service, Lousey Nitpickers, in July, budgeting $8,000 to launch a website and buy a supply of hair care products, towels and nit combs.

Six months later, the company's revenue is still very small. And like most fledgling entrepreneurs, Parker and Campos face several tough challenges if they are to establish a sustainable and profitable venture, business consultants said.

But with sales steadily expanding, Parker and Campos are optimistic that their business will continue to grow, given the demand from frantic parents who discover their children have head lice.

The firm fields an average of 10 calls a day, some days as many as 25. Most are direct referrals from past customers.

"People don't tend to book us in advance," Parker said. "By the time they call, their child's been sent home from school and they want treatment that day."

Accommodating as many as 90 itchy customers a month can keep Campos, the firm's chief nit-picker, another full-timer and three part-time employees busy from 7 a.m. until 10 p.m., shuttling to homes across the Los Angeles area. The two men, who have known each other for a couple of years, found their nit niche after years in the hair care business. A licensed cosmetologist, Parker, 43, had earlier developed and marketed a line of hair products. Campos, 21, had worked at a children's hair salon in Los Angeles. Neither is a stranger to lice.

The bugs are as old as civilization itself, with references in the Old Testament to "the plague of lice." The insects pick no favorites or seasons and plague people of any age, said Vermont pediatrician Barbara Frankowski, who is chairman of the American Academy of Pediatrics' council on school health. But infestations spread most easily among preschool- and school-age children who touch one another a lot, she said.

"Little kids hug each other and snuggle up close on the beanbag chair in the classroom to read together," she said.

The result: 6 million to 12 million Americans are infested with head lice each year, according to the National Science Foundation.

Given a permanent bull market for nit-pickers, Parker thought an in-home service would be a more cost-effective business than a salon with fixed overhead. His idea is not new. The LiceSquad is a similar service headquartered in Ontario, Canada, and Parker says wealthy families have long been able to afford hairdressers who will make discreet house calls.

He figured there would also be a market among middle-income families.

The strong demand for nit-pickers is also because of the development of so-called super lice, which have grown resistant to commercial and prescription products in recent years.

Lice have built a tolerance to insecticide-based shampoos because the products have not always been left in hair long enough or been repeatedly used as directed, Frankowski said.

That's why Campos and his colleagues rely more on painstaking nit-picking to end the infestation.

Parker initially expected that the company's printed materials and website, louseynitpickers.com, would be its best marketing tool. But by the third month, he said, referrals from customers and schools began multiplying almost as fast as lice themselves and now generate at least 40% of new customers. In hindsight, he said, he wishes he hadn't ordered so many pamphlets.

Jim Lee found Lousey Nitpickers and his family's deliverance from weeks of lice by going online.

Lee's 4-year-old, Karissa, started scratching first, in mid-October, then 2-year-old Micah and finally Monica, his wife, 40.

The family had tried a prescription shampoo and two commercial products to kill the pinhead-size critters. For good measure, Monica Lee cut several inches from Karissa's long hair. She also slathered her own long hair with mayonnaise and covered her scalp with a plastic bag, one of several home remedies some believe can suffocate the bugs.

When all that failed, Jim Lee searched on the Internet for lice removal services.

"I figured there's got to be someone who does this," said Jim Lee, 42, head chaplain at Oaks Christian School in Westlake Village. "And if not, I said I'll start the business myself."

Campos answered the Lee family's call, in an unmarked Honda sedan. (Parker said he frequently had to reassure embarrassed customers who ask, "You're not going to show up with a big louse on the roof of your car, are you?")

Typically, Campos inspects the head first to assess the degree of infestation, then he shampoos and conditions the hair before settling down to work with his nit comb.

The firm will make a return visit within 14 days in case a nit missed in the initial treatment has hatched. The nit gestation period is a week to 10 days, and getting every last one is key, pediatrician Frankowski said.

The service costs $150 to $200, depending on the number of infested people in the household and the length and thickness of their hair.

Desperate families such as the Lees who say they're only too happy to pay have pushed the firm's revenue to a projected $21,000 in the fourth quarter of 2006 from $12,000 in its first three months of operation.

Although Parker, Campos and Campos' sister are co-owners, Campos is the only one of the three who currently draws a salary from the venture. Parker still works for a hair care products company that manufactures a line of nontoxic, botanically based shampoos his nit-pickers use and sell to customers.

Parker hopes the business will support him full time after a couple of years but acknowledges that "the reality is you have to keep your day job for a while."

Their venture is a good example of how practitioners can apply their expertise to fill another, more narrow niche, said Peter Cowen, a Westwood-based consultant to emerging companies. But having a good idea is not always enough to expand their profits, he said.

Reaching their goal will depend on the firm maintaining solid gross margins, Cowen said. Without guaranteed repeat customers, he said, Parker and Campos need to keep a close eye on their ratio of costs to fees and explore opportunities to franchise or otherwise expand the geographic reach of their venture.

Profitable margins are just one requirement for success, said Ben Martin, an attorney who advises small businesses for the Loyola Marymount University Small Business Development Center.

"Cash supply is another big one," he said. "A lot of people think it's the amount of money a business has on hand," he said, "but it's also the timing when cash comes in, when it goes out."

The firm's growth so far is, in large measure, because of Campos. With his ready smile and playful manner, the Los Angeles native has charmed many fidgety youngsters into sitting still for the hour or two a typical treatment takes and turned several of his young customers into fans.

One boy recently presented him with a wallet he made from duct tape. Another composed a poem.

Finding employees such as Campos is one of the business' biggest challenges. Parker relies on a number of online job sites, including Monster.com, to advertise for "service technicians."

"If we say 'nit-picker,' it scares them away," he said.

Securing liability insurance was the other major obstacle. Parker said he just wanted a general liability policy because the venture's risks were limited "We're not using chemicals or sharp instruments." But until State Farm Insurance agreed to underwrite the firm, "nobody knew how to classify us."

A number of area schools have recently hired the company to screen students for lice. That service has quickly become a major source of new customers, Parker said.

Despite that demand, Martin warns that 70% to 85% of small-business entrepreneurs fail after two years. Many who shut their doors were making money, but not enough to earn a decent living. He advises Parker and Campos to be proactive: to use a bookkeeping system that shows them how well they're performing and to get outside advice.

"Business owners are often too close to the process," he said.

For the moment, however, Parker and Campos' venture often generates some awkward cocktail party talk.

"Initially people are really quiet when I mention what I do," Parker said.

"Then all of a sudden everyone has a lice story."

That's when they ask for his business card.