This 12 months I’ve sprinkled occasional “Ecommerce Conversations” episodes with real-life grasp courses from Beardbrand, my firm. Thus far I’ve addressed hiring, branding, profit-building, priority-setting, and exiting.
For this installment, I’ll share Beardbrand’s expertise of shedding almost $1 million throughout 2023 and 2024. I’ll recap how we managed to outlive our worst years in enterprise whereas remaining 100% bootstrapped.
It acquired unhealthy. Our money ranges dropped to the place they have been in 12 months one, 2014. We have been hemorrhaging cash.
However we’re nonetheless right here — nonetheless constructing and nonetheless studying. We made it by way of with out outdoors funding.
Right here’s what the long run holds for Beardbrand. My complete audio dialog is embedded under. The transcript is condensed and edited for readability.
Ghosted
A giant portion of our loss got here from Goal. The corporate had been a seven-figure account for us for years, and we thought the connection was strong. Yearly, we pitched Goal our plans. Traditionally, the workers there offered us with clear suggestions — what labored, what didn’t, and the place there was room for development.
In 2023, Goal had a sustainability initiative. We revamped our packaging, switching from glass and plastic to aluminum. It’s lighter, extra recyclable, and aligns with eco-conscious targets. On the identical time, we elevated the scale of our beard oil packaging from 1 oz. bottles to occupy extra shelf house and stand out.
We dedicated early, produced stock, and delivered Goal’s buy orders on time. Then silence. Nothing. After years of working with us, the workers ghosted us. No suggestions, no responses. Worse, they dropped us and left us with almost $200,000 of unpaid product.
We erred by giving Goal exclusivity, which meant we weren’t promoting on Amazon or Walmart. That killed our potential to maneuver leftover stock rapidly once they dropped us. By the point we lastly acquired on Amazon, the merchandise had already aged out. We destroyed a big amount that had expired.
Reserves
We’ve all the time run Beardbrand conservatively. Which means conserving a good quantity of capital in reserve — not as a result of we’re paranoid, however since you by no means know when a black swan occasion may hit. Having that runway enables you to clarify, intentional choices quite than panicking. It provides you time to discover options, check channels, and get a greater night time’s sleep.
Fortunately, throughout our stronger years, we constructed up a strong cushion. And that cushion is what stored us afloat throughout the downturn. We primarily burned by way of all of it. However we by no means dipped under zero, which meant we didn’t must take out high-interest loans, open strains of credit score, or herald outdoors buyers.
We did have conversations simply in case. I even thought-about withdrawing cash from my private financial savings. However that’s a tough determination when issues aren’t going effectively. If you’re in the course of the storm, it doesn’t really feel like a brief dip — it looks like a freefall. You begin questioning: Is that this the underside, or is there extra ache forward?
Writing one other private test to the enterprise, particularly after years of constructing wealth from it, was not one thing I wished to do. And neither did my companions. We have been decided to discover a approach ahead that didn’t contain doubling down with private capital or giving up management.
Pileup
Along with shedding Goal, we skilled a sequence of setbacks. First, the state of Texas audited us. We cooperated absolutely, waited for the ultimate numbers, and as an alternative acquired slapped with a tax lien. That lien triggered Brex, our company bank card supplier, to freeze our account, regardless of our good fee historical past. Fortunately, American Categorical stood by us and stored issues transferring.
Then got here an ADA lawsuit, a leaked 100% off coupon code, and a $20,000 air conditioner restore at our barbershop. We additionally confronted regulatory modifications that compelled us to reformulate key fragrances.
We had inner missteps, equivalent to shedding a key development group member and coasting once we ought to’ve pushed more durable. We targeted on profitability, however the enterprise slowly declined.
We simplified our product line to satisfy a producer’s wants, which, in hindsight, proved to be a mistake. The lesson? Accomplice with distributors who worth your corporation. You don’t wish to be too small to matter, or too large to be managed. That relationship must be good.
We additionally lowered costs to drive quantity, however it backfired. Loyal prospects simply paid much less, and those that thought we have been costly nonetheless did. In the meantime, bigger packaging lowered buy frequency, and killing off beloved fragrances damage loyalty. High-line income acquired lower in half.
Moreover, when your corporation shrinks, fastened prices equivalent to workplace leases and payroll can turn into overwhelming. Our $10,000 monthly lease that after felt small grew to become an enormous deal.
Rebuilding
The excellent news? Beardbrand is alive. We’ve weathered the storm and slowly began turning issues round. It hasn’t been a dramatic rebound — it’s been regular, gradual progress. We’ve got targeted on enhancing operations, addressing stock points, resolving stock-outs, tightening pricing, and enhancing product high quality.
We now have the proper achievement supplier, manufacturing companions, and techniques in place. As a substitute of existential crises, we’re coping with on a regular basis stuff — delivery points, advert efficiency, and the occasional unhealthy product batch. That’s a large shift. It’s not glamorous, however it’s now not a matter of survival.
We lower prices aggressively — even eliminating $15 monthly software program. We reestablished wholesome margins. Our customer support, returns, and product high quality all depend upon having room to breathe financially.
The Goal fallout is behind us, the tax lien is resolved, and the ADA plaintiff dropped the bogus lawsuit. My enterprise associate stepped out of day-to-day operations, and a few group members transitioned to part-time roles, which helped enhance our money stream. We’ve managed all of this with out layoffs. My group is similar one which helped us develop, and so they’re nonetheless extremely proficient and devoted.
I’ve additionally lower my very own wage and lived off private financial savings to maintain issues afloat. However I’m optimistic. With the enterprise stabilizing, we will rebuild our financial savings and begin exploring new development alternatives once more.
Momentum
Survival mode means specializing in making it by way of the day. Some entrepreneurs attempt to develop their approach out of issues. For us, it began with stabilizing operations. We will lastly assume long-term once more.
We’ve begun reinvesting in development, supporting our paid media and Meta efforts, and increasing our inventive group to provide extra content material and adverts. Extra inventive output means extra probabilities to attach with prospects and gasoline a rebound.
We’re additionally rethinking channels past direct-to-consumer. Goal was a powerful retail associate for years. Retail as a channel nonetheless holds potential — maybe it’s impartial salons, boutique pharmacies, and grocery shops. The purpose is to diversify. Beardbrand.com will all the time be our residence base, however we’re a enterprise that sells to folks, not simply an ecommerce model.
It’s thrilling to assume forward as an alternative of trying again. We’re aiming for 7% profitability this 12 months — that’s breakeven in my e-book. It offers us with a buffer for unpredictable occasions, equivalent to lawsuits, audits, and air con failures. The actual purpose is 17% revenue — that’s once we can fund development, rent workers, and breathe simpler. Something past that’s the candy spot the place the stress and sacrifice begin to really feel value it.
I’m excited once more — for the group, for the long run, and what we’re constructing.
