From the 1985 arcade game Gauntlet by Atari

Sales Doubled in May!

Here’s the report.

Sales doubled from April to May which presented a different set of problems than I thought I would have. It was kinda like being sent through the Gauntlet to see if I can handle it. I handled it but also caught a glimpse of what my maximum capacity is working from home. I did 800 lbs. of laundry in May.

I want to move the operation into a professional facility as soon as possible, despite the tremendous fixed costs that would be added to my expenses. But I know that it is much better to increase capacity and grow into it, rather than outsource the work, which is what I am being forced to do already.

Another aspect of my work that is suffering due to increased business is this blog series. That’s not a good excuse though. I should be writing more consistently and I know it.

I am adopting a template for these monthly reports that allows me to give an overview of the business. The sections are Milestones, Sales, Marketing, Cash Flow, Expenses, and Profit and Loss.

Milestones

In May I hit 2 more milestones and learned that I needed to rearrange the upcoming milestones. The 2 most important milestones on this list are #8 and #9. A physical retail location is so important right now. I need it to increase my capacity since I’m working out of the house. I also believe that a physical location will pay for itself in foot traffic within a few months.

The other very important milestone is when the company becomes profitable. I want to define this point very carefully. Profitability is the month that revenue is greater than expenses including my salary of $800 per week. I crunched some numbers and I believe the expenses will be such that profitability will be achieved when net sales exceed $8,000 per month or ~$270 per day.

Sales

Speaking of sales, I’m pleasantly surprised by the increase in sales but I also know part of it is due to luck. I’ve only been open for business for 3 months, and that’s just not enough data to be able to predict the next month. Any month could be an anomaly.

I’m constantly terrified that I will have a month where net sales decrease from the month before. So when sales explode as they did in May, it is both a blessing and a curse because now I have to hustle hard to make June better.

Net sales is my one metric that matters because discounts and refunds are money that I never actually see. I purposefully priced the service a little higher so I could afford to offer a 10% discount across the board to almost every customer.

Marketing

I’m pretty disappointed in myself for my marketing efforts, or lack there of, in May. I actually cut my online ad spend to a remarkable $220, the lowest it will ever be. This is primarily because I turned off my Instagram ads and utilized coupons from Google.

My only motive for turning off the Instagram ads is to get coupons from Facebook to turn them back on. I think they have an algorithm that automatically generates and sends you coupons after so many days. I’m going to test it for 45 days.

I’ve got a pretty good handle on my online ad campaigns. It’s the offline campaigns that I’m letting myself down. My 1 deal with a luxury high rise has been the highest ROI of all of my efforts, by far. I have to make a concerted effort to make more deals like this despite everything else going on in my business.

Sales cures all. And deals like this generate long term sales. I need to make a deal like this every week, or at the very minimum once a month.

Cash Flow

As my business grows, so do my expenses. Operational costs are going to increase by 50% in June because the business is now paying for my car payments and insurance. Costs will double as soon as I get a retail location.

That’s the whole game — getting sales to outpace expenses.

In May my sales outpaced my expenses for the first time, but keep in mind that I only paid myself $300 for the whole month. My savings only allow for me to go 1 more month without pay.

The business needs an infusion of cash and I’ve lined up an investor: my brother. He has agreed to invest $10,000 to keep the ship afloat and allow for the operation to move out of the house and into a commercial space.

This will only extend my runway by a few months, but with each month I can make a stronger case for a government backed small business loan, which I hope to obtain before the end of the year.

Expenses

My expense categories are still not finalized. I have some work to do on the spreadsheet. Right now my cost of services for outsourcing is lumped in the same category as operations and I have to separate them.

Cost of services is not a fixed cost. Since I outsource the dry cleaning that cost will go up and down based on how many dry cleaning customers come through. So I need to separate fixed monthly costs and variable monthly costs to have a better idea of where the money is going. I’m still ironing out the wrinkles in my bookkeeping.

Nonetheless I know that I’m going to burn at least $2,000 a month going forward, and closer to $4,000 a month once I get real estate.

Profit and Loss

Despite the expense categories being somewhat ambiguous, my overall bookkeeping has been on point. I have 2 sources that feed into my spreadsheet: the checking account and Square. My spreadsheet is accurate to the penny with both sources.

Here’s hoping there’s more cash in the bank at the end of June than there is right now!


This story is part of a series documenting the journey of a 2016 Dallas startup called Feather. For your reference here is the Table of Contents for the series.

Previous Story: My Business Has Outgrown My House

Next Story: Focusing on Customer Retention

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