September Report & the Long Road Ahead
I’m exhausted. September kicked my ass. Once again net sales grew from the previous month. I am surprised at the pace of business, with minimal advertising too. We’ll get to that.
The thing I wanted to do most and failed to do was find a commercial space to move the operation into. I prospected several locations and sent out 2 offers and both were rejected. Despite the various reasons I have been given so far, I cannot help but think the true reason is my finances.
There’s only $10k in the bank and the company has been bleeding money at a rate of $1k a month without the overhead of rent and utilities. Immediately upon getting a place the company would be bleeding $3k a month, which leaves only a couple of months of runway before it runs out of cash.
My plan was to get the capital I needed to stay alive (with a loan or an investment) after I had secured a location. Basically cross that bridge once I got to it, because it was becoming increasingly difficult to work from home.
But the constant rejections from landlords have humbled me. They made me realize that I actually may not be able to afford rent yet. What if I can’t get a loan or an investment? Then what?
Why do I take going into debt or selling off a piece of my company for granted?
It is quite possible, nay, probable that I won’t be able to get a substantial loan or investment in the next 3 months.
Given this reality, I looked for and found an alternative.
My brother and I have made a deal to buy a condo together where I can both live and work. As it turns out, we found a great condo, made an offer, and they accepted. We are closing on the condo this month and I will be moving into it November 1st. This solves the more immediate problem of my living situation but also alleviates my work situation. I will have a lot more space and a new washer / dryer set. Also a lot less distractions. I believe in that environment my efficiency will improve and my monthly laundry capacity will increase.
What this allows is for me to postpone a commercial location and focus on increasing sales. More sales will solve most of my problems.
The great lesson here is one about money. I need more cash to get a store. I can borrow that cash, I can divest part of my company for that cash, or I can make that cash by growing sales. The answer will probably end up being some combination of all three. But the more I focus on sales, the better off I will be in the long run.
The new plan is to push sales and gauge my maximum capacity in the new house. Getting a store is inevitable, but it is being postponed for now.
Now onto the monthly report…
Milestones
With my new plan I also have a new perspective on what metrics are important for my business. My next milestone was to get a store, but I want to create a new milestone: cash flow positive.
Cash flow positive is different than profitability because it takes my lack of a salary into account. All it cares about is whether the money in the bank is growing or shrinking.
In other words, to hire someone to do my job, my business needs to be profitable. But by doing the job myself for pennies on the dollar (less than minimum wage), the business is technically not profitable, but the cash in the bank is growing.
This is an important distinction because I know that if I reign in my personal expenses, my business can become cash flow positive much sooner.
Sales
As I mentioned sales have been growing. I wish I had better data on my customers such as an accurate customer retention number. This is something that I just don’t have the time to do manually. The shitty thing is that the data is all there in the Square payment processing software but they don’t provide it to you.
Suffice it to say that I’m getting a few new customers but the majority of my business is repeat customers right now. I believe sales will continue to grow and that this thing will be profitable within a year.
Marketing
I actually stopped running ads on Instagram altogether. Yes I know I’m missing out on many new customers but I want to make sure I can handle all the business I’m getting. I will start running new ads on Instagram again once I settle in to my new place.
I’m still running the Google ads and new customers are trickling in from those. I have other marketing and business development plans that I will put into motion a few months down the road. But now is not the time.
Cash Flow
As I said in the milestones section, cash flow is quickly becoming my most important key performance indicator. September was my best month of cash flow so far. I started the month with $9.7k and ended it with $9.5k in the bank. But it’s likely an anomaly. Cash flow has to be looked at over longer periods of time because one month could be an outlier.
If the company can become cash flow positive for several months in a row it can eventually afford a retail location in a high traffic area. What that means is ending each month with a higher balance in the bank. The objective is to grow sales enough to have three consecutive months of positive cash flow. I think I can make it happen.
But it is safe to say that even at the current pace, without the overhead of a store there’s enough cash in the bank to last at least 6 months.
Profit & Loss
I have not yet started separating out the tips from the total revenue and not sure when I will. Right now it doesn’t matter enough to worry about it. I’m putting every dollar back into the company except the bare minimum I need for food, shelter, and minor recreation.
In the meantime, I have to go back to work doing laundry. I don’t want to get behind schedule.
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.
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