"Profit Margin Last Month Was Like 8%, Now It's Like 2" — Transcript

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1. 0:00My name is Ruud. We have a
2. 0:02Ruud from the Netherlands.
3. 0:04>> All right. Ruud.
4. 0:05>> You can also call me Eric. Yes.
5. 0:07>> [laughter]
6. 0:09>> It's my second day, so yeah.
7. 0:11>> I had one of my buddy's dad's, his name
8. 0:13was Merodad. He was like, you can call
9. 0:14me Mike.
10. 0:15>> [laughter]
11. 0:16>> Yeah, yeah. So we have an DTC brand.
12. 0:19It's gym wear with shapewear. We hold
13. 0:21the patterns on the ribbing technology
14. 0:22to lift the booty.
15. 0:24>> Yeah.
16. 0:24>> Last year was first year we did 10
17. 0:26million. This year we do 80.
18. 0:27>> Amazing.
19. 0:28>> And we would like to be at like 500.
20. 0:30>> Are you on like TikTok Shop? Is this
21. 0:31pulling you up or what are you doing?
22. 0:32>> Not even TikTok Shop.
23. 0:33>> So what's what's been the growth
24. 0:34strategy?
25. 0:35>> We have elite creators. So it's
26. 0:38basically like affiliates. Yeah, elite
27. 0:40we call it affiliates. It's basically
28. 0:41like affiliates. But then we run there
29. 0:44we run ads on their page.
30. 0:46>> Got it. So you
31. 0:47you you're recruiting a handful of
32. 0:48people who have big brands.
33. 0:49>> Yeah.
34. 0:50>> And then you just ramp you put gas on
35. 0:51it.
36. 0:51>> And also smaller creators, so yeah.
37. 0:53>> Yeah, understood.
38. 0:55Okay, so you're going to do 80 this
39. 0:57year.
40. 0:58>> 80 this year and we want to be at 500.
41. 1:00>> are you at year-to-date?
42. 1:02>> Uh now 20.
43. 1:03>> Okay, got it. So you're 20 year-to-date,
44. 1:05you want to finish at 80 or more. Cool.
45. 1:09What's the question?
46. 1:10>> Uh supply chain and quality.
47. 1:11>> Yeah.
48. 1:12>> Yeah, huge.
49. 1:12>> Tough.
50. 1:13>> Yeah. So because every time we restock
51. 1:15it's going to like 5 6 700k a day.
52. 1:17>> Yeah.
53. 1:17>> Uh also
54. 1:19>> Also cash flow now because the quality
55. 1:20issues. Like profit margin last month
56. 1:22was like 8%. Now it's like two.
57. 1:25So that's the biggest issue now, yeah.
58. 1:27>> Yeah.
59. 1:29So what is the question though? I agree
60. 1:30that is a problem and a pain.
61. 1:31>> Yeah, like what should we do? Should we
62. 1:33focus on like scale or like back end or
63. 1:36>> So
64. 1:37>> Because marketing is not an issue of
65. 1:38course, but yeah.
66. 1:39>> So
67. 1:41in all likelihood you'll have to have
68. 1:43some sort of
69. 1:44>> [snorts]
70. 1:47>> You'll either have to throttle growth so
71. 1:49that you can basically reestablish your
72. 1:51cash position because you have to think
73. 1:52of it from the from a downside risk
74. 1:54perspective is that like
75. 1:56do again
76. 1:57risk is one of the eternal things that's
77. 1:58always up to you. Right? There is no
78. 2:00correct answer on risk on how much
79. 2:01you're willing to take.
80. 2:02Um
81. 2:03but me, I would rather I would rather
82. 2:05give up some growth to make sure that my
83. 2:07business will be here tomorrow.
84. 2:08Because of the alternative of like I
85. 2:10tried to grow too fast and I could have
86. 2:11kept this thing if I just not gassed it
87. 2:13which like was self in I hurt myself.
88. 2:17Right? [laughter] Because of an
89. 2:18arbitrary number that I made up.
90. 2:20Right?
91. 2:21You're like I want to go from 80 to 500.
92. 2:22It's like you could say you want to go
93. 2:23from 80 to 150 and guarantee you get
94. 2:25there. I'm not saying you do that, but
95. 2:26like there's a range. Right? And so um
96. 2:30Option one is that you can throttle
97. 2:32growth and keep more equity. Option two
98. 2:34is you can take on basically debt or
99. 2:37having some sort of larger credit line
100. 2:39with the growth that you have. Thing is
101. 2:40is that debt doesn't really care about
102. 2:42growth. It cares about downside. And so
103. 2:44the lines that you'll be able to get are
104. 2:45not going to probably be nearly big
105. 2:46enough.
106. 2:48Most likely if you wanted to like keep
107. 2:49the aggressive path is just like how
108. 2:51much can you raise that from a valuation
109. 2:52perspective and then let outside
110. 2:54investors cash flow the growth.
111. 2:57>> Okay.
112. 2:57>> So those are the three doors. I don't
113. 2:59know if one of those sounds better for
114. 3:00you. I think given the nature of the
115. 3:01business that you have um
116. 3:04it can make sense.
117. 3:07Like door three would make a lot of
118. 3:09sense for you right now.
119. 3:11Now the supply chain stuff that's always
120. 3:12an issue. You're going to have to start
121. 3:13going whatever you'll do with that. Um
122. 3:16but I think it's a lot of these problems
123. 3:17are capital related.
124. 3:18>> Yeah.
125. 3:19>> And so
126. 3:20the nice thing about raising because you
127. 3:21already have this great growth story
128. 3:22right now. You'll probably get a very
129. 3:24favorable valuation.
130. 3:26Um which means you probably wouldn't
131. 3:26have to give up that much equity in
132. 3:27order to get a load of liquidity.
133. 3:29>> Yeah.
134. 3:30>> And that would probably be the correct
135. 3:31move.
136. 3:32>> Okay.
137. 3:32>> I mean do whatever you want. I would
138. 3:33probably do that.
139. 3:34>> Okay, perfect. Thank you.
140. 3:35>> If you like this video and you're a
141. 3:36business owner who wants to break
142. 3:37through your current revenue ceiling, I
143. 3:39distilled every lesson from scaling 10
144. 3:40businesses past 10 million and three
145. 3:42businesses past 100 million into a
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147. 3:46I've used to go from zero to one, zero
148. 3:47to 10, and zero to 100 plus. And so you
149. 3:49can click here and you can check it out.
150. 3:51Again, absolutely free. and since you're
151. 3:52a business owner, appreciate you, and uh
152. 3:54enjoy.