4 Lessons from Losing $100,000+ 🔥💵
Business was going great last year coming into August.
I was closing in on six figures of monthly revenue pretty much alllllll by myself.
Should have kept it that way, and that’s where I messed up…
Well, that’s one of the areas I messed up.
If you’re a business owner, especially in the e-commerce / DTC, here are some of the biggest lessons I learned through this process.
Want the real juicy details?
Listen to this “Rich Ad, Poor Ad” podcast I did with my friend Dylan (he’s spent over $10,000,000 on ads).
Seriously, give it a listen: I go into alllllll of the $, the specifics of borrowing money, bankrolling influencer’s lifestyles and what I’m doing to climb out of the six figures of debt.
This post will summarize some of the talking points of the podcast (go listen, I don’t hold back)
Profit vs Revenue!!
I had a fractional CPA and somehow I still messed this up 🤦‍♂️
There’s a small but massive difference in these two metrics.
I knew the difference but I was more focused on growth, not stability.
My thought process was, “Just grow the top line numbers as fast as possible and down the road I can patch the holes and become profitable.”
This is the investor-backed, startup-oriented, Silicon valley mindset.
Mistake: I was growing revenue, I wanted to keep growing, so I hired people, but the profit wasn’t there to hire people…. so eventually everything flipped.
Lesson Learned: As a boot-strapped business wanting to stay that way, revenue doesn’t mean shit.
Borrowing Money from Loan Dolphins
Because of my flawed “scale revenue and down the road figure out profitability” mindset I was running out of money…
Slowly and then all of a sudden I was totally out of money.
I was making $50-$70k a month and somehow didn’t have any money.
But on paper that looks pretty good so I had people knocking down my doors to give me money.
And eventually, I took it.
Because my business runs through Shopify and PayPal they both all of my financials and both conveniently have “Working Captiol” options.
With the click of a button they’ll deposit money into your bank account.
No SBA, no credit checks, no waiting… boom the money is there.
And I took it because I needed a life jacket.
I borrowed $100,000 with the CLICK OF TWO BUTTONS!!!
The possibility of doing this is insane and can be massively valuable *IF DONE THE RIGHT WAY*
Go listen to the podcast to learn more about these details.
Mistake: Borrowing money too quickly without a full understanding of the repurcussions.
Lesson: Fullllyyyyyyy evaluate lending options and financial positions before taking money.
3 Months of “Influencer Marketing” cost me $30k
I hate influencer marketing.
Don’t get me started.
DO NOT EVER CONSIDER THIS ROUTE.
Just forget about it unless you like burning money… no, seriously!
You might as well just light stacks of money on fire.
For the amount of money I paid influencers for their photos I could have traveled the world twice over and taken BETTER content.
If there’s any one mistake I would take back, it would be hiring an influencer marketing manager and paying influencers for taking photos and posting them on Insta 🤦‍♂️x10000
Oh…. and this next one, too.
Hire Slow, Fire Fast
I was running everything myself…
What’s everything?
Content production
Social media management
Facebook marketing
Product design and production
Customer service
Returns and exchanges
Then I thought, “I’m the CEO, I need to be doing CEO things in order to take all of this to the next level.”
So I started hiring people to…
Take over responsibilities
Do better than I could do
So I hired people to do exactly that.
But no one I hired did better than me.
No. One. I. Hired. Did. Better. Than. Me.
The $5k/mo I paid for Facebook ad managers? They did worse!
The $2k apparel designer? No better.
The couple grand spent on content? I was just as involved as before and it didn’t ease my lift.
I spent so much money on paying other people and none on paying myself.
Which goes back to Profit vs Revenue.
I was more focused on growth at all costs than conscious hiring.
Mistake: Hiring urgently without lots of second opinions. I needed second, third, fourth and fifth opinions.
Lesson: Stay lean, keep the focus focused and hire the RIGHT people.
Go listen to the Rich Ad, Poor Ad postcast where I go through all of this in detail.
Learn from my six-figure mistakes!
