"We Sell Out Every Restock. Why Are We Broke?"

0:00My name is Ruud. Uh we have a Who's that? Ruud. From the Netherlands. >> All right, Ruud. >> also call me Eric. >> [laughter] >> I had a one of my buddy's dad's, his name was Merodach. And he's like, "You can call me Mike." >> [laughter] >> Like, anyway, keep going. >> So, we have a DTC brand. It's uh gym wear with shapewear. >> Okay. >> hold the patents on the weaving technology to lift the booty. >> Yeah. >> last year was first year, we did 10 million. This year we do 80.

0:27>> Amazing. >> would like to be at like 500. >> Are you going like TikTok Shop that's blowing you up, or what are you doing? >> TikTok Shop. >> So, what's what's been the growth strategy? >> Uh we have elite creators. So, it's basically like video. >> Elite? >> Yeah, elite we call it elite. It's basically like affiliates, but then uh we run their we run ads on their page. >> Got it. So, you you you recruited a handful of people who have big brands. >> Yeah. >> And then you just ran you put gas on it.

0:51>> also smaller creators, so yeah. >> Yeah. Understood. Um okay. So, you're going to do 80 this year? >> 80 this year, and we want to be at 500. >> So, what would you at year-to-date? >> Uh now 20. >> Okay, got it. So, you're 20 year-to-date, you want to finish at 80 or more. Cool. What's the question? >> Uh supply chain and quality. >> Yeah. >> Yeah, huge. >> Tough. >> Yeah, so because every time we restock, it's going to like five, six, 700k a day. >> Yeah.

1:17Cash flow. >> Also cash flow now because the quality issues, like profit margin last month was like 8%. Now it's like two. So, that's the biggest issue now, yeah. >> Yeah. So, what is the question though? I agree with that as a problem and a pain. >> Yeah, like what should we do? Should we focus on like scale or like back end or >> So, >> is not an issue, of course, but yeah. >> So, in all likelihood, you'll have to have some sort of You'll either have to throttle growth so that you can basically reestablish your cash position because you have to think of it from the from a downside risk perspective is that like do again, risk is one of the eternal things that's always up to you. Right? There is no correct answer on risk on how much you're willing to take.

2:02Um but me, I would rather I would rather give up some growth to make sure that my business will be here tomorrow. Because of the alternative of like I tried to grow too fast and I could have kept this thing if I just not gassed it, which like was self in I hurt myself, right? Because of an arbitrary number that I made up, right? You're like, "I want to go from 80 to 500." It's like you could say you want to go from 80 to 150 and guarantee you get there. I'm not saying you do that, but like there's a range, right? And so, um option one is that you can throttle growth and keep more equity. Option two is you could take on basically debt or having some sort of larger credit line with the growth that you have. Thing is is that debt doesn't really care about growth, it cares about downside. And so, the lines that you'll be able to get are not going to probably be nearly big enough.

2:47Most likely, if you wanted to like keep the aggressive path, is just like how much can you raise that from evaluation perspective and then let outside investors cash flow the growth. >> Yeah. Okay. >> So, those are the three doors. I don't know if one of those sounds better for you. I think given the nature of the business that you have, um it can make sense. Like door three would make a lot of sense for you right now. Now, the supply chain stuff, that's always an issue. You're going to have to start going club, whatever. You'll deal with that. Um but I think it's a lot of these problems are capital related.

3:18>> Yeah. >> And so, the nice thing about raising cuz you already have this great growth story right now, you probably get a very favorable valuation. >> Mhm. >> Um which means you probably wouldn't have to give up that much equity in order to get a shitload of liquidity. >> Yeah. >> And that would probably be the correct move. >> Okay. >> I mean, do whatever you want. I would probably do that. >> Okay, perfect. Thank you. >> Yeah, easy. If you are a business owner and you are not growing as fast as you like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling road map, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly, where they got stuck and how they got past it. And so we broke it in these 10 stages and we made this little kind of quiz thing where if you put in your business information it'll tell you where you're at and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so no matter what you're struggling with, someone else has already struggled with it and solved it. And so I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information, and if you want us to actually help you deconstruct the business and you're trying to scale, we'd love to help you out. On the thank you page you can book a call with my team and we will look at the business, see if we can help, and if we can we'll invite you out to Vegas and we'll do this in person live.