I love this story. I heard Ben on the Andrew Faris podcast and I recommend listening to the episode yourself, following Andrew and following Ben.
Ben Perkins founded &Collar, a mens dress shirt company which he grew from $300,000 to $2 million to $7 million to $15 million. Amazing success. But that type of growth is super hard if not impossible to sustain with organic cashflow at their margins.
So, he starts looking for capital. The temptation of the MCA’s became too much. He bit.
Because of that, debt started climbing. His rapid growth means he is paying back MCA’s faster than his cash conversion cycle. Interest is piling up. Free cash flow is rapidly falling because the percentage of daily sales for repayment is climbing.
He starts stacking Shopify Capital on top of Wayflyer on top of PayPal. He’s using every MCA he can find. The negative debt spiral is worsening.
Finally, his young finance guy who he just hired comes in waving a huge red flag. This is unsustainable. We cannot survive with this much debt. And fortunately for everyone, Ben listened.
Their first move was to refinance with Ampla. They lower their interest rate and get predictable payments. But then disaster hits. Ampla goes out of business and calls in their loans. They, or more likely their credit fund, demands their money back. Now they were really screwed.
They go back to Wayflyer to refinance Ampla. But now are saddled with a $65,000 per week payment.
So they cut software. They ax ad spend.
And they have to cut headcount. In doing that, they try something genius. They assign everyone a weekly P&L. You have this amount of gross margin to deliver every week. This sifts out the highly motivated people. Those people realize that they can make more money under this new system. But not everyone likes it. So they offer 4 months of severance to people who leave. 7 of the 13 full time employees take the severance. They are left with 6 very hungry people.
And it works. Crazily enough. Those 6 highly motivated people produce more than the 13. They were getting more results with far less payroll.
This ruthless focus on weekly results not only saved the company, it set the foundation for success. Because the balance sheet improved, they were able to access a term loan and line of credit from Key Bank. And they have kept the weekly personal P&L goals. Their next challenge is bringing back their ad spend, but they have the foundation to do that intelligently. But they now have a company doing $17 million with $1.7 million of EBITDA.
Besides the new confidence gained from surviving those harrowing 18 months and the improved management of the company, Ben’s biggest takeaway is that he would have matched his growth to his cash cycles and he would have looked to his suppliers first for better financing and help to improve those cash cycles.
I love Ben’s transparency and modesty and you should hear the story for yourself. So give the episode a listen. Sign up to follow Andrew and Ben.
The Andrew Faris Podcast He Just Did $1.7M In Profit On $15M In Revenue After Being $3M In Debt
AJF Growth AJF Growth: Work With Andrew Faris To Grow Your Ecommerce Brand
Ben Perkins
&Collar Stain-Resistant Dress Shirts, Ties & Pants For Men
Worth it: Ben Perkins’ self rescue Worth it: Ben Perkins’ self rescue
If you are a brand leader feeling stuck, listen to Ben’s story. You too can self-rescue. And if you need help with that, reach out.