Going through the desert

[Camzcl]

Hi All!

I'm going to admit to being a lurker in the forum. Today I decided to post and be more active. I'm going through the dreaded period called the Desert of Desertion.
My business partner and I have been working 4 years in this project. We framed it pretty much following the CENTS rules and are happy we did it. We have a good moat. Control is relatively good as we work with several wholesalers across the US and hopefully soon in the EU. of all the CENTS rules I'd say Scale is the hardest as it is a luxury product (and very hard to make), so we sell less volume, with higher margin.
Now comes my emotional part. These four years our business hasn't paid us a dime. I think it has paid for 2 dinners and one lunch in 4 years.
I can understand the long term game and rationalize this (trust me I've been working for free for 4 years) but I have to be honest in that it is starting to get to me emotionally.
Also financially.
I freelance on my old full time job to pay the bills. but now money is just not enough, and I find myself late in paying rent and things like that.
We ordered a massive amount of inventory this year to cover several months of sales as we sold out the last holiday season (yay). Now we're running to make enough sales right now just to pay for this large inventory altogether. In my mind after we make the leap into this larger stock we can alleviate our cashflow situation and probably even cover our rents or something. a F*cking coffee paid for my business would be nice.

Aside from the rant, I'd like to ask fellow entrepreneurs here what they have done during this period to stay motivated and to avoid falling in desperation or full out exhaustion.
I built this business not knowing what the hell I was getting into and has provided me with incredible experiences. I used to love getting up at 6am to work. That's not the current case.
We're so deep into this desert I don't think we can even quit, but every morning feels a lot more difficult than the previous one to me.

Thank you to anyone out there who took the time to read this.

 

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[Johnny boy]

You aren't building a biotech company, you shouldn't have 4 years of unprofitability building a simple e-com business. Something is wrong, most likely your ability to get sales without paying too much in ads.

This should've been tested the first week.

Test the underlying premise of your business as soon as possible to avoid situations where you waste a lot of time.

People need to actually want what you're selling. It has nothing to do with if you want to sell it or not. I assume you want to sell them very badly. But if there is not demand you are failing the "need" commandment.

In my business people call us and say "you're the only company that picked up the phone" and then "thank you so much, we appreciate you guys" since we help solve a problem and make it easy to do so. Add value. If that wasn't the case and everyone had their problems solved already, we wouldn't make any money.

If I was ever going to sell products online, my primary focus would be PROVING that people WANT it and I can get sales EASILY. That would be 95% of my focus. There needs to be an obvious plan for how to print sales on demand. I would need to run ads and see a great ROAS instantly. Otherwise I would think "this is probably going to be an annoying uphill battle just trying to make a couple bucks".

 

[Camzcl]

You aren't building a biotech company, you shouldn't have 4 years of unprofitability building a simple e-com business. Something is wrong, most likely your ability to get sales without paying too much in ads.

This should've been tested the first week.

Test the underlying premise of your business as soon as possible to avoid situations where you waste a lot of time.

People need to actually want what you're selling. It has nothing to do with if you want to sell it or not. I assume you want to sell them very badly. But if there is not demand you are failing the "need" commandment.

In my business people call us and say "you're the only company that picked up the phone" and then "thank you so much, we appreciate you guys" since we help solve a problem and make it easy to do so. Add value. If that wasn't the case and everyone had their problems solved already, we wouldn't make any money.

If I was ever going to sell products online, my primary focus would be PROVING that people WANT it and I can get sales EASILY. That would be 95% of my focus. There needs to be an obvious plan for how to print sales on demand. I would need to run ads and see a great ROAS instantly. Otherwise I would think "this is probably going to be an annoying uphill battle just trying to make a couple bucks".

Hi johnny,

Sorry let me explain further. Designing the product took two years after finding the niche. We’ve been selling for 2 years. Every year we have turned a profit. A tricky profit since all the employees in the company work for free. But at least I’m not putting my own money in the business.

We are not an e-commerce. All retail with some e-commerce presence but the bulk of our sales is wholesale to brick and mortar retailers.
Ad spend is low, but we do spend in PR which is expensive.
All our capital/profit goes to larger inventory since the demand is growing.
The problem is that the person running this is running out of emotional capital.

 

[CanadianTrucker]

Is the problem that there isn’t any profits yet or that you guys are reinvesting all of the profit to build the business. I believe it is very important to pay yourself even if it’s a smaller amount right off the start, I never did this with my first 2 businesses but now with the current business I made a point to take pay for our work from the very start. We take 30% of the profit from every sale to pay ourselves and reinvest 70% back into business. This has worked very well so far. It definitely helps that we were profitable starting with first sale. You said it is a higher margin business, is it just inventory management that needs tweaking to get you cashflow that can pay yourselves?

 

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[CanadianTrucker]

Hi johnny,

Sorry let me explain further. Designing the product took two years after finding the niche. We’ve been selling for 2 years. Every year we have turned a profit. A tricky profit since all the employees in the company work for free. But at least I’m not putting my own money in the business.

We are not an e-commerce. All retail with some e-commerce presence but the bulk of our sales is wholesale to brick and mortar retailers.
Ad spend is low, but we do spend in PR which is expensive.
All our capital/profit goes to larger inventory since the demand is growing.
The problem is that the person running this is running out of emotional capital.

This post seemed to come at the same time I posted my other reply. I got some of the answers to my questions now, that’s as bad timing. Can you reasonably slow your growth so that some profits can pay you rather than just go into more inventory?