Rapid Growth: 350K to 2.4M in 6 months

“I have this client who needs your help, he’s some kind of kid genius, but he hasn’t got a clue.”

That was one of my referral partners, a business attorney, who sent me a lot of business. So of course, I agreed to talk to the kid and to help if I could.

And a couple of weeks later, I was driving to New Jersey to meet my new client and his team. First on the agenda; to figure out why a company that was making $350k in sales couldn’t get a small business loan or attract an investor.

I drove up to the building and thought “this can’t be it.” It was an office building. And sure enough, it was it. They were manufacturing customized electronics in an office building. And each time they ran out of space, they would rent another office and walk down the hallway between the now 5 separate rooms where production was taking place.

The kid’s office was off the soldering room and sported a desk, a futon, and two large bean bag chairs. His desk was littered with empty cans of energy drinks and his two supervisors; also kids, friends who had never supervised anyone a day in their lives, sat sprawled out on the bean bag chairs. 

The kid gave me a tour. There was inventory everywhere. And most pressing was a backlog of orders on eBay and Amazon with rising customer complaints and one and two-star reviews.

When I asked about the past due orders list, they didn’t have one. I ask, “How does anyone know what to work on each day?”

“They make what they can and if they don’t have the parts they skip over it,” the kid answered. 

That’s what we call cherry picking orders. And the result it pissed off customers and a metric ton of communications to calm them down.

And the eBay sales were dying and more and more one-off and custom orders that took the team more time to build, but sold for the same price.

And they were on the 4th page on Amazon in their category. Proliferating SKU’s, bad product descriptions, poor reviews due to late deliveries. All were taking a toll on the business.

3 or 4 competitors dominated the first three pages.

But none of them had figured out the key: Fulfillment By Amazon (FBA).

We chose the top 5 sellers and increased the price to cover freight and warehousing fees.

Built a safety stock of those 5 SKU’s and shipped them to the FBA warehouse.

Now any Prime members who only ordered Prime-eligible products picked our products over our competitors. Because they clicked on the checkbox which meant that all of our competitors' products didn’t even show up. 

Orders started flowing in. And customer reviews went up because Amazon sent out the product and it was on-time!

We still had a long cash cycle. Custom plastic products prepaid in China and shipped by boat to the US. Eight weeks lead times. And too much inventory required to support the 200+ SKU’s that had been created over the past two years. None had been discontinued even when sales dropped off. So we went through that exercise, begrudgingly, because the kid made the same mistake a lot of product companies make, and had fallen in love with his own product. Even the product that was costing him money sitting on the shelves.

And we still had a manufacturing setup in an office building. And two “supervisors” that were useless and were becoming a liability by doing things like talking about a job applicants “rack” in front of employees.

We needed to move well in advance of Christmas (the busy season), and we needed more working capital (cash) and a real production manager.

So while sales and production were increasing, we found a new place to lease. And an investor. And hired an experienced productions manager.

As a result of these things, the kid’s $350k company grew to $2.4 M in 6 months. And it was just July, plenty of time to ramp up for the Christmas rush.

All despite issues with cash flow, lead times, staffing, facilities, and production. 

Three months later, the kid realized his “friends” weren’t doing him or his business any favors and they no longer worked for him. 

So if you are sitting on a boatload of inventory or you hired your friends from high school and it's not working out, don’t despair I can help.