#248 - Ben Tregoe, Bainbridge - The Cash & Funding Crashcourse For DTC

On this episode of DTC Pod, Ben joins Blaine to give an overview of how to generate cash as a DTC brand. They talk about everything from first financial decisions as a founder, to inventory management, financing options, how to think about equity vs. debt financing options, raising a round, speeding up cash conversion, raising the right amount of capital for your business, going omni-channel, tools like revolvers, asset backed loans, factoring, what the macro environment means for DTC businesses, and more.
 

7:00 Speed This Metric UP!!

The cash conversion cycle is literally you buy, inventory, you pay for your suppliers, you put money out, and then there's this period of time when it comes into you, and then you sell it. And then when you sell it, that's the end of the cash conversion cycle. And oftentimes people don't think through that well enough. And the problem is, you have ever increasing money going out before you can generate it yourself.

9:50 - The Overlooked SECRET to AMAZON's Success

Well, the all time hero of this is Amazon, right? Which was able to pull off a negative cash conversion cycle. And so what that means is that they were getting paid in advance of having to buy the inventory. And so when you think about, Amazon, I'm old enough to kind of remember when they sold books, that's all they sold. But, that was like, why they could drive the prices down so low. Because, in effect, they had this cash flywheel and they didn't have to worry about it.

34:30 - MATCHING (finance not fashion)

The key is matching. That's the thing that's often overlooked. Everybody wants to jump into interest rates and the cost of capital, but you really want to focus on the matching. So what matching means is like, the use of the capital that you're borrowing matches your ability to I said this wrong. The term in which you have to repay it matches your ability to use it. So the way to think about this is like, if you were to go get a bank term loan, and it's like a three year loan, right? You close it and then the next day they wire you that million dollars, and guess what? You start paying interest on it and sitting on your balance sheet.

45:30 - Turn Your PO's into $$$

And because it's Walmart credit, they're like, oh, well, it could be, like, $0.95 on the dollar or some really high rate on it, because they're basically just taking Walmart credit risk at that point. So factoring can be a terrific way, as you build your, omnichannel business, to find that growth, because everybody faces that problem, right? I got an order from Target. We're going to kill it. And it's like, Holy shit, I got to come up with, like, $2 million of inventory. Now what do I do?

 

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Past guests & brands on DTC Pod include Gilt, PopSugar, Glossier, MadeIN, Prose, Bala, P.volve, Ritual, Bite, Oura, Levels, General Mills, Mid Day Squares, Prose, Arrae, Olipop, Ghia, Rosaluna, Form, Uncle Studios & many more.

Additional episodes you might like:

• #175 Ariel Vaisbort - How OLIPOP Runs Influencer, Community, & Affiliate Growth

• #184 Jake Karls, Midday Squares - Turning Your Brand Into The Influencer With Content

• #205 Kasey Stewart: Suckerz- - Powering Your Launch With 300 Million Organic Views

• #219 JT Barnett: The TikTok Masterclass For Brands

• #223 Lauren Kleinman: The PR & Affiliate Marketing Playbook

• ​​​​#243 Kian Golzari - Source & Develop Products Like The World's Best Brands

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Ben Tregoe - CEO and Co-Founder of Bainbridge Growth
Ramon Berrios - CEO of Trend.io
Blaine Bolus - Co-Founder of Seated