S3 E12 How to fund e-commerce growth and manage cash flow safely

Many e-commerce business owners confuse their profitability on paper with having actual cash in the bank, leading to sudden operational bottlenecks when it is time to purchase inventory or scale their digital presence. If you are experiencing friction with your cash conversion cycles or stock limits, you are not alone. 

In this episode, Gaby from https://avask.com/ explores the true cost of e-commerce growth and how to navigate common cash flow traps. Stephanie khalikyar from https://www.weareuncapped.com breaks down when to comfortably bootstrap your operations, when external capital is a necessary leverage tool, and how to identify if you are pouring money into a viable growth strategy or simply masking a broken operational process. We also cover how to select the precise funding product—from lines of credit to term loans—based on your specific business goals.  

Key insights: 

- How to accurately differentiate between true profitability and cash flow

- The cost of waiting too long to secure external funding

- Why platform diversification builds long-term financial resilience  

- Choosing the correct capital structure for your specific inventory cycle 

Timestamps: 

00:00 The cash flow challenge for e-commerce sellers  
03:35 What it actually costs to scale your brand  
05:35 Bootstrapping versus external funding  
07:43 The opportunity cost of delaying capital  
10:35 Confusing paper profitability with actual cash  
15:09 Managing platform volatility and diversification  
20:02 Breaking through the seven-figure operational wall  
28:00 Demystifying cash advances, lines of credit, and term loans  
33:20 The strategic way to fund your advertising spend  
44:43 Practical steps to regain control of your cash flow

Transcript

SPEAKER_00 0:02

Hello and welcome to another episode of the Online Hustle Podcast sponsored by Avast. Today we are lucky enough to be joined by Stephanie from Uncapped, funding partner that works uh to provide capital for online businesses and e-commerce sellers. So in today's episode, we're gonna dive into what it really takes to scale an e-commerce business, true cost of growth, cash flow traps, and so much more. Thank you so much for being with us today, Stephanie.

SPEAKER_01 0:32

Thank you for having me.

SPEAKER_00 0:34

Yes, absolutely. So let's let's dive into it. For anyone that is new to Uncapped or doesn't know what Uncapped does, what do you do? What kind of seller is it that usually is the best fit for Uncapped?

SPEAKER_01 0:47

Okay, so Uncapped was founded in 2019. Uh it's one of the few uh funding groups that has made it all the way through the last uh seven years in the e-comm space. So that says a lot. We serve e-commerce businesses only. So no SaaS, no uh brick and mortar. We didn't go wide, we went deep. So Uncapped is only does e-commerce so that our products are evolving with the market, which is changing all of the time. And we with Amazon sellers, TikTok Shop is um our newest um and venture that we're heading towards. We support Shopify sellers, we support Walmart sellers. So anything um that is in the digital shelf space is our ICP. Um and we have lines up to two and a half million. So that's anybody looking for that amount or less, uh, we are your people.

SPEAKER_00 1:43

Awesome, awesome. And what is the most common reason that sellers come to you? What is it that they're usually trying to solve?

SPEAKER_01 1:51

So a lot of times when sellers are coming to uncapped, they are in one of two places. They're in their, I know exactly what I'm gonna do and I need more capital to do it stage, or they're trying to keep the lights on. So usually people hit that capital conversation with themselves at an inflection point that is either going in the right direction or the wrong direction. Um and so half of our clients that come in are like, I understand my numbers, I'm entering a new market, I'm doubling down on inventory and shifting over to a secondary channel or a tertiary channel. Um, and they're and they're very clear on that, and they're business um reporting on our side, like all of the fundamentals and the PL reflects that information. And then the other half of people are like, I have no cash and prime day is coming up, or it's almost Q4, and that's for this inventory. And that's usually an operational issue where like you're coming for capital and you're probably gonna pour gasoline on something that needs fixing, which is kind of the other side of things. So people are usually coming to us in one of two directions.

SPEAKER_00 3:05

Yeah, definitely. It in all industries and all aspects of life, there's always two kinds of people, right? 100%. So talking about growth, right? Everyone talks about scaling an e-commerce business, but nobody talks about how capital intensive it actually is. So what does it really cost to grow from your perspective?

SPEAKER_01 3:28

Yeah, so um something that catches people off guard, and especially like if this is like your first e-com business, is what the business model looks like in real life. So what when you're looking at a high level, it's like buy a product, sell a product, I make this much profit, and yay me. Um, but what it actually looks like is a completely different story. And I think understanding that is the first step at running a serious operation. So thinking about what happens when you're gonna double inventory. Like, say things start going well and your cash conversion cycle, which is how long it takes for you to spend money on a product and get money back from that product, right? Like understanding that, what does that look like in terms of growth? And can you afford to expand and grow on the things that you're doing, understanding those numbers? So a lot of time knowing where your margin is. Um, sometimes it's sitting in a boat on the water with a new product. Sometimes it's sitting in a deposit with your supplier, sometimes it's sitting in storage costs somewhere else or, you know, in advertising spend. So the sellers that really want to understand capital in a business need to know where their profits are, where their cash conversion cycles are, and how long it takes to go from spending the money to getting the money back and the shift in thinking around that versus buy a product, sell a product, keep the profit, is how you can start to think about planning to use capital um externally to grow the business. Right, right, of course.

SPEAKER_00 5:10

Um, and that that brings me to an interesting point of like bootstrapping versus funding, right? So if let's say a seller came to you tomorrow and said, you know, I don't want to take on debt, I'd rather just grow it slowly. What would you say to them?

SPEAKER_01 5:28

I would say that if you can, you should. Um not every business in the world needs external capital. Um before I was working with uncapped, I worked in MA and I looked at a lot of businesses. Um, and there were some, especially the unsexy ones, like at an automotive or like something that's like not as trendy, right? Like the the stuff that no one's paying attention to, those have like extremely beautiful profit margins where like the cost of the of the product is low, the advertising is cheap because a lot of people don't play in those pools, right? And you have all this profit to reinvest in a business. So if you can, you should. Um and I'm I'm down with that a hundred percent. If you don't need debt, don't take it. But at the same time, sometimes debt versus no debt can be more is the is the capital going to propel something that you couldn't do with the profits that you currently have, and is it worth doing? So, like if you know that every dollar you spend returns three dollars and how long that takes, and if the cost of borrowing an additional dollar takes like 25 cents of that return, then being cautious and moving slow might actually be hurting you and leaving money on the table versus if you could pour gas on what's working and grow faster, um, is that the conversation you should be having? So the risk isn't necessarily debt all the time, but more like is it expensive debt where it's gonna start hurting your business? And are you gonna be deploying debt into something that has been validated or hasn't been validated? Because that way you know if things are like gonna work in your favor or not.

SPEAKER_00 7:18

Yeah, of course. And that's actually a really good example for everyone that's listening. So thank you. Um, what do you think is the opportunity cost that uh sellers, founders are ignoring when they do choose to wait?

SPEAKER_01 7:34

Um sometimes when you're waiting too long, uh, you might miss your opportunity for the best capital options for you. So let's say um, let's say you're growing and things are moving in the right direction, and you're like, like like the previous question you asked, I don't really need it, but I could maybe you see an opportunity and you sit on it too long, and maybe your product life cycle starts hitting its peak and more competition is coming in, and maybe you hit a bad review or Amazon shut you down because all of a sudden it believes you're a pesticide, and maybe you have a concentration of revenue in in a couple buckets that haven't spread out yet. If you wait on even exploring the idea of capital, um, you could miss the train of getting the most value for where your business is when it's super healthy. Um, I think the same goes across multiple industries. You should always take money when you don't need it, right? So, like exploring the opportunity doesn't necessarily mean you need to execute, but at least knowing here's what's available to me, where I am today, and if I used it, what would I use it for and what would the results look like? I think waiting until it's a need goes back to the original conversation that we were just having of that's you assume that there's an operational issue and that that needs addressing.

SPEAKER_00 9:00

Yeah, exactly. It's it's almost like going to the doctor, right? People instead of going to the doctor to take preventative measures and check up on themselves, they wait till things explode. And then the doctor's like, well, now you have to go to the emergency room. I can't help you. Right.

SPEAKER_01 9:15

Which you're speaking language on that one because I have my have my follow-ups of fucking blood work tomorrow, um, where I do that exact thing. And it's it's just so much easier to to hit things before they're a problem. But in the world of business, unlike our health, where like our body can tell us pretty immediately if something's like buggy, in your business, sometimes you don't see it until it's like I don't want to be too right there, speechful, right? Like you're like, oh, this is a stuffing problem. Um so sometimes it's hard to find and hard to pay attention to, um, which capital can also help with when you are thriving, because sometimes the problem is you, right? Sometimes you are the bottleneck.

SPEAKER_00 10:00

Yeah, absolutely. So in in situations like this, right, what is the biggest mistake that you see e-commerce sellers making when it comes to managing their money in all stages of of their business, right? Because obviously there are people who are in early stages, people who've been doing this for a long time. So just in general, what do you think is the biggest mistake that that sellers are making?

SPEAKER_01 10:27

I mean, this goes beyond sellers. This is like business people in its entirety, but confusing profitability with cash. Um, they're two different things. It's one of the biggest things that I've ever seen. It's so common and it causes problems across industries. Um, you can be genuinely profitable, right? Um, OpenAI is a great example. They're like killing it, whatever, but they're not, they are like negative every month over, but they're like have this huge valuation and all these things. So you can be profitable on paper and have good margins and growing your revenue, all these things, but you still find yourself with like no dollars in the bank account. Um and it's really understanding like kind of what I mentioned earlier, where is your money sitting? So is it tied in inventory? Is it sitting in an Amazon reserve? Um, is it an outstanding payment to a supplier? Like understanding kind of where those things live on a consistent basis and not keeping it in your head is really, really important because then you can start to break down like all of the different layers, which kind of goes into contribution margin of like, here's the cost of each of my products, here's how much I spend on fees per product, here's how much I spend in in storage and in advertising per product per platform. Here's what I'm left with at the end of the day. That's your profitability line. But then what about payroll, insurance, subscriptions, communities if you're part of them, or whatever, whatever else you're paying for? That's the cash all the way down there. So understanding like where all of that stuff is living and handling your business and treating cash flow as the forecast function, not just the profitability line, is probably the biggest mistake. So like making understanding the difference between what profit looks like and what cash in your bank account looks like and where your gap is.

SPEAKER_00 12:22

Yeah, definitely. And it's at the end of the day, it is a a simple habit almost that that people can fix faster than they think, um, especially with help from you know companies like Uncapped, right? Uh, but just like on a personal level, I think people we all do the same thing, right? We see, you know, whatever money comes into our bank account, nobody factors in like that, oh, the $20 Hulu subscription or, you know, the $5 Prime subscription, it can't be $5 anymore, but just an example, right? Like we we forget about those little things. And so we think we actually have more money in our bank account than we do. Um, and it's really common among amongst businesses, but obviously when you're in a business, it it's gonna affect you a lot more than your your personal small expenses.

SPEAKER_01 13:11

Well, and then when you're in e-com, especially when you're a business owner, some of that stuff cross-pollinates, right? So you're like, this is a business expense. I'm gonna put it in this bucket over here, but like sometimes that's why they have apps for this stuff now. Like sometimes you're paying subscription twice, one in your personal, one in your business, and like, and you know what I mean? Compounds crop compounds across industries like all the time, and it's death by a thousand, right? It's just like five dollars here, ten dollars there. Yeah, and then like you hit an emergency where you're like, I need my product now. Maybe you went viral on TikTok, right? And then you air freight a whole shipment in that extra couple thousand dollars it took to get here quickly, right? Is going to hit your PL, but you might not have changed your cost of goods, right? So, like that's a default where you're like, now you're in the negative and you don't know that because you were moving on the fly, right? E-commerce moves fast, and and it happens all the time.

SPEAKER_00 14:15

Yeah, yeah, definitely. Okay, so let's talk about platform volatility. You mentioned in the beginning, right? You work only with e-commerce sellers, all these platforms, especially now that sellers are working on so many platforms, right? Diversifying their marketplaces, which is a great thing. Um, all of them are they work differently, right? They operate differently and they provide different things for sellers. So Amazon, Shopify, TikTok, Walmart, they all keep changing the rules. How should sellers be thinking about financial resilience uh when the ground keeps shifting under them?

SPEAKER_01 14:49

Yeah. So diversification is a huge importance for multitude of reasons. Risk diversification helps you with your multiple when you want to go exit. And it helps you with your own business when you know something changes, a policy, uh, you know, payout period, whatever on whatever platform you're on. So the more diversified you are, the more risk averse you become. Um, it's not the whole answer, but it's part of it. So when you want to be resilient, you have to think about two things, which is the unit economics well enough to understand quickly recalculating changes on platform fees and commissions and all those other things that happen per platform so that you know exactly when a channel stops being a a profit center for you. So Amazon's a great example of that. They add a new fee, they add, you know, they take something away, but then they add something else in and like really understand where that plays in your unit economics will help you decide whether you should stay on a channel or not, first of all. And if it stays profitable or if it's great for like market share, which Amazon is, um, and having multiple platforms at once helps you not be fully dependent on any one platform's decision making. Um, and it also plays into like when they choose to pay out. So cash flow timing per platform is different. Um and that's where capital can become like an asset rather than just like funding your next thought or you know, products or whatever is like Amazon just changed multiple policies in the past 60 days that impact how sellers get paid, right? They introduced DD plus seven, but then they were like, oh, we'll give you this disbursement button. Um, but only after DD plus seven and in reserve holds and all this other stuff. So you're still waiting around. And then Shopify, you have much more control. So not being dependent on one channel's payout to fund the rest of your business helps you be extremely resilient in how your business works and you are not like at the mercy of any of those policy changes. Adding capital as like a go-between buffer for those kinds of situations makes sure that you're like adapting, that your business doesn't become, you know, at risk, that your operations can maintain and you can continue to grow and you don't have to reinvent the wheel because one of the platforms you're on has decided to implement a new policy or strategy.

SPEAKER_00 17:34

Yeah, a hundred percent. It just allows you as a business to have tighter operations as a whole. And it's something that we always trust to our clients, right? Especially we obviously focus on global expansion, mainly Europe, UK, obviously other markets as well. But a lot of people in this day and age, they just want to use Amazon. And obviously, Amazon is great, it's a powerhouse player right now, but you can't rely on just one platform. Because, like you said, if if one thing changes on Amazon and that affects your entire business, what are you gonna do? How are you gonna order more products? How can you attend to new customers? Right. So having that that cash buffer and that diversification in your marketplaces, of course, is gonna be able to help you run that ship tighter, right?

SPEAKER_01 18:20

At the end of the day, like nobody wants to run an e-com business forever, right? The goal should always be exit. And if you switch your thinking to like buying a business, would you want a business that only sells on one platform? Would you want a business that only has two hero skews bringing in 80% of the revenue? No, of course not. You'd want something that felt safe, that you knew you could grow in different areas, that you knew like had a streamlined operation in multiple places, that if one thing happened in one place, you still have these other three. So, like, if you think about it from a perspective of like, would I want to own this business if I was buying it from somebody else? It kind of flips the script and kind of forces you to get out of the leads for a second and look at things a little differently.

SPEAKER_00 19:08

Yeah, a hundred percent. That's a great perspective uh to see it from because a lot of these sellers that that stick to again only one platform, um, don't use the capital, right? Don't don't do things the right way, they bootstrap their way to a certain point and then they hit a wall. Um, in your experience, yeah, yeah, exactly. Um it's it's not right. And so in in your experience, what does that wall usually look like? What does it take to to get through it? And where do you see people just kind of like hit the wall and just give up from there?

SPEAKER_01 19:43

I don't see, I don't see people give up very easily, I will say that. Um but usually when you're getting to the seven-figure range, like when you're hitting like a million, you're like, all right, I gotta handle my business, I know what's working, I got a product fit, the margins are there, like you're doing the things, right? Everything seems to be going in the right direction. Um but usually the wall sits with I can't move fast enough, which is like an inventory, ad spend capital conversation, or um, I can't do it all, which is a team capital conversation. So like both money to push past the wall. Um where you get money, how you do it is up to you, but capital is always like an easy first step, right? It's like fill the space with something like lines of credit are my my personal favorite in the e-com space because you pay for what you use and you have a huge line available to you that just can rotate and work with your business, you know, as it ebbs and flows. Um, so when it's a capital constraint, I can't do enough or meet demand with my ad spender inventory. I mean, that's what that's wall number one. And the other one is usually kind of like I mentioned earlier, the boss, um, the founder, the CEO, whatever you want to call yourself. Like you've been doing multiple roles and you can only get to so many things in a day and put out so many fires at a time. And it might be time to use money, whether outside or internal, to then invest in a secondary full-time person to alleviate that blocker. Um, usually the first to go is like advertising. You either love it or you hate it. And and those who hate it need to offload it as soon as humanly possible. Speaking from experience is like this is my biggest thing. So, like getting that out of the way. Uh, expansion and leaning on who not how, which I preach a lot about, is is absolutely how to break through those barriers. So um, whether you need to grow faster with the demand. Which is such a great problem to have, you're the perfect candidate for capital. If you need to invest in the team to get out of your own way, also a great problem to have. It means you're going in the right direction. But that's usually the wall that you'll run into, and it's usually around the million dollar mark. And then the next wall is the scaling wall. And that's usually over the $10 million mark, where it's like, now operations are complex. We're in multiple, and it's usually like hiring a bigger team. And that starts to go into conversations. Like once you start passing like the eight-figure range, there's a conversation of like, should I raise? Right? Like, how big are you gonna go? What's the goal back into that? So to exit or to sell to like Unilever, get into retail and like really blow this thing out of the water. Like sometimes seed investment res are worth a conversation.

SPEAKER_00 22:55

Yeah. And obviously it's all, I guess, you know, a case-by-case situation. Every business is gonna be different, everyone's gonna be in a different situation. Um, and so this is something where, you know, if you're listening and you're in the situation and you need help, right? Go to Stephanie from OneCapped. They can help you figure out things like this. What's gonna be the best way to move forward and how can you use that capital uh to help you instead of hit the wall, but you know, push through the wall and and keep going in whatever avenue is gonna be best.

SPEAKER_01 23:29

Maybe you're headed towards the wall and you don't know it's there yet. Like that's totally normal. Um, sometimes we are persistent to a fault in um in the entrepreneur world, right? Like we don't we don't take kindly to like the the pushback, but we like love to push through. Um, and sometimes it just requires like more people or more things um that isn't all dependent on yourself.

SPEAKER_00 23:55

Um, but yeah, even if isn't the answer um for what you need, I'll probably know someone who has the answer for what definitely and I I think that's such a great point, is that most people think that, especially when when you start on your own and you don't have a team with you or you just have a small team, they think like, okay, we just need to work harder. Uh, and that's not always the answer. That is sometimes the answer that that gets you to the wall.

SPEAKER_01 24:23

Right, right. Or yeah, you just build that wall yourself by like, we just need to do this thing. It's like, no, life doesn't need that hard, actually.

SPEAKER_00 24:33

Exactly. And and something else that you said is very true. Um, sometimes it's also about who, not how. There's so many resources nowadays, right? Like it's not like e-commerce was 10, 15, 20 years ago. There's resources, partners, agencies, uh, free tips online, even, right? So there's so many ways that that founders can find information that's gonna help them figure out, you know, where am I right now and what is it that I need to do to keep going, or like you said, sell, right?

SPEAKER_01 25:06

I mean, I think the problem with that though is that the overstimulation of information almost causes analysis paralysis, and there's so it's like you can go find the answers, but you're gonna find like a hundred answers. It's like you have to find the right place to find the answer. Yeah, if you think about like how we looked at health in the past like 20 years, it's like carbs are the bad guy. Actually, carbs are the good guy. If you're eating carbs, you're gonna die. And this is like, whatever. This is like everything is so true, it's so silly. And it's just like, you have to have this peptide. Having this peptide is gonna kill your eyeballs. Like, it's just wild, and like all relax for a second and like only think about the things we actually need and like be diligent about who you work with. Like, I'm a big fan of like hiring individuals dedicated to your business versus agencies in general. Now, I know some great agencies, but that's only because I've been burned by other agencies and align myself with the right ones, but that took a lot of pain and expense to get to that point. And like, it's right. So it's like, yes, there's all the information in the world out there. It becomes hard to know who to listen to.

SPEAKER_00 26:24

That is very, very true. Um, and it's something that I see all the time with my clients, right? A lot of people come to us and they're like, I want to expand to Europe. And I went, you know, on Chat GPT or I Googled it, and AI told me I need this, this, this, and this. And I'm like, okay, slow your roll. And usually I have to be like, forget everything you read and let's start from scratch. Because yes, there's a lot of information out there. Some of it's true, some of it's not. You know, whatever you read may not pertain to your exact business model and goals.

SPEAKER_01 26:57

So that is a very, very good point. Yeah. And like, never mind the fact that your price points have to be totally different in other countries because people won't pay in Europe when they pay in the states. And if your margin can, you're not going.

SPEAKER_00 27:11

Yeah. And I mean, taxes, there's there's so many things, right, that need to be adjusted. But um, that is a really good example. And so speaking of just, you know, funding and all of this um jargon, right? The people stay online, they they research, they find all this jargon. We like to call it here the alphabet soup because there's so many acronyms about everything everywhere, and it's hard to understand them. So we always talk about working capital, cash advance, chargebacks, lines of credit, right? There's so much jargon that a lot of people don't understand. If you had to cut through all of it, what's the one question that a seller should actually be asking before they take any funding?

SPEAKER_01 28:02

Two questions. One for themselves and well, one for themselves and the other one for their business. But the first one is do I know what I want to use this for? So, like, what do you want it for? If you want to keep the lights on, like I mentioned earlier, don't take it because just borrowing money for something that's failing, you have an operational problem that needs addressing. Um, so you have clear this is what it costs, this is where I'm going, this is what I'm gonna get out of it. Like, if you have a clear path for capital, deploy. Uh, the second question is like, how long is whatever product I'm looking at here, how long will it take for this to pay for itself? So can I afford to get this back and still pay my team and still grow and order inventory? Blah blah blah. So can you handle the debt load that comes with whatever product you're looking at? Um, those are the two first questions that you should ask yourself before you start exploring, and then understanding like what each thing means and like the parameters that live around it, like uh MCAs or cash advances, like those are short-term, usually higher APR products. If you are highly seasonal, like say you have a uh pool float business, right? And like this is your season, right? You're in it right now. Um, in February, you should have been looking at an MCA type of product to fund your peak season that's coming right now, so that when you hit peak, you could pay it back no problem. And then you don't need any longer terms than six months. So, like, yes, you pay more for the money, but you get the money for exactly what you need it for, and then you're debt-free for the rest of the year to like launch and scale in your seasonal, volatile type of business model, right? That is a good example for something that works really well. Um, if you took an MCA and you have consistent sales through the year, you're paying a really high APR for something that usually takes you know four months to get from order to in the warehouse and sellable at minimum, right? It takes a long time. And like you're almost done with that loan timeline. So that would not be ideal for you because then you're paying on a loan where you haven't turned your inventory yet. So like it it can be it could be detrimental um taking that kind of loan if you don't have the kind of business to match it. Um lines of credit, like I said, if you're going from like that growth to scaling arena where you're like, I need just consistency in like extra capital so I can keep growing, so I can double down on these ads that are working. Like, I love lines of credit for that. They're on the lower APR side of things. You only pay um on the money that you use. So like you may have $200 to use and say you only use $50 of it. You're only paying APR on that $50. And when you pay that, you that line goes back up again, and you can just keep rotating and use it. It's very consistent. I love that product. Um for a term loan, it's like I'm launching into Walnut, I've done my due diligence, I know it's gonna land. I need eight to 12 months to pay this back. So you get one chunk of money at a time and you start paying that money back pretty immediately, but you're deploying it in more of a massive model, right? So you kind of know exactly how that's gonna turn for you. That's kind of where that works. So if you can clarify like which product in the world of capital best suits your business and how you're gonna use it, and you'll you know how you're gonna get a return on it and when, like, that's the whole conversation. So if you can just get clear on things, then you'll know exactly what you're looking for when you go to look for funding. Or maybe you're like, I didn't know that this kind of funding option was available to me, and this is what would work really well from a business. So maybe think of it the other way around. If you hear about this, like, oh, I didn't think about it that way. Um, I would do it really well with a line of credit so that I could do this thing, or I'd do really well with a term loan so I could do that thing, and like, you know, back into how you want to deploy that and why.

SPEAKER_00 32:21

Well, yeah, definitely, right? Because I think, again, everything is case by case. So a business might, you know, get capital and to to use it well, they have to decide where it's gonna go first. Like you said, it could be inventory, marketing, hiring a team, right? Um, there's there's so many ways. But you mentioned that ads are one of like your favorite things for a line of credit. What do you think is one of the biggest misconceptions about using capital for ads?

SPEAKER_01 32:52

That a bigger budget means better ad performance. Um I think I think you need to have a hard look at your conversion, your ad to cart, and your ROAS. I mean, ROAS isn't really a full metric, and especially with this whole like Rufus gets shut down and Alexa shopping gets turned on, and and here we are ride, right? Like everything changes so quickly. Like to me, inventory paying for what's working with outside capital in terms of inventory is like the best use for debt possible. And the next step would be adding more to if you're just running out of the ability to like scale ads off Amazon or on, doesn't matter, and you just keep maxing budget and you just like things are working, you're getting a ton of organic traffic and like repeat business from these ads, use it, right? It's a great use of capital. But if you can pay for that inventory with capital, take profits from that use and dump it into your ad spend. I would rather do it in that sense than just capital on ads alone. Um, I would rather like same thing with a team, really. If I was gonna hire, I would use capital for the operational side of my business and hire with the profit. Personally. Um, so there's just a lot of ways to look at it, but like lines of credit to me are the best products because they're versatile and you only pay for what you use when you're using it, and that changes all the time, right? E-commerce it goes up and down and side to side and all over the place. So like having that consistent baseline so you can use it how you will, when you will, is just something that like is one less thing to think about as an e-commerce business owner.

SPEAKER_00 34:48

Yeah, a hundred percent. Um, and and as you said, e-commerce is always changing. It's it's there's no steady path anyway, it's up and down all the time, every day. Um, and like we said, it's it's changed so much over the last five, 10, 15 years. Um, so talking about the future of e-commerce and e-commerce capital specifically, um, five years from now, what do you think the relationship between e-commerce sellers and their capital looks like? What needs to change to get there?

SPEAKER_01 35:21

Um, what needs to change to get there and what it looks like are probably different conversations. But the best version of the future, yeah. The best version to me is that capital is considered like part of building a business. Like it's just another structure that is automatically part of the business. So, like, like your three PL or your freight forward or whatever. It's like this is something I'm a hundred percent gonna do at some point or another, um, because that's just part of running a business. Like, I see capital living more integrated in the idea and the process of building an e-com business, um, more so than where we are today, which is like, I need this now. Kind of like that shoot from the hip moment. Um, and a lot of that comes from just repositioning capital in the market as a whole, which is like a whole nother piece of work, right? So to get there, the hardest part at the moment is trust and safety. Because so many people have had bad experiences with lenders who weren't transparent about costs or fees or like they went upside down and like they got the wrong product, understand how it's gonna impact their their bottom line and just all these different things that have happened. It's like we need to rebuild like transparency and trust across like the capital market as a whole. Um, and to re-establish that as like just being like a straightforward approach, um, giving customers exactly what they need when they need it and being willing to say no when it's not safe for them to borrow. Um so capital as a tool for all sellers as part of their stack of building, um, is where I wanted to go. But getting everyone in the market to kind of share enough to be clear and transparent is like probably the piece of work that it would take to get there.

SPEAKER_00 37:15

Yeah, very fair. Um, what do you think will separate the sellers who are thriving versus the sellers who are gonna get squeezed?

SPEAKER_01 37:26

You have to know your numbers really, really well. Like basically the the least sexy parts of the business are the parts that you need to pay attention to the most. Um the most important parts. Honestly, like financial the financial conversations in e-com have really only been like present the past like three years. You know, like I'd say. And that's and that's only three years in the tiny bubble that I live in where I've been talking about it and I'm around people talking about it. That's not everybody that I don't see that might not know any of that information, still to this day. So like I think we're still transitioning from that like era of buy it and badge it, and I thought of a cool idea and I'm just gonna launch it, and I did no research. Like, that's still happening a little bit. Um, and then there's like these younger people who are like really sophisticated and like know exactly what they're doing. And I'm like, I wish I was like that in my like it's like get out of here. Um, but like there's just a transition. I think the people who are gonna thrive are the people who like start their business with a clear business mindset, not just uh, I'm gonna do a thing and I'll figure it out as I'm going. It's just you need to be intentional because money is more expensive than it used to be, it's harder to come by than it used to be, and the atmosphere of which our customers live in, because we are customers too at the end of the day, is so no. So, like, what problem are you actually solving? And does anybody want it? If you're not clicking on that, there's a good chance that your business won't make it, right? And and you can still launch a water brand today, right? Like we've had water and yet like liquid death and like free birds. I was about to say liquid death, you know, they're all like launching water, and you're like, that's insane. But you can speak to your people. Who are your people? I'm liquid death type of person. I'm never gonna spend eight dollars on a can of water, but I love the branding, I appreciate it. Like, find your humans, speak to them and build a culture around them, and like either build a movement or solve a problem, and like if you nail that, then you will thrive in this environment. If you just buy a bandage and kind of just hope for the best and not know your numbers, like it's gonna be an uphill battle.

SPEAKER_00 39:57

Yeah, agreed. I think right, answering those questions clearly, knowing your target audience, it sounds so like common sense, but it feels like such an underrated aspect in today's uh day business models, right? I see people all the time that are just like e-commerce is a new thing and it's trending, and I'm just gonna, you know, whatever, grab whatever product I see first and just start selling it and kind of just hope it goes well because I'm seeing these people on Instagram making $10,000 a month and I can do it too. Um and they don't actually spend, yeah, and they don't actually spend the the time, effort, and research, have these kind of conversations, listen to the podcast and and find, like you said, the right type of information. They just kind of see what's out there and all right, let's go for it with no plan, no clear answers to those questions. And I think that's why we're seeing so many e-comm businesses fail today.

SPEAKER_01 40:57

Yeah. I mean, it's like I said before, it's like I buy a product, I sell a product, I keep the money in between. No. Nopey, nope, nope. Like it is four years ago, it was about $30 to acquire a customer for Shopify. I can't imagine what that is right now. Like, it's it's only gone up, right? And it's noisier and crazier than ever. I mean, you can have wild success, but like just like how a lot of Amazon stuff was like, I'm gonna do Shopify or I'm gonna do TikTok. It's like the next greatest thing, and I'm totally definitely, absolutely gonna succeed because we are visionaries and we like to just dream, right? Not every Amazon product is TikTokable. That's like the hard truth. I'm like, does anybody on TikTok care about your spatula? No, probably not. Like, you know what I mean? Like, you have to be a brand. You have to be a movement, you have to get people to want to be behind it that's like those weird, what are they called? Like labo boos or something that the laboooboos, that's the new movement of the laboooboos. Nowhere it's just this ugly creepy doll that everybody loves, and it's like sellers. And I'm like, they love mine, and they love them. They love something on Amazon if you start, right? Like, you have to understand like who are you talking to and what are you giving them? And like, how's it gonna get from point A to point B? Right. And it's like I did the same thing as a seller. I like I had aromatherapy style products, and I was like, Well, technically this is for like anyone. So am I gonna target everyone, that's targeting everyone, no one, right? Like it was very into organic packaging that decomposed and only using essential oils, and what my audience are Whole Foods shoppers, like that's you know what I mean? But at the time, I was like, everyone I'm like, no, it's not everyone. A very specific group of people who have problems type of people paying way more money for something that they believe is better for their body, better for the kids, better for whatever. Uh so yeah, it's just really driving that down. Um, if you know who exactly it is that you want to talk to, and you can nail that verbiage with them, speaking directly to them, you can charge what you want more often, keep your pro um prices consistent across platforms, and it'll help you kind of be more predictable with your forecasting, help you understand your financials, your PL, and make better decisions. So it kind of is like a ripple effect. Step one, who are you serving and why?

SPEAKER_00 43:38

Yeah, a hundred percent. That's like the baseline before you get to what am I everything else? Yeah, yeah, a hundred percent. I wish we could like tattoo this on you know, e com founders' foreheads.

SPEAKER_01 43:52

What am I doing here?

SPEAKER_00 43:54

Yeah, right, exactly. Uh so all right, if somebody is listening to this right now. Now um and they are cash stressed. They don't really know where to go, what to do, who to talk to. What advice would you give them? What's the first practical step they can take today, this week, to regain that control?

SPEAKER_01 44:16

I would break down each skew on well, each performing skew, right? Each revenue generating skew on each platform that you sit on and understand exactly what you're paying your supplier, what your terms look like. So if you're still doing 3070, that is a non-starter. You're just your cash is sitting far, far away from you for a long period of time. So understanding your cost of goods, your terms, how many fees you're paying on each platform, how much ad spend that you're spending to get that person to buy that product on each platform, and then all the things that you're paying for after those three things. And if and if you are seeing numbers that you don't like, then you need to reflect on what can I string down? What products are working for my business and which ones aren't? What channels are working for my business and which ones aren't. And like be really honest with yourself. Maybe you've been carrying a product that you've loved for years because it was awesome four years ago, but it's now oversaturated and it's a price price competition to the bottom. Like you may need to kill it, right? So like having that honest reflection after looking at the data. No emotions involved, and it's hard because we work hard for what we do, right? So understanding that at a fundamental level, then you'll be able to start seeing low hanging trade opportunities. Maybe you're overpaying for like maybe you're in the wrong product size tier and you're paying too much in storage and you had no idea. Like things like that happen all the time. I've seen it in multi-million dollar companies where I'm like, you guys are leaving millions of dollars of profit on the table because you're in the wrong category or you're in the wrong advertising tier or whatever, and it's just that simple. But once once you get when things get complicated, you just forget to look. You know, there's too much to do. So like spending a whole day, a couple days just breaking that down, understanding where everything is, making a keep it or kill it decision on channels and products, and then cleaning up the mess of why you're unprofitable. If it's at the Cogs level is your CM1, you need to renegotiate with your suppliers. Canton Fair opportunity is coming in October, you should be there, right? If it's a fee stack situation, is Amazon one of your platforms? Is it still something that you should be doing or should you be looking into alternatives? Right? And like how can you optimize those? Just all of all of those honest conversations you need to have. That would be step one. If you're growing and all those numbers look great and you just want to grow faster, come to me.

SPEAKER_00 46:58

Yeah, exactly. Exactly. And like you said, you know, understanding where when you're in the right situation to have that debt. I think one of the biggest issues um in America in general, uh with businesses, especially, is like we are accustomed to looking at debt with a negative connotation. Uh, you hear debt and it's like, oh, bad, bad. We don't want debt. Um, but there's obviously a huge difference between good debt, right? The right type of debt, the debt that's going to be an investment in you and your business, and bad debt, right? Getting yourself into debt for the wrong reasons. So I think that's one of the biggest things. Okay, yeah, exactly. So I think that's one of the biggest things that we need to be able to distinguish, you know, uh for business owners. Um, again, people just well, you hear debt and you your brain goes the wrong way. But at the end of the day, like America runs on debt. You know, you know the saying America runs on Duncan. No, America runs on debt. So at this point. Yeah. So again, just being able to figure out when that's gonna be the right move for you is is super important. So if somebody is in that situation and they want to come to you, where can listeners connect with you and learn more about uncapped?

SPEAKER_01 48:26

So you can find me on LinkedIn, Stephanie Calkiar. Uh, you can DM me if you want to, send me a friend request, or you can email me directly um at Stephanie.collickar, which is a long one. Good luck. I hope it's on here somewhere for you to look at it at weareuncapped.com. And I'm happy to forward you to my sales team and they will take good care of you. Awesome. Awesome.

SPEAKER_00 48:50

Stephanie, thank you for your time. It's been an amazing conversation. What uh an insightful conversation for sellers to you know hear about the ways that uncapped can help them, things that you know maybe they can relate to and listen to and say, okay, I've been struggling with this. Maybe I didn't, I either didn't realize I was struggling with this, or I didn't know that I was in a place where I needed to reach out to someone like Uncapped, um, or or someone else even right to help me with this situation. Um so thank you for sharing all of your insights with us. If you're listening to this episode and you've enjoyed it, please make sure to like, subscribe, leave a review, and share with anyone in your network who is helping the e-commerce business and might find this episode useful to them. Thank you then, Stephanie, and thank you so much for covering the online podcast. We'll see you in the next episode.

SPEAKER_01 49:42

Thank you.