We set a different kind of record in November:

• Revenue down 52% ($236K → $113K)

• Marketing down 78% ($54.4K → $11.9K)

• Profits up 19% ($17.8K → $21K)

• Net margin up 49% (15% → 23%)

This is despite Sunday and Monday of Black Friday/Cyber Monday being in last year's numbers, but not this year's.

How? Why?

I didn't like what I saw looking into the crystal ball. We were repeatedly having cash flow issues, we didn't make enough money on our revenue, and we were too reliant on hitting our sales budgets to meet our payroll and costs. Consequently, we were too reliant on Meta ads. It felt like every ad homerun we hit only made ends meet instead of resulting in a larger payday for us—the founders bearing all the risk.

Here's what I did to turn things around:

Strategic Changes:

1. Fired 4 people (~$210K/year).

2. Reduced sales budgets to a more "natural" level that isn't artificially inflated by previous Meta ads success, Covid, etc.

3. Implemented new budgets that allow us to eliminate ALL forced ad spending. Now, all ad spending must be first-order profitable.

4. Pivoted to focus more on our own high-margin products to build a better brand and moat. No more putting ad spend behind other brands to hit revenue goals.

5. Moved to a smaller warehouse (~$30K/year, not reflected in the screenshot numbers).

Operational Improvements:

1. Implemented new, cheaper shipping options that 99% of customers now choose (~$10K/year, not reflected in the screenshot numbers).

2. Switched from Klaviyo to a new email service provider (~$7K/year).

3. Reviewed all subscriptions and services, keeping only essentials and finding cheaper alternatives (approximately $5K/year).

4. Optimized our warehouse layout for faster picking and packing.

5. Built more custom app tools to make warehouse operations more efficient.

6. Embraced AI tools in both development and marketing.

The result? We now:

• Make more money

• Have less inventory risk

• Don't live or die by whether we hit sales budgets or not

• Generate significant extra profit when ads perform well

• Can justify spending time on long-term things that doesn't necessarily result in short-term revenue

• Sleep better and feel less stressed about sales

• Have more family time (I'm way more present at home)

Of course, it's not all perfect. There are disadvantages too. I've become too much of a key person—managing our three online stores myself and helping in the warehouse two days per week.

However, I'm confident we'll emerge stronger. I think we're highly likely to generate a few million in profits next year. Then, we can use these learnings to rebuild the company much better than we did the first time.

Can you see yourself or your business in any of this? Feel free to reach out if you need advice from someone not too close to the problem ❤️

Godspeed,
Mathias