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There's no monthly fees, no account minimums, no minimum balances, and no hidden fees. So big thanks to Relay for sponsoring this podcast. I'll leave an affiliate link in the description so you can try it out for yourself. I'm going to tell you about the hardest month in business that I have ever had. And it happened in April. And I want to explain what happened so you can learn from my mistakes and hopefully not have to make the same ones.
So I'm going to put you in my pocket, keep you recording and fill you in. Before I talk about why April of this year was the hardest year I've ever had in business, need to give you some context and we need to go back to 2020. 2020 gave me a false sense of security, gave me a shot in the arm in terms of business, and led me to believe that it would always be this way. It would always go up and to the right. Business would always grow and it would always just keep going.
That was the first mistake I made. The second mistake I made, I joined a training program and took advice on blind faith without double checking, without corroborating, without getting a second opinion, I just took their advice and went full send on hiring. I just hired a bunch of people, thinking that, Oh, this person's been there, done that, they know what to do. He said I just need to do the owner's model, so I'll just do that.
Now, I want to make sure you know I'm not placing blame on anybody. It's entirely on me, okay? Extreme ownership is our number one core value. So I just want to make that distinction. I'm taking complete ownership of my situation. It's entirely my fault. I wrote the checks. I made the decisions. I made the calls. I sent the slacks. I sent the emails. I did the things. It's on me.
But what's important is that by taking ownership, I look at the mistakes that I've made and make sure that I don't make them again. Because mistakes are okay. They happen. It's okay to lose money. It's okay to fuck up. It's okay to make a bad call here and there. What's important is that we don't repeat it. Okay. So I had retained earnings.
I had a, about a quarter million dollars from 2020 and I spent it all on people thinking that if I just hire all these people will run, operate and grow the business for me. Well, I wasn't good enough to attract top talent. I didn't know what to do. I didn't know how to hire, didn't know how to vet, didn't know how to interview, didn't know how to cast a proper vision and make things clear. And so I ended up with BNC Talent. Not everybody, but majority.
we're talking like people in Taiwan to source products, like customer support and content creators and Google Ads and Pinterest Ads and supply chain and logistics, all these things. Yeah, it was pretty bad. And so very, I increased our operating expenses to like 50 grand a month, and we're only doing 1. 2 million. So if you know anything about what I teach and what I talk about, you'll know that that is way too high of a percentage of our top line.
That's like 45 percent of our top line spent on people. It should be 20%. 20 percent is a reasonable, healthy amount. So if I am earning a million dollars a year, 20 percent is 200, 000. That's what I can afford to pay for people, not 50 grand. So that was my first mistake. Not having clarity around how much I could spend on people, not having clarity on exactly who I needed to move the needle. Second thing was I hired people for operations. I didn't hire people for sales and marketing.
So the positions that I hired added to our operating expenses and our overhead, but they didn't directly affect the income and the sales that were coming in. I wasn't growing the business. I was simply, adding people in to help alleviate the processes. And, uh, it was a problem. It was a problem. Because the overhead increased, yet the top line stayed the same. Okay, so, very valuable people lesson here. But, you know me, I deeply care about my people.
I deeply care about these people that I promised the world to, that I said, Hey, come work with me. I'll take care of you. I'll be able to help you accomplish your goals and your dreams. If you help me accomplish mine, we'll do it together. It's gonna be fantastic. And, for a short time, it was. And I led them, and I enjoyed it. And it was almost working, so I have all these people and the top line of the business isn't growing. I needed to figure out a way.
And in my mind, I thought, I just need to wait a little longer. I just need to last. If I give it some time, it will all work out. We'll gain the market share. We'll grow. It'll, it'll work. So I started taking out debt and that was my third really big mistake. I used debt for operating expenses. I used debt for things that I wasn't going to get paid back with. Huge mistake. Huge mistake. I use debt to pay for people's salaries. I use debt to pay for legal expenses.
I use debt to pay for all these things in the business when I absolutely should not have used debt for that. I have come to realize now through making these mistakes over and over again, that debt is for repeatable predictable expenses like buying inventory, like marketing spend. You know what's going to happen when you spend money on marketing. You know what's going to happen when you spend money on inventory.
You're eventually going to get paid back and you will have a method of paying back the loan. When you spend that money on people, you don't have a method to get paid back. There's no clear path. You just spend it and it's gone and it doesn't come back to you. So that was my third big mistake. Taking out debt. for operating expenses. Yeah. Big no, no. So now I have to PayPal loans and no way to pay them back because the money's gone and it's not coming back to me. that was tough.
So I'm like, okay, we just need to make it last. We just need to make it last. Let's keep spending. Let's keep going. Full steam ahead. We can crack this code. We can get the funnel working on the front end on Shopify. We can make this work. I know we can. And so I grinded dude year and a half testing offers and funnels and ads and all the things. And we got so close, but we couldn't quite make it work. We couldn't get profitable on the front end.
I at best I would make like a dollar or two on the front end for a sale with our customers. I just, it was, it was driving me crazy. I just couldn't figure it out. So I got to a point where I was like, All right, I'm going to talk to my customers. I'll figure out what's going on. I need to know more. So, I meet with my customers every week, right? I have conversations with them.
There's a handful of ladies that are my customers, that are creators, and I get a lot of first hand information from them. I ask them, I said, hey, where else are you buying craft supplies online? What other websites are you going to? They're like, I couldn't name a single one. Not one. I said, well sometimes Amazon. That's it? You don't go shop anywhere else for craft supplies online? No, we don't. Well, so where do you shop? They go in stores.
Walmart, Hobby Lobby, Michaels, Target, Joann's, Dollar Tree. That's where they shop. They don't shop online for this stuff. Was a big eye opener, you know, and I was just like, Whoa, okay. And that's when the reality started to set in. So the fourth mistake that I made was I assumed that there were plenty of customers ready to buy online. I assume that my ideal customer, my Pinterest Polly and my crafty Carol wanted To buy my stuff online. They don't, they want to buy in stores.
They want to buy in retail. They don't want to buy from me on my website. That was a pretty heavy realization. And that happened in the beginning of 2024. I promise I'm getting to a point here. So I had a false sense of security from 2020. I hired a bunch of people and followed advice. I shouldn't have followed. I didn't know how to hire and I hired the wrong people. I took out debt for things that I shouldn't have taken out debt for.
And I was trying to make it work on Shopify where my customers didn't even want me to make it work. Even if I was the best, they wouldn't have cared. Because they don't shop there. That equation, that soup of challenges was really heavy because I knew what the answer was. I knew that I needed to let my staff go. The reason I say that is because the majority of the people that I hired were hired to help me grow and operate the D to C side of our business, the Shopify side, the website.
You don't need a web designer when you're selling on Amazon. You don't need Facebook ads when you're selling on Amazon. You don't need supply chain logistics and 3PLs when you are selling on Amazon and directly into retail. You barely even need customer support. So I knew that if we pivoted and just focused on Amazon and retail, that I would have to let go of majority of my staff. And you know, I had Cut down operating expenses throughout this time.
I had let people go that weren't absolutely necessary. But the operating expenses, the people budget was still around 200, 000 a year, 20, 000 a month. It was still too much. It was still too much. So when seasonality kicked in after the holidays, January, February, and sales start to go down like they do every year, started to squeeze us. It put pressure on our budget. Because our people expense is 20 percent of our top line.
And if the top line goes down, so does the amount of money that you have to pay your people. What finally ended up happening is my partner and I, Nick, got real, real honest about the state of the business and what we believed was happening and what is going to happen in the future. And it became clear that we needed to turn off Facebook ads and stop spending money on advertising to our Shopify store, to our DTC side of the business. It just wasn't worth it.
We were spending so much and putting so much effort and time into it, and it wasn't yielding any results for us. But turn off ads, top line goes down, there's less money for people. And I knew that if we did that, I was going to have to let people go. And that's what made April so hard because I was staring down my own deficiencies. I was staring down my own mistakes, and I didn't want to face up to them. I didn't want to have those hard conversations.
I didn't want to tell people I'm not as good as I think I am. I didn't want to tell people that I couldn't keep my promise and I didn't want to affect the livelihood of the people that I deeply care about. Yet I had to because if I didn't the business would die and if the business dies, no one eats, but if the business survives, there's still a chance. So in April I started having those conversations one by one.
I talked to each individual team member and expressed to them and told them what was going on. I was very honest and I started each conversation like this. Hannah, you're going to think I'm the worst business owner of all time. And you're probably right and justified to think so because I've made some serious mistakes. Here's what's going on. I needed to approach it with humility, kindness and take complete and full ownership of the situation.
So I did, I had those hard conversations and I told him, I said, look, there's no money left. I can't afford to pay you anymore. And I'm so sorry. I really gave it everything I had. Here's what happened. Here's where I made the mistakes. Here's what I think is going to happen. And I just feel terrible, but here's what I can do for you because I want you to be in a better state than when you found me. Here's what I can do for you. I'm going to write you a letter of recommendation.
I'm going to keep you on for another month so we can sort things out. I'm also going to put feelers out to my network and my audience to see if there's anyone out there who could use your services. I really do care about you and I think you're an exceptionally talented person. And I want to do right by you. So please be patient with me. And I promise you that I won't stop until you have been put in a situation that's even better than the one that you're in now.
I learned a lot of that from Gary Vee, by the way. And I just want to do right by people. Because I really do believe that this is a game of people and they're not bad people. Like there's, I made the mistakes, not them. They're the ones that trusted me. This is on me. This is on me to fix. And I know it's not always necessary to do that kind of stuff, but the ideal version of me conducts business in that manner. The ideal version of me would do that for his people.
So that's what I decided to do. And throughout the month of April, I had hard conversations one by one with every single team member, told them the truth. The team members I didn't let go. I reduced their pay by like 70%. But, I am pleased that I was able to fulfill my promises. I was able to execute. And every single person that I let go has a new and even better opportunity than they had with me. That's why it was so hard because I had to face up to my own mistakes.
The mistakes that I made two, three, four years ago were coming to fruition in the beginning of 2024 and they were forcing me to do very hard, very uncomfortable things that I didn't want to do. Now I could have ignored it. I could have just played it off, but, uh, we would have just gone into more debt and the business would eventually died and no one would be able to eat.
But by approaching it in this method, I took all the ownership and all the blame and that's what needs to be true for us as leaders of our businesses. I really do believe that. And that's why extreme ownership is our core value, our number one core value. Because I mean, would you want to work for me if I didn't take ownership of my own mistakes? Would you want to work for me if I placed a blame and gave the power away? No, you wouldn't. You wouldn't want anything to do with me. So I did it.
I spend 6, 500 a month on people. Now, I kept a customer service person. I kept my supply chain and logistics person who's doing all of our shipping. I got rid of our 3PL and we rented a garage from, Hannah's grandpa. For 500 bucks a month and she goes over there every day and does the shipping and I pay her 2, 500 bucks a month and she's awesome at it. Customer services hours got cut and then I kept the chemist. Everybody else was let go.
Amazon team, web designer, Facebook ads, Google ads, Pinterest ads. Social media manager, content creators, the Tok creator program, everything. I cut it all because I had to. And if I didn't, The business was going to surely fail. It was hard, man. was not fun. It didn't feel good. I felt about two inches tall.
Most days I was waking up stressed in the middle of the night, trying to force myself to go back to bed knowing full well that there's like a whole giant to do list of uncomfortable things that I've got to get done. And, It just sucked. It just sucked. It wasn't fun. And there were multiple nights where I was just sitting there heading my hands, heart rate up, wondering how I was going to figure this out. Wondering if I could tell my wife about it.
Wondering if she would understand like, man, what are the people in my membership going to think, you know, what are the people in the accelerator going to think, you know, and like, they're going to think less of me. And like, okay. Oh, so many thoughts, so many things. And, but 99 percent of it was tied back to ego. So I was like, well, what happens if I remove my ego? What, what's true? What does this look like?
Well, it's quite obvious actually what I need to do if I remove the ego component. I did and I made those decisions and I opened up about it. That's why I made that podcast last week about having a really hard time at that event. My business wasn't doing well and I didn't want to talk about it because it made me feel less than But I talked about it anyway. And because I talked about it, I was able to connect with people on a deeper level.
And because I was able to connect with people on a deeper level, I was able to discover a new pathway forward. And that's why I felt so shitty. Because I didn't have a clear path. I didn't know what to do next. And when you don't know what to do next, you feel lost. You feel like you don't have hope. You feel like, okay, great, like, now what? And that is not a good feeling. It does not feel good to be without a path. So I got honest. I got honest with the people around me.
I got honest with my network. I got honest with my colleagues. I got honest with my wife. I got honest with myself. I got honest with my employees. In getting honest, I was able to discover a path. God, I'm so grateful for that. Because being without a path just is a miserable feeling. You just don't know what to do next and you feel lost and overwhelmed at the same time.. And that next path is a focus on Amazon and retail. You see, my customers don't shop, on other crafting websites.
They just don't buy craft supplies on websites. They shop on Amazon and they shop in stores. Well, we have an Amazon presence and it's been 80 percent of our revenue, uh, well 70 percent of our revenue from day one. It's just been our bread and butter. So I'm like, okay, let's focus on what's working. Let's just stick to Amazon. And then we will put some energy and attention into our retail channels because I already have relationships with Hobby Lobby, Michaels, and Walmart.
Like we already sell into these retail stores. We've already figured it out. We've built the relationships and our scorch marker is in there and those channels are steadily growing every single year. They grow a little bit more, but I've been ignoring it cause it's not sexy. It's not the thing that I want to focus on. I wanted to have an eight figure website. I wanted to be able to run Facebook ads and control my customer data and like serve them on that level.
And, It's just not in the cards right now. It's not in the cards. We're not good enough. I'm not good enough yet. So we made the decision to shut down the DTC advertising. Now we didn't turn off the website or anything. It still makes sales every day. Sometimes 0, sometimes 300, sometimes 500, but most days probably about a hundred bucks so that we can take that attention, money, focus, and put it on Amazon and retail. And over the last month, that's what we've been doing.
We recently got into Walmart and I've been pouring myself into that process to learn how to manage those relationships. And Holy cow, it is hard. Let me tell you, I am out of my element when it comes to retail, but I'm learning and I know I can learn it. Amazon straightforward. We're making the best listings we can possibly make dialing in our optimizations, making them as clean and clear and concise as possible. Great, creative, great videos.
And really dialing in our PPC and advertising strategy on Amazon. Those two things are our focus. I wouldn't have been able to come up with those ideas and put them in place if I didn't get honest with everyone that I mentioned before. I had to get honest. I had to talk about these things. I had to just swallow the frog. I had to do the hard thing and the hard thing was telling people that I'm not as good as I think I am.
The hard thing was telling people that I kind of suck and I made a mistake and I need help. Um, I'm so sorry to let you down, but I don't have any money left. I, I messed up. I messed up. Now you might be thinking, cool, Evan, great. You cut off X and stuff, but what about all that debt? I sold my assets to pay it back. I liquidated Bitcoin and a lot of the stocks and bonds and things that I had saved up over the years to wipe the slate clean.
I paid off all the credit card debt about a hundred thousand dollars. If I had kept the credit card debt, the interest rate of 20%, 22, 24%. It would have outpaced the net profits of the business in a very short amount of time and I would have never been able to pay it back. It would have grown too quickly and too much. Our Econ brands do 10 20 percent net profit on a yearly basis.
Like, there's no way I'd be able to pay back a 10 20 percent interest on a monthly basis on a credit card with the business. So I needed to go even harder. So I burnt the boats, I sold our assets, whatever I could sell, and I put that money into the into the business to pay off the cards so I could have a clean slate so I could try this again. And that's why April was the hardest month for me. I had to do things I've never had to do before.
I've had to have conversations I've never had to have before. And I had to humble myself. Not easy things to do. Not easy things to do. However, now that I'm You know, days past that, it's a different story. The initial pain and discomfort of going through that process, it's not really there anymore. It's not really there. I don't feel that pain anymore, which is a good thing.
But I want to remember it, and I don't want to make the same mistakes again, which is one of the reasons why I'm recording this piece of content for you. It's just as much for me as it is for you. So I can remember what I went through and remember the difficulty and the pain and the suffering so that I don't repeat the same mistakes. So how do I not repeat the same mistakes? Well, I can't try and grow too fast. Don't take advice from people who aren't currently doing what you want to do.
And if you do double check, get some opinions. You know what I mean? Don't settle. For B&C players, just because it's convenient and you don't know what to do. Hold out for top talent. Wait to hire until you can afford that top talent. Owner's model could probably work and I could probably hire people and run a badass business, but not until we're like 10 million plus. I just don't have the leverage. I don't have the cash for that. You gotta pay some of these people 150, 000 a year.
Can't afford that right now. So that means I need to do the work until I can get the business to a point where it's generating enough profits to be able to pay those people. Okay. Don't take out debt for things that aren't predictable and repeatable and get honest and clear sooner than later about the state of your business and what's going on. In order to do these things and have these realizations and see what's happening, you've got to track your numbers.
I couldn't do any of this if I didn't have good bookkeeping in place. If I didn't have, metrics, dashboards and KPI tracking, I just wouldn't have known so there was a lot that led up to these events and in the end, I know it will make me a better business owner. And I know everybody goes through this, right? All the dudes that you see out there, all the women out there who are running and operating, magnificent brands, they've been through this.
The Gymshark owner's been through this, the guys on the operators podcast have been through this. My partner Nick has been through this. We've all been through it and we all have to go through it at one point or another. We, we need to be tested and forced or even shown the limits of where we're at with our financial understanding and knowledge. Our character is going to be tested. It's how you show up in these hard times that determines who you are.
I chose to show up as the ideal version of me and let me tell you, it was one of the hardest things I've ever done and I've done hard things, but I'm glad I did because it's over now and we can move forward in a direction that is positive, healthy and in line with our mission. So, I hope you learned something from this, because I sure learned a whole lot.
And I believe that it's my job to take the lessons that I've learned and share them with you, so that you don't have to make the same mistakes. Sure, you're going to make similar mistakes, but maybe they won't have to be as painful. Maybe they won't have to be as many zeros attached to them. Maybe I can help prevent some of them, or at least lessen it a little bit.
Um, and that's why I get vulnerable and talk about some of these shortcomings, because I need you to know, I need you to know that, I'm not special and unique. I'm an average dude. I just am obsessed and I love talking about this stuff and by me talking about it.
I can share in those experiences with you and you know, like I always have this fear in the back of my head, you know, what if people aren't going to want to be around me anymore or listen to what I have to say or what if they don't care? What if they look down on me for it? Okay, so be it. So be it. So be it. If you're the type of person that doesn't want to be around me anymore or be a part of because of the things that I'm sharing, then okay, cool. I totally understand. I respect that.
Okay. But on the flip side, the people that stick it out and continue to show up and continue to listen while I grow on this path and share their experiences with me. They're the real ones. They're the ones that matter. There's a saying that I repeat from time to time. Those who care don't matter. Those who matter don't care. And when I say don't care, they don't care about the mistakes and the uglies that you share and talk about. The people that really care about that stuff, they don't matter.
It's the people who don't care that are like, hell yeah, dude, we're in this together. We are a team. We're a tribe. Those are the ones that really matter. So worst case scenario, I build deeper bonds with my team. I build deeper bonds with my tribe. You and I get closer because you'll know more about me and the struggles and the shortcomings I've been through. It's not all strawberries and rainbows all the time, man. This is business ownership. This is entrepreneurship.
This is incredibly difficult. The hardest sport, the hardest one. There's no cap. There's no high score. Like you can get to an infinite level with this stuff. And there's so many different ways to do it. But the fundamentals are true for all of us. You've got to make more money than you spent. Crazy, right? So where are we at now? We're focusing on retail. We've cut back significantly on Shopify.
Amazon is our focus and things are going well and it's growing despite the entire economy being down. Our buyer seller ranking is improving. Our conversion rates are going up. Our sales were still, you know, in our off season and you know, it hurts a little bit, but I know that come Q4, we're going to be prepared. We're not going to be doing any fancy things, no bells and whistles. We're going to be hitting the fundamentals hard.
We're going to make sure we're in stock and we can sell through our units and we have content planned and all the stuff and we're going to grow these retail channels. I'm going to get maker's magic into retail stores. And as I learn what's required and what needs to happen to make all these things true, I'm going to continue to share them with you. If you have questions about any of this stuff, I'd be happy to share them with you. I'm an open book with you guys. Thank you for listening.
Have a great day.