Justine and Kendall Barber have brought their startup, Poppy Barley, from idea to growing business in under two years. Quite a feat for any entrepreneur, let alone a company that produces custom products with staff in two countries.
Poppy Barley solves a long-running problem that most women face, proper fitting footwear. Through their ingenuity and partnerships, Poppy Barley is offering premium, custom-made, beautiful footwear at accessible prices.
From the early days, when the partners were simply recording purchases and using personal funds to get off the ground, the financial end of their business grew in complexity as fast as their sales.
But even then, they were organized. "Kendall, my co-founder, and I shared a Google drive where we would write down and record all of the personal money that each of us had put into the company” says Barber. “We started building out our budgets seriously after we had sales and then we had margins and we had cost of goods.”
The Case for Cash Flow Projections
Within a very short time, the partners were faced with the daunting but familiar task of raising money. Developing financial projections became critical. Potential investors always asked "What's your cash flow and how many months of runway will this give you?” says Barber. "Typically they wanted to see two years of projections with sales, margins and then hires, space, insurance, all of that,” she says. When estimating sales, they were encouraged to "cut our sales in half, add 20% to our costs...because I think entrepreneurs are often overly optimistic.”
The company landed some much-needed investment dollars and, with money in hand, their business grew in quick and grew in complexity. Within a couple of months "we hired our first two people, brought on two more contractors, who over the summer became our employees,” says Barber. "Then we also went through the process of becoming a ‘real company’” where expenses pile up. “A business license, insurance, and health care and you start using more tools to help your business."
“The biggest lesson of my first year of business was really all about cash flow, cash flow, cash flow. We took it much more seriously in determining our runway with the investment we had. Figuring out how many months we had until death,” says Barber.
She says that the greatest advantage of managing your cash flow is that it "just buys you time.” She believes that "if you have enough money and you’re diligent, you can figure it out and end up successful. But in the meantime, if you run out of money... that’s when you die.”
Managing their cash flow gives them that time and that control that they need. “We have a much better sense, in year two, of every single cost that we actually incur and how high it is,” says Barber, “We’re also a lot more cautious in making projections, that we budget in multiple scenarios of sales.”
In their second year as entrepreneurs, the partners are already highly-experienced in the management of their business. Staying organized and a dedication to managing their cash flow has given the company control over their destiny. "Now we’re in our second year, because we have sales that vary quite a bit month to month, money in the bank and higher overhead, it’s makes a big difference for us now so we keep a very close eye on our cash flow,” says Barber.
Poppy Barley is well on its way to changing the way women buy footwear. Careful cash flow management means that they can concentrate on that goal, resting assured that their finances are under control.
Dryrun is a cloud-based tool that can help you take hold of your cash flow and plan for growth.