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A DTC Finance Journey: Bootstrapping, Dragons Den, And Hitting Credit Limits


From the initial investment of $900 to scaling beyond 8-figures, Bushbalm was bootstrapped during the whole journey. Cofounder David Gaylord and his team have worked through all the financial hurdles of hitting credit card limits, pitching on national TV, and searching for investors. In this episode of the Bushbalm Miniseries, David gets into every nitty-gritty detail to share how they make their numbers make sense.

For the full transcript of this episode, click here.

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Initial investments and the financial setup of Bushbalm 

Shuang: When you started Bushbalm, how much did you and your partner contribute to the business?

David: When we first kicked off, we all put in a very small amount. I think it was $276, or something like that, all three of us put in. So it was really a small amount and that money was to simply get products. So just to get enough product, as well as I think it was to pay for our domain name and a few other things, but we wanted to start with a tiny assortment of products and our investment wasn’t to make a huge company. Our investment was just to see if the idea worked and if people would buy it, and if people enjoyed the product. So the investment for us early on was just to see if it would work and could we do it very small, that it would be if we lost $1,000, we learned a lot from it, that’s how we exactly started with finances.

 A model reaches for a packaged bottle of oil by Bushbalm on a shelf complete with an array of other skincare products.
Bushbalm was bootstrapped after an initial investment of $900.  Bushbalm

Shuang: At what point did you take this seriously and said, “Oh, we need a banking account. We probably need to move things into something separate than our personal accounts.”

David: The first year we didn’t do very many sales. We did about $3,200, so very small. At that point, it’s very easy to manage. Income is so low from it. Even your credit card, if you’re putting money on it, it’s easy to pay yourself back. Nothing is too complicated. And then in year two, we started to do more sales. In year three, I think we were at $150,000 in sales. At that point, we thought, “Okay, we’re starting to actually have money flow through the business into new inventory, Facebook ads.” At one point we thought, “Okay, we should really talk to a bank, to not only make it organize and easier to run, but also we need to build up our credit history with a bank.” That’s so old school to say, but often with a small business account, if you’re brand new, banks will give a lower limit on your credit card. But if you’ve been there for two years and you’ve paid off your credit cards on time, they’ll say, “You know what, we can raise it a little bit. We can change it to this.” So once we started to say, “Hey, this is a real business, making a few investments in growing,” we moved it all there and it helped so much on just organizing everything. My credit card wasn’t constantly at like $10,000 limit for Facebook Ads. I lost the ability to get points personally, but I think that’s worth it now. We probably should have done it a little bit earlier, to be honest, but yeah, it made a big difference in organizing everything. 

Challenging traditional banking systems as a fast-growing DTC operation 

Shuang: What are some things new business owners should look out for when starting their relationship with banks? 

David: There are so many horror stories about banking in general. We went through one with our old bank who we moved away from. We signed up with them at the $100,000 a year in revenue mark and then we went to $150,000 the next year. But then the next year, which was about a year and a half ago, we did almost $2 million in sales. So, what happened was, we went to our banking partner at one point and we said, “Hey, we’re selling so much that our bank account and our line of credit and everything is just not sufficient anymore. Can we increase our credit card limit? Can we increase our line of credit? They were like, “Oh no, you don’t have enough history with the bank. We can’t increase it.” That was the first time I’d ever been so frustrated by a system not making any sense. Because literally every day the money would flow into our bank account in their bank and then our ad spend would go onto our credit card and then we’d pay it off and this cycle would continue.

It got to the point where I had to fully pay off our credit card just to keep our ad account from shutting off from not paying the bill. So, you get no benefits from a credit card because you can’t pay it in 30 days. I literally had to pay it every single day, whereas working with our new banking partner, we went in, “Hey, here’s our financials. Here’s where we’re at. Here’s how we scaled.” They said baseline, here’s where we’ll start you. Which was 10 times bigger in credit than the first bank we were with. The first bank, the reason we couldn’t get the line of credit, was because we didn’t have enough history. Whereas new bank said, “You know what? Yeah, you have your sales history. We see it, it’s fine and we’ll scale.” So, some banks obviously are different. Having the ability to get capital from a bank is really efficient if you have the available credit. Whereas if you don’t, it’s really challenging.

It’s actually funny, there are ways to be more efficient with just how you move money around and how you pay bills, and how you do these things. Whereas a lot of your standard banking accounts and business banking accounts don’t have options for certain things. So a funny example is last year at the peak of COVID, we were growing so fast and we had to buy inventory so fast. I do remember it was when COVID in North America was really spreading and everyone was shutting down, things were locked down.


A model holds a collection of three oils and a tube of cream made by Bushbalm.

Challenging traditional banking systems comes with the territory of being a fast-growing DTC brand.  Bushbalm

I physically had to go for five days in a row to our local bank to send a wire transfer. I had to walk in and they asked me the questions. They were turning people away. You could do it online and in other places, but I had to physically do it in person and sign and do all these things. Then after that five days in a row, the following week I came back, I had to do another wire, it was just the time I had to drive there, it was like an hour to do it every single time, at least. They then told me that for $24 a month, I can get a platform and I can just do it from home. It took a week and a half for them to tell me that option. I was so frustrated because I thought $24 a month to save how much time, that’s incredible. There are tools to just make things more efficient and payroll and all the things you might have to do, which isn’t intense or anything. It’s just knowing these tools exist to make your life easier.

How business and friendship intertwined at Bushbalm 

Shuang: I want to ask about, your partnership with Tim, you guys are friends and you guys are coworkers before. How did you guys approach going into business together?

David: So there’s a lot of things. We have our shareholder’s agreement. And then when you sign with the bank, there are all these agreements you have. We’re incorporated, so there’s even more there. But one thing for us that we said was pretty important was let’s sort out how we do work.

 A model applies cream to her thigh.
Having clear roles and responsibilities allowed Bushbalm’s team to move from friends to partners. Bushbalm

So being very clear with what you do for your role was important for us as a partnership. And actually, in the early days, Tim’s wife, Mel was heavily involved. So we had it set up to where I’m going to run this and we’re very specific about what that is. Tim is going to run this and we’re very specific about that. And then Mel is going to run this. So the more specific we were, the easier things were in regards to expectations and how we actually get everything done. If there was any sort of gap, it was more obvious because, “Hey, no one owns this. Who’s going to do that?” Then we’d say, “Oh, okay, I can do it.” Or, “You can do it.” That isn’t directly related to finances, but what it does is it makes it so it’s very specific for who’s going to do which thing and it becomes a little more fair in that way and leads to obviously less disputes, so less people upset. So for us, just making sure there are clear roles and responsibilities is important for the partnership. Then on the finance side, we do a lot of reporting, monthly reporting on the finances, how we’re doing, where spend is going, that kind of thing, which keeps us really in line with how we’re growing the business.

Preparing financials for pitching on national TV 

Shuang: For the different stages of growth, you mentioned year three, six figures, last year, multimillion in sales. At which point have you thought about external fundraising and what efforts have you guys taken for those fundraising times?

David: We’ve thought about fundraising in many ways, at many points in the business. And right now we’ve bootstrapped the whole thing but last year, last summer in August, we actually signed up and we got accepted and we went on Dragons’ Den. So, at that point, we were on pace to do about $2 million in the year. We went on there with a fair valuation, we thought our pitch was great. They saw the value in the company and saw the valuation was really fair. So, we actually did get a deal on Dragons’ Den and that would’ve been, imagine the years, $2 million in sales. So, some people will raise money at that point. We thought maybe if we get money, it would be a good idea and we could put it into this investment or that investment. We went on the show, got a deal. It was excellent, we had great publicity from it. The partner was Arlene, with who we got a deal. 

So the process, is you obviously work very hard on your pitch. This is for any sort of investing, say we were to raise money elsewhere, it will be the same thing. You’ve got to builds a compelling pitch to show why you’re worth a certain valuation, but also the opportunity and the upside. So I think on Dragons’ Den, we did a great job of that. On the show, you see some of it, but you’re in the room for about almost an hour and a half, pitching through your business. So, it’s a lot longer than the seven-minute episode you see. Then there’s the piece of yeah, deal’s accepted, great, handshake, whatever it is, let’s go into due diligence. 

So with our Dragons’ Den deal, we went into due diligence, and one thing for any investor and any business owner is before due diligence and before the pitch, the key element of yourself and your business is to make sure one, your finances are so solid. If you have really clean finances, everything’s in order, you’re going through all the processes, that will make obviously knowing the data for your pitch, knowing your profit margins for your pitch, all those so much easier. But also when you go into due diligence, it’s quick, you’re going to send it over, here’s our balance sheet, here’s our margins. They will love that.

 A model in white holding a tube of body cream by Bushbalm.
Having well-kept financial records is crucial for day-to-day operations and is also extremely helpful when pitching the business to investors. Bushbalm

And then the second is being really tightly organized. So, if you are running your business now, you should really have all of your agreements organized in folders, all of your employment agreements, all of your contract, all of your financials from the last three years, four years, every quarter, your monthly statements, you should all have that set-aside and made in folders, so if you do go to raise money or you go Dragons’ Den or any of those shows, it’s quick in due diligence. You pop that over, you say, “Here’s what they think. Here’s what we got.” So luckily, we were really organized going into Dragons’ Den and made it really helpful. We understood our data, our numbers, and then due diligence for us, we sent everything over. It was pretty quick to get going back and forth and discuss. 

The hard part with a fast-growing business is during negotiations, we were growing so fast that our valuation, at some points we thought, “Okay, we’re growing faster and it’s been a month and a half, two months. Our valuation might actually be much higher now.” By the end of it, it was for sure the case of, “Hey, our valuation is probably $2 million more, so we have to really start fresh on this.” As well as the terms of any sort of agreement, if you’re going through the due diligence phase, really get a lawyer or work with business people that you trust, and there are certain things that you’ll want to understand really carefully, whatever the terms are, whether it’s board seating, how they want you to use the proceeds, say, monthly reporting, they expect to see from you. You should read the fine details because, in the end, those will be really important. So anyway, long story short, our Dragons’ Den deal actually never went through, for some of those reasons, and looking back, it might have been the best scenario for us because we quickly grew this year to $10 million. Evaluation earlier on a year before was much lower than what it would be now. We bootstrapped and figured out ways to get finances in. The best thing for us earlier to get finances in is we found that new banking partner whose line of credit was five times more. Our credit card, I think was 10 times more. So, we were able to bootstrap the business really efficiently that way. 

How to conduct a valuation for your business 

Shuang: How do you actually project and calculate and make sure that your valuation of yourself will make sense to whoever’s listening to your pitch?

David: You see it in the stock market, tech companies, and growth, a lot of it is based on future value or expectations. Whereas with a DTC company, you can look online and do some research into what are common valuation trends or what would you expect for this? What we saw is our company is profitable, so our EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is really strong. Typically if you have about 20% EBITDA, that’s really strong and people will look at that really favorably and you’ll see often things, it’ll be a multiple on EBITDA. So, say your EBITDA this year is a million dollars of profit, they might do imagine it 10 times EBITDA. So then, your business is worth $10 million. So, that’s like a common one. You’ll often see others do a revenue multiple. At the time we went on Dragons’ Den, we did a revenue multiple as well as EBITDA. So we had both those numbers available. So, if you are selling, you are profitable, these things you can find online and figure out what your valuation likely is close to.

Then other things that you can do in those pitches is you build up this multiple and this valuation, and you have to be able to obviously defend it in a very straightforward way, but also you should be thinking about the industry and the potential of the business. If you’ve got your multiple at a certain point that you can defend really well for the investment fund, they will look as well at the potential. So, if you can grow 10 times more and they, and you can talk about how you can do that and how big the opportunity is, they will look at you even more favorably. Whereas if you’re in an industry that sounds so niche and you can’t explain how it’s bigger than it is, it’ll be much more difficult because they obviously want to invest and get a big return. So you have to show that, “Hey, this isn’t just a $10 million company. Here’s how it can be a $100 million company.” That’s usually what will get your pitch from interesting to really interesting.

Shuang: Now that you guys have moved full-time to look after the business, how has that shift for you been, and what is different about your approach to finances now?

David: Yeah, it’s changed quite a bit. So now, we’re really in the business and excited by it. With our last two years, not only are we obviously full time, but our view on potential has drastically changed. So, if you see a business as, “Wow, I think this can be a very large, global company.” Versus seeing it as like, “Oh, this could be a good hobby business, or we could get it to this point.” Whereas now we’re in it every day and we could see the opportunity and the potential. We are so excited by that. My view on what we can be has changed drastically for size and scale and how many products and assortment, but also what comes with that and what comes with investment is more pressure. So, now I feel pressure with, we have employees. We’ve got people that rely on Bushbalm, not only for obviously a paycheck, but we want them to be successful as well. Whether it’s their career if they can scale up at Bushbalm and grow and become a leader in the company. Or maybe they succeed at Bushbalm and then they move on somewhere else. Now there’s this new pressure of, “Hey, people are relying on us, and let’s do good by them.” But yeah, it’s mostly been, as we’ve seen in the opportunity ahead of us grow, so has our excitement for running the business full time, just because yeah, we’re ready to get to that new stage.

Tools and resources for managing business finances 

Shuang: What are some tools and resources that really helped you to understand finances revolving around employees?

David: Your banking partners are going to be pretty critical. Then we use QuickBooks for our accounting side, which has actually been really, really useful and smooth. Then I think we use a connection from Shopify called A2X, which has worked really well with our accountant to pull in all the information. Then right now, we’re actually in the process of exploring some new software for, whether it’s forecasting or in that kind of ballpark, whether it’s cash flow, we’re exploring more tools there. Then there’s a few on lifetime, value, revenue, growth, product growth, we’re exploring more tools there. We’re not quite landed on the ones that we want for sure. Then another one which some people might not be comfortable with is we’ve used ClearBank. At one point we did a microloan from them, which the only reason we did it was because we wanted to open up options for loans. So if we needed money quickly, it was a good way to do it. We can’t use Shopify Capital, as we were employees at the time of Shopify, so we were technically not allowed. So we use ClearBank, but ClearBank is this cool tool, they call it Valuations, and you can actually check your valuation and obviously, it just pulls data and it tells you what it thinks it could be but that was useful just to see where we stood. If you want to go use a valuation tool, you could sign up and try it there. There are probably others that do a similar … it’s just an algorithm that would tell you based on your spend and profitability, that kind of thing.

 A model out of focus in the background holding a bottle of oil and a dry brush made by Bushbalm.
Raising capital should be a proactive activity as the best time to raise money is before the business needs it. Bushbalm 

Shuang: Speaking of microloans, a lot of the time it comes with pivotal moments when you have a large order or a new retail partnership. Have there been moments where you were in a financial bind and what did you guys do to move past it?

David: In the early days we were in one, where we had to personally put in money, which we put in close to $100,000 to do our biggest order in the early days to grow. So, that was when our banking partners couldn’t handle that growth. Whereas now, luckily we haven’t been in these binds where we are struggling to figure out where to get capital. One thing I would recommend to anyone is the best time to raise money is when you don’t need it. So, if you’re at a point where things are going well and you don’t actually need the money, think about finding the options to have it. So, whether it’s raising outside money or whether it’s working with your bank to increase your line of credit, or whatever it is, just make sure to get ready because you’ll never know when something big is going to come. For instance, if we get a huge retail order, now we know, “Okay, here’s where we can get capital from.” We’ve worked through this, talked through it. Whereas if we didn’t do that, we’d be scrambling to try to find the source for it. So yeah, that’s one thing I always recommend is just either build the relationship so when you need to raise, you can quickly, or have tools in your back pocket and that’s ClearBank we used as a tool that we didn’t think we’d use, but just in case something happened quickly, we could get a quick loan from them. So yeah, having options is very helpful.

Shuang: Do you operate with the thinking of reserve funding and also maintaining a minimum balance for comfort levels and things like that?

David: We do. For us, we have a line of credit that we don’t tap in that much. And the only times as a business like ours, and a lot of DTC businesses, you’re very cyclical. Buying inventory often goes up at one point, your cash goes way down. Then as that inventory is depleted, your cash goes way up. So, what we try to do is just spread out our buying habits to not be so demanding at certain times. So that’s one way, but as far as having a budget at the top that we don’t touch and keep, we typically will just have that there. Then ideally if we don’t have to tap into our line of credit, we don’t tap in. So, it becomes more of our buffer, is that line of credit to be able to, I don’t know, buy a lot of inventory. We often have that budget available and then if we don’t use it, we don’t use it.

Bushbalm’s process of finding and pitching to investment firms 

Shuang: Now that you guys are an 8 figure business and you’re looking for investors and you’re pitching, how did you approach the aspect of searching for investors and prepping for that process?

David: So the prepping actually is very similar to Dragons’ Den is building … we have a pitch deck that we’ve been iterating on constantly, and as the opportunity gets bigger and we think it’s larger, we’ve been changing it and adjusting it. So I’d recommend that to anyone, is build your pitch deck and just have it as a document that always lives and gets better. So, you’ll always need it, it’ll always be helpful. Not only is it helpful for investors, it’s helpful for just telling your good friend what your business is. 

Shuang: When you are searching for investors, what are the qualities you are looking for in an indeal investor?

David: When you are looking for an investor, there are a few things there. Then when you meet with certain investors, there are certain things to look for to see if it’s a good fit for you. So for us, in regards to investors, this is a bad answer, but trying your best to network and meet people either through your network who know people, or just finding the firms that have invested in other people in your industry and looking, and maybe you reach out and you say, “Hey, we’re not quite ready, but here’s our business. We’re keen to talk potentially in the future.” Those intros will go a long way.

Then when you are looking for an investor, one thing you got to know is first off, if you’re doing a friends and family round or whatever that looks like, and people are investing money in you, the more investors you have, the more you have to manage. The more people you have to worry about, talk to, and if someone’s really demanding, that could be a drain on your time and effort, so that’s one thing to consider. The other thing is if you’re investing with say, a VC firm, they’re going to have much more demands on you. Things are going to be, “We want to see you grow by this much. We want to see this have, we want to see this.” So you just have to know that and understand it and be ready for it and obviously, you’ll talk about it. Whereas if you’re bootstrapped, you can grow at whatever rate you think you can grow at. There’s less pressure to do something, particularly, or partner with someone, or whatever it is. So when you’re evaluating the right investors, is really think about who’s a good fit and who has similar values to you. 

On the finding an investor side, there are lots of VCs out there, but consider who you might know that can connect you with the right people to talk to. Because yeah, it’s obviously not a good answer because not everyone can network in certain ways, but you got to try, whether it’s just sending a cold email to an investment fund with your business and your pitch. If you send a bunch of those, maybe you will get a couple of meetings, and then maybe you’ll scale quickly and those meetings will turn into the investment that you do need.

 A model out of focus in the background holding an electric trimmer by Bushbalm.
Financial habits of record-keeping and understanding performance are key for Bushbalm to manage its growth. Bushbalm

Shuang: Thank you for all the insights. I think finances is such a daunting task, but it’s important to talk about those things. So, if you were to give new business owners some advice when handling finances, what would they be?

David: Maybe just one piece of advice for anyone who’s running the finance financial side of their business, or the marketing side even, is monthly, do a profitability calculator. So, just put in the numbers, the inputs and have a template that you use every month and really look at, “Okay, how much per specific order are you profiting or losing?” If you can break it down that granular, what it means is you can say, “Okay, next month we can spend $10 more per order on marketing.” Or you can say, “Oh geez, we’re really tight. We actually have to keep our customer acquisition costs really close to where it is.” So, if you can build that spreadsheet where you just plug in the numbers and you can do it every month, that’s really helpful to scale. Especially on the financial side, because if you’re profitable, you can put more money into marketing or you can invest more in different places. So getting down to the individual order level, how much you can make or not make is pretty critical. It’s been a huge part of our success.

This originally appeared on Shopify and is made available here to cast a wider net of discovery.
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