Joining A Non-Tech Startup Accelerator Program To Improve Our Business
This is a follow up story for Popov Leather. If you're interested in reading how they got started, published almost 6 years ago, check it out here.
Hello again! Remind us who you are and what business you started.
I’m Ryan Popoff, founder of Popov Leather. We manufacture bespoke leather goods and sell direct-to-consumer via our website and Etsy presence. When I look at our best sellers, I can undoubtedly say that our Traditional Wallets and our sturdy Belts top the list of popularity. We focus on making a quality product, with quality materials at an affordable price.
While we’re a Canadian business making everything in-house, the majority of our customers come from the USA. There is a strong passion for well-made leather goods south of the border. In 2019, we crossed $1.5M in sales and we’re projecting $2.5M this year.
Tell us about what you’ve been up to! Has the business been growing?
Since we last updated Starter Story, a lot has happened.
In 2019, we participated in a non-tech accelerator program that addressed three key areas of our business: product profitability, hiring a production manager and taking control of our financial reporting.
There are ways to make you stand out from your competition and build a base of customers who love your brand.
To address product profitability, we developed a spreadsheet that examined every single product we make. We looked at every aspect of direct costs that goes into making an item: material, man-hours, postage, burden rates, etc. and used that report to identify and remedy products that were unprofitable for us to manufacture. That spreadsheet took about 6 months to make, but it’s our framework whenever we run a sale, work with wholesale customers and when we prototype and test new products.
After hiring our Production Manager, he instituted a number of programs within the workshop that addressed operational issues. Kanban was put into place to ensure orders were made and fulfilled in a timely fashion - this process brought our turnaround time down from two weeks to 3(!) days. He also automated several of our processes such as make list generation (our list of orders to process) from a task that took 1 hour/day to 2 minutes/day.
Next, I became financially literate. I worked one-on-one with a coach who helped me understand how to read a P&L and Balance Sheet. I also developed a budget and forecasting management spreadsheet which allows us to make sound business decisions much faster. I used to just check my bank balance daily - now I understand the difference between profitability and cash flow.
My stress levels have come WAY down just from the three major changes above.
In addition to those major accomplishments, we internally hired a Product Developer who successfully launched seven new products - one of which was our highest grossing presale ever.
And in August, we launched a loyalty program that has dramatically increased average order value and repeats customer order rates with a high 25% redemption rate. The program also generated an additional $12k in referrals since it started - bringing in new customers and rewarding existing customers for their effort.
What have been your biggest lessons learned in the last year?
I’m going to reiterate what I mentioned above, but I learned some really big game-changing lessons in 2019.
Going into 2019, I had no idea what a Profit/Loss statement or Balance sheet was. It was just something I got once a year from our bookkeeper and looked at once. We now have a budget and forecast that we update monthly. This allows us to pivot quicker if we have to. Up until 2019, I was just looking at my bank balance every day and using that as a metric for business health. There’s a big distinction between profit and cash flow and I was only seeing one side of the coin.
Hiring a production manager was the single greatest thing that we’ve ever done for our business. It’s intimidating paying a high salary for one person (he makes 2x what I earn!) but when you hire correctly, you get what you pay for. He has transformed our craft business into a manufacturing environment. Staff are stoked to work at Popov Leather, orders are being made and shipped in record times and we’re able to take on new opportunities. Until we hired our production manager, I was juggling all the operations, HR, and sales-related functions. Now I can focus purely on what I love: marketing and sales.
Finally, understanding what we sell. Are the items profitable? Where should we focus our attention? Should we negotiate with or find new suppliers? I went through every single item we make and charted costs: material, man-hours, burden rates, sales channel costs, advertising cost, etc. I can now tell you the gross margins on everything we sell and if it’s worth pursuing based on labor or material costs. We can apply this to new products when we’re prototyping tool.
These three changes took about 6-8 months to work through. Countless hours of stress and uncertainty. But going into 2020 my stress has been greatly reduced knowing I have all these tools and knowledge in place.
What’s in the plans for the upcoming year, and the next 5 years?
This year, our plan is to focus on content creation. But it has to be sustainable and most importantly: fun.
We’ve been hitting Instagram pretty hard with content doing 3 posts a day. This has given us an increase in net followers of 100/day. Along with the follower count, the content is being constantly reused in our marketing and ad copy materials.
The next vista is YouTube. I’m working with our team to create a series of videos within the workshop: tutorials, workshop life and product features to start. Video editing has always been a fun hobby of mine and I plan on really diving into it this year.
As ad spend gets increasingly more expensive, we need to turn our attention to other opportunities. The leatherworking community has given me so much when I first started, I want to give back by producing informative and valuable content.
Originally, I had planned to write a series of blog articles, but I just can’t stick with it. It’s the reason I switched from being an English major to a Visual Arts major 4 years into university. I hate writing! Focusing on video is much more in my wheelhouse than essay writing and I look forward to flexing some creativity there.
Have you read any good books in the last year?
Kill Your Conversion Killers - Joris Byron
A great little book on setting up sales funnel reporting within Google Analytics and diving into conversion rate optimization. There are a lot of low-hanging fruits when it comes to CRO and this book dispels a lot of misconceptions (ie. is a green add to cart button better than a red one - spoiler: it doesn’t really matter).
Advice for other entrepreneurs who might be struggling to grow their business?
There are ways to make you stand out from your competition and build a base of customers who love your brand.
Always treat your customers like gods. Bend over backward and do EVERYTHING you can to make them happy. Those first few critical sales can grow quickly with word-of-mouth advertising. We set ourselves apart in a sea of wallet companies by providing our customers with unparalleled customer service. Generous return and refund policies will make your customers love you and trust you. I’d rather have an unhappy customer return a product than being forced to keep it and complain to all their friends.
We’ve had a number of folks who didn’t like our product but left us a 5-star review simply because of our customer service.
And speaking of customer service, be an email all-star. If a customer emails you, respond immediately (unless you’re asleep). An email that is left for hours means that your customer will browse other websites.. even worse if your competitor responds quicker than you do. That usually means a lost sale.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
