Two and a half years ago I had the dream to build Closed Mondays into a full-fledged manufacturing business with 100 employees. At the time I had 2 full-time employees. I was immersed in business courses to learn finance, operations and to plan for growth. The clear path from that education was to access capital in the form of loans. Then with that extra capital increase revenues, profits and total output. That cycle continues for years and years until the business reaches the goals I had set for myself.
In 2020 it was relatively easy to take out loans, the government was doling out money to small businesses left and right and I was in a privileged enough position to know how to apply for loans and where to apply. I had excellent personal credit and the financial history in the business to receive just under $100,000 in loans with low interest rates. I was ready for this next phase of growth!
At the end of the day, the goal of reaching the 100 person manufacturing business in Brooklyn is pretty ambiguous and a little empty. It didn't even touch many of my values. Of course, I wanted to be an excellent employer, maintaining the 4 day work week, health benefits and to be a place where people actually wanted to go to work. But the financial reality of paying people living wages, offering health insurance, selling our products at a reasonable price and increasing our annual sales year after year became completely draining and exhausting.
Fast forward to early 2021, I now had 3 full-time employees and 1 part-time. The team could crank out baskets like nobody's business. But at the same time, my profit margins were getting slimmer. I wanted to offer health insurance to the team, so I did. We had a decent amount of cash in the bank and I felt confident that we could get to a more profitable place before the cash ran out. I was wrong. Over the last half of 2020 and first half of 2021 sales started to fall, and the margins were decreasing. Looking back, I could have made a million different decisions at this moment. But, I held on for dear life thinking things would change.
The team was very much devoted and consumed by the actual manufacturing process and we didn't have extra capacity to figure out how to sell more baskets and become more profitable at the same time. My cash reserves slowly dwindled as 2021 progressed. In April I reached a breaking point and told the team our financial reality and that we only had a few more months at this rate in the bank. By June, I had let the entire team go. This was one of the worst moments in my life. Everyone had been dedicated to Closed Mondays and on a personal level we truly enjoyed spending time together. It was an especially close-knit group because we had worked through much of the pandemic together and became quite the support system for one another through that time.
I took on the entire workload myself for the next 6 months. My health suffered. I was working incessantly trying to keep revenue at least steady so I could pay off the loans. By December, I was burned out and sales were bottoming out. There was no way I could keep up the pace of production, admin, and marketing. I had barely posted on Instagram or written a newsletter in months.
I hadn't been keeping up with bookkeeping. I was avoiding the realities of the situation and was treading water. My clothes stopped fitting because I hadn’t exercised or spent any energy on my health. I realized it was time for some drastic measures to take my own life back. It was clear it would be a slog to pay off these loans and I was barely making more revenue than the loan payments. I decided that was going to have to be okay. If I could make my loan payments and my personal rent, that would have to be enough for now. My creative side and health side had suffered too much to continue this pace.
It’s been almost a year of barely making it financially. But it’s been worth it to feel creatively fulfilled and prioritize my health. Being pregnant was a great motivator in putting my body before my work. I am still trying to paint daily and be as chill as possible about the fact that I still have $60,000 in business debt.
The whole thing is super painful to think about. There are so many feelings of failure and shame around that level of debt even though I took it on with the best intentions to grow my business. It feels completely isolating because not many people are willing or able to talk publicly about this kind of debt. Pop culture and mass media celebrates business growth, but I see little discussion about the cost of trying and then failing to grow.
I needed to write about my whole experience so it doesn’t bear so much weight on me. I’m not expecting to be saved or even to receive pity or sympathy. I just know that keeping this inside is not serving me or anyone else who wants to build a business. Knowing all the risks and downsides is part of responsible entrepreneurship.
Part of me wants to wrap up this tale for you and give a satisfying ending. But, right now, I sense I am just in the very middle of this story and you’ll have to check back in a year or two for any progress.