A rose by any other name might smell as sweet, but there's nowhere near as much wiggle room when it comes to startups' financials during the precarious growth phase of their lifecycles. As flower delivery startup BloomThat has learned more than once, keeping a close eye on the numbers during this process can help even the least savvy entrepreneurs avoid heartbreak.
In an interview with Bloomberg Business, BloomThat Cofounder and CEO David Bladow relayed the two-steps-forward, one-step-back dance the company found itself in when attempting multiple expansions across the U.S. from its home base in San Francisco. Bladow explained that BloomThat found initial success following the growth paths of other Silicon Valley social media and FinTech startups; however, it quickly realized that it had burned through so much of its $7.6 million in seed money — including one July that saw BloomThat spend $600,000 — that big changes needed to be made.
“We looked up, and we were like, ‘Holy s---, we’ve got a problem,’” Bladow told Bloomberg.
What has BloomThat done in response to its spending spree? First and foremost, it has cut costs and created additional revenue streams. The company began charging a delivery fee in 2015, and a reduction of full-time staff from 70 to the current 42 has brought down overhead even further — losses amounted to just $15,000 in October. Gross profit margins increased from negative figures to between 30 and 40 percent.
But like the chicken and the egg, now that BloomThat has righted the ship after missteps during the growth process, it has no choice but to attempt it all over again. However, Bladow thinks that what hasn't killed BloomThat can only make it a stronger competitor on the wider market.
“We've come through the valley of the shadow of death,” Bladow told Bloomberg. “I think a lot of companies aren't going to make it through that.”