While small businesses across the U.S. are reopening and adapting to the new normal, we’ll be highlighting stories of OnDeck customers who are facing these challenges head on. They share ways they changed their business operations to deal with new realities and how they used financing from OnDeck to help along the way.
We recently spoke with OnDeck customer Luke Sutherland (right, above), who operates an e-commerce business and has used his OnDeck financing to invest in growing his business.
Tell us about your business. How did it come about?
I run an e-commerce company – we primarily sell basic home goods, though we’re now expanding into some grocery and health and beauty items.
Over the past few years (with the help of OnDeck financing), we’ve grown the business from one person – me – operating out of my home, to 6 full-time employees in a warehouse. With the added warehouse space and manpower, we’ve been able to increase our sales volume and negotiate bigger contracts with our wholesale vendors.
What have been some of your biggest challenges as a small business owner?
Our two biggest challenges have been: accessing the financing we need to keep growing and larger, external shocks. We need a lot of upfront capital to purchase inventory in bulk at attractive rates. We were unable to get financing from traditional banks, even though our business has been profitable for years and we were able to put up collateral against the financing.
This year our bigger challenge has been navigating global supply chain issues. At the end of 2019, we were concerned about global tariff changes. Then in early 2020, the pandemic hit.
Why did you choose OnDeck and what’s been your most memorable experience working with us?
We started working with OnDeck a few years ago when we struggled to get financing from a traditional bank.
The simple application process and speed to get funded have been the most memorable part of working with OnDeck. The process was very easy, and our account manager Brittany was so great to work with, that we continued to go back to OnDeck as we needed more financing.
We are always working to expand the list of wholesale vendors we work with, and sometimes a new contract will come through rather last minute. We’ve been able to make large purchase orders knowing that our OnDeck funds will hit our bank account in a day or two.
In the past few weeks, we were so grateful that OnDeck was lending, as most other lenders were not. We had an opportunity to purchase inventory at an attractive rate, and the financing from OnDeck enabled us to do so.
How have you used the money?
We’ve primarily used our OnDeck funding to purchase inventory in bulk, though it has also come in handy for when we’ve hired new employees and opened our warehouse. In general, it’s been crucial to helping us grow our business.
How has the coronavirus impacted your business? Have you had to do anything to adapt to COVID in the long term?
It’s been really up and down for us. At first, sales spiked but we ran into shipping and fulfillment backlogs since demand for online deliveries was up across the board. Then, our state issued a stay at home order. We immediately shut down our warehouse and sent our 6 employees home. 3 of our employees primarily do office work, so they were able to keep working remotely.
Either way, we continued to pay everyone, including benefits. We were lucky that we had a backlog of orders still going out, so were still bringing in revenue even while our warehouse was shut.
Once the stay at home order was lifted, we brought our staff back into the office with social distancing guidelines implemented. Fortunately, our county never really had many cases, and we don’t have many employees, so it’s been relatively low risk bringing people back in.
Our business is now up since more people are ordering items online – we’re up about 50% compared to pre-COVID. For example, demand for kitchenware items has skyrocketed since people are staying at home and cooking more.
We’ve expanded into offering more beauty and grocery items due to increased demand to order those items online. We were already thinking of expanding into those categories – coronavirus just accelerated that shift. To make that expansion, we started looking for more financing, but unfortunately most banks and lenders have tightened up on lending.
What do you love about being a small business owner?
The flexibility and the freedom of it – I could never go back to working for someone else. I get to spend every day working with my employees who are now some of closest friends. I know everyone’s birthday, we celebrate big life milestones together.
Additionally, our business is really a team effort. All our employees are empowered to make decisions to help grow the business and take on leadership roles. It’s a fast-paced rollercoaster and a ton of fun.