Nobody has to tell Ted Dellas about the dangers of poor cash-flow management. He readily admits that it was his lack of adequate preparation that led to him being forced to close LeisureTime Warehouse Stores after having run the business successfully for nearly 20 years.
LeisureTime was in the business of building and installing pools, hot tubs, and spas. Located in Mayfield Heights, Ohio, this was obviously a highly seasonal business.
“Business was slowing in 2006 and 2007, and I was still dealing with product liability issues from the early 2000s,” Dellas recalls. “When the crash (of 2008) came, not only were we not selling anything, but credit card purchases from months and years earlier were being canceled, and business for hot tubs all but disappeared.”
To make matters worse, even on the sales he was making, Dellas’s margins were shrinking down to the mid-twenties.
“It was sand falling between my fingers, and there was nothing to do to stop the problem,” he says. “Overhead stayed in place, and sales were gone. My only attack point was to stop advertising due to no money. That was the final nail in the coffin.”
His local bank revoked his line of credit, and he was forced to sell his business just to stay afloat.
They say what doesn’t kill you only makes you stronger, and that certainly applied to Dellas. He read Walmart’s founder Sam Walton’s book and came away with three critical lessons:
- Keep qualified staffing
- Be in a position to secure funding as needed in a timely fashion
- Provide enough savings to get through the winter to avoid having to borrow large sums to cover overhead shortages
In the same book, ironically, Walton warned that seasonal businesses added a dimension to business challenges that he did not like.
“Apparently, I didn’t pay attention to Mr. Walton,” Dellas adds wryly.
Not one to simply give up, he spent the next two years building back his credit and finances. In 2010, he relaunched LeisureTime Warehouses with plenty of help from Kabbage.
He had looked at a number of different funding sources, but was not happy with the interest rates he was offered and the limitations placed on withdrawals. Kabbage offered Dellas far more attractive terms, and he qualified for a Kabbage line of credit the day he applied for it.
Today, Dellas utilizes Kabbage funds every month. With Kabbage, Dellas hasn’t faced the kinds of cash-flow crises that caused the original business to go under in 2008. Operational costs, including payroll, are always covered during the offseason.
In a few short years, LeisureTime Warehouse has grown to more than $4 million in revenue and supports 25 employees.
“My Kabbage (representative) is very good, focused, and always there when I need an answer,” Dellas notes. “I have grown sales in 2019 by almost 2 million dollars which would NOT have been possible without a funding source. Kabbage is the best.”
So, what are the biggest lessons Dellas has learned during his 35 years in business?
“Save for a rainy day,” he implores. “No matter how strong you are, no matter how successful, no matter what position you have at any given moment, tomorrow or the next day is going to be different. You’ve got to be able to adjust quickly and aggressively if the indicators show up in the wrong direction. Drastic circumstances require drastic changes.”
The other lesson is the one he considers to be the most important of all: people.
“Business is all about people,” he says. “Vendors, customers, staffing. They all tie to the same thing for me. I try to meet, and more so, exceed their expectations.”