Breakthrough in Hair Care, Overcoming Tragedy, and a Successful Exit, with Beth Di Maio

The total market value of the hair care industry is about $100 Billion worldwide and over $15 Billion in the United States. That seems like a huge opportunity, but the market is dominated by big name players like Loreal, Proctor and Gamble, Johnson and Johnson, and Unilever.

So how did Cordiale and Beth Di Maio find market share in 2007? And how did Beth overcome her husband’s tragic passing and take Healium Hair to the next level – and even a successful exit?

Today’s episode of Deal Closers is hosted by Jason Gillikin, brought to you by WebsiteClosers.com, and is produced by Earfluence.

 

 

Transcript

Beth Di Maio – 00:00:05:

 

The snow globes that you shake at Christmas, and it’s this beautiful, snowy picture. I said, that that imagine. That’s our life. And somebody didn’t just shake it, they just they threw it on the ground and they shattered it.

 

Jason Gillikin – 00:00:23:

 

You’re listening to Deal Closers, brought to you by websiteclosers.com, a show about how to build your ecommerce business to be profitable, scalable, and one day even sellable. I’m Jason Gillikin, and on the show today, Website Closers, Brent Fisher, Izach Porter and I talked to someone who overcame tragedy and found a way to break through in the extremely crowded hair care industry. In the hair care market, the total market value is about $100 billion worldwide and over $15 billion in the United States. That seems like a huge opportunity. But the market is dominated by big name players like L’Oreal, Procter & Gamble, Johnson & Johnson and Unilever. So one way to tap into the market is to come up with a specific niche product. And that’s exactly what Beth and Cordiale Di Maio did back in 2007. At the time, they were both working in the beauty industry and they saw a gap. There wasn’t a product that would make fine, thin hair beautiful with natural ingredients. So they teamed up with a chemist they knew in the industry, and they launched Healium Hair. With their connections, they start off pretty well. Even if Beth and Cordiale didn’t always agree. 

 

Beth – 00:01:27:

 

Our strategic ideas didn’t necessarily align. For instance, we were only selling to the licensed cosmetologist at the time. And he did not want to take credit cards. He wanted to only offer COD. And I thought, are you living in the freaking Dark Ages? Like nobody carries a checkbook anymore. I was the one who was very intricate into the details. He would have an idea and then I would implement.

 

Jason – 00:01:59:

 

One of those ideas was around packaging. And as a small company, they needed to find manufacturers who would deliver 1000 products instead of a typical minimum of around 30,000. And because they were self-invested, those thousand needed to be attractive, right away. 

 

Beth – 00:02:14:

 

He would drive out to The Hamptons to do his creative thinking. And he was sitting out there at the beach. It was like 04:00, and it was this beautiful blue sky. And our products are designed for a client that has fine and thin hair. And so you’re virtually weightless, you’re water soluble, you’re light, it’s airy. And he looked at the sky and he said, oh my God, this is a color we need for the bottles. Went to Home Depot, got color pantones, literally held them up to the sky. And that’s how we got our baby blue bottles.

 

Jason – 00:02:52:

 

I love that. And so you’ve got a product, and I read that you started going door-to-door to salons. Is that right?

 

Beth – 00:03:03:

 

Yeah. Well, I always say we did it the hard way, the wrong way, and the expensive way. And I don’t know which one was worse. But when we first initially launched, we launched with distributors. We had a big launch in New York and Times Square at the W. Hotel, and his background had been working with distributors. So we thought, this is the path we’re going to follow. So we very quickly learned, though, if you are not stiffing those sales consultants with Money, TVs, iPods, or you’re not physically writing with them on that day, they’re not selling your brand. And so we kind of took a step back. And I had previously been the salesperson here based in Florida, and I hated the weather in New York where we were living at the time. So we decided, why don’t we just head back to Florida where we have so many connections and existing customer base, and start there? And so we did. We literally put foot to pavement. We’d have our three Hero products. We’d go out and sample salon hail. Be back in two weeks if you love it, great. And we started to build small territories, local territories that way. And once we got it up big enough, we did hire a part time salesperson, just part time. It was a stylist who worked in one of our salons, and we turned those babies over to her to now turn into toddlers, into adults. And then it would free us up to move 2 hours south, and we’d start a new little pocket down there, and then we’d head 2 hours north and start a new pocket up there. And as we started to gain momentum, we started to gain some money and we started to gain some notoriety on the shelves. We started to peak interest in not only other salons, but in smaller distributors throughout the US. Which we realized was where our niche was. If we were going to partner with distributors, it was those that had seven or less lines, had five or less employees, and really could put the blinders on and focus on growing Healium every day, not just the day that we were with them.

 

Jason – 00:05:20:

 

That is awesome. Talk about some of those early times selling door to door. I imagine you got some doors slammed in your face. I imagine some people are like, I mean, I’ve never heard of you, and these are named brands on here. And it’s got to be tough to get people to say, yes, I want you on the shelf with these products that consumers already know.

 

Beth – 00:05:43:

 

Absolutely. And when you were well, at the time we were in the era of Sephora had started carrying name brand products, Ulta was absolutely in their baby stages of growth. And you’re trying to convince a stylist to convince their customer in the Chair to buy a specific product when you’re only there once every eight weeks. When I pass by, I can’t tell you how many hairsprays and shampoos when I’m in the grocery store four times in one week. So really creating a great price point for our customers was super important and also explaining, I always sold on education. What are the benefits behind the brand? And why is this product specific for this customer? And I think knowing those niche pockets of information and knowing it forwards, backwards, front, South, east, and west allowed me to almost always have the answer to a no at hand. I will tell you, the one thing that I did take personally, and I still do, is when someone would criticize the packaging. I don’t have very thick skin. And so that one always hurt me a bit, because it’s like your baby. You put your blood, your sweat, your tears, and your money into this, and somebody’s telling you, oh, you don’t look like Alterna or you’re not expensive enough. It’s probably not good. And so definitely having years of experience has taken that edge off of me to take it less personally.

 

Jason – 00:07:32:

 

Yeah. What about Ecommerce in 2007, as you’re just getting started, were you thinking about Ecommerce at that time? Were you not? Where were you at with that?

 

Beth – 00:07:42:

 

Yeah. So that’s, again, where the husband and wife partnership and age difference really came into play. And I used to say our kids, we would sit at dinner, and our two girls would say, Stop fighting. And I’d say we’re fighting over payroll. Like, this isn’t what mom and dads fight about. Most mom and dads don’t work together and talk about HR issues over mac and cheese. But I will say that initially, my late husband wanted nothing to do with Ecommerce. And honestly, our Ecommerce business really didn’t even come about until after his passing. I was always a proponent of Ecommerce because it’s direct. I mean, why not, right? Your margins are better. You’re direct to the consumer. It’s just such a wider market that’s so much easier to market to. Those were tough conversations that never really went anywhere, obviously, until I took over. And come 2017, we said at least specific to our industry, you’re selling to a customer who’s wholesale. She doesn’t want you selling online because you’re taking her customer away. So how do you satisfy both of those needs? I want to sell to this consumer over here, but I want to keep this wholesale customer happy. And so at the time, we did not have national coverage as far as sales consultants to wholesale. So that was one benefit for me. I had an opportunity to open up Ecommerce to maybe those consumers who didn’t have a salon nearby that still wanted to buy product. So that was kind of my first little loophole into Ecommerce. So I said, okay, well, nobody seems upset about that yet. Now I don’t want my existing customers to think I’m stealing the customer in the chair. So now how do I conquer that? So what we did is we actually price our products one dollars more at MSRP on our website than what a salon would actually sell them in house. Plus, we were offering bimonthly promotions to the salon owners. So I’m going to give you an example. Several years ago, we had what was called an aerosol partner program. So an aerosol partner would sell our hairspray at $14. Every other Joe Schmo who wasn’t an aerosol partner would sell our hairspray at $18. If a consumer went to our website to buy that hairspray, it’s going to be $19. Plus they were paying 495 shipping at the time. So my benefit is if I go to my stylus and I buy it for 14 from her, I can almost get two for the price I would if I sat at home and bought it online. So what am I going to do? I’m probably just going to buy two next time I’m there and call it a day. I’m happy, my stylist is happy, and I’ve got extra product. I’m not going to run out. Which is if you’re a woman and you have found a product that you love, you don’t want to run out of it. 

 

Jason – 00:11:00:

 

That’s smart. But this is like 2018 or so that you’re just moving forward with Ecommerce.

 

Beth – 00:11:06:

 

Yeah, this was in 2017. And so that was a great way for us to really satisfy the needs of a wholesale business and also the needs of the direct to consumer who wanted to buy at home. And so trucking along business is great. And then boom, we’re all hit in the face with COVID Right? And of course, COVID changed so many businesses that we’re still lucky enough to be in business, and salons are closed. So now what? Now we really need to capitalize on this little keyhole in the door that we’ve opened for Ecommerce. And so at that time, I had a friend of mine who had started his own marketing firm, and he was a one man show. He was doing web design. He was doing Facebook ads. He was doing SEO. And I said, let’s try it. I’ll give you this much of a budget. My budget at the time was $5,000 a month. And I said, let’s see what we can do. And we started doing it was called Tuesdays at Ten. And it was on Facebook. Facebook Tuesdays at ten. And every Tuesday I got on and I did a live, and it was on what our customers wanted from us. It was either product tutorials, education trends, how to’s, and those coupled with really funneling down to knowing who is our customer and targeting her specifically on Facebook, it was like these fireworks just took off. And I felt like such an idiot that I had waited so long to sell direct to the consumer. It was like years and years of profit that I had wasted.

 

Izach – 00:12:57:

 

So Beth, a couple of things about that. So when we were looking at the business, that growth trend that you’re talking about was pretty apparent when we looked at the financials, what did you see in terms of profitability for the business, how were your margins different for the direct to consumer? Maybe not specifically, but just generally. And then how did you start to think about the business going forward at that point?

 

Beth – 00:13:20:

 

So speaking about margins, specifically, our margins direct to the consumer were now almost, if not double what they were direct to the wholesale, because we really were trying to keep like at a 50% markup from our cost of goods. So it was not only this explosion of immediate growth, but it was an explosion of immediate cash flow that was not only immediate, but wow, now it’s consistent. So now I was taking that Facebook marketing budget, which was 5000, and now I said, okay, this month I can give you seven. Let’s see what we can do with seven. One thing that I can look back on and say as far as the marketing strategy that I would have changed is we were tunnel visioned into Facebook. And I attribute it because that’s what my marketing guy knew at the time and he knew how to do it well. In hindsight, I would have taken that budget and I would have divvied it up between TikTok and Instagram now, but you only know what you know at the time.

 

Jason- 00:14:36:

 

Yeah. Beth, let’s back up a little bit. So from 2007 to 2017, when you get on ecommerce, you said something like there were a lot of expensive mistakes besides not being on ecommerce. What were some of those expensive mistakes?

 

Beth – 00:14:55:

 

Packaging. Packaging was not a big mistake, but I made mistakes there because I was doing what I knew how to do, even if I knew it wasn’t the most efficient way to do it. So I’m going to give you an example. To keep our packaging in the US. We had a specific product called Framing paste. Framing paste comes in a puck, like what most men use, a paste pomade product. So we would get those from a manufacturer in Louisiana. Those would then be this is going to sound ridiculous now that I say it out loud. Those shipped from Louisiana to Brooklyn, New York, to a screen printer, who would then screen print, he would repack it, and then we would ship it to New York. I’m sorry, new Hampshire, where our warehouse was at the time. In New Hampshire. It would be filled, it’d be palletized, and then we’d ship it back down here to Florida to be stored, packed back up and shipped out wholesaler, direct to consumer. So is it stupid? Yeah, it was really stupid, but it worked. And it was something that didn’t need an immediate fix. It had a band aid on it, but I knew I wouldn’t have to replace the bandaid for a while, so I just left it. But those exorbitant shipping costs over and over again just added to my cost of goods that was never passed on to my consumer. And so that, for instance, was just one example. Another was an example. We had a packaging change. Again, to try and minimize our packaging cost, we went to what is known as an airless pump on one of our products. Well, nobody knew how an airless pump worked, not even our chemist who was filling the bottles. So they were filled without one of the plastic components put onto the bottom to literally hold all of the product in the bottle. And we got pallets delivered to us that were literally just oozing product out of the bottle. It was like the best smelling warehouse ever, but pallets of product wasted.

 

Izach – 00:17:26:

 

You know, it’s interesting, Beth, though, there’s so many sellers that we’ve talked to that have these exact same stories like this of products that got destroyed or shipping. With the shipping example specifically, did you ever come up with a better way, like a better mousetrap? And what did that look like?

 

Beth – 00:17:46:

 

Yeah, well, the better mousetrap, so there’s two options to that. So the better mousetrap that we did now that I have sold and have somebody else that’s taking care of that is working with a manufacturer that has larger minimum order quantities, so they will mass produce the pucks and screen print all at the same time, ship to our New Jersey lab where they’re filled. And now we ship out of New Hampshire. So it’s the way it should have been. The only other way that I knew to solve that particular problem. Again, Alibaba and out of the country vendors that will again create the molds and also screen print all in one.

 

Izach – 00:18:36:

 

Yeah. And so the key there is the MOQs. Right.

Because the challenge you had was not that you didn’t know how to do it better, is that it was expensive to get that higher order quantity. So there’s a cost to being able to implement that efficiency. You kind of have to grow into that.

 

Beth – 00:18:52:

 

Exactly. And that particular product, for instance, isn’t one of our top sellers. I don’t need to have four years worth of inventory. But for me to do it the right way is exactly what I would end up with, when I needed to take literally any money I had and put it into our aerosols, which still are our number one sellers, but also require minimum order quantities. That there’s no negotiating those.

 

Jason – 00:19:21:

 

Yeah. Beth, you’ve mentioned your late husband a few times, and in 2017 he dies of colon cancer. Tell us about the diagnosis and what’s going on at that time.

 

Beth – 00:19:38:

 

So step back to 2014. Business is growing small, slow but steady. And he was going in to have his gallbladder taken out. It was an outpatient procedure. Come in at seven, you’ll be out by noon. Great. I literally still remember what I wore that day. The doctor came out, said, I need to talk to you. Took me into a private room and he said, the gallbladder is not the issue. Your husband has stage four colon cancer, and he has maybe ten months to live. And we at the time have a three year-old and five-year old at home with a babysitter. And I say the best example is the snow globes that you shake at Christmas. And it’s this beautiful, snowy picture. I said, Imagine that’s, our life. And somebody didn’t just shake it. They threw it on the ground and they shattered it. I couldn’t believe it. It didn’t seem real. And he came out of surgery. He’s in recovery, and he says, oh, gosh, I feel so much better. And they hadn’t done a thing. And so they scheduled him. That was on a Friday. Our daughter’s fifth birthday party was on Saturday at a house full of kids coming. And they said, well, we can’t really do much for you over the weekend. Why don’t you just stay in here? Because it’s going to be easier for us to schedule everything on Monday if you’re just already here. And so I went home, I had a birthday party, I went through this fog of shit and went back to the hospital monday, he had a colonoscopy. They said. Oh, my God. Great news. It’s not bile duct cancer. It’s only stage four colon cancer. Diagnosis hadn’t changed at all. It was just a better, worse scenario. So he went in on that week, and he had a hernia fixed, he had his pork put in, he had his gallbladder taken out, and he started chemo every two weeks from that point in 2014 until 2017. July 12, 2017, he passed away at home, and I was thankfully with him, and that’s exactly how we wanted it.

 

Jason – 00:22:16:

 

Wow, I’m so sorry you had to go through all that.

 

Beth – 00:22:21:

 

So 2017, thankfully, we had had enough time to prepare as he he survived almost three years. And so I was really able to learn a lot of what he was doing in his roles. As far as he did payroll, he did the taxes, he did the forecasting, he did the bottle ordering. I just printed out checks, and I would try and be nice to people. And I was able to coast, really through the rest of 2017 without much effort put into the business. It really was on cruise control. And then 2018 is where I made some financial mistakes, as far as I knew. COVID scared me as a business owner, just as it did so many other people. And I think a bit of that panic was, let me see where I can throw money, and I’ll just focus on where it sticks. And that unfortunately as far whether it was packaging, a big downfall of that was social media. Everyone thinks the route to success is with influencers, and I learned that lesson the hard way, and that was not successful for me at first, because I was going about it the wrong way. So 2018 was expensive and then I feel like 2019 really became like a rebirth of the brand.

 

Jason – 00:23:55:

 

Yeah. Okay, so as you’re going through the cancer, was there a thought of, screw this, I don’t want to go on like this. I don’t want to keep going with helium here?

 

Beth – 00:24:10:

 

Um there were many times, like, I wrote my own resignation letter, but I didn’t have anybody to give it to. So I think it just made me feel better to vent how much I hated it and how much I hated life and how unfair it was. But when I was in it, I also didn’t see the beauty of my kids were never in daycare. And I took my kids to school every day, and I picked my kids up, and I mean, Mondays, I dropped my husband at the hospital. That was two minutes from our house, thank God. I’d take my kids to school, I’d go home and I’d work. I’d pick my kids up, and we’d go back and have Popsicles in the infusion room as he finished Chemo. And it became a routine. But quite honestly, as many times. And my sister would say to me, well, why don’t you just quit? And I said, well, what the fuck am I going to do? I need a paycheck. Am I going to stick my kids in daycare while my husband’s at chemo and go work for somebody else? It sounds easy, but it just doesn’t work that way. And it created a lot of resentment on my behalf, because I felt like I was left to clean up this mess. I was stuck. What am I going to do? I have this warehouse full of hundreds of thousands of dollars of inventory. What do you mean just quit? It’s not an option.

 

Jason – 00:25:40:

 

Yeah. So 2018, you’re growing, making mistakes. 2020 COVID hits, and you’ve really got to go full throttle on Ecommerce. When did you start to look at, maybe now’s the time to exit the business?

 

Beth – 00:25:58:

 

Yeah. As we got into 2020, one of my downfalls was making professional decisions with personal emotions.

 

Jason – 00:26:12:

 

Well, that’s understandable given what you’ve gone through. 

 

Beth – 00:26:16:

 

But it doesn’t make a very good business owner, because I realized one thing that I was doing which made me feel so good inside, but I was overpaying my people, and I couldn’t step that back. It’s like negotiating for a car. You don’t work backwards. And so I had people on staff that I knew depended on that paycheck. I knew they were being paid too much for what they were doing. But it was a personal emotion and a personal relationship that I just couldn’t, out of my heart and out of my head, change it. That was just one thing that started to actually suck cash out of my business. And when I started to see financial situations, I always thought, this is what I would say to myself. I’m not giving up. I’m giving it to God. And it always works out and unfortunately, Jason, I kind of just continued to say that with no plan. I just said, oh, well, when it gets bad enough, I just give it to God and he’ll figure it out for me. And it wasn’t really happening that way anymore. I knew I had God still on my side. And I don’t mean that, but God wasn’t fixing my financial situations with COVID my aerosol company that I worked with specifically, it’s one of the largest in the US. And I was the small guy on the totem pole. They had been sold three times by the time I started working with them. I knew they really didn’t want to do business with me anymore because I’m just, honestly, a nobody. I’m running 30,000 cans at a time, and they’re dealing with spray paint manufacturers running a million cans, and they’re not cleaning lines for me to run 30 cans. And so I was getting and I’m not joking about this in 2020, I had three price increases from my aerosol manufacturer in one year, and I, on top of that, had 20 week lead times. So they were making it very difficult for me to do business with them. So when I started to see that my top sellers were going to be out of stock and I wasn’t going to have them back in stock, I started to say, okay, I have no more personal money that I can put into this. I haven’t paid myself in months. What am I even doing this for? This isn’t fun. I’m not even doing what I enjoy in this business. And I really came to this realization that my world needed to go in one direction, and right now it was split. I was either going to give 100% to my business and something’s going to suffer, right, and it’s going to be my kids, because there’s nobody there to pick up the slack for me, or I’m going to give 100% to my kids and my business isn’t going to go where I want it to be. And part of me has always held on to the business because of my late husband. It was like our third baby, and I couldn’t give up on it. I had to figure out a way to keep it going. And that’s when my conversations, really with Brent and Izach started of, is there maybe somebody else that will want this and will want to take it to the next level? Not bury it, not change it, but continue to grow it? And when we started having those conversations, it kind of gave me this little glimmer of hope. Like I came to peace in my heart that I could now give this to someone else to grow, and I could be okay with that. I wasn’t killing it. I wasn’t quitting it. I was making a personal and professional decision to continue to grow it where I knew it could be, but I couldn’t do by myself.

 

Jason – 00:30:48:

 

Yeah, that seems like the perfect time. Izach, Brent, what do you remember about those initial conversations?

 

Brent – 00:30:55:

 

I remember as Beth showing through here, she was so easy to talk to. And the great thing about Beth is she knew her client. She is her client. So when she first came to us with the situation, we thought finding someone to buy this company is going to be no problem, especially if Beth’s willing to stay aboard. And there’s a lot of hair care products, and capturing market demand is the biggest challenge in that space. And Beth really figured that out, right? So we knew it was a great brand. We knew we would get her through it. And it was fun working with Beth.

 

Izach – 00:31:35:

 

I think the other thing that was important is we knew the product was great. We actually talked to several celebrity hairstylists early on that were using the product in their own salons, and they were just enthusiastic about the quality, about the ingredients, about how their clients liked it, so the product was good. The challenge we had, and we can talk about this, is that as we went through the sale process, the company ran out of inventory. And so most of the transactions we run are kind of positive cash flow generating businesses that are on a growth trend. In this case, we had a great brand, great products, but a financial issue, kind of mid transaction. And that created a lot of complexity for us to navigate, to still get to an outcome that was going to be good for Beth and that we could find a buyer to sign up for.

 

Jason – 00:32:40:

 

So why did that happen, Beth? Were you just kind of done at that point?

 

Beth – 00:32:46:

 

I was financially, emotionally, and mentally checked out. Once I had made the decision that this business could pass on to the next growth generator, my emotional connection had been depleted, my mental connection had been depleted. And financially, I had gotten into a situation that I’m trying to think of the best way to explain it. I was in a shit pit. So, like I said, I hadn’t been paying myself. My prices had increases had increased from my vendors. I wasn’t passing that on. And I didn’t have any more of my personal funds to invest. And so I had reached out to several of the loan companies that are quick turnaround loans. They’re predatory loans. And at the time, I thought this was, again, my quick fix. I’m like, oh, no problem. By the time these are due, I’ll have the funds in and it’ll be paid. And I won’t even really have to think twice about this because it’s my short term fix. And then that one short term fix became a second loan, and then that second loan became a third loan. But I didn’t really have to worry about the first two because that third one was actually going to pay off those other two. And. In my mind, that sounded great. In reality, that never happened. And so I’m running out of inventory. I don’t have anywhere else that I can pull funds from. And I really thought, this is the place that I never thought I’d be. I never thought I would be at the grocery store and my credit card was declined. And that happened. It happened. I really was at the end of my rope. And Brent and Izach were trying to be so creative in different scenarios and different buyers and how can we do this and how can we do that? And a buyer fell through and it created this perfect storm of exactly how it was supposed to be.

 

Jason- 00:35:12:

 

Wow. And Brent, Izach, it sounds like Beth needed a bit of a lifeline, and that’s not exactly negotiating. It from a position of strength here. So how do you package that to potential buyers? Right. And you’ve got to be on her team here, but you’re thinking like, this isn’t a great situation.

 

Izach – 00:35:35:

 

Yeah, it got to be really challenging just from a traditional brokerage perspective. And we had gotten to know Beth throughout this process and really wanted to get her to a good outcome, or at least the best possible outcome that we could. And so what we ended up doing is we had to negotiate with the lender. So we had a buyer that made an offer that was less than the amount of the debt outstanding on the business at that time. But what was good about the offer is it included an opportunity for Beth then to work with the buyer and manage parts of the business and had pretty significant upside potential for her post closing. But we got an attorney involved. We went to all the banks and effectively it was a negotiated bankruptcy buyout where we took the offer that we had from the buyer. We went to the banks and said, look, you guys have to take a lower payoff amount than what’s owed or you’re not going to get anything, essentially. And we were able to negotiate somewhere between 25 and 45% discount on the outstanding loans without going through bankruptcy. By the way. We just negotiated payoffs without a bankruptcy, and we’re able to get the banks to take a discount in order to get some principal repayment and put Beth in a position where she was able to sell the company and not owe a bunch of money at the end, because that was the outcome that I think would have been maybe catastrophic. Right. You sell the company, you don’t have the income generation, and you still owe hundreds of thousands of dollars. What we realized is and we talked with Beth in a lot of detail throughout this process to try to understand what her goals were, too, but we wanted to get to an outcome where she could get out from under this debt, which the interest rates were absorbing it and the fees were absorbing it. And the lenders were very aggressive with kind of how they were treating it. And so we wanted to get her out of that and get her in a place where she had upside without this big debt cliff hanging over her head. And so I think we were able to do that. We were able to negotiate discounts with all the lenders. It took a ton of work, but I think the outcome was pretty good. And Beth, I’m just curious kind of what your perspective on that whole process was.

 

Beth – 00:37:58:

 

I had loans from all the names you hear on SiriusXM that are out there willing to give you money. And one thing that I did not realize is they’re really all in cahoots in the sense that if one accepts terms, they’ll all accept terms. And so once we got and I had a lawyer on board with Brent and Izach, and she was my mouthpiece, and she started a conversation. And the first lender, which was my smallest amount that I owed, agreed to 42% off. And so now I could prove to this lender, hey, they agreed to 42% off. She said, Well, I’ll only do it if everybody else does it. So our lawyer went to the largest debtor, which was six figures, and they not only took 42% off, they actually went to 61% off. And it was this instant, like, oh, my gosh, okay, there’s light at the end of this tunnel. There’s going to be good that comes out of this. Once I had those under my belt and we did the closing paperwork, now I just had to worry about the little guys, my $70,000 credit card or the $30,000 line of credit. And so I realized I can tackle these on my own, the same as the lawyer did with the predatory loans. Let me try it. So I did. And you know what? They all started agreeing. And I have not had one that has not agreed to less than 42%.

 

Jason – 00:39:50:

 

Wow, that’s awesome.

 

Beth – 00:39:52:

 

It leaves me with, as Izach said, in our buyer agreement, I am on board still with the company for a minimum of three years. So I not only have an agreement with them that will bring in income, I still get to be a part of the decision making, still the face and the founder of the brand. But I can now drop my shoulders to know that this massive amount that I thought was going to be sitting on my shoulders, it really isn’t that massive. And I can be done with this in six months. And this isn’t why you go into owning a business. You want the financial freedom, you want the physical freedom. And I know I’m not the only one who thinks, I don’t want to ask because I’m too embarrassed or I don’t want to ask, how did she fund her business? I’ll just try and figure it out. And that’s what I was doing I was listening, but I wasn’t asking because I didn’t want anybody to really know the depths of the financial difficulty that I was in.

 

Jason – 00:41:05:

 

Yeah.

 

Izach – 00:41:06:

 

Jason, one of the things I want to point out too, about some of these inventory lenders that are out there is that the way that they are structuring their payments is based on a percentage of the revenue each month. It’s pretty much automated approval, automated underwriting. So what happened in the case with Healium Hair is one lender is taking 30% of revenue every month as their payment. And so if revenue goes up, that payment goes up. If revenue goes down, that payment goes down. But if there’s four lenders taking 30% of your revenue, that creates a massive problem immediately where none of the lenders knew what the other lenders were pulling out. And so it just drained the business of cash pretty quickly. I think what we’ve seen as we’re talking to other owners and founders is there’s a lot of people in this situation that have taken these inventory loans out with these type of repayment terms over the past couple of years. And then if there’s any kind of a pullback in the business, you can immediately end up underwater in terms of cash flow. And it can be a really fast change from feeling like the business is healthy to being like, oh, my God, I’m going to go out of business. And it can happen in like two to three months, where it’s really whiplash from a cash flow perspective because all of a sudden these payments just keep coming out and they don’t adjust till the following month where they go down. So it’s like if the cash flow is going down, your payments are more than your cash flow on a monthly basis. And we’ve seen a lot of people in similar situations to Beth. And I think one of the messages that I wanted to convey is that there are ways to get out of that scenario and negotiate payoffs and get to a buyout. Now where I think what Beth did a great job of is she was very realistic with kind of the situation and the expectations that she had around what she needed out of the exit. And so that helped us to get to a deal that worked because it’s a tough sell to find a buyer that is basically looking at this saying, well, why didn’t it work and how am I going to make it work? And so we had to talk to a lot of buyers to find the right buyer and ultimately found a buyer who really understood the business well and had some capital to inject. And I’m curious, Beth, how’s it going now and how have things been since close?

 

Beth – 00:43:40:

 

I feel ridiculous that I did not do this sooner. I have had a challenge with the transition of not doing everything on my own. As business owners, we’re all type AAA personalities, and if I don’t do it myself, it’s not going to get done right. And letting go of that I don’t necessarily want to call it ego, but that power to know that somebody else can just handle it. At first, it was emotional for me, and I could not be more thankful now. And my buyer, I mean, we talk all the time, but I physically make a point. About twice a month, I send him an email just saying thank you. I never thought it’d be the first of the month and I would actually smile instead of cry. I’m not paying taxes and payroll in the warehouse and corrugated and inventory and sourcing, and business is thriving. And it has allowed me to get back to the side of not only what I enjoy doing in the business, but to be present as a mom, which my girls are now twelve and 14, and it’s an impressionable age that I need to be present for. And so it’s really I would have I wake up every day and I thank God. I am so grateful. And I never thought I could go from what was almost one of the worst years of my life to feeling so grateful.

 

Jason – 00:45:39:

 

Beth, thank you so much for coming on the show today. One last question from me. How do you think about your legacy with Healium hair as you’ve gone from 2007 knocking on doors to now having exited the business and having some sort of relief?

 

Beth – 00:46:02:

 

I’m going to get teary eyed now that you just asked me that. I thrive in knowing what I have learned the hard way to pass along to others, that I can help them grow or change their business to make it more successful for them. It is such a rewarding feeling, and I am so proud to know that this brand is going to continue, not only in this industry, but in growth as well, because it is not just such a great product, but in reality, we don’t really sell product, right? You sell the emotion behind it. And ours is such a story that so many people can connect to, because I’m a business owner, I’m a mom, I was a wife, and people say, oh, my God, what would I do? What would I do if I were her? And then the caveat is, oh, I try the products and they’re great. And so knowing that not only in the beauty industry that you can help women look as good as they should feel, that is very rewarding. But to know that I’ve done everything that I can to continue to send this brand into the future of growth is rewarding. And to help others that were in my shoes along this journey as well, that’s priceless.

 

Jason – 00:47:52:

 

All right, that was Beth Di Maio, and you can find Healium Hair @healiumhair.com with Healium spelled H-E-A-L-I-U-M. Thanks, everyone, for listening to this episode of the Deal Closers Podcast. Brought to you by websiteclosers.com. If you like the show, be sure to rate us, write a review, press a follow button or share with your network. And of course, if you’re looking for help, selling your ecommerce business, be sure to visit websiteclosers.com. This episode was edited and produced by Earfluence. I’m Jason Gillikin, and we’ll see you next time on The Deal Closers Podcast.