Credibly had the pleasure of attending a panel at the U.S. Chamber of Commerce Small Business Summit featuring Nicole Snow, the CEO of Darn Good Yarn. In this, our first Bootstrapper interview, Nicole shares how she took her “triple bottom line business” from $16K to $1M in six years.
Tell me a bit about Darn Good Yarn. When did you get started and where did the business idea come from?
I started the business back in 2008 with two boxes of yarn. It was an idea that has been on the market for a long time – the concept of recycled silk yarn. About 90% of our yarns have a recycled component. We work with textile manufacturers in India and Nepal to recycle the waste that occurs when curtains, bed sheets and other textiles are made. We’re collecting that textile waste, because over there it’s usually just discarded and thrown into rivers.
Our people go in and collect hundreds of pounds of waste. We then turn that waste into yarns. In doing that, we give safe jobs, mostly to women, who sew, spin and create our yarns. When I started Darn Good Yarn I had another general import business that I call my ‘Fisher Price’ business. I say Fisher Price because it’s where I got a lot of my footing on how to be a more serious business person.
That first business wasn’t a good fit, and I was getting burned out on it. I wanted to learn how to knit, so I thought, ‘Okay, let me just try to bring some yarn in through the business. If I don’t wind up knitting it, I can sell it as an inventory item.’ One of the first projects I made was with this recycled silk that was available on the market. I thought, ‘This is amazing stuff – it hides my mistakes! It would be really great for a beginner.’
I learned that the women making the yarn were only spinning that yarn for two or three months out of the year. It wasn’t sustainable employment. Maybe I could turn Darn Good Yarn not into a yarn company, but into a conduit to give these women year-round employment. That’s really how Darn Good Yarn got started.
Are you involved in hiring the women in India and Nepal who create your yarn?
There are versions of me over in India. There are five other small businesses that I work with, and they’re the pinpoint to collect the materials and then work with the individual villages. One village, for example, will separate the materials. Another village will be responsible for sewing the material. Another one will be responsible for spinning.
You’re helping the environment. You’re making people’s lives better. It must make you feel really good.
It does, and I’m really passionate about getting the word out there about how businesses can run on the triple bottom line framework. The triple bottom line is the idea that you’re not only a profitable business, but you have a component in there that has an environmental responsibility and then another component that also takes care of the people in the supply chain and brings them up to that next place. So that’s what I’m most proud of.
When you started the business, where did your start-up capital come from? Was it carried over from your previous import business?
Part of it was. I am a big saver, and I’m evangelical about it, especially with women. When I was in the Air Force, half of my paycheck went to my bills and the second part of it went into savings. I made it work. I got a really cheap place and I’ve always been a saver. So I was self-financed. I used that nest egg that I had started from a really early age to continue to fund the business.
How did you learn about things like cash flow management and budgeting, forecasting, burn rates, and bookkeeping?
It was a slow progression. I think budgeting is just something I’ve always done, personally. I look at money in a way that it allows me to do whatever I want, and it’s not like, ‘How much money is in my bank account?’ I have a certified financial planner that I actively work with now, monthly, if not weekly, in some cases.
As the business grew, for a while I was a sole proprietor. But once you hit a quarter of a million dollars in gross sales, you have to start reporting a balance sheet. And it was at that point, we thought, ‘Okay, let’s become an S corp,’ and that was me working with my accountant. When I choose people, like my accountant or bookkeeper or financial planner, one of the key points for me is that I insist that they teach me along the way. I don’t go and blindly sew. That’s where I’m getting my education from, as I move forward.
Did you have to go through a few people before you found the right fit?
Well, I don’t want to say it was magical. On the front end, I had a lot of applications. I went through what I think is a lengthy interview process. I was looking for a good working relationship where I would feel comfortable asking questions. You could tell pretty quickly who didn’t really want to answer your questions and just wanted to do your books and move on to the next person. Then I found my bookkeeper, Anthony, on elance.com.
I’ll talk to him three times a week, depending on what’s going on. For example, when we were purchasing the building, which I’d say was my largest financial commitment, we worked together every single night. To say, ‘Okay, now I’m going to take on a mortgage and a very real property tax bill,’ was a little scary.
Is this the financial ‘stress test’ that you mentioned at the U.S. Chamber’s Small Business Summit?
Yes, that’s exactly it. How many balls of yarn do I really need to sell every month? What would happen if property taxes went up? What would happen if sales decreased? How much cash do we have in the business before I have to make different financing decisions or maybe sublet the building?
I’m really proud of how I’ve been able to control the growth of the business since I started. It’s not just the money. It’s the growth, and how much time I want to put into the business. I want to be in control if I decide I want to have a kid down the road or if I want to cut the business in half.
How long did it take before you saw a profit, and what were the biggest financial challenges that you faced the first year?
We were in the first couple months when I started seeing a profit. That first year, I don’t know. I didn’t really have any hurdles. I think my first year in business, we grossed $16,000. I was working two other jobs as well to make sure that I could still put money into marketing.
When were you were able to leave those two jobs and devote yourself full time to Darn Good Yarn?
It was about two years into it. I had to really hustle. And they were tough years. My one job, I worked three days a week and I commuted an hour each way.
I would get home, and I remember just balling yarn and packing out orders. It was grueling, but I gotta tell you, Carrie, I had to be in that place because it taught me how to streamline processes right from the beginning and respect every single dollar that I put into my business. To this day, we don’t buy fancy desk chairs, we strip out all of the nonsense, and we hustle. The women that work with me understand our corporate culture. I think that’s why we continue to stay successful and have a lot of profitability.
This is our first year offering a 401(k), and we have profit sharing as part of our retirement plan. We’re probably one of the only independent yarn companies that actually offers such a comprehensive package, and I’m proud of that.
How many employees do you have now, and when did you know it was the right time to hire your first employee?
It’s me, along with three other women that work full time, very full time some weeks. My financial advisor actually said, ‘think about getting to $250,000 in gross sales. That’s when you’ve proven yourself on the market, that it’s really a concept and not just a hobby that’s doing really well. Then you can start to think about bringing someone on.’ That was really the perfect advice. My goal was to reach a quarter of a million dollars in sales within the first three and a half years, and I made that goal. And I brought someone on as a virtual assistant.
You mentioned that you were in the Air Force. Do you feel like that prepared you for being a business owner?
I was active duty for two years. I was an officer. I think that experience made me a better CEO today. I think the Air Force taught me the concept of trusting your gut, but for me, I think my leadership comes from a more feminine place. It allows me to listen and balance things and put things into perspective a little bit more.
One of my favorite moments from the Small Business Summit was when Jim Blasingame asked you what your favorite thing is about being a small business owner. You said, ‘Because it’s an opportunity to be a large business owner someday!’ So what’s on the horizon for you? What’s next?
We’ve been able to test certain concepts and products that are outside of yarn. We have some wearables, like skirts and handbags. Those have done very well with our core audience. So what we’re realizing is that people are really in love with what Darn Good Yarn does and is, but they’re not going to always knit and crochet. I haven’t knit in months, at this point, and I own a yarn company. We’re pivoting more into this place of being a lifestyle company offering goods and services that appeal to women either starting their own business or they just want to live a more artful lifestyle with intentions.
We’re going to be offering a broader product line, but we’re also moving into this space of opening up corporate stores. I’m talking to some investors right now, where it’s going to be this fusion of having it be our Darn Good Yarn products meets wine bar. I know that sounds weird, but there’s not a place we’ve found, except for Starbucks, for women to go and gather. And it happens at knitting groups all across the country, and there are tons of knitting groups across the country. We’re meeting in cafés and pulling it together in our own little way, and there’s not enough light. So I want to provide that space and bring the Darn Good Yarn experience into the corporate store environment and have a place for people to kick back, get a glass of wine with their friends, and if they’re there to craft and explore their creativity, they can do that in that space as well.
I always joke that it’s going to be like Chuck E. Cheese for women. We’re going to have wine. We’re going to have crafts. It’s going to be awesome, and you’re going to have a good time.
So right now, are you totally online sales, or do you have some of that community mix going on already?
We’re opening a dedicated fiber studio within our building and we’re doing classes here too. We have a retail store here in Schenectady. The people that know about us, they’re diehards, and they come in every single week.
What’s your biggest piece of financial advice for entrepreneurs who want to scale a business as you have?
Financially-speaking, saving is important, and don’t live further than your means. I purposefully live in a smaller house than I can afford because I don’t want that financial stress every month. If I have that financial stress, then I can’t actually develop the authenticity of the brand because I’m too worried about paying the bills in the here and now. I chose a very inexpensive house. We live fairly frugally. You don’t want to live totally poor, but keeping it in check and saying, ‘Just because my business is making over a million dollars a year doesn’t mean I need to be drinking $100 bottles of wine every day.’
Thank you so much to Nicole for taking the time to speak with me. If you’re in the market for some Darn Good Yarn, you can find them online at:
Are you a “Bootstrapper?” Do you know what it’s like to start a business from your kitchen table, garage, or mom’s basement? Learn cash flow management, balance sheets and “invoice factoring” by the grace of the Almighty Google, or a night class at your local community college? If so, I’d like to feature your story.