How Lalabu Manages its Cash Flow

The husband‑and‑wife team break down how they manage business finances.

It all started with an airplane napkin drawing. Like many side hustles, the Soothe Shirt, a babywearing garment, came to exist when Lalabu president Brian Fosse was working another job.

“At the start, I was one person working to bring one product to market with no existing community,” he says.

Babywearing first caught Brian and his wife Keri’s attention when they were on a trip to Africa and noticed all of the babies were happily on their mom’s backs. Brian eventually had a breakthrough, realizing he could design gear that would bring parents and babies closer together. After a few prototypes, the Soothe Shirt launched in 2013. Not too long after, the Dad Shirt was released. Both received wide acclaim.

But entrepreneurship doesn’t come easy, especially when it comes to financing. Here’s how Lalabu has managed their cash flow:

“We did a lot of things personally to reduce our living expenses so we could have as much runway as possible to get our business going,” Brian tells us. Not only did he and his wife leave their full-time jobs, they sold one of their cars, sold their home to live with Brian’s mother-in-law (later moving to a 1-bedroom apartment for a couple of years), worked crazy-long hours and, of course, didn’t pay themselves until 2 years after their business launched.

“I tell others who are just getting started to plan to be in start-up phase longer than you think,” Brian advises. “I had a 4-month plan from startup to first paycheck, which is amusing to me now in retrospect. Whatever your planned timeline, plan on it taking even longer. I still encourage setting goals with deadlines and working towards them. The reality is that the more time you can give yourself, the more likely you are to succeed.”

“The good thing about having little money is that you don’t waste it,” Brian says. “The bad thing about having little money is that you have to wait longer to realize your vision.” 

“Ideally you want to access the cash you need at little to no interest,” he says. Some tactics Brian and Keri have used include getting a credit card with longer terms, meaning you can pay it off every 60 days with no penalty instead of monthly. They also asked for more credit with a simple call to customer support. If you don’t have the credit to do that, Brian recommends calling your bank and requesting to move all of your credit across your existing cards to one card for your business. 

Brian and Keri also took advantage of 0% APRs to generate cash, which is ideal for inventory buys, he says. Perhaps you have to spend $10,000 on an asset that you will be able to generate $40,000 off of over the next 6 months, he says. “Go ahead and use the 0% APR for 18 months credit card offer that came in the mail to pay for it. It is free, immediate money to grow your business. Be disciplined and pay it off prior to the deadline when interest will start.”

But, he warns, don’t buy things that don’t bring in money because then you run the risk of not being able to pay the balance off.

Some states also have special programs, like an angel investor tax credit, which helps spur business development. “Your city or state might have programs going on like this, too, so ask around,” Brian says. “Most people didn’t know about the program I used at the time, and it helped us get an early loan without needing to go to a bank or pay extra interest.”

“If you sell a physical product, then buying inventory is your largest expense,” Brian explains. “A lot of times you’re pressured to place bigger orders to get better rates on materials and labor, but if the orders you’re placing are too big, this may be one of the best places to solve your cash-flow problems.”

He cites a Lalabu example: when they were producing 7,000 units at a time of their best-selling product, they were only selling 1,000 of them each month. That meant that they would place 1 large order every 6 months. 

“At the same time we were struggling to pay for new opportunities to grow our business. All of our money was literally sitting on the shelf as inventory,” he says. 

They realized that if we could decrease their purchase orders (POs) to 3,500 units at a time, they could still fulfill all of their orders and have half of the money that was tied up in inventory back as cash to fund ongoing business needs.

“Thankfully, we have a great production partner who was willing to work with us to place smaller POs more often. They understood that helping us have access to that working capital would help us to grow and in turn bring them more business, too.”

“In the long-term I want to get to a place where we have the cash to fully execute our company vision without delays due to cash flow,” Brian continues. Until then, they’ll continue to use the tactics above to continue to build more opportunities.

“The longer and stronger our track record gets, the more hopeful I am that banks will make larger lines of credit available to us to place big POs and develop new products,” he says. “The numbers get bigger, but the underlying approach stays the same: Get access to the capital you need to fulfill your strategy while paying as little interest possible.”

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