Client Crash Bankrupts Entrepreneur

Resilience comes to mind when describing Hunter Durham. In eight years, he went from a college graduate to a Facebook employee to a company owner to bankruptcy.

Fortunately for us, he’s willing to share his experience. It’s a helpful case study on borrowing money, riding an ecommerce boom, and relying on a single client.

The entire audio of my conversation with Durham is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Tell us about your journey.

Hunter Durham: I filed for personal bankruptcy late last year. Since then I’ve helped a friend here in Puerto Rico launch a cocoa business. We raised a couple hundred thousand dollars in financing but ultimately decided the timing wasn’t right. So I’m now looking for my next role.

I’ve had multiple ecommerce and marketing positions. I was a college intern at Red Bull and then Dell in Austin. My first full-time job was at Microsoft during my senior year. I graduated in 2017 and landed at Facebook that year. I was on the advertising team managing ecommerce accounts.

It was a lot of fun. My clients included Johnsonville (sausages), Pacific Life (insurance), and roughly 50 other ecommerce brands. That was back when everything was pretty open on Facebook. I could see top-line revenue, how much they were spending on advertising, and their margins. I did that for about three years before joining one of my largest clients in 2019, a drop shipper out of Canada that has since gone out of business.

I stayed there for about seven months, then Covid hit, and ecommerce blew up. My experience came into heavy demand. I consulted with Sampars, the grocery wholesaler. That position became my agency, Impact Industry Marketing, which grew rapidly during the next few years.

During that time I bought three businesses in the furniture space. Two were shippers — we provided delivery services for furniture retailers. Then, last August, our largest customer ceased operations. They owed us in the high six figures in revenue. It forced me to file for bankruptcy late last year.

So I’m back to square one.

Bandholz: You lost your biggest customer.

Durham: The company was Mitchell Gold + Bob Williams — a giant high-end furniture manufacturer doing $180 million the year before they went out of business. They had been around for 25 years, with about 60 retail locations and an online presence.

When I bought the two shipping companies, Mitchell Gold represented 15% of our revenue, but by the time they shut down, it was 60%, or about $3 million a year. We serviced about 33% of their total shipping volume. When they shut down, our business died.

I had outstanding operating expenses, plus an SBA loan we had taken out to acquire the shipping companies. I couldn’t repay that loan, which I had personally guaranteed. That prompted the bankruptcy filing.

Bandholz: Could you elaborate on the bankruptcy process?

Durham: I had to learn a lot quickly. I had no clue. When we stopped getting paid, I started calling bankruptcy lawyers. It was a crash course.

Mitchell Gold started delaying payments in June 2023, and the company ceased operations in August. I spent the whole summer in crisis mode as it became apparent they would not pay us.

It was a matter of putting one foot in front of the other, letting employees go, and then engaging attorneys to start my bankruptcy.

Bankruptcy is an orderly process that unwinds many bad things. Chapter 11 bankruptcy is restructuring. It ironically costs a lot of money. For example, my bankruptcy attorney required a $250,000 retainer. Bankruptcy attorneys are the first to get paid.

Then you get a restructuring advisor paid for by the debtor (my company) but mandated by the bank. Chapter 7 is liquidation. It’s much cheaper than Chapter 11.

I had a couple of months of savings when I realized I had to file. Bankruptcy is a snapshot in time. It matters when you file and what you file. A bankruptcy lawyer figures that out.

Bandholz: All of that is now behind you. What’s next?

Durham: I’m still exploring. I may return to running an agency, perhaps focusing on clients’ creative and business strategies. Combining artificial intelligence with branded content seems promising.

Bandholz: We look forward to your next moves. Where can people follow you or reach out?

Durham: I’m on X, @Huntercdurham.

Beardbrand Perseveres Amid Challenges

I host “Ecommerce Conversations” while running Beardbrand, my direct-to-consumer provider of men’s grooming supplies. Periodically I’ll divert an episode to share the details of my business in the hope it helps others. I’ve done that three times in the last year, a challenging period for many ecommerce companies, including mine.

I’ve addressed our initial sales decline, plans for recovery, and, most recently, a year-end recap.

In this episode, I’ll discuss our recent changes at Beardbrand to persevere for better times.

The full audio of my dialog is embedded below. The transcript is edited for clarity and length.

Logistics

Since my last update, we’ve focused on lowering costs. One significant initiative was moving to a new 3PL to get closer to our new manufacturer. The goal was to shorten the time from the completion of manufacturing to shipping products to customers. We’ve been consolidating our manufacturing to one provider, which should help tighten the supply chain.

Our new manufacturer is in the U.S. Midwest. Our 3PL was in Dallas, Texas. We could have shifted fulfillment to the new manufacturer, which offers that service. Instead we opted for another 3PL, one that’s closer to the manufacturing facility.

The direct fulfillment cost would have been roughly the same for the manufacturer or the new 3PL. We chose the latter mainly because the initial setup would be quicker.

The transition from our previous to the new 3PL went pretty well. There were some hiccups, but I’ve got a good team member who managed the process well. We’ll wait to determine how much savings, if any, the new 3PL achieves.

ADA Lawsuit

Beardbrand has been dealing with an ADA lawsuit for allegedly having an inaccessible ecommerce site. Many industry colleagues recommended that we settle and move on. I couldn’t do that on principle. The plaintiff was suing 50 companies simultaneously and never reached out to us to respond to its complaints. The plaintiff falsely claimed we had no alt tags on images, for example. It was a money grab, and I didn’t want to reward that behavior.

Settling the lawsuit might save money, but it has downsides. If all entrepreneurs and operators fought bogus lawsuits and lawyers rather than settling, the problem would lessen. By settling, we encourage them to continue. If you have the means to fight the lawsuit, do it. We’re going to fight it.

Sales

Sales continue to be soft. We’re in our slow season — around September, it typically starts to improve. Meta has historically been our main customer acquisition channel, but our efforts there lately have been mostly unsuccessful.

Last week, we brought on X as a marketing platform. We’ll see how it performs.

We’re launching new products to counter the slowdown. We have a new, natural, aluminum-free deodorant in the works. Hopefully, it’ll be available by the end of the year. We’ll also be releasing new products on Amazon. I have a lot of ideas for new products, but we’re focusing on one of our core areas of expertise: small-batch fragrance development.

The raw materials costs for some of our products have gone through the roof. It’s forcing us to decide whether to raise prices to customers or reformulate the products. We’ve always developed products based purely on quality. I’m questioning that approach for the first time in 12 years, asking myself if an ingredient is worth the premium investment. My answer is no. We have to evolve. We’ll test, get prototypes to our customers, and see if they meet their expectations. If not, we will explore the higher price point.

YouTube

Traffic to Bearbrand’s videos on YouTube has declined. Since about 2019, we’ve seen a dramatic drop in organic views. We’ve devised new approaches. We now have two channels, and we’re tweaking how we film. Nothing seems to work. Our videos no longer seem to resonate with our audience or the algorithm. We’ve had several good hits on YouTube Shorts, Instagram, and TikTok, but they don’t build the same affinity with our audience as long-form versions.

We now plan to host regular livestreams to get back to the basics of connecting authentically with our audience. That sort of direct communication with customers is critical. I’m excited to get it going.

Moving Forward

Despite our challenges over the past two years, I am encouraged and optimistic about our changes. A business needs to be sustainable. It has to make money. Dealing with shrinking sales is no fun, but entrepreneurs do not get to choose their problems. We prioritize, align resources, and move forward. That’s how we succeed over the long term.

Successful Entrepreneurs Don’t Overthink

Corey Wilks is a clinical psychologist turned business coach. He helps entrepreneurs and creators improve their mindset and overcome self-imposed obstacles. He says a common obstacle is overthinking a problem. Others involve perfectionism, doubt, and even fear.

In our recent conversation, he addressed those mental hurdles and more. The entire audio is embedded below. The transcript is edited for clarity and length.

Eric Bandholz: Tell our listeners who you are.

Corey Wilks: I am a licensed clinical psychologist specializing in cognitive behavior therapy, the practice of helping folks overcome unhealthy thinking. I now coach entrepreneurs and creators to build a values-aligned life and business and overcome beliefs holding them back.

I write a lot of articles on my website and for Psychology Today. I’ve appeared on a couple of prominent podcasts.

I received an early coaching boost from Ali Abdaal. He’s a prominent productivity expert, YouTuber, and entrepreneur. He put out a 45-minute video about the eight things he struggled with in life and business. It was exactly what I help people with, so I dropped everything and, in a day, wrote an article on how I would approach his pain points.

I posted it on X, and enough people shared it that he finally saw it. We worked together for about six months. I didn’t know him before then.

Many good things have happened since then. When I see somebody struggling with something, I send them either a video or an article that might help. If they want to work with me, that’s cool. If not, they still have that resource to check back on.

Bandholz: What does your coaching look like?

Wilks: Being a psychologist, all of my work is around mindset and prioritizing strategies. Common obstacles of entrepreneurs are limiting beliefs and personal narratives. Most of us know what we want or how to get what we want, but we second-guess ourselves and listen to what others think. We question our intelligence or worthiness of success.

Many entrepreneurs struggle with self-doubt and perfectionism. They blame a lack of money, resources, and intelligence for not getting the things they claim to want. But that is very rarely the case, especially with how accessible information is online.

They talk about it, but they never take action. And that typically comes down to fear. So much of my work with business owners is about identifying and overcoming these limiting beliefs or clarifying what matters. We then figure out where the disconnect is.

Bandholz: What’s your advice to people with expectations that exceed their capabilities?

Wilks: Intelligence after a certain point can be a hindrance because you overthink everything. Entrepreneurship is about identifying problems and creating solutions. Smart people are good at solving problems. But there are an infinite number of problems, and it’s easy to get paralyzed.

I know many more successful entrepreneurs who are intelligent but do not necessarily have a high IQ. They don’t overthink. Plenty of mediocre people are high performers because they’re not overthinking. That’s a big thing.

Bandholz: I’m curious why you left psychology.

Wilks: I got fired from my job as a behavioral health provider — a psychologist. I specialized in addiction treatment, working in rural West Virginia. I had peak job security. During Covid, I accepted a remote telehealth position in Kentucky. Two months into that new contract, I got an email stating I was fired in 30 days.

In the U.S., the patient has to reside in the state where the therapist is licensed. I’m licensed in West Virginia, not Kentucky. I couldn’t find another remote job out of West Virginia and wasn’t willing to move back.

Getting licensed in Kentucky would have taken four to six months. It’s a lot of red tape. I had 30 days and three paychecks to figure out my life. I spent 12 years getting my doctorate, and I couldn’t practice therapy anymore. What do I do with my life? I had to take all this knowledge and apply it to something else.

I got certified as an executive coach, which is like a four-letter word among therapists. Coaching is unregulated. A 14-year-old with a TikTok can call himself a life coach.

I decided to pursue coaching because the therapy world defines wellness as the absence of illness. Coaching is about helping healthy people flourish, thrive, and reach their potential.

I had to learn how to set up a business and create a WordPress site. I did a lot of Googling and YouTubeing. I met some kind and helpful entrepreneurs on X. We became friends. They took me under their wing and showed me the ropes.

I’ve taught myself. I produce valuable content to help folks attract friends and customers. I tell people to just start and then iterate.

Bandholz: Where can people follow you and learn more?

Wilks: My site is CoreyWilksPsyD.com. I’m @CoreyWilksPsyD on X, or add me on LinkedIn.