How The Simple P&L Statement Can Be Key To Long-Term
What is the magic number when it comes to profit margins?
There really are not too many similarities between selling fighter jets and operating an online razor business, and yet Patrick Coddou has been successful in both pursuits.
Coddou spent more than eight years at Lockheed Martin helping to broker deals in the billions, but after a while, he began to feel an entrepreneurial itch.
“As outrageously cool as the subject matter was of what I worked on in my previous life, it was… working in the U.S. government, there are procedures and processes and just layers of bureaucracy,” Coddou said. “It led to boredom and, frankly, anxiety and depression personally. I wanted to be fulfilled in my work, but wasn’t finding the ability to be so in what I was doing. I tend to plan and think ahead a lot. When I visualized the future of my life there, I could literally see myself sitting at the same desk doing the same things that I had been doing for the next 30 years.
“I wasn’t raised as an entrepreneur. I don’t really have that in my family. I didn’t know the first thing about starting a business, but for years I was always thinking about what is my path out of this life and into the next one?”
Because Coddou wasn’t a natural risk-taker, he eased his way into the business world. While still working at Lockheed Martin, Coddou began to explore and work on some side projects. There was one project he was personally invested in that he wanted to pursue — the need for a better razor. He had found an older, single-blade style razor that was working well for him, and noticed that this particular model was not sold widely in the market. He believed that this was his chance to finally take the leap.
Rather than go full bore into the business, though, his friends advised him to stay patient.
“That turned out to be really good advice because it took me about a year and a half if not two years to go from a Kickstarter campaign, which was the initial rough prototype, to having a supply chain or product that I could actually sell at scale,” Coddou said. “A lot of those two-ish years was just me making it up. I had no investors. I had no real network or people to rely on to help me figure out how to make this product. So a lot of it was just figuring it out as I went and making a lot of mistakes and fixing those mistakes when they happened.”
But when Coddou did fully move into running his razor company, Supply, it wasn’t as if he had all the answers.
Supply launched in 2015, but 80% of the company’s lifetime profits have come only in recent months. The reason: Coddou finally figured out the secret to gross margins.
“I worked all last year to significantly improve our gross margins — essentially how much our products cost to make versus what we sell them,” he said. “The first four years of my company, I wasn’t charging enough for my products and they were costing me too much to make.”
Coddou said that he started to live in his profit and loss statements, analyzing every penny to make sure that his margins stayed where he needed them to be. Once he found the formula that worked for him — which boils down to having a 4X margin — he put the wheels in motion to make and deliver products in a way that would finally lead to more profits.
He also started prepping for an appearance on Shark Tank. Coddou and his wife appeared on the show in November of 2019 and although he accepted a deal with Robert on the show, ultimately the two parties couldn’t agree on final terms. But even without a deal, Supply saw a surge in demand.
“It really put a ton of wind in our sales,” Coddou said. “It’s really helped us upgrade a lot of our business to the next level and … it’s given us social proof of being on this national platform.”
Coddou and his team use clips and other assets from the Shark Tank episode in their marketing materials and people respond. As more customers find their way to Supply’s website, Coddou sawn an opportunity to test more than ever in order to optimize the digital experience.
“Every month, we’re testing something new or we’re launching a new feature,” Coddou said. “Sometimes it works, sometimes it fails miserably. Each month is just an opportunity to get better.”
Some tests work, some fail. Either way, though, Coddou said that he is constantly learning and building a better, more nimble business. Ecommerce, he says, is a volatile industry, and the ability to adapt to the changing tides is what separates the winners from the losers.
Coddou intends to keep adding wins to his resume. To learn more about how, be sure to check out his full interview on Up Next in Commerce.