How are today’s small businesses navigating growth across channels and what role can access to capital play?
The Enigma Blog sat down with entrepreneur Sarah Burrows, co-founder of Modern Sprout, to discuss D2C vs. wholesale, the advantages of PO financing, and how to navigate periods of rapid growth.
Enigma Blog (EB): How do your products reach your customers? What are the different sales channels that you rely on?
Sarah Burrows (SB): Now there's such an emphasis on omnipresence. And I think one of our greatest strengths is channel diversification. So we are now focusing more of our energy into our DTC platforms, while still having a foundation of brand awareness with credible retail, which includes everyone from Target to Nordstrom.
Omnipresence is becoming increasingly more and more important for a brand, and fortunately channel diversification is one of our greatest strengths. Our products reach customers by being on-shelf at key retailers, ranging from thoughtfully curated specialty boutiques to Whole Foods and Target. Online, we work with strategic ecommerce partners including Uncommon Goods and Food52, and have recently been investing energy into our D2C platform.
EB: How do you think about the split between wholesale and ecommerce retail?
SB: For the majority of the Modern Sprout’s lifespan, we’ve been focused on wholesale…because keeping up with the demand was all we had time for. However, within the last two to three years the pandemic steered our focus towards our online platforms, as we experienced a major increase in traffic and sales on our website. In the midst of such a rapid growth phase, you’re constantly reacting and it can be a challenge to be proactive. We’re still primarily wholesale, but ecommerce is growing exponentially for us and we recently relaunched a new website in the fall of ‘22. It’s exciting, because there’s a lot of opportunity in that channel – a lot of low hanging fruit.
EB: With a newer focus on the digital side, what has your journey been in terms of selecting tools for ecommerce? How did you make those decisions?
SB: We were able to bring in a seasoned pro to lead our ecommerce department, which has been a game-changer. It’s easy to become completely overwhelmed by choices and determining what’s the right fit for our business, especially given our size and our growth trajectory.
We didn’t want to buy a tool that had way more functionality than we could use and we came across that a lot. But we also needed software that could grow quickly with us. Our previous site was a hybrid between WordPress and Shopify, and now we are exclusively on Shopify.
There are so many levers that we have yet to pull. But we've started: we upgraded from MailChimp to Klaviyo for email marketing, and we're in the process of integrating platforms like Gorgias to help with our customer service support and Bazaarvoice to help with review acquisition strategy.
We went through rapid growth in 2021 and everything changed for us. It enabled us to bring on new leadership positions and also empowered us to commit to new software platforms to support our growing business.
EB: What was your experience like getting capital for Modern Sprout?
SB: We started Modern Sprout on Kickstarter and crowdfunded $80k. After that we invested a modest amount of our money and bootstrapped it – we ran profitably and reinvested those profits in growth. We did a small friends and family raise that has since been paid out to almost everyone. When we started working directly with suppliers on full shipping containers we went out and found an amazing partner that specialized in PO [Purchase Order] financing. PO financing is incredible for a business like ours because it gives us access to capital as soon as we receive the order, long before the orders ships and we are paid for it.
EB: What’s one challenge you faced when your business experienced rapid growth?
SB: It was hard for us to create a common persona of the Modern Sprout customer. The appeal of our product is so wide-ranging, which is amazing, but it can also make it challenging to decide where to focus.
When we started the brand, we were designing for ourselves and our needs: urban dwellers, who didn't have a lot of outdoor space but wanted to sustain an indoor garden for cooking. That was the catalyst for all of these ideas around how to make gardening more accessible for more people.
We learned a lot through our retail partners. We had a really hip store from Brooklyn that called saying a specific product, our original garden jar, just flew off the shelf and they needed more. The exact same day, a boutique in Fargo, North Dakota called and said the exact same thing. Just a few weeks later, we had an inquiry from Lowe's about our hydroponic planters and literally the same day, I had the same product inquiry from Goop for a very high-end retail outpost in Malibu. Those were defining moments for us, and a validation of why the products we were bringing to market were so needed.
EB: What’s something you think people get wrong about entrepreneurship?
SB: I don't have a metric to back this, but it feels like there are more and more people becoming entrepreneurs. Certainly, there are more tools to enable people to launch a company with fewer resources than ever before. However, a lot of people are scared to take that jump. And I think it's correlated to how people evaluate risks. In the modern world, we are led to believe that the resources are scarce and that we need a lot of things to feel safe, content, and fulfilled.
I really think that that hinders innovation. People are afraid to take the leap and temporarily live without the things that they think they need. Someone once said to me, “but I won't be able to contribute to a 401(k).” You’ve got to accept that it’s just a totally different game.
We took this risk. We had support so we always knew we would be fed and have shelter; we were fortunate in that. So, it was really just about learning how to enjoy the ride and knowing that if you don't hit the success threshold that you're aiming for, you'll most likely be able to pick yourself up, dust yourself off, and start again, but this time with a lot more insight.
EB: What’s something you think people get wrong about sustainability?
SB: I feel very passionate about sustainability. There's a lot of greenwashing out there. One of our biggest objectives is to grow the business in a way that is honest and open. We have to be accountable for every aspect of our business. We can control what’s happening under our roof, but the responsibility goes beyond that – we have to prioritize finding vendors that align with our values and, once we find them, challenging them to, like us, continue to innovate better ways to do business for the planet.
Enigma is proud to support small businesses like Modern Sprout. For more insights on the small business economy, explore our State of the SMB Economy report.