Think all debt is created equal?

It’s not.

Finding a reliable guide to such a volatile subject is almost impossible.

Today, we’ve got the most reliable, most battle-tested guide in all of ecommerce.

🔥 Mehtab Bhogal shares how to use debt to fuel growth without blowing it all up

💰 Cody Plofker gives HexClad three easy ways to carve out more AOV, CVR & RPO

🤩 Joanna Wallace invites you to our Growth Summit with 25+ DTC leaders

Along with this week’s top-five headlines in consumer news and executive summaries.

Cody Plofker

CEO, Jones Road Beauty

With a Score of 72/100, Maybe It’s Not a “Knife Fight”

Inspired by last year’s Super Bowl commercial, I ran HexClad through PDQ’s Checkout Index.

It provides a personalized score comp’d against millions of checkouts across more than 500 brands. Then, identifies your issues + how to fix them.

HexClad did pretty well. 72 out of 100 with only one critical issue and 5 warnings.

What did the report discover? 3 things I want to highlight.

First, even though HexClad’s upsells are locked in on its PDPs and in the cart … at checkout, they’re hidden underneath the order summary dropdown.

People can’t buy what they can’t see.

Second, it only offers two shipping upgrades for the knife set Checkout Index was trying to purchase:

2nd Day Air: $227
Next Day Air: $439

Those are pretty expensive jumps from free shipping with no middle ground or delivery dates.

Now, compare it to Jones Road where PrettyDamnQuick lets us calculate “arrives by” guarantees with calendar dates + injects upsells right below the pay button.

Third, Checkout Index also found an easy opportunity to increase revenue-per-order by including a gift-wrap option.

Of course, for a brand the size of HexClad, maybe optimizing margins isn’t the “knife fight” Sean Frank likes to talk about. I know it is for us.

If you care about fighting for every extra dollar — improving AOV, CVR + RPO — all you have to do is enter your store URL …

Run Your Free Checkout Report

Mehtab Bhogal

Karta Ventures

Debt 101 for DTC: 5 Steps to Credit-Fueled Growth

Used right, credit is fuel that minimizes risk, lowers costs, and deploys non-dilutive capital.

Used wrong, ‘tis a Molotov.

The difference shows up when things break; good debt structure gives you runway … weak structure forces bad decisions.

Here’s how to build a winning debt stack for DTC.

1. Know the Jobs & Linchpin

Before taking on credit, ask yourself two questions:

What job is this debt supposed to do?
Under what conditions does it fail?

If you can’t answer both, don’t sign.

Working Capital

The Job: Fund inventory and operating cycles where cash timing is predictable.

Peak season inventory
Wholesale payment delays
Repeatable market spend

The Linchpin: The debt structure must absorb normal cash-timing delays without triggering a liquidity event.

Growth Acceleration

The Job: Fund initiatives with a clear ROI, sometimes with longer payoff timelines.

Scaling acquisition channels
Entering new geographies
M&A activity or roll-ups

The Linchpin: The structure must give the investment enough time to work without forcing premature cuts or defaults.

Dividend Recapitalization

The Job: Use debt to take cash out without selling equity.

Diversifying net worth
Returning capital
Refinancing exposure

The Linchpin: Over-leverage must not turn normal volatility into forced decisions.

A good debt stack can make use of all three — with proper timelines and terms.

But understanding these uses, and the corresponding linchpin, is only the first step.

Before drawing down, you need to …

2. Build a 13-Week Cash Flow

Why is this important for debt? Because it shows whether you’ll have cash on-hand when payments are due.

Model this before taking on debt to pressure-test the structure and negotiate terms. Then, watch it closely afterward to monitor at-risk agreements.

Fundamentally, a 13-week cash flow model is very simple:

cash in
cash out
ending cash

… tracked week by week.

I built one for you here as a “Make a copy” Sheet.

Enter your assumptions in the blue cells. All other cells calculate automatically.

At the bottom of the Sheet, you’ll find your ending cash balance, plus space to enter your debt obligations.

The purpose of this model is to see how much runway you have if credit agreements go sideways.

Good debt structure will give you 15 weeks of runway; a bad one only gives you three.

Let’s talk about what “good” means. Then, we’ll return to your 13-week cash flow model in Step 4.

3. Choose Aligned Lenders

Lenders are not interchangeable. They behave differently when things go wrong.

An “aligned” lender …

Understands Your Business

If a lender doesn’t understand your business, they won’t know the difference between volatility and impairment.

That shows up in:

Overreaction to normal cash delays
Inflexible covenant enforcement
Preemptive pressure to cut costs

Industry familiarity isn’t a nice-to-have.

It determines whether a lender gives you room to recover or forces a bad outcome.

Has Survived Downturns

Lenders are businesses, too. And not all of them are well run.

You might only find out how mismanaged a lender is when they’re under stress themselves and they preemptively:

Pull lines
Change terms
Force action

Lenders that have survived multiple cycles are less likely to panic.

Makes Money From Repayment

Aligned lenders are incentivized to get repaid on principal coming back with interest, not on fees, penalties, or defaults.

Some lenders design their offer so that you breach covenants so they can rack up additional fees.

One simple due diligence trick that casts a wide net? Look at their litigation history.

Have they funded similar companies?
Did they escalate immediately?
How did disputes resolve?
Were cases settled quickly?

Actions speak louder than words. How they dealt with previous borrowers is going to be how they deal with you.

But even with fully aligned lenders, you’ll need to …

4. Negotiate the (Real) Costs

Interest rate is only the tip of the iceberg.

You need to understand (and then negotiate) the following terms and conditions.

Reporting Requirements

Many lenders require monthly reporting, forecasts, or audited financials. If you’re a small business with $10–$20M in revenue, paying for audited financial statements is a tangible expense that impacts the business.

Negotiate: Frequency, format, and audit requirements.

Covenants

Covenants are rules you agree to follow after taking the capital. Commonly, they include:

Debt-to-service coverage
Maximum debt to EBITDA
Minimum working capital

Plus, limitations on unfunded capital expenditures and payments to shareholders.

The risk isn’t the existence of covenants. It’s whether they restrict your ability to operate the business.

For example, if a necessary dip in cash puts you out of covenant compliance, fees kick in, restrictions tighten, and “cheap” debt becomes expensive very quickly.

Negotiate: Headroom, cure periods, definitions, and carve-outs for planned investments.

Breach Fees

If you breach a covenant, typically the lender will charge you a fee.

Model out the full impact of compliance on your working capital needs, profitability, and growth goals using your 13-week cashflow model.

Negotiate: Fee size, default interest step-ups, grace periods, and caps.

Management Time

Your C-level or finance team will spend billable hours reporting to the lender, answering questions, and managing the relationship.

That time has an opportunity cost, and it increases when the lender doesn’t understand your industry.

Negotiate: Reporting cadence, standardized deliverables, and limits on ad-hoc requests.

Embedded Pricing

Most lenders want compensation for:

Original issue discounts (OID)
Warrants or equity kickers
Diligence fees
Legal fees

Beware, these add up very quickly.

Negotiate: OID, third-party fee caps, and any equity participation.

Personal Guarantees

For smaller businesses, personal guarantees are often unavoidable.

As a rule of thumb, companies under ~$10M in revenue should expect to provide one. Beyond that, lenders may offer pricing discounts in exchange for a personal guarantee.

Negotiate: Scope, duration, release triggers, and pricing trade-offs.

Now you know what terms to negotiate. But how do you know what the conditions should be?

That brings us back to your 13-week cash flow model.

Once basic cash flows are in place, add in the debt:

Loan proceeds
Loan payments

Consider your forecast cash flow to determine which terms and conditions you need to negotiate to make the debt feasible.

Minimum liquidity requirements
Covenant thresholds
Restrictions on CapEx

After the base case is built, break it.

Run simple scenarios with different terms:

Cash receipts delayed by 2–4 weeks
Inventory arrives late
Margins compress for a quarter

Start with 13 weeks to see the immediate pressure points. Then, extend the model out to 3+ quarters.

Just highlight the last two rows, click the dot in the bottom corner, and drag to the right …

Your goal is to negotiate terms that align maturities, covenants, and payments with when the business actually has cash.

If the terms don’t work on paper, they definitely won’t work in practice.

Modeling your cash flow will give you the conviction you need to negotiate conditions that work for your business, as well as the ammunition to back it up.

But a good debt structure isn’t just a cocktail of the right terms.

It’s a cocktail of the right lenders. Plural.

5. Diversify Your Debt

This brings us to the biggest mistakes brands make when taking on debt.

They rely on a single lender.

But this single lender can pull the rug and force decisions.

Multiple lenders change behavior.

When credit is diversified, litigation is less likely — because it risks triggering problems with other creditors and draining liquidity across the stack.

1️⃣ Short-Term Credit

Short-term credit is capital with short maturities and frequent repayment or renewal cycles.

This includes things like:

Revolving credit facilities
Inventory financing
Short-term working capital

It should be used to fund predictable, repeatable cash flow needs — inventory purchases, seasonal ramps, and timing gaps between cash out and cash in.

2️⃣ Long-Term Secured Debt

Long-term secured debt is capital backed by assets or cash flows, with longer maturities and tighter restrictions.

This includes term loans and asset-backed facilities tied to inventory, receivables, or the business as a whole.

It’s best used for larger investments with clear returns and longer payoffs — expansion, infrastructure, or major growth initiatives.

The critical requirement is alignment:

Maturities
Amortization
Covenants

These all must match your business’ cashflow. If they don’t, normal volatility forces bad decisions.

3️⃣ Unsecured Credit

Unsecured credit is capital without collateral and with fewer enforcement mechanisms. This includes:

Vendor terms
Trade credit
Corporate cards

It’s useful for flexibility and uncertain bets — where outcomes aren’t guaranteed or where you want to preserve optionality.

Vendor debt, in particular, is powerful.

In a distressed situation, you can often defer payment to a critical vendor and offer them something in return, like additional volume or paying more for inventory in the future.

Diversification shows up under stress.

With the right structure:

Secured creditors can still get paid
Unsecured creditors provide flexibility
Runway extends dramatically
Your options stay open

If you do nothing else after reading this …

Build a 13-week cash flow model and stress test it by projecting delayed receipts or compressed margins.

This will show you where debt can fuel growth, which types of credit your business can support, and which conditions you need to negotiate to stay compliant.

Credit can either buy you time and optionality, pouring gasoline on the fire to fuel your growth. Or it can explode in your face, forcing bad decisions at the worst possible moment.

Mix wisely.

THE FEED

Thrasio Bought It, Ben Bought It Back: A Founder Who Lived It Tells All

Creative Strategists Are Dead, Here’s What Replaced Them With Dara Denney

The Trends

Curated by the editor of CPG Wire, the five top stories in commerce and DTC.

1. Once Upon a Farm Goes Public: Reuters

Once Upon a Farm listed on the NYSE under the ticker OFRM, and the organic baby food maker raised $198M in its IPO.

The company reported net sales of $226M along with a $52M net loss for the 12-month period ending on September 30th, 2025. Investors in OFRM include CAVU, Access Capital, Cambridge SPG, and several others.

2. CAVU Raises $325M For Fund V: GlobeNewswire

CAVU Consumer Partners exceeded its $275M target and raised $325M for its fifth fund. Founded in 2015 by Rohan Oza and Brett Thomas, CAVU has backed disruptive brands like Once Upon a Farm, Poppi, Bai, Good Culture, and Vital Proteins. Just last year CAVU added two more fast-growing brands to its portfolio — Recess and Sauz.

3. The Marzetti Company Acquires Bachan’s: Business Wire

Bachan’s, the fast-growing Japanese barbecue sauce brand, has been acquired by The Marztetti Company for $400M.

Bachan’s was founded by Justin Gill and launched in 2019 after six years of product development. The brand has grown 50% per year over the past three years and generated $87M in net sales in 2025. Bachan’s was backed by Prelude Growth Partners, Sonoma Brands Capital, New Fare Partners, and others.

4. Tony’s Chocolonely Delivers Impressive Growth: Reuters

Despite the myriad challenges facing the chocolate industry over the past few years, Tony’s Chocolonely delivered impressive growth in 2025, and revenue jumped 20% to €240M. Even more impressive, Tony’s growth was partially driven by a 4% increase in volume, not just price increases.

The US also overtook the Netherlands as the company’s biggest market. US sales jumped from $55 million to $83M thanks to strong performance at Walmart, Kroger, Costco, and Publix.

5. Willie’s Remedy+ Raises $15M: PR Newswire

Fast-growing THC beverage brand Willie’s Remedy+ closed a $15M Series A round led by Left Lane Capital. Second Sight Ventures also invested in the round.

In less than a year since launch, Willie’s Remedy+ has sold more than 400,000 bottles and hit an $80M run rate. The brand is a partnership between JuneShine Brands and country icon Willie Nelson. Lately, more and more institutional investors are betting on the THC beverage category.

1 of 25 Reasons to Cancel Your Plans

Next Wednesday, Joanna Wallace — VP of Paid Media Creative at birddogs — reveals how to build a creative testing machine that fits your business at the Operators Growth Summit.