A fast road to success

When Claudia Harvey, CEO and Co-Founder of Dig It Apparel Inc, and her partner came up with the idea for Dig It Handwear^® —a line of utility/gardening gloves specifically targeted to women because they could protect hands and manicured nails—they knew it was a good one. Still, they weren’t prepared for how good—and how in-demand—their product would be.

The idea was hatched at a casual BBQ. After damaging their hands and nails in the garden the day before, the two entrepreneurs researched the marketplace and realized there was a need to create a glove that protects women’s hands and nails—and the investment they’ve made in their manicures. Taking the leap to launch the business, Dig It appeared on the top-rated CBC show Dragons’ Den within just a few months. Their goal was to obtain $50,000 in financing for 10% of the business—along with some publicity.

Their plan worked. Dig It partnered with Kevin O’Leary (also of NBC’s Shark Tank fame). Shortly after their appearance on the show, the business started to grow and the orders started rolling in—including orders from Home Depot Canada and US worth upwards of $400,000. The retailer wanted the product in time for spring, just a few months away.

While this was undoubtedly good news, it also came with its fair share of challenges, particularly because Dig It didn’t have the cash flow needed to manufacture and ship such a large order, let alone make it through the 35 to 60 days it would take Home Depot to pay the invoice (very typical of the retail market). Additionally, acquiring bank financing was difficult because Dig It wasn’t yet large enough to qualify for a commercial loan, and the need was greater than a small business loan could support.

“We fell into the gap. A small business loan is usually about $50,000, which we qualified for, but we needed between $200,000 and $250,000—and weren’t even sure specifically how much. The bank needed more solid information to bump us up to a commercial loan, and we didn’t have it. So we were not able to get the loan secured in time for manufacturing. We needed to look at other options.”

– Claudia Harvey, CEO and Co-Founder, Dig It Apparel

Right solution, right time

In need of financing—and fast—Dig It started exploring the options. They started talking to other banks, but didn’t yet have the relationships or track record needed. Next, they considered selling a portion of their company—fortunately, a trusted person in their business network introduced them to Liquid Capital before that became necessary.

Immediately, Dig It realized that Liquid Capital was different from the banks. Liquid Capital understood about manufacturing cycles, sales cycles and the resulting payment gaps. As such, they knew it could take between six or nine months before a loan was repaid—and they were okay with that. The fact that Liquid Capital didn’t require proof of sales, was willing to move quickly and was also recommended by a trusted friend made the decision to go with the company a comfortable solution.

Liquid Capital quickly set up Dig It Apparel with two tiers of financing—factoring and PO financing—to help cover the company’s manufacturing costs. The loan requirements were based on manufacturing need, so, while a $300,000 credit line was made available to Dig It, the company was only charged interest on the money it actually used.

The arrangement allowed Dig It to manufacture and ship four containers’ worth of gloves in prepacked retail displays in time for the spring market—and the products completely sold out. Nine months later, the company was able to repay Liquid Capital in full.

“It helped to get an introduction to Liquid Capital from someone I trusted. Thousands of dollars were on the line. We had to basically bare our souls to a company that isn’t regulated like a bank. To move to a factoring company, you need trust and a solid introduction to a reputable provider.”

– Claudia Harvey, CEO and Co-Founder, Dig It Apparel

A new phase

The supportive aid from Liquid Capital enabled Dig It to expand, allowing it to offer banks the solid projections necessary to obtain traditional financing. A year and a half later, with the aid of a bank line and investor funds, the company is setting its sights on expanding its product line and moving further into the US market, where its products will imminently be carried by over 120 retailers.

While she no longer requires the services of Liquid Capital, Claudia will never forget the integral role the company played in Dig It’s development and success and will not hesitate to recommend the company to anyone looking for help in transforming their business dream into reality.

“Liquid Capital was an integral part of our growth and evolution. It allowed us to free up our money for product expansions, so we’re now able to expand our geographical footprint and product lines,” she says.