Three years ago, Kelley Higney and her mother Ellen McAlister appeared on ABC’s hit show, ‘Shark Tank,’ with an innovative product – and highly entertaining pitch – that led to all the Sharks biting with offers to invest in the business. But it was Lori Greiner’s ‘Golden Ticket’ offer that secured the partnership.
By the end of the segment, the duo had secured the funding needed to continue to grow Bug Bite Thing, which is a suction tool that removes insect saliva or venom from underneath the skin and helps alleviate the itching, stinging, and swelling caused by bites and stings.
“I wish I could say I remember it, but we were so scared that we kind of went blank,” said Ellen.
The successful Shark Tank adventure buoyed growth for Bug Bite Thing beyond the family’s expectations.
“After our initial funding, we grew very, very, very quickly,” Ellen said. “Once you’re on Shark Tank, you’ve become a household name. Our sales skyrocketed in 2020. Because of the COVID-19 lockdowns, people were engaged in more outdoor activities.”
The Cash-Flow Challenge
According to Ellen, in 2020, Bug Bite Thing saw its website sales skyrocket. “As we continued to grow, we started running into cash flow problems because we needed to have inventory,” she said. “There were supply chain problems, so we had to order in advance to keep up with our customer demand, or we would never have enough product.”
Due to the nature of the product, there is a degree of seasonality that exacerbated the cash flow issues. Bug Bite Thing needed cash to build inventory during the slower, winter months, before spring/summer and “mosquito season.”
“Since 2020, we have hired more people and continued to run into cash flow problems because we’re playing in the big leagues,” Ellen said. “When you’re dealing with a hundred thousand units, it’s a lot different than dealing with more than a million units. Everything multiplies and money goes very, very quickly.”
A large part of Bug Bite Thing’s growth came from new relationships with big box retailers and national drugstore chains, such as Rite Aid, The Home Depot, and more. “We had to be able to bring in inventory, package it, and have it ready to go prior to them even shipping it,” Ellen said. “That’s like a four-month long process to import it in from Denmark, ship it to our co-packer, package the product and have it ready to go out to retailers.”
When working with the big box stores, mother and daughter soon realized that 60- to 90-day payment terms were the norm – putting the working capital strain at up to 180 days.
The LSQ Solution
To help with the cash flow crunch, Bug Bite Thing leveraged its existing bank relationships to acquire a line of credit, but quickly outgrew it. So more funding was needed.
And that’s when Ellen and Kelley were introduced by their banker to LSQ.
“LSQ was able to come in and give us a line of credit against our AR, which really helped us,” Ellen said. “Being able to get money when we need it made a huge impact on our business.”
With LSQ FastTrack®, Bug Bite Thing has been able to easily access early payments on invoices within 24 hours to keep cash coming in, allowing operations to run smoothly. “As far as the whole platform goes, it’s pretty user-friendly,” Ellen said. “It’s easy to see and reconcile everything.”
Prior to Shark Tank, Bug Bite Thing had only a few employees. Today, it has a team of over 30. Its fame has also continued to grow. In November 2022, the company was featured on Good Morning America’s “Deals & Steals for Gifting.” Bug Bite Thing is Amazon’s #1 selling product for insect bite relief with more than 75,000 reviews. The product can be found at every major drugstore chain location and is sold by many big-box retailers. Bug Bite Thing has recently begun offering more combo packs and bundles, travel bags, and other accessories. The product is also available in 34 countries.
“We’ve outgrown our space twice and had to move into new warehouses, said Ellen. “We now have three locations. We’re continuing to grow and have new products in development. There’s a lot of opportunity and the business just keeps growing.”
And LSQ continues to be a part of it.