Solara Home is a Sydney homewares brand selling through three channels: a Shopify store, a Marrickville showroom, and a wholesale channel supplying independent retailers. Sixteen staff, founder-led, revenue of $3.2M. The founder’s own summary at intake: “Every year we sell more, and every year I take home less. I can’t see where it’s going.”
Solara does not have a profit problem. It has a channel problem wearing a profit costume. The fastest-growing channel — wholesale — is also the lowest-margin and slowest-paying, so every dollar of growth is funded by the two profitable channels and by the founder’s cash. Because reporting shows one blended P&L, this has been invisible for at least two years. Every other issue in this report — the cash pressure, the founder’s workload, the warehouse strain — flows downstream from this one structural fact.
The blended gross margin of 47% is an average of three very different businesses, and averaging them hides the problem.
Margin by channel: DTC runs at 58% gross margin, the showroom at 51%, wholesale at 27% — before freight and payment terms. Wholesale grew from 19% to 34% of revenue in two years, which fully explains the profit decline. Nobody had ever seen these three numbers side by side.
Cash blindness: The “cash flow forecast” is the bank balance checked each morning. Wholesale customers pay on 60-day terms while suppliers require 30; the business permanently finances a ~$210k gap and experiences it as inexplicable tightness.
Advertising unallocated: $23k/month of ad spend is reported as one line against total revenue, though it drives DTC only. Measured properly, DTC’s true contribution is lower than assumed — and wholesale’s is worse.
The team is capable and loyal. The organisational design makes them wait.
Sixteen people, one decision-maker: Fourteen staff effectively report to the founder. In one observed morning, she was interrupted 19 times for approvals a team lead could own — pricing exceptions, stock substitutions, refund calls.
The vacant role everyone works around: The operations manager position has been empty for seven months. Its responsibilities were absorbed by the founder and the warehouse lead, which is why both describe themselves as “always behind.”
Three core systems — Shopify, Xero, and a spreadsheet for inventory — operate as islands, reconciled by hand.
Manual bridging: Customer service spends ~2 hours daily re-keying wholesale orders from email into Shopify, then adjusting the inventory sheet. Every hand-off is an error opportunity; we found 3 stock discrepancies in the single day observed.
Nothing documented: No process exists in writing. Onboarding a new hire takes “about three months of shadowing” per the showroom manager — a direct tax on every future hire.
Work moves, but it moves twice. The warehouse walk revealed what the order data could not.
Double-handling: When warehouse bins run empty, staff pick from showroom display stock, then restock the showroom later — roughly 1 in 7 orders is touched twice. This is a symptom of the inventory spreadsheet, not a warehouse failing.
Returns backlog: Returns sit un-processed for an average of 11 days, holding ~$18k of resaleable stock out of circulation at any time and generating “where is my refund” tickets that consume customer service.
The commercial model rewards the wrong growth. Two mechanisms are quietly consuming the margin the other channels earn.
The flagship customer problem: The largest wholesale account is 17% of total revenue at the lowest negotiated price tier, on 60-day terms, with free freight. On full allocation of costs it contributes approximately nothing. It is also the account the business is proudest of.
Discount culture on DTC: 31% of online orders carry a discount code, averaging 18% off — codes created for past campaigns that were never switched off and now circulate on coupon sites. Estimated margin surrendered: $75k–$95k per year.
The hero range is starved: The top product line delivers 38% of revenue at the best margin in the catalogue — and was out of stock for a combined six weeks last year because reordering is manual and cash was tied up in wholesale receivables.
This is the strongest dimension — which is unusual, and worth saying plainly.
The instinct is correct: Unprompted, the founder described wanting “fewer, better wholesale accounts and a stronger direct brand.” That is precisely what the numbers support. The strategy exists — in her head, unwritten, unresourced, and overridden daily by whoever emails loudest.
Growth readiness: The $5M ambition is achievable, but not by scaling the current model — scaling it would scale the losses. Readiness depends on completing priorities 1–3 below first.
Re-price the wholesale tier to a 38% minimum gross margin, move new accounts to 30-day terms, and renegotiate the flagship account with a prepared walk-away position. Losing it outright would reduce revenue 17% and reduce profit almost nothing.
Audit and expire all legacy discount codes, cap sitewide promotions to two planned windows per year, and replace always-on discounting with a first-order offer that protects repeat-purchase margin.
A monthly three-column P&L — DTC, showroom, wholesale — with allocated advertising and freight, plus a one-page weekly flash: cash position, receivables over 45 days, stock of the hero range. This is the instrument panel every other priority is flown by.
Hire or promote into the vacant role with written authority over warehouse, returns, and inventory decisions. The measurable target: reduce founder interruptions from ~19/day to under 5, releasing her time for priorities 1 and 2 — which only she can execute.
Replace the spreadsheet with inventory management connected to Shopify and Xero, giving one live stock position across all three channels. Ends the double-picking, the re-keying, and the hero-range stockouts at the source.
Every 360 Diagnostic closes with a 90-minute strategy session where we walk through each finding, challenge anything you disagree with, and leave with the 90-day plan owned — task by task — by named people. The diagnostic finds what needs to change. The session is where the change gets decided.
Every figure above was invented. Yours will not be. Book a free 30-minute Fit Call and we will tell you honestly whether the 360 Diagnostic is right for your business.