This is our sixth Trends Report with 300 owners representing $3.5 billion in combined revenue participating. A huge thank you to members of the eComFuel Community and the Operators Network for participating and promoting.

Something in this report always changes how I think. I’ve spent years side-eyeing heavy paid traffic dependency, convinced it was a margin trap. This year’s data changed my mind. My hope is something in here challenges your thinking, too.

Table of Contents and Section Links

In Part 1, we cover look at where the conventional wisdom in eCom is wrong. Specifically around paid traffic, the margin divergence, Amazon’s decline, the warehouse myth, and AI’s missing ROI.

In Part 2, we look at broader trends around business model shifts, tariffs, financial intelligence, capital extraction, and what’s ahead for 2026.

Part 1: The New Blueprint

The conventional wisdom said to diversify away from paid traffic or it’ll crush your margins. It said Amazon is a growth engine. It said adopt AI, it’s your future edge. And it said if gross margins are rising, business must be good.

On all of these fronts, the conventional wisdom is either outdated or flat wrong.

Paid is Table Stakes. But It Doesn’t Have to Crush Your Margins.

I’ll lead with this one because it’s the finding that changed my own mind.

Paid traffic is a fact of life. 97% of stores now use it, and most can’t run their business without it. But there’s always been a stigma — the single-channel, building-on-a-sandcastle, one-trick-pony narrative. “Free” organic traffic is what the long-term thinkers pursue. Right?

Turns out that’s all garbage. Stores leaning hardest into paid are crushing it — and not just on topline growth, which you’d expect. They’re growing net income 71.7% versus 18.0% for everyone else. Net margins are shockingly higher, not lower.

How is this P&L-defying feat possible?

Winning with paid is about great margins and low overhead – not ROAS.

Being great at paid is less about top-notch ROAS and more about building a business model that supports ads as a major line item. The brands winning at paid don’t have the best ROAS — their average is actually 2.5x, well below the survey-wide 4.0x. What they do have are fat gross margins (63.7%) and very lean overhead (16.6%).

The P&L anatomy tells the story clearly. Self-identified paid traffic experts run COGS at 39.1% of revenue and overhead at 16.6%. Everyone else? 55.1% and 21.7%. That gap, not the ad account, is where the real edge lives.

Like it or not, it’s a paid traffic world now. And the operators with lean, high-margin business models are the ones who get to make money playing in it.

It’s Day 2 At Amazon

The Amazon era is sputtering, at least for U.S. sellers.

Amazon’s share of community revenue has fallen to 20.1% — the same level as when we started tracking in 2017. What makes that number remarkable: more operators sell on Amazon today (63%) than at any point in survey history. Amazon has quietly transitioned from growth engine to supplemental channel.

DTC, meanwhile, is winning on nearly every metric that matters. DTC-primary operators grow revenue 65% faster than Amazon-primary peers (30.2% vs. 18.3%) and carry meaningfully higher gross margins (52.7% vs. 41.9%). The sentiment gap is just as stark: 91% of operators who sell DTC love it. Only 17% feel that way about Amazon, while 39% actively dislike it.

Amazon’s share of sales fell back to 2017 levels

The next generation isn’t being seduced either. Operators with fewer than six years of experience are among the least likely to make Amazon their primary channel. They’re building DTC-first from the start.

Smugness in our tone? We’ll own it. Amazon’s customer obsession is admirable. But years of fee creep and operator indifference have consequences, and brand owners are responding accordingly.

AI is Amazing. But It Isn’t Generating ROI.

We live in astonishing times. You can talk to machines. Build software without writing code. Generate images from a sentence. It’s thrilling and 72% of store owners have jumped in.

So we were surprised when the data came back and said it isn’t translating into more money.

Revenue growth? Virtually identical — 26.7% for AI adopters versus 27.8% for non-adopters. Net margins? A coin flip. Team sizes? Similar. Non-adopters are actually growing profits faster: 55.3% net income growth versus 32.7% for adopters.

The technology is real and improving rapidly and the first quarter of 2026 has seen dramatic advancements. But the time required to stay current on everything happening, let alone learn, adopt, and integrate these tools into real workflows, seems to be negating any financial gains. At least so far.

One surprising finding: this isn’t a young person’s game the way you’d expect. Operators in their 50s adopt AI at higher rates (80%) than those in their 30s (66%). And owners aged 40–55 are more likely to be building with Claude Code than those in their 30s. Perhaps it’s the operators with the most operational complexity who see the clearest use cases.

We believe the edge is coming. But over the last twelve months, it hasn’t shown up.

Fatter Product Margins, Thinner Profits

The gatekeepers of eyeballs are often villainized. Every eCom conference has a panel about rising ad costs eating margins. It’s time to stop solely blaming them as we saw above.

The stampede toward manufacturing — with its higher margin profiles — has resulted in the highest gross margins we’ve ever recorded: 49.5%. And yet, net profit margins have never been lower at 10.6%. That’s a nearly 39-point spread, the widest gap since we started tracking in 2017.

The culprit isn’t advertising. When we control for how much brands spend on paid traffic, profitability stays surprisingly consistent. The real thieves are product economics and overhead. Stores netting 20%+ margins spent 38% less on COGS and 30% less on fixed costs than those below 5% profit margins.

The compounding cost of modern eCommerce — tariff pressures (more below), intensifying foreign competition, and the sheer operational complexity of running a brand in 2025 — is squeezing that spread from the bottom.

One bright spot: the $25–50M revenue tier stands out as a profitability sweet spot, netting 13.8% versus roughly 10% for most other tiers. That tier is concentrated with well-run manufacturers who’ve achieved scale without the complexity tax that seems to hit north of $50M.

Owning a Warehouse Dramatically Slows Growth

For years, the conventional playbook for scaling was buy a warehouse, build a team, stock the shelves, control the operation.

That playbook is showing its age.

Stores with owned warehouses grew revenue at just 3.9% — compared to 33.5% for leasers and 22.2% for those outsourcing fulfillment entirely. Even when we controlled for revenue size ($1M–$10M businesses), the gap held. Warehouse owners carry twice the inventory burden, run the least remote teams, and report the lowest hopefulness for the future of any cohort.

Warehouse owners grow revenue at 4% vs. 22-33% for non-owners

The remote work data reinforces the point. Remote-first teams (75%+ remote) grew net income 51.8% versus 26.9% for in-office teams, while running leaner: 10.5 employees on average versus 30.5, at nearly double the median revenue per employee ($1.25M vs. $583K).

There’s one owned-warehouse edge we can’t measure: business durability. Having your own warehouse with deep SKU selection — especially if you’re a niche leader — is a meaningful moat. But based on everything we can measure, operators who own the least are winning the most.

Part 2: The Real Landscape

The first half covered where conventional wisdom breaks down. This half covers the broader forces shaping eCommerce right now: the structural shifts, external pressures, and operator realities that form the backdrop for everything above.

A Massive Shift Toward Manufacturing

The shift toward manufacturing has dramatically accelerated. The share of store owners making their own products jumped nearly 50% over the last few years — from 41% to 58% — and the rise in “proprietary product” as the number one cited competitive advantage tracks right alongside it, climbing from 26% to 35%.

Meanwhile, almost every other business model and competitive edge shrank. Reselling, drop shipping, lowest cost — all contracting. Foreign competition has made it brutal to sell me-too products, and rising ad costs mean you need fatter margins just to stay in the game. Manufacturing your own product addresses both.

Brands manufacturing their own products jumped 50% in the last 3 years.

International stores performed as well or better than their U.S. peers on nearly every metric, despite 74% of respondents being U.S.-based. The U.S. boasts the world’s largest consumer market — and seemingly the competitive pressures to match.

Smaller stores (under $1M) struggled disproportionately, even when controlling for years in business. Economies of scale and rising customer acquisition costs are leaving them at a structural disadvantage.

Brands Absorbed The Majority of Tariff Costs

Businesses absorbed a significant chunk of tariff costs. Among brands that reported seeing their income decline due to tariffs, they only passed along 42% of costs to consumers in price increases — absorbing the remaining 58% as a direct margin hit. 40% of U.S. brands didn’t raise prices at all.

The stated goal of bringing manufacturing back to America is off to a slow start. Of brands that weren’t already manufacturing domestically, only 4% have decided to actively move their supply chains to the U.S.

Brands impacted by tariffs absorbed 58% of the costs by not raising prices

Perhaps the most revealing data point: tariffs ranked as only the fourth biggest struggle for owners, behind margins/rising costs, growth/scaling, and hiring/talent.

The good news? eCom brands will survive tariffs. The bad news? eCommerce is difficult enough that tariffs don’t crack the top three biggest challenges.

Financial Fluency: The Most Underrated Edge in eCom?

Finances and accounting are among the least sexy aspects of running a business. But the cost of not being financially fluent is staggering.

We asked owners to self-rate their financial expertise on a 1-to-5 scale. Those reporting mastery (5/5) have significantly higher net margins, more cash in the bank, faster income growth, and extract capital at higher rates.

The most surprising part: the difference between a self-rated 4/5 and 5/5 isn’t subtle. That fifth star translated to a 37% increase in net margins (9.4% → 12.9%), nearly double the financial runway (48 months → 109 months), and meaningfully faster income growth.

Going from “good” to “great” with financial literacy put 37% more money into owner’s pockets.

This pattern held even when we controlled for business size. It’s not just that larger businesses accumulate more expertise and cash — financial knowledge independently predicts better outcomes at every level.

80% of owners rated themselves below 5/5. Which means 80% stand to see a dramatic payoff from investing more deeply in their financial education.

Ready to upgrade your financial chops? Check out the eComFuel guide to Building Financial Mastery as an eCom entrepreneur.

Most Owners Don’t Get Paid Until Mid-Seven Figures

It’s not just you. Most eCom owners don’t see meaningful financial rewards until mid-seven figures. 53% of owners take a modest salary or nothing at all.

It’s especially hard to extract capital if you’re fast-growing or under $1M. Among companies growing 50%+, only 13% take meaningful dividends — and among sub-$1M fast growers, the number is zero. Both groups are plowing everything into working capital and building the machine.

The data surfaced a sweet spot: salary plus small distributions. That cohort posts the top-tier net income growth in the survey (+45.3%), above-average margins (12.0%), and the highest hopefulness of any group. It turns out that small, consistent distributions don’t hurt growth — and they diversify your wealth, encourage operational discipline, and keep you sane.

Aggressive extraction and rapid growth are mutually exclusive. You can’t fund scaling while pulling big dividends. But making small distributions a habit appears to be a triple win.

The Future: Optimistic, Lean, and Betting on AI

Despite getting hammered by tariffs, navigating a brand new AI landscape, and facing a margin squeeze from every direction — 80% of owners are still optimistic about the future of their businesses. Average hopefulness sits at 7.8 out of 10.

What separates the optimists from the pessimists? Operational leanness. The optimistic cohort runs lower fixed overhead (19% vs. 24% of revenue), carries lighter inventory (11.9% vs. 14.6% of revenue), and is far more likely to lease a warehouse than own one.

The number one investment priority for 2026? AI.

The number one investment priority for 2026? AI and automation, cited by more owners than any other category. Marketing and advertising came in second. Simplifying operations and cutting SKUs ranked third — a clear signal that operators are getting the message about the value of staying lean.

Younger founders and larger stores are both meaningfully more optimistic: fewer battle scars on one end, more resources and resilience on the other. But across the board, this community remains remarkably resilient.

The 2026 Trends Report is produced by eComFuel, the private community where seven- and eight-figure store owners share what’s actually working — all year long.

The 300 operators who made this report possible are the same ones trading insights daily inside the community. You can learn more and apply here.

Roman Khan got on stage at one of our eComFuel events a few years ago and said something that became a cornerstone of my financial philosophy.

“It’s important to build your personal balance sheet alongside your business. Try to get to $2.5 million in liquid assets as soon as possible.”

The specific number matters less than the principle behind it. Maybe for you it’s $1M. Maybe it’s $5M. But the idea is the same: build a meaningful financial cushion that exists completely outside your business.

I’d always believed this intuitively. I’d been pulling money out of my business and investing it for years. But I’d never heard someone vocalize it so clearly or so urgently.

Here’s why it hit so hard: most eCom owners I know have 90%+ of their net worth locked inside their business. On paper, they look successful. In practice, they’re exposed. One platform change, one bad quarter, one industry shift — and the thing that represents nearly everything they’ve built is suddenly at risk.

Hopefully you have that big, life-changing exit someday.

But sometimes it doesn’t happen. Sometimes industries radically change overnight. And the discipline of taking regular dividends forces you to operate more efficiently while building a financial cushion that lets you sleep at night.

Your business should be your best investment. But it shouldn’t be your only one.

The Emotional Case Is Real

I’ve talked to dozens of store owners about this topic over the past few months. Two anonymous, paraphrased experiences from members of the eComFuel community capture the range:

“I’ve been reinvesting about 90% of my profits outside the business for over a decade. If I got fed up tomorrow, I could walk away and my family would be fine.”

“I didn’t think about investing outside my business until COVID hit. A lot of volatility and I realized I was stuck with one big thing and little else. Diversifying helped my finances and my mental health.”

Diversifying helped my finances as well as my mental health.

Read that last line again. Finances AND mental health.

If you’ve ever laid awake wondering what happens if the business hits a wall — and every entrepreneur I know has, including myself — this is how you start to fix that.

But the emotional case only gets you so far. You need to know when you can actually start doing this, and how. That’s where the data comes in.

Benchmarking Data on When Dividends Make Sense

I pulled early data from the 2026 eComFuel Trends Report — about 200 store owners so far. One of the questions: how do you handle capital extraction from your business?

There’s four buckets: don’t take anything out (not even a salary), take a small salary only, take small regular distributions, or take meaningful regular distributions.

Here’s what stood out.

The Sweet Spot Is 10-20% Top Line Growth

Half of store owners growing at 10-20% annually are pulling meaningful capital out of their business. For pretty much every other growth bracket, that number drops to 5-15%.

Why this range? Because you’ve got enough momentum to generate real excess cash without bleeding it all to fund rapid expansion. The business is mature enough and growing enough that there’s actually something left over after you reinvest in growth.

It doesn’t sound sexy. But it’s where the math actually works.

Hypergrowth Kills Extraction

Owners growing 60%+ top line have capital extraction rates that look nearly identical to sub-$1M businesses. Both are pouring everything back in — one by choice, one by necessity.

If you’re in hypergrowth mode, this is a future conversation. And that’s OK. But it’s worth knowing the trade-off you’re making.

The $1M Revenue Threshold Is Real

Below $1M in revenue, less than 10% of store owners are taking anything out. You’re building the machine. That’s expected.

But once you cross that threshold and settle into moderate growth, the window opens fast. At $1-5M growing 10-20%, about 55% are extracting capital. At $5-25M with the same growth rate, three quarters are.

Margins Are a Gatekeeper

Below 5% net profit margins, less than a 1-in-5 chance of pulling anything out. Get to 10-15% net margins, and it jumps to better than 1-in-2.

You need some margin to work with. If you’re below 5%, the priority is fixing that before thinking about distributions.

Financial Knowledge = Money Dividends

This one surprised me most. Owners who rated their financial knowledge 5 out of 5 extract capital at nearly DOUBLE the rate of those at 3 out of 5 or below.

Think about why. You can’t safely pull money out of a business if you can’t forecast cash flow 3-6 months ahead. If you don’t know exactly what’s driving your profitability. If you can’t tell what’s ROI-positive and what isn’t.

Without that clarity, every distribution feels like a gamble. So you leave the money in. Year after year.

Financial fluency doesn’t just make you a better operator. It literally puts more money in your pocket.

Your business revenues may keep growing on paper. Your personal balance sheet is more likely to stay flat.

Financial fluency doesn’t just make you a better operator. It literally puts more money in your pocket.

How Much to Pull Out

Your business is almost certainly your best-returning investment. So you don’t want to starve it. But you do want to take some chips off the table.

This varies enormously based on your business economics, growth stage, and personal situation. But if I had to offer a rough framework:

Ballpark: 20-35% of excess cash after taxes and expenses.

Call it roughly a third. If you don’t have great alternative uses for the capital in your business, or you’re not confident you can deploy it well, bump that number up significantly.

This is a gut range, not a rule. Your circumstances will dictate where you land. But having a target — even a rough one — is better than defaulting to “reinvest everything” year after year without thinking about it.

How Often to Pull Money Out

Two approaches that work well, and you can combine them.

Monthly draw plus dollar cost averaging. If your business revenue is fairly predictable, set up a modest monthly draw and invest it on a regular schedule regardless of market conditions. Simple, automatic, and removes the temptation to time things.

Quarterly review. If your business is lumpier — and most eCom businesses are — sit down every quarter. Look at performance, upcoming capital needs, working capital position. Decide what you can safely withdraw. Then pull it.

I do a combination of both. Small monthly amount that goes out automatically, plus a larger quarterly assessment where I pull more if we have excess capital that quarter.

Where to Invest It

I did a full episode on my investment philosophy recently, and wrote it up in more detail. But here’s the concentrated version.

First Things First

Emergency fund. 3-6 months of personal living expenses in cash. If you don’t have this, stop here and do this first.

Tax-advantaged accounts. Max out your 401k, IRA, and similar vehicles before moving to taxable accounts. This is essentially free money from a tax perspective.

Hassle-Adjusted Returns

This is a concept I think about constantly and one that’s shaped my entire investment approach.

Everyone talks about risk-adjusted returns. I think a more useful framework for entrepreneurs is hassle-adjusted returns — what’s your actual return once you factor in the time, headaches, illiquidity, K1s, and operational hassle?

A few years back I was running a small investment syndicate called ECF Capital, investing in small eCom businesses. One of my investors — a really sophisticated, wealthy guy who had bought Tesla near the IPO and made a number of other savvy bets — passed on our first deal.

Everyone talks about risk-adjusted returns. Almost nobody talks about hassle-adjusted returns.

His reasoning: “The public markets let me buy when I want, sell when I want, no headaches, and the returns are consistently good. Sometimes great.”

I thought he was crazy at the time. Maybe even lazy.

Our deal returned slightly above market. But when I factored in my time running the syndicate and how long the capital was locked up, it didn’t come out ahead on a hassle-adjusted basis.

For most eCom owners already pouring massive amounts of time and mental energy into their businesses, simple wins.

What I Invest In

• ~70% US broad index. I like VTSAX from Vanguard — total US market, not just the S&P 500. You get the full mix of value, growth, small cap, everything.
• ~20-30% international. VTIAX — total international ex-US, insanely low fees.
• 90% boring, 10% bold. I take a small slice for 1-2 concentrated bets in areas where I have real expertise and outsized conviction.

What I’d Skip for Most People

Real estate — unless it’s your primary business, it’s rough on a hassle-adjusted basis. Especially low-unit residential. Different ballgame if you’re investing in a warehouse for your business or you’re deeply specialized and know your stuff.

PE, hedge funds, venture — most underperform the market, especially the ones accessible to general investors. The best ones are hard to get into.

Angel investing — the vast majority of angel investors I know have not made money. Fun to do occasionally to help a friend or if you have insane conviction. But don’t do it for returns unless you have a real unfair advantage in expertise and/or network.

A Note on Taxable Accounts

People avoid taxable brokerage accounts, but they’re not as bad as you think. If you buy a broad index fund and hold it for 10+ years without selling, it compounds effectively tax-free. Only the reinvested dividends — maybe 20-25% of total returns — get taxed annually. The rest is deferred until you sell.

Just make sure you’re buying things you feel good holding for a long time. Selling and re-buying kills that sweet, sweet tax-free compounding.

Where Do You Fall?

The biggest takeaway from all of this: should you be pulling money out of your business regularly? You’re probably in one of four buckets:

1. “I shouldn’t be extracting yet.” You’re early stage, growing fast, or both. File this away for the future.

2. “I need more financial knowledge to extract safely.” Invest the time to get your financial foundation solid and revisit. If you haven’t yet, check out our series on Financial Mastery for eCom owners.

3. “I’m already set.” You’ve got meaningful personal investments that cover your burn and you’re reinvesting by choice with a huge safety net. Huge kudos — you’ve won.

4. “Maybe I should be thinking about this more.” Good chance this is where a lot of us are. If so, hopefully the data and framework above give you a place to start.

95% of the entrepreneurs I know don’t want to retire on a beach. They want to build on their own terms without worry.

Your business should be your best investment. But it shouldn’t be your only one.

Want to Go Deeper?

Interested in regular insights on building personal wealth alongside a serious eCom business from the archives of our 7- and 8-figure owner community? Let’s stay in touch.

My friend Bill was sitting in his car in a parking lot, hands shaking.

He was staring at a letter. Our main supplier—responsible for 80% of the SKUs in a business we’d invested in together—was terminating the relationship. Effective immediately.

Bill was holding a seven-figure personal guarantee on that business’s debt.

If the company went under, the bank wasn’t coming for the LLC. They were coming for Bill. His home. His brokerage accounts. His savings.

If the company went under, the bank wasn’t coming for the LLC. They were coming for Bill.

Turned out to be a clerical error. “Sorry, disregard.”

But those 20 minutes aged him—and burned into both our minds just how fast debt can turn from tool to threat.

Debt Is a Tool—But Many Owners Treat It Like a Toy

I’ve been in eCommerce for close to two decades now. In that time, I’ve watched debt build businesses and destroy lives—sometimes both in the same year.

The owners who get hurt aren’t stupid. They’re busy. They’re growing. They click the button because the money is right there and they need it now.

What they don’t do is understand the terms, model the cashflow, or think through what happens if things go sideways.

Bill and I recently sat down to talk through the most dangerous debt mistakes we keep seeing. Here’s what made the list.

No Cashflow Forecast Before Borrowing

Before you take on any debt, you need a 13-week forward-looking cashflow forecast showing exactly when payments hit and whether you can cover them.

This is especially brutal with merchant cash advances. MCAs pull a daily percentage of revenue. If your margin is 12% and they’re taking 10%, you’re running the business on 2% for the entire repayment window.

The businesses that get crushed almost never saw it coming—because they never mapped out the future.

No detailed model showing how you’ll pay it back and how it will grow your business? Don’t click that button.

Reactive Instead of Proactive Financing

Banks are the worst.

Business healthy? “We’d love to offer you a substantial line of credit!”

Desperately need liquidity to survive? “Sorry, can’t help.”

They want 2-3 years of clean financials, consistent revenue, solid margins. The approval process takes 60-90 days. Mountains of paperwork. Multiple rounds of questions.

If you’re in crisis—revenue dropping, margins compressing, cash tight—you won’t qualify. The bank will see the stress in your numbers and pass.

The best time to get a line of credit is when you don’t need it.

Here’s what matters: once approved, most smaller facilities don’t have heavy ongoing covenants. If you secure the line while healthy, then your business later deteriorates, you can often still draw on it.

That optionality saves businesses. But only if you set it up before the storm—not during it.

Build relationships with local and regional banks now. Look into SBA 7(a) lines of credit. The process is annoying. Do it anyway.

Not Tracking ROI Religiously

A member of our community recently opened up about taking a six-figure EIDL loan during COVID because the rate was cheap. Eighteen months later, he wasn’t sure where it went.

Now he’s in a really tough spot paying it back.

It’s a mistake that’s easy to make unless you’re guarding against it. When your account suddenly has an extra $500K, discipline disappears.

Every borrowed dollar needs an explicit purpose, a projected return, and actual tracking against that return.

If you take a loan and park it, at minimum put it in a separate high-yield account. Be intentional about every draw. Track returns obsessively.

Underestimating Personal Guarantees

Back to Bill in that parking lot.

A personal guarantee means if the business can’t pay, creditors bypass the corporate veil entirely. They can come after your home, your brokerage accounts, your savings—everything except (usually) retirement accounts.

Before signing a PG, ask yourself: would I wire this exact amount from my personal savings into this business today, knowing I might never see it again?

Because functionally, you just did.

What most owners don’t realize: almost every business credit card is personally guaranteed. The Amex Gold. The Chase Ink. The Capital One Spark. All the cards you’re running ads through and collecting points on.

That float you’re carrying for cashback rewards? If your business craters, it becomes personal debt overnight.

Audit your total PG exposure across all instruments—credit cards, term loans, lines of credit, equipment financing. Add it up. Look at that number.

Ask if you could survive writing that check.

Using Debt to Mask a Broken Business Model

If your last batch of inventory didn’t throw off enough cash to fund your next PO, that’s not a timing problem. That’s a flashing red light.

Something is broken: margins too thin, CAC too high, expenses bloated, dead stock eating your balance sheet, or you’re pulling too much out of the business.

Borrowing to buy more inventory feels like a solution. It’s not. It’s kicking the can down the road.

When you finally have to face the real issue, you’ll face it while underwater on debt.

Fix the model first. Debt will only compound the problems with a bad business.

Miscalculating the True Cost of Capital

A “10% fee” on a merchant cash advance is NOT 10% interest.

This is where smart owners get destroyed—because the math is designed to confuse you.

Borrow $100K. Pay back $110K. The MCA company calls it a “10% fee.” Your brain hears “10% interest” and thinks: cheaper than most credit cards.

Wrong.

A 10% interest rate means you pay $10K to use $100K for a full year. But MCAs don’t give you a year. They want their money back in 10-20 weeks.

When you run the real math, that ‘friendly’ 10% fee can push 75-100% true APR.

If you’re paying $110K back over 10 weeks, you just paid a full year of interest in two and a half months. That’s closer to 50% APR.

But it’s worse. The payment you make in week one? You only had that money for seven days—but you paid 10% on it. That slice of the loan cost you astronomical rates.

When you run the real math, that “10% fee” can push 75-100% true APR. Sometimes higher.

MCAs aren’t inherently evil. If you’re growing 100% year-over-year and need to float inventory for a proven winner, the speed might be worth it.

But most owners taking MCAs are filling cash gaps and masking margin problems—paying 80% interest without realizing it.

Bill built a free calculator to help you run the real math before signing anything.

Stacking Loans to Stay Afloat

Using one MCA to pay off another is a death spiral.

Each new loan comes at a higher rate, buys less runway, and compounds your hole. I’ve seen owners juggling three or four MCAs, all pulling daily from revenue, slowly (then quickly) strangling the business.

Refinancing expensive short-term debt with cheaper long-term debt CAN make sense. A 5-year term loan replacing an MCA is often a smart trade.

But that requires your business to be healthy enough to qualify—which is rarely the case once you’re in the spiral.

If you’re stacking, you need restructuring, not another loan.

Believing Debt Is Your Only Option

Yes, eCommerce requires more working capital than software or consulting. Inventory is a cash monster.

But heavy debt isn’t inevitable—especially if you run a tight ship.

Higher margins mean less financing needed. Faster inventory turns free up cash. Better supplier terms extend your runway. Organic growth doesn’t require borrowing to fund ads.

Sometimes the right move is making hard decisions—slower growth, cutting costs, killing a product line—instead of borrowing to avoid discomfort.

It’s not easy. It’s not fast. But it builds a (perhaps smaller) business that actually stands on its own.

Resources Worth Bookmarking

If you want to go deeper, Mehtab Bhogal wrote two excellent pieces on this topic:

• Ignite DTC Growth: How to Use Debt Without Lighting Yourself on Fire
• DTC in Distress: A Tactical Guide to DTC E-Commerce Turnarounds

And again, Bill’s true APR calculator.

Want to Go Deeper?

Interested in regular insights on financial mastery and avoiding the traps that sink 7-figure stores?

Get regular financial insights from our community of experienced eCom owners who’ve navigated these waters.

Let’s stay in touch.

A store owner I know had 35 employees.

He was doing fine. Revenue was solid. But profitability was always tighter than it should have been, and he was constantly stressed. Managing 35 people is a full-time job on top of your full-time job.

Then he made some hard calls.

He went remote. He hired a 3PL. He replaced most full-timers with freelancers and contractors.

Today he runs with one employee and eight contractors. His profits have never been higher. His stress has never been lower.

This story stuck with me because it contradicts most of what we hear about growing a business. More revenue means more people, right? Scale requires headcount?

Not necessarily. And this isn’t just one anecdote.

What the Research Actually Shows

When I studied what separates profitable stores from struggling ones across hundreds of businesses, I expected marketing to be the differentiator.

It wasn’t.

The difference in ROAS between top and bottom performers was negligible. The stores crushing it on profitability weren’t necessarily better at Facebook ads or SEO.

What did separate them?

Top performers had half the payroll. They were 25% more likely to outsource warehouse operations. They were 25% less reliant on paid traffic.

Operational leanness beat marketing cleverness every time.

I’ll be refreshing this data in the upcoming eComFuel Trends Report. If you run a store and want to help validate (or disprove) these patterns: participate here.

“Top performers had half the payroll. Operational leanness beat marketing cleverness every time.”

Lean Means More Than Headcount

When people hear “stay lean,” they think layoffs.

But overhead is everywhere.

It’s the nice office that felt necessary in 2019 but sits half-empty now. It’s the warehouse space you’re paying for when a 3PL could handle fulfillment better and cheaper. It’s the SaaS subscriptions auto-renewing every month—$50 here, $200 there—that you forgot you signed up for.

One useful filter: what’s actually core to your brand?

If design is what makes you special, keep your designer in-house. If packing boxes isn’t your competitive advantage, why are you running your own fulfillment operation?

The store owners winning on profitability aren’t just cutting costs randomly. They’re being intentional about what deserves their resources and what doesn’t.

The Uncomfortable Truth About Hard Conversations

There’s a quote I come back to often: your success in life is measured by the number of hard conversations you’re willing to have.

Most of us avoid hard conversations until we’re forced into them.

When recession hits. When cash gets tight. When profitability drops to the point where it’s an existential crisis.

The owners winning on profit are having those conversations proactively. Before they have to.

They’re asking: do we really need this role, or did we just hire because we felt busy? They’re asking: are we paying for this tool out of necessity or habit? They’re asking: what would we cut if we had to cut 25% tomorrow?

And then they’re actually making some of those cuts. Not because they’re in trouble. Because they’re being intentional.

The Second Unsexy Lever

I used to think of taxes as a fixed cost. You make money, you pay your percentage, you move on.

Then I met store owners who were paying a fraction of what I was on similar income.

They weren’t cheating. They weren’t using some exotic offshore scheme. They were just being deliberate about something most of us treat as an afterthought.

Here’s an example that illustrates what’s possible.

A Tale of Two Owners

Imagine two store owners with identical businesses.

Same $2.5M in revenue. Same $250K in profit. Same salary. Same family situations—married with three kids.

Owner A pays $75K in taxes every year.

Owner B pays $21K.

The difference? Owner B is intentional about after-tax outcomes. Here’s exactly what he does differently, assuming roughly a 30% marginal rate:

Profit sharing: He contributes $45K into retirement accounts through profit sharing, well beyond the standard 401k employee limits most people think of.
Savings: ~$13,500

Appreciated stock donations: When he donates to charity, he donates stock that’s gained value instead of cash. He avoids the capital gains tax entirely and still gets the full deduction.
Savings: ~$3,500

Maxed HSA: He contributes the full $8,500 family limit to his Health Savings Account—triple tax-advantaged money.
Savings: ~$2,550

Paying his kids: His three kids do real work in the business. He pays them each $7K. It’s deductible for him, and they invest it in Roth IRAs where it grows tax-free for decades.
Savings: ~$6,300

Inventory donations: He has $60K of old inventory that wasn’t moving. Instead of liquidating at a loss, he donated it to charity and took the deduction at fair market value. This one is huge and massively underutilized in eCommerce.
Savings: ~$18,000

Total difference: ~$54,000 per year

Why This Stays Invisible

The reason most store owners miss these opportunities is that taxes are scattered everywhere.

Personal returns. Business filings. Brokerage accounts. Payroll tax reports. There’s no single dashboard showing you the full picture.

So you never see what you’re actually paying. And you never think to ask if you could be paying less.

Owner A in our example isn’t dumb. He just never sat down and added it all up. He has a decent accountant who files everything correctly. But decent accountants don’t proactively bring you ideas—they just process what you give them.

A Simple Test for Your CPA

Here’s a question: when’s the last time your CPA came to you with an idea?

Not answered a question you asked. Not filed your returns accurately. Actually reached out proactively and said: “I’ve been thinking about your situation, and here’s something we should consider.”

If you can’t remember, you probably have a fine accountant. Fine accountants know the basics.

But fine accountants cost you real money in missed opportunities. The $54K difference between Owner A and Owner B isn’t complicated—it’s just intentional.

If your CPA isn’t bringing you ideas, it might be time to find one who will.

Two Levers Most People Ignore

Marketing gets all the attention. ROAS. CAC. LTV. These are the metrics everyone tracks, the topics everyone discusses, the problems everyone’s trying to solve.

But the store owners who actually win on profitability?

They have half the team. They pay a fraction of the taxes. They keep more of what they make.

Better marketing is great. But keeping more of what you already earn is often the smarter place to start.

“Better marketing is great. But keeping more of what you already earn is often the smarter place to start.”

Want to Go Deeper?

Interested in regular insights on building leaner, more profitable operations from the archives of our 7- and 8-figure owner community? Let’s stay in touch.

This is a post in our series on Financial Mastery for eCom Owners, specifically Commandment #2: Master Your Financial Statements.

Two products. Same price. One has 65% gross margin, the other has 50%.

Which one do you push harder?

If you said the 65% margin product, you might be leaving serious money on the table. I’ve watched store owners make this mistake over and over – prioritizing products, killing campaigns, and allocating resources based on a number that doesn’t tell the full story.

Gross margin is one of the most looked-at metrics in eCommerce. It’s also one of the most misleading.

What Gross Margin Actually Tells You

Gross margin tells you what it costs to manufacture your product and get it to your warehouse.

That’s it.

It doesn’t account for customer acquisition costs. It ignores shipping and packaging. It skips over credit card fees, returns, and all the other variable costs of actually selling and delivering that product to a customer.

So when you look at your P&L and see a healthy gross margin, you’re seeing an incomplete picture. Your income statement is giving you one big average across all products and all channels – and that average is hiding the truth about what’s actually making you money.

The Metric That Actually Matters

Contribution margin tells you what’s left after ALL variable costs are paid. It answers the question: “When I sell this product, how much actually goes toward covering my overhead and generating profit?”

This is the number that should drive your decisions.

Let me show you why with a real example.

The Bells of Steel Example

Kavon Khoozani runs Bells of Steel, a fantastic home gym equipment company. Let’s pretend we’re looking over his shoulder deciding which products to push harder. (These numbers are hypothetical for illustration.)

He sells two products for $400 each:

Product A: Workout Bench

• Gross margin: 65%
• Looks great on paper

Product B: High-End Barbell

• Gross margin: 50%
• Looks worse

Easy call, right? Push the bench.

Not so fast.

When we calculate contribution margin – accounting for shipping costs, advertising complexity, and conversion rates – the picture flips:

Workout Bench:

• Higher shipping costs (bulky item)
• More complex advertising required
• Harder to convert customers
• Contribution margin: 30%
• Kavon keeps: $120

Barbell:

• Ships cheaper
• Simpler sale
• Easier customer acquisition
• Contribution margin: 40%
• Kavon keeps: $160

The “worse margin” product puts $40 more in his pocket on every single sale.

Multiply that across thousands of orders and you start to see how optimizing for gross margin can quietly cost you a fortune.

Why This Destroys Your Discount Math

This same blind spot makes store owners wildly underestimate what discounts actually cost.

Let’s say you sell podcast gloves for $100. (Yes, podcast gloves. Every serious podcaster needs proper hand attire.)

You’ve got 80% gross margins. Fat and healthy. So you figure running a 20% off sale is no big deal – you’re only giving up a quarter of your profit, right?

Wrong. Very wrong.

Here’s the real math:

Your gross margin is 80%, but after accounting for customer acquisition, shipping, packaging, and credit card fees, your contribution margin is 40%. That means $40 per sale goes toward overhead and profit.

Now you run a 20% off promotion.

You just cut your real profit in half with a ‘small’ 20% discount.

That $20 discount doesn’t come off your gross margin. It comes straight off your contribution margin.

$40 becomes $20.

You just cut your real profit in half with a “small” 20% discount.

And that’s assuming your other variable costs stayed flat. If you spent more on ads to promote the sale? Even worse.

Why Black Friday Feels Like a Treadmill

This is why so many store owners feel exhausted after big promotional periods.

Record revenue. Record orders. Record hours worked. And somehow… not that much more profit to show for it.

The math is brutal when you don’t understand contribution margin. You’re working harder to sell more units at dramatically reduced real margins.

How to Calculate Your Contribution Margin

Contribution margin isn’t listed on your P&L. You’ll need to calculate it yourself, usually in a spreadsheet.

Here’s the basic formula:

Contribution Margin = Sale Price – Variable Costs

Variable costs include:

• Cost of goods sold
• Customer acquisition cost (for that product/channel – estimates if you have to)
• Shipping and packaging
• Credit card processing fees
• Estimate returns and refunds (some products get returned much more than others)
• Any other costs that scale with each sale

Your Assignment This Week

Calculate contribution margin for:

• Your top 10-20% of products (the ones driving most of your revenue)
• Your top 2-3 sales channels

You’ll probably be surprised by what you find. Products you thought were winners might be lagging. Channels you’ve been neglecting might be your most profitable.

And next time you’re planning a promotion, you’ll know the real cost before you commit.

Want to Go Deeper?

Interested in regular insights on financial mastery from the archives of our 7- and 8-figure owner community?

Or want detailed resources, templates and tutorials on how exactly to calculate contribution margin in your business? If so,let’s stay in touch

This is a post in our series on Financial Mastery for eCom Owners, specifically Commandment #2: Master Your Financial Statements.

Your P&L could show record-high profits. And you could be on the verge of insolvency.

It sounds impossible. But it’s more common than you think.

I’ve watched store owners celebrate their best year ever, then scramble to make payroll two months later.

The problem isn’t that they weren’t profitable. The problem is they misunderstood what their financial statements were telling them.

Your Business Is an Airplane

Here’s the framework that finally made this click for me.

Think of your business as an airplane. You’ve got three instruments to monitor:

Income statement = your trajectory. It tells you if you’re pointed toward a sustainable, healthy business. If you stay on this path, will you end up where you want to go?

Balance sheet = your structural integrity. It tells you if your aircraft can handle turbulence. If you hit a storm or need to make a hard turn, will the wings stay on?

Cash flow = your fuel. You can have the nicest Gulfstream 7 on the planet. Perfect trajectory. Beautiful structural integrity. Run out of fuel and you’re going down. Hard.

Most store owners obsess over the income statement – their trajectory. They glance at the balance sheet occasionally. They ignore cash flow until it’s an emergency.

That’s like staring at your compass while your fuel gauge drops to empty.

Why Profitable Businesses Crash

Here’s a scenario that plays out constantly.

You have a great year. Your P&L says $250,000 in profit. You’re feeling good.

But that cash isn’t sitting in your bank account.

$150,000 went back into inventory for next year’s growth. Another $100,000 went to cash outflows that never hit your P&L – purchase order deposits, debt payments, owner distributions.

Bank account: empty.

Profit is an opinion. Cash is a fact.

Then the IRS calls. They want taxes on your $250,000 paper profit. That’s $75,000.

You owe $75K with nothing in the bank.

You’re underwater on your best year ever. Because profit is an opinion. Cash is a fact.

The Balance Sheet Tells You If You’ll Survive

Let me give you a choice between two businesses.

Business A:

• Revenue up 50%
• Contribution margin: 30%

Business B:

• Revenue up 20%
• Contribution margin: 25%

You want Business A, right? It’s growing faster with better margins.

Wrong choice.

Business A turns inventory once a year. All that cash is trapped in slow-moving stock. They have two weeks of operating expenses in the bank.

Business B turns inventory four times a year. They have 4 months of cash reserves.

Business A looks great on the income statement. But the balance sheet reveals the truth: one surprise expense and they’re finished.

Business B survives.

Inventory Turns & Cash Reserves

Two important metrics to watch:

Inventory Turns:

• 30-45 days: Elite management
• 2 months (6x/year): Pretty great
• 2-3 months: Average to good
• 4-6 months: Longer than ideal
• 6+ months: Below average, something’s off

Cash Reserves:

• 2-6 months of operating expenses is the target
• Harder for fast-growing businesses, but still critical
• Cash gives you options when things go wrong

Balance Sheet Hygiene

Your balance sheet only helps if it’s set up correctly.

Make sure you have sub-accounts for:

• Inventory in transit
• Pre-paid expenses
• Liabilities (especially pre-order money)

Pre-order money deserves special attention. If customers pay you before you deliver, that’s a liability – not your cash. I keep pre-order money in a completely separate account. It looks like my money. It’s not. It’s a massive obligation until delivery.

Without proper organization, you’ll look at your bank balance and think you have more than you do.

Cashflow Forecasting: Stop Looking Backward. Start Looking Forward.

The cash flow statement is one of the three official financial statements. It’s also the least useful for actually running your business.

Why? It’s backward-looking. It explains why you ran out of cash – after the fact.

What you need is a 13-week cash flow forecast.

This is a forward-looking projection of your cash position. You estimate:

• Revenue by week
• Known expenses
• Upcoming purchase orders
• Tax payments
• Any major cash events

Then you see where you’ll be 4, 8, 12 weeks from now.

You’ll be wrong. That’s okay. The point isn’t precision – it’s visibility. You want to see the cash crunch coming while you still have time to react.

Your accounting software won’t do this for you. QuickBooks and Xero track history; they don’t forecast the future. Most operators do this in a spreadsheet.

Not sure how to do a cash flow forecast? I’ve got you covered. Join the ECF newsletter and I’ll send you a number of financial resources and tools, including a customizable cash flow model I built along with a tutorial on how to use it.

Your Assignment

Answer these three questions:

1. How many months of operating expenses do I have in the bank right now?
2. How many times per year does my inventory turn?
3. Do I know what my cash position will look like 8 weeks from now?

If you can’t answer all three confidently – or you’re worried by the answer – you’ve found your priority.

Your P&L tells you where you’re headed. Your balance sheet tells you if you’ll survive the trip. Your cash flow tells you if you have enough fuel to get there.

Watch all three instruments. Not just the one that feels good.

Want to Go Deeper?

Interested in regular insights on building a financially resilient eCom business from the archives of our 7- and 8-figure owner community? Let’s stay in touch.

In this post you’ll learn:

• If your lack of financial knowledge is endangering your business
• How to delegate financial tasks while limiting risk
• What you should be doing weekly, quarterly and annually

He almost didn’t review his tax return that year.

Busy season, million things going on, and his CPA had always been reliable. Why bother going through a stack of documents line by line when you’re paying someone good money to handle it?

But something told him to take a look. And buried in the paperwork, he found a $115,000 error.

His CPA had made a mistake. Not malicious. Just a mixup. But it would have cost him six figures if he hadn’t caught it himself.

This story comes from a store owner I know. And it’s not unusual. I’ve been running businesses and watching entrepreneurs behind the scenes for over 15 years. The ones who blow up financially almost always have one thing in common.

They outsourced their finances and mentally checked out. Not the work. The ownership.

Big difference.

You Can Delegate the Work But Not the Responsibility

Financial Commandment #1: Your money, your responsibility.

You can hire a bookkeeper, a CPA, a CFO. You can bring on business partners to handle financial details. You should delegate the work wherever possible.

But you cannot delegate responsibility.

The moment you stop understanding what your financial team is doing, you’re exposed. Not because they’re bad people. Because everyone makes mistakes, and no one cares about your money as much as you do.

I learned this the hard way. Last month, I found my bookkeeper had misclassified some revenue, inflating our paper profits by about 20%. Not malicious. Just a mistake. But I would have paid real taxes on fake profits if I hadn’t caught it during my monthly review.

And I’m not immune on the personal side either. Just this week, I paid my property taxes a month late. Pulled up the county website and saw a big red DELINQUENT staring back at me. Not because I didn’t have the money. I just got busy.

The point isn’t that you need to be perfect. The point is that no one else is going to catch these things for you.

What This Looks Like When It Goes Wrong

The $115K tax error isn’t an isolated incident. Here are a few other real situations I’ve seen over the years:

A business partner secretly stopped paying taxes without telling his co-founder. The debt became a shared liability. Years of cleanup followed.

One owner had 58% of his daily Shopify revenue going to an ill-advised merchant cash advance. Every single day. More than half his sales were gone before he could touch them. It nearly sank the company.

A bookkeeper misclassified earnings, inflating paper profits by 20%, potentially incurring real and undeserved taxes for the owner.

None of these were malicious. All of them were preventable with basic spot-checking.

Where Trust Goes Wrong

Let me walk through the specific areas where I’ve seen trust break down.

Bookkeepers make mistakes quasi-regularly. Even the decent ones. eCom accounting is complicated, especially with inventory. You have to review your monthly financials in depth, not just skim the top line. If something looks even slightly off, dig in.

CPAs mess up too. I find errors on my taxes about half the time I review them. Going through tax documents is painful. It’s one of the worst ways to spend an afternoon. Do it anyway.

Business partners can hide things, even partners you trust. You need clear visibility into bank accounts, owner’s draws, tax filings, and credit card spend. I’ve seen partners hide the real performance of the business, run up debts, and stop paying taxes without telling their co-founder.

CFOs, if you have one, should be leaned on for their expertise. But make sure you actually understand what they’re telling you and run it through your own brain. Their philosophy may not align with yours, and bad advice happens even with people who have years of experience.

Bank access is where I’m most paranoid. The longer you can avoid giving someone carte blanche check-signing or wire authority, the better.

I use Mercury for all my business banking partly because of their granular permissions. Team members can spend up to a threshold with automatic notices to me. It lets me delegate without giving away the keys.

The Spot-Check System

You don’t need to micromanage. You need to verify. Here’s what I recommend:

First and foremost, make sure you have a working knowledge of your business finances. You should feel comfortable with your P&L, balance sheet, statement of cash flow, and doing a basic cashflow forecast. If you’re not there yet, the book Financial Intelligence for Entrepreneurs comes highly recommended as a primer.

Monthly, review your financials in depth. Not just the bottom line. Spend enough time going through them line by line to spot things that seem off. This is where I caught the 20% misclassification in my own books.

Quarterly, compare a few account balances to your actual bank and credit card statements. It’s overkill to do this constantly, but it’s a nice sanity check. At a minimum, make sure the balances on your balance sheet roughly match what you know is in the bank.

Annually, scan your tax returns line by line before signing. Is it a massive pain? Yes. But I usually find at least a few small errors, and sometimes material ones. Like a $115,000 one.

A few hours total per year. It can save you six figures. Or your business.

Rate Yourself

Here’s a gut-check for you. Rate yourself 1-10 on how well you understand your business finances right now.

1 means you’ve outsourced everything and don’t really know what’s going on. 10 means you’re a KPMG auditor ready for duty.

You should be at an 8.5 or higher.

If you’re not there, find the area where you’ve been trusting someone blindly the longest. Do a spot-check this week. Build a system to do it quarterly.

Your money. Your responsibility. No one else’s.

Ready for More?

This post is the first in an eight-part series on financial mastery for store owners and entrepreneurs.

Interested in following along? Or in regular insights from the 1,000+ 7- and 8-figure owners inside the eComFuel community? If so, let’s stay in touch.

In this post you’ll learn:

• The one thing you can’t delegate in your business
• How to move from fledgling knowledge to financial mastery
• The biggest mistakes entrepreneurs make with money

Being financially literate is as important to your success as understanding your customers.

Maybe more.

Nearly 20 years in this game, I’ve watched a lot of entrepreneurs get hurt by misunderstanding money. Cash flow crunches that sink growing businesses. Leverage that looked like easy money until it took twice as long to pay back. Owners betting everything on an exit that never comes. Financial reports that might as well be written in a foreign language.

The mistakes are common, but they’re not inevitable. So I put together a framework. Eight pillars of financial mastery for store owners.

The 8 Financial Commandments

1. Your money, your responsibility.

It’s easy to think we can outsource financial decisions to the experts. Hire a good accountant, find a financial advisor, let them handle it. But experts get it wrong sometimes, and you’re the one who pays the price. No one cares about your money as much as you do. You have to fully own the decisions and outcomes in this area, even if you have great people advising you.

2. Master your financial reports.

Understand how your income statement, balance sheet, and cash flow statement actually work and interconnect. This isn’t sexy, but it’s essential. Too many store owners have a vague sense of what these reports say without really understanding the story they’re telling. When you deeply understand them, you make better decisions about inventory, hiring, marketing spend, and everything else.

3. Prioritize your profit levers.

Not all profit levers are created equal. Three things move the needle most: pricing, your fixed overhead costs, and optimizing for post-tax profitability. These deserve disproportionate attention. A small pricing increase can have an outsized impact on your bottom line. Keeping fixed costs lean gives you flexibility. And what matters isn’t what you make—it’s what you keep after taxes.

4. Borrow wisely.

Few things can get you into trouble as fast as leverage. I’ve seen it over and over again—taking money looks like easy money, then it takes two, three, four times as long to pay back as expected. Leverage can be incredibly powerful and incredibly destructive. You need to deeply understand when and how to use it, and when to walk away from it entirely.

5. Invest outside your business.

If you’re betting everything on a future exit that may or may not happen, you’re taking a big risk. How do you know when to start taking dividends out? How do you balance investing back into your business versus building your personal balance sheet? These are critical questions most entrepreneurs don’t think about until it’s too late. Build your personal net worth alongside your business, not after.

6. Earn your freedom, choose your work.

Get clear on when you’re financially free. Not so you can retire on a beach—most entrepreneurs would be bored in a week—but so you can work on things you truly love and believe the world needs. How do you know when you have enough? How do you start making trade-offs that optimize for meaning over maximum profitability? This pillar is about understanding that inflection point.

7. Evolve your habits.

How you interact with money has almost nothing to do with how much you have and almost everything to do with how you were raised. We all carry biases and patterns from childhood that shape how we spend, save, and think about money. Some of those patterns serve you. Some don’t. Understand your biases and work to correct for them.

8. Pass it on.

If you’ve built something meaningful, you have an opportunity and a responsibility. How do you give back and enrich the world? How do you raise financially literate and responsible kids, especially if you have resources? How do you mentor the next generation of entrepreneurs? This pillar is about using what you’ve built to make a broader impact.

That’s the framework. I’ll be diving deep into each pillar over the coming weeks.

To follow along – and for regular insights from our community of 1,000 7- and 8-figure owners – stay in touch.

In this post you’ll learn:

• Why you should build personal wealth alongside your business
• My full portfolio allocation and rationale for positions
• Stock picks for 2026 and which ones I sold

I believe you should be building your personal balance sheet alongside your business. This is one of the eight pillars in the financial mastery framework I’m writing about.

If you’re betting everything on a future exit that may or may not happen, you’re taking a massive risk. Building your personal net worth alongside your business gives you optionality, security, and lets you make better decisions because you’re not desperate.

So I’m going to start sharing what my portfolio looks like and tracking my performance vs. the S&P each year. Here’s my 2026 baseline.

How I Calculate This

Quick caveat: I don’t include my primary residence, physical possessions, or my business in these numbers.

Your house is consumption, not investment. Physical possessions aren’t investable assets. And your business is illiquid and volatile until you sell it—including it can give you a false sense of security. I think it’s cleaner to track what you have in actual liquid investments separately.

The Breakdown

3.5% individual stocks.

I think investing should be 90% boring and 10% bold. You should have a few bets if you have deep conviction in a space that you think will outperform, but they should be few and far between. And you should make sure the position size is large enough that if you’re right, they actually count.

My two positions: Shopify and Cloudflare.

Shopify is the closest thing to a monopoly in ecommerce outside of Amazon. There’s just not another good option in the hosted software space, and it’s getting more entrenched every year. I’m long Shopify.

Cloudflare I know a little less about their internals, but everyone I’ve talked to loves them and my own experience has been great. They do a lot of things well and seem to have a strong culture.

63% index funds.

Mostly US total market, about 15% international, zero bonds. Boring and intentional. I’m working to increase international exposure a bit—international stocks ripped this year and I think there’s still room on a valuation basis, plus it’s good diversification. But the core is simple: broad market index funds, low fees, hold forever.

12% crypto.

Primarily Bitcoin and Ethereum. Still believe in the original thesis as a non-institutional store of value and a hedge against government monetary policy gone wrong.

That said, it’s a little unnerving that it’s acting more like a risk asset than digital gold lately. Gold was up 70%+ over the last 12 months. Bitcoin hasn’t kept pace, which is strange for something that’s supposed to be “digital gold.”

But I like the fundamentals long-term, I have some gains I don’t want to take the tax hit on, and it’s a meaningful diversification play as an anti-institutional hedge. The more institutions buy it and the bigger it gets, the lower the upside and more volatility—but I’m still holding.

11% real estate.

One rental property. Honestly not a great pure investment—more a house we love that we’re renting out until we decide what to do with it.

Setting up and running an Airbnb for the past four months has given me a new appreciation for how much work short-term rentals are, even with someone else managing it. It’s also made me appreciate what a good deal Airbnb is as a traveler—walk in, use it for a few days, pay, and leave without dealing with any of the headaches.

9% cash.

I like having a cushion, especially with markets at all-time highs. Half of this is earmarked for a “big bets” fund—waiting for one or two high-conviction opportunities where I can bet meaningfully. Looking for those in 2026.

Less than 1% private investments.

Three small bets on founders I believe in: IntelliGems, Postpilot, and Kanpai Foods. All three have built great companies.

I haven’t put a ton of money to work on the private side. It’s interesting when you have domain expertise and get opportunities with people you trust, but it’s a small part of the overall portfolio.

Two Sells This Year

Tesla. I held Tesla for about four years. Good run. But I sold this year for a few reasons.

My original thesis was the product—the car was so good and people were so happy with it. But the company seems to be shifting from being a car company to a big bet on robotics, self-driving, and automated taxis. Not that those won’t work, but my original thesis has changed and I haven’t done the homework to evaluate if those other things are worth a trillion-plus valuation.

There’s also increasing key man risk with Elon. He’s getting older, has worked insanely hard his whole life, and is spreading himself across multiple companies. That risk grows every year.

At a trillion-plus valuation with my original thesis changed, felt like a good time to exit.

Airbnb. This was one of my worst decisions recently. I made a knee-jerk investment—heard it recommended by someone and bought it because I wasn’t sure what else to do with the money. Classic mistake.

I held it for six to twelve months, broke roughly even, and sold. After setting up my own Airbnb this year, I realized I’m not as bullish on the company as I thought. They’re not terrible, but they’ve been lackluster in growth for years and I’m not sure what the catalyst for change is.

The biggest lesson: don’t make 5-out-of-10 conviction bets on individual stocks. If you don’t have high conviction, just put it in an index fund.

That’s the Baseline

I’ll report back at the end of the year on how this performed vs. the S&P.

Want regular tips on building financial mastery as an entrepreneur, as well as deep insights from our community of 7- and 8-figure owners? Let’s stay in touch.

Every year, Bill D’Alessandro and I make predictions about where eCommerce is headed. Here are our 11 predictions for 2026, covering everything from AI-powered advertising to tariffs to the fate of lifestyle e-commerce brands.

• My 5 predictions for 2026
• Bill’s 6 predictions for 2026
• Why there’s a steak dinner on the line this year

Quick note on stakes: we got called out last year for being too generous, grading ourselves on our 2025 predictions. Fair criticism. So this year, we’re feeding the transcript into Claude and Grok at the end of 2026 and letting AI declare a winner.

Loser buys the winner a steak dinner. And feeds them the first bite. (Humiliations galore).

Here’s what I’m betting on:

My Predictions

1. LLMs will launch ad platforms that make Meta’s targeting look primitive.

Meta knows your interests. ChatGPT knows you’re afraid your business partner resents you, you’ve Googled “signs of burnout” four times this month, and you’re one bad quarter away from seriously considering selling.

When OpenAI launches ads, the targeting won’t just be precise. It will feel telepathic. Early movers win big.

2. Tariffs on China will settle between 30-50%, not higher.

Inflation is creeping up and economic growth looks soft. Trump responds to markets, and when the bond market freaked out earlier this year, tariffs got walked back fast. I don’t see him shooting a wounded economy when things are already shaky.

3. The AI bubble won’t pop in 2026.

Counter to prevailing opinion here. The NASDAQ’s forward PE is around 27x right now. During the 2000 tech bubble, it was north of 100x. Government AI spending is also roughly 5x what tech spending was back in 2000, adjusted for inflation. The fundamentals look different this time.

4. Major platforms will start testing “verified human” content badges.

I created a fresh X account recently and was shocked. Roughly a third of the videos in my feed looked AI-generated. Trust is eroding fast. I think we’ll see at least one major platform experiment with certifying content as human-created this year.

5. Video and audio editing will be largely automated at 7/10 quality.

Descript can almost do this now. By year end, I think you’ll be able to drop raw footage into an AI, tell it what matters, and get a polished edit back. Scrappy founders will produce content that used to require a full production team.

Bill’s Predictions

1. 2026 will be the year of the K-shaped economy.

Big tech and the Mag 7 continue to run, maybe up another 20%+, while the real economy and average consumer struggles. For eCommerce, Bill thinks you either need to go up-market selling to affluent consumers, or go down-market with sharp pricing on essentials. The middle is dangerous.

2. Inflation will be north of 3% in 2026.

Bill sees no political will to cut spending, which means continued deficit spending, which means inflation. He thinks this is sticky for the next decade, not just 2026. His advice: position your portfolio and your business for a persistent inflationary environment.

3. AI will completely take over Meta ads content.

Bill’s seen proof of concepts from big brands running pipelines that spit out 100 novel ads per day. AI reads reviews, pulls brand assets, generates stills and soon video, and launches directly through the API. He thinks 2026 is when this goes mainstream.

4. The lifestyle brand is dead.

Unless you have strong IP protection or a top 5-10% brand, single-digit million eCommerce businesses are going to get crushed. Larger players building AI-powered machines will outspend you, out-test you, and tolerate higher CACs than you can.

5. M&A will be gang busters at the high end and anemic at the low end.

Deals above $1B are up 19% year over year. Deals in the small and mid-size range dropped 18%. Bill thinks this continues: top-tier businesses will command eye-popping multiples, while typical eCommerce brands struggle to transact at all.

6. Bitcoin will dip below $70K but finish above $100K.

Bill sees competing pressures: a struggling consumer hurts Bitcoin as a risk asset, but inflation helps Bitcoin as digital gold. He thinks volatility comes first half of the year with a dip below $70K, then recovery as the inflation narrative takes hold.

You can listen to the full episode here.

When OpenAI launches ads, the targeting won’t just be precise. It will feel telepathic.

Want a real peek into the future?

Predictions are fun, but they’re not your best bet for truly staying ahead of the curve.

What you really want is to plug into a braintrust of a thousand seven and eight-figure store owners who are discussing what’s working, what’s not, and what to expect going forward.

Join us inside the eComFuel community and learn from others like you in the trenches about what to expect this year.