How Outsourced Accounting Helped Pelipost Double Revenue...Twice

Pelipost’s beginnings: The birth and growth of a loving link

One in 12 U.S. kids experiences life with an incarcerated parent. Kids living apart from their incarcerated parent have been shown to live in more socioeconomically disadvantaged areas and more often with single mothers. They’re more likely to live below the poverty line and rely on government assistance. On top of all this, they tend to move around more, adding to the stress of growing up apart from their incarcerated parent(s).

To make things worse, communicating with a mom or dad “inside” can be extremely difficult for loved ones.

Pelipost set out to change that. However, they needed help managing the financial ups and downs this mission would bring.

Pelipost began five years ago when Joe Calderon, whose mom was serving time, realized how difficult it was to stay in touch. Becky Calderon was incarcerated, and Joe was driving eight hours each way to see her. And their phone calls were limited to 20 minutes every other week.

Becky’s health declined, and Joe fought intense discouragement.

“During our brief phone calls, my mom would always say, ‘Son, send me pictures of your car!’ I would always respond, ‘I will, mom.’ However, between my new job, caring for my grandparents, and life demands, I’d keep forgetting to run to the store to print and mail them out.”

Sadly, the Calderon family’s experience is not unique

Criminal justice journalists at the nonprofit Marshall Project report that over 63% of incarcerated people are in prisons more than 100 miles away from home and loved ones. Meanwhile, visits from family and friends have a measurable effect on inmates. According to researchers from the University of Central Florida and California State University,

Inmates who receive visits have 26% lower recidivism (repeat offenses) than non-visited inmates.

Phone calls are complicated, too. Inmates must phone out, which means families have to rearrange plans to ensure they’re near the phone at the right time. Sometimes, incarcerated loved ones don’t get the time slot they’d planned for, extending the wait another week and confusing loved ones. And when they are successful, calls are expensive. A 15-minute phone call costs $24.95 from many prisons.

Source: Prison Policy Initiative’s 2019 State of Phone Justice Report

Who pays for this? Friends and families of inmates. The Ella Baker Center for Human Rights worked with Forward Together and Research Action Design to research and report the familial costs of incarceration. They discovered that the vast majority of incarcerated people don’t earn money (and those who do have an average income of $.86 per day). Consequently, the financial burden of this communication almost always falls on families.

As a result, the same report found that two out of three families of incarcerated loved ones struggle to meet their own basic needs, like food and housing.

Paying for phone calls and visits alone caused 34% of families of incarcerated loved ones to go into debt.

Meanwhile, online Q&A forums and Facebook groups continually spring up as loved ones get creative and swap tips.

“At times I can’t afford stamps, and my loved one feels forgotten about, but life is expensive out here,” Jestine Pudlo, of Crystal River, Fla told the New York Times. “I can’t afford to put money on the phone, either, so I have to decline calls, and it hurts my heart to do that.”

Pelipost answers the call

In 2015, Joe and his mother launched Pelipost, a mobile app that includes a printing and shipping service to allow loved ones on the “outside” to print and send images to incarcerated loved ones from their smartphones at the tap of a button. The service removes all the friction Joe felt when trying to send his mom photos while she was inside.

With Pelipost, users open the app, snap or upload a picture, add a sticker or supportive text, and with one final tap, send the photo — in postcard form — to their incarcerated loved one. There’s no store, no stamps, no shipping. Just “smile, snap, and send.” Joe’s team does the rest. Each postcard sent costs as little as $.45, and postage is free.

A favorite type of card to receive is when inmates are with their families at prison-sanctioned gatherings or visits.

Source: Pelipost

Incarcerated parents love seeing their kids’ achievements, and Pelipost makes it easier to share these moments.

Source: Pelipost

“So many people inside write to us from prison telling us how thankful they are to get pictures of their loved ones. It's such a rewarding thing to be part of,” says Joe. “And it's not just that we came up with this business out of thin air; we have that personal connection with my mom being inside and going through that pain of having to send her photos. That's our personal connection. This is a personal mission.”

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The challenge: Obscured finances cuffed Joe’s decision-making power

Pelipost grew and grew. Sadly, though, the business struggled to manage its own success.

Pelipost’s Leadership had no visibility into finances

Joe was astute enough to know rapid growth doesn’t equal sustainable success. And he was right: of all the fastest-growing startups, about two-thirds fail. Throwing himself into the needy operations side of his business, Joe lost sight of important financial metrics that would have helped him make informed decisions on-the-fly.

Joe knew fast growth was just as much a hazard as it was a cause for celebration.

“Losing track of finances” tops Inc’s list of “Dangers of Growing” a business too quickly.

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Joe began to see why.

To be clear, growth itself isn’t a harbinger of trouble. Uncontrolled growth, on the other hand, usually is. That’s why slow-growing businesses outperform their fast-growth counterparts long-term. The speed of growth isn’t the determinant. It’s the decision-making control business leaders have throughout the growth that matters.

Unsure, Pelipost kept its former CPA — just in case

Hesitant to cut ties with its current CPA, Joe looked for supplemental financial services that could help him make better finance-based business decisions.

“I’d gone through different CPAs and I wasn't really getting that personalized attention I needed,” recalls Joe. “My accountant did taxes and sent reports, sure, but you know, monthly meetings, quarterly meetings weren't happening regularly. So, I wasn't getting the deeper financial insights that I needed to really make decisions about the best moves to make for my business.”

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Added complication: Runaway revenue

These challenges would have warranted an outsourced accountant’s help. But something complicated the matter further: Pelipost’s user base grew so fast that before Joe knew it, revenue had doubled.

'Wow! We're increasing in revenue, we're profitable, our margins are great!' But at the same time, I couldn't tell where our cash was going.”

“Believe it or not, it's kind of hard to tell. I didn't know if we were doing things right, overspending, underspending, or what,” says Joe.

As more and more users signed up, hiring intelligently was a problem. What level positions could (and should) Joe afford? When exactly could he hire without causing cash flow problems?

At the same time, Joe wanted to know if Pelipost could purchase a new large-scale printer to accommodate the new growth — but couldn’t tell if it would backfire financially.

Eager for answers, Joe signed on to receive CFO services from Ignite Spot.

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Ignite Spot removes the shackles

Ignite Spot’s CFO services gave Joe instant visibility — but not where he expected it.

Immediate, unexpected surprise benefits — in the “tens of thousands”

In their very first meeting, Ryan Steck, Pelipost’s dedicated virtual CFO from Ignite Spot, found that Pelipost had overpaid tens of thousands of dollars in taxes from prior years.

In their very first meeting, Ryan Steck, Pelipost’s dedicated virtual CFO from Ignite Spot, found that Pelipost had overpaid tens of thousands of dollars in taxes from prior years.

He interrupted their strategy session to investigate the blunder, verified his findings with another CPA, then filed the paperwork to recoup the cash on Joe’s behalf.

To put it mildly, Joe was thankful. He was also impressed.

Ongoing decision-making power

As for Pelipost’s original challenges, Ryan and his team went to work.

First, he helped Joe formalize his processes so that transactions would automatically feed into accurate, high-level reports that could be trusted for spontaneous decision-making. For the first time, Joe could see where his company was spending and why, plus what to do differently if he wanted to continue scaling up sustainably.

Then, Ryan put together some projections that mapped different choices to their resultant outcomes, letting Joe choose the routes (and their upshots) that he wanted.

Ryan also gave Joe some surprising advice: he advised against cutting costs during the company’s high-growth phase. This was contrary to what Joe anticipated his new CFO would recommend. Ryan helped Joe see that the expenditures allowed for continued growth that Joe now knew was also sustainable.

Joe’s new virtual CFO helped Pelipost’s leadership team know when and how to acquire heavy equipment and other large capital investments so as not to disrupt cash flow. They were also able to use real, reliable insights to intelligently hire the right people at the right time.

Revenue doubles again — this time with a CFO’s guidance

As Ryan and Joe continued tightening up Pelipost’s processes, the business also continued to grow. And with it grew the risks.

“Working with Ignite Spot allowed me, honestly, to sleep better at night,” says Joe.

“Because I started off as a solopreneur, I did it all by myself. And to a certain point, you can get away with that. But increased revenue raises the stakes. So, one bad decision can impact your business tremendously. You need to have that guidance from someone that knows these things. With Ignite Spot, I sleep well at night knowing that we're on the right path.”

When revenue doubles, it can be outside of your control — or on your own terms.

Joe’s decision-making confidence doubled right along with revenues. “Now, stakes were higher, but I felt better. I can’t imagine doubling again without the guidance of Ignite Spot’s virtual CFOs.”

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A Bright Future Ahead and Finacial Freedom

Pelipost just sent its 10 millionth photo. The company now has the financial foresight to partner with other incarceration service organizations and familial support groups. Every season, it can now give back to the communities of justice-involved people and their families.

What could your business do for itself and for others if you had the financial visibility that Joe has? Would you invest in better equipment, more people, give back to the community you serve, or all the above? Find out what’s possible today by giving Ignite Spot a try. Right now, our virtual CFOs are offering free 30-minute sessions to business leaders who need it. Sign up for one today to realize what’s possible.