274. The Fastest Way CPG Founders Lose Their Runway

0:00Welcome to day two. understanding how your business works with confidence. If you're honest, there are probably parts of your business you avoid. The financials, the ugly back office stuff, the operational details that don't feel exciting as your product innovation, branding, or being the face of your company. You're not alone. Most founders struggle with the day-to-day mechanics of running a business. It's normal. You didn't launch a brand because you love debits and credits or because you dreamed of managing deductions and reconciliations. But here's the truth you can't afford to ignore. You cannot scale what you don't understand.

0:37If you don't deeply understand how your business works, especially how your sales engine works at retail and online, you'll always feel like you're guessing. You always react instead of being strategic, and that certainty will put a hard cap on your growth. Let me explain. In episode 273, we talked about your foundation, your business plan, your business goals, and your ability to think ahead instead of constantly reacting. Today, we're going to build on that by helping you truly understand how your business works so that you can lead with confidence. Because no sales, no business. And not understanding how sales really work at retail is one of the fastest way to sabotage your own runway.

1:20Step number one, know the game you're playing. Before you can have any success launching or growing your brand, you need to know what game you're playing, what the objective is, what the rules are, and how to leverage those rules to your advantage. In episode 136, Bob Burke laid out in very stark terms what's expected of you if you wanna launch or scale a brand in natural. The cost, the timelines, the support requirements, the reality behind the romantic story. Those aren't nice to know details. Those are the rules of the game. The good news, once you understand those rules, you can stop playing defense.

1:58You can start using those advanced strategies we're talking about in this series, my podcasts, my webinars, my guides, to maximize every opportunity instead of constantly feeling like you're behind. If you are following the same traditional strategies everyone else has taught, overspending on trade, accepting every promotion, chasing distribution at all costs, you'll struggle. Your margins will suffer, your cash flow will be strained, and you'll never get the competitive edge that you need to level the playing field with the most sophisticated brands. This series exists to change that. Step two, strip business down to its core.

2:36Let's simplify. Your business is about two things, making things and selling things. That's it. The founders who win are the ones who truly understand the make side, the capacity, the ingredients, the packaging, lead times, cost, truly understand the sell side, distribution, velocity, shopper behavior, promotions, retail expectations. Consider this. If you want to grow 20%, what does that actually mean? How many more units need to leave your warehouse? How many more stores or SKUs do you need? What velocity do you need in each account? How many promotions will it take and can you support them?

3:13How much incremental inventory do you need on hand? Once you identify what's required to hit your goals you can work backward and make sure that every piece is in place. The production capacity, the packaging, the logistics, the data and the reporting, and the retail execution. This is how you eliminate out-of-stocks, maximize every selling opportunity in itself, and execute cleanly across your entire sales funnel. This is how you start thinking like a category leader, not just a product supplier. Step three, learn the story behind overnight success. None of us were born knowing how to do this.

3:50We love to tell the overnight success story, but we skip the years of grinding, testing, and failing and adjusting. In episode 42, Gary Hirshberg talked about the overnight success of Stonyfield that was many years in the making. The reality, consistent problem solving, consistent adaption and consistent learning. The brands that last are not the ones that never fail. They're the ones that treat every failure like data. So be willing to fail as long as you're equally willing to learn from it. When you understand how your business works, failure becomes feedback, not verdict. When you see why something didn't work and fix it, instead of telling yourself the story retail is broken or we just need more money.

4:32Step four, why category management exists and why you need it. Yesterday I talked about strategy and why your business plan needs to be so robust and alive. Today I want to connect that to how big brands operate and that will give you an advantage. If you look back in time, big brands use the same approach in retail the way that a lot of natural brands still do today. Buy your way on the shelf, use relationship and influence, computer and price rely on generic promotions. It was ineffective and quite frankly destructive. It trained shoppers to focus on price at the expense of quality. It drove us toward a throwaway culture.

5:10Cheap ingredients, lower durability, consistent discounting. In the early 90s when Walmart exploded, independence started consolidating. Brands and retailers needed a better way. They needed less inventory, fewer out-of-stocks, more efficient promotions, better assortments, and smart innovation. That's when category management was born. Category management advanced skill strategy toolkit big brands still relearn today to drive profitable growth. That's how they plan, forecast, optimize assortments, and align promotions with shopper behavior and retailer goals. The problem? In natural, these skills are often ignored or watered down to what I call push-button category management.

5:52Your hand can top-line reports and told that that's enough. It's not. Those same reports are available to your competitors. They won't differentiate you. They won't tell you how unique shoppers shops, and they won't give the retailer anything they don't already know. To win, you need to go deeper. You need to bring actionable insights to the retailer, insights they can't get from anyone else. Throughout this series, I'll show you how. Step number five, learn every role in your business. Have you ever watched Uncover Boss? I love that show because it perfectly illustrates how disconnected leadership can become from the day-to-day realities of owning their business.

6:31Senior executives are often shocked by what they see when they learn to walk in their employees' shoes. Don't make that mistake. When I was a grocery manager at Price Club, now Costco, we were encouraged to constantly find better, more efficient ways to do our jobs. Something as simple as how many cuts does it take open a box mattered. Most people make four cuts. We figured out how to do it in two, and that mindset applied to everything. I believe an effective leader needs to understand every major role, respect the people doing the work, keep communication clear and open, and encourage cross-training and shadowing.

7:06When you do this, your team becomes an early warning system. They help you spot bottlenecks, avoid landmines, and spot problems before they show up at retail or in your P &L. Let me take you behind the curtain for a moment. I once worked on a project for a large CPG company I had always admired. They brought me in to help launch a healthy snack. I built a full path to market plan, clear merchandising strategy, robust category overview, everything. But the marketing team had a very different strategy. Sales wasn't aligned. Promotions didn't support the launch timing. Merchandising is inconsistent.

7:41Shoppers were confused. The result? The product failed. Not because it was bad, but because the company was so siloed that they were incapable of working together as a cohesive unit. That's the Achilles heel of big brands. You can turn that into your advantage. When your team is aligned, communicating and focusing on the same shopper and retailer objective, you become far more effective and far more attractive to your retail partners. Step number six, your customer is your ultimate advantage. Traditional focus groups and generic research often miss the point. They pull in people who don't understand your category, who don't shop natural, and don't value what you bring to the shelf.

8:20Years ago, while at Unilever, we launched a groundbreaking stain treater. Customers love it. The marketing splash is huge. The product should have dominated. But the refill, the backbone of the strategy, didn't fit our most store shelves. No one had asked the sales or category management team how the category was actually merchandised. Fixing it meant either re-merchandising every store or redoing the packaging at enormous cost, so they killed the project. That's what happens when you don't understand how business works at the shelf. Your shopper is unique. They understand the value of clean label, better for you products.

8:56They build specific baskets around it. If you can understand how they shop and what else they buy when your product is in the cart, then you can bring those insights to your retailers. You gain a sustainable, unfair competitive advantage. That's what this entire series is about. Day two action item. Map out how your business really works. Today, I want you to list the core functions in your business. Making. Operations, sourcing, production, logistics. Selling. Sales trade, e-com, marketing, category. Write down what you know and what you don't know about each. Where are you confident? Where are you guessing?

9:31Identify one role you need to understand better. Commit to shadowing, interviewing, or working alongside that function in the next 30 days. Capture one question you'll start asking every internal and retailer conversation. How does this decision impact the shopper, the retailer, and our ability to execute? What gets written down gets done. This is how you shift from guessing to leading with confidence. In closing, you can learn this. You can master this. You were not born knowing how to launch and scale a brand. No one is. But you can learn how your business works at a deep level. And when you do, everything changes.

10:07Retailers trust you more. Investors see you as less risky. Your team feels more aligned. You gain control of your growth instead of feeling dragged by it. Tomorrow on episode 275, we're going to build on this by talking about the specific numbers and KPIs you need to track so that you can manage your business like a pro and extend your runway. Make sure you subscribe so you don't miss it. Share this with a founder who feels overwhelmed by the business side of their brand. And download the free guide in this episode. My mission is to help you get more runway from your available resources. Get on more store shelves and get into the hands of more shoppers while converting occasional customers into loyal evangelists and earning an equal seat at the table.

10:51You can do this. I'm here to help you prove it. For additional inspiration, listen to the follow podcast episodes. Episode 136, The Retail Game, What You Need to Know to Win with Bob Burke with Naturally Products Consulting. I already talked a little bit about this in the podcast and why it matters. Bob does a phenomenal job painting a stark reality of what's expected of you as a new brand or as an existing brand that wants to grow on scale. You need to know what the rules are and how the game's played. Next, listen to episode 85, Using Advanced Strategies to Boost Retailer Sales with Adam Lowry with Ripple Foods and Method.

11:28Learn how using advanced strategies can give your brand the competitive edge and robust sales with retailers. Adam co-founded Ripple Foods and Method Products, a green cleaning company, to influence consumer behavior towards sustainability. Ripple Foods, a plant-based milk brand, focuses on strategic partnerships and product innovation to provide value to retailers and consumers. Then listen to episode 126, A Well-Defined Business Strategy for Lasting Success. Dustin Finkel with K-Pop. In this episode, we have a great conversation about the importance of having a solid business strategy and how that strategy is going to give you the bandwidth you need to succeed and how that strategy is going to give you the additional bandwidth that you need to grow and scale your brand.

12:10And more importantly, it's that strategy that can help remove a lot of the obstacles that derail other brands. This is one of my favorite episodes because in this episode, we talk about how to leverage the best advanced strategies used in mainstream while keeping natural natural. Tip of the day, commit to learn and appreciate the different roles in your business. This will keep you grounded and will help you better understand how your business works. Thank you for listening. This episode has accompanied video with illustrations and additional information I can't share in an audio podcast. You can watch it at RetailSolve.com slash 30-day challenge.

12:46You can get the show notes for this episode by going to RetailSolve.com slash session 274. Tomorrow's episode is surround yourself with trusted advisors and experts. This episode will build on today's conversation. Want more sales? How to profitably scale a food business today, tomorrow, and beyond. Here's this week's free downloadable guide. The 30-Day to Prosperity Workbook is a companion to the 30-Day Challenge. This retail-solve blueprint will teach you what you need to know to confidently grow and scale your brand, build a connected community of loyal evangelists, and multiply your brand's impact, sales, and profits.

13:21Every slight improvement means more runway for sales growth, higher brand evaluations, better terms when negotiating with investors, fuel for more innovation, greater support for mission-based causes, and much more. Thanks for joining us today. Please reach out and share your most pressing questions, and I'll do my best to get you the answers that you need on future episodes, including expert advice from CEOs and industry thought leaders. Comment, leave your questions, and get this week's free downloadable guide and the show notes at RetailSolve.com slash session 274.