320. Most Brands Don't Have a Spend Problem—They Have This

0:00Every founder I speak with now is working to justify every dollar, stretch already limited resources, claw back promotions, better control cash, and scale back innovation. And if you're like most founders I speak with, you're probably asking yourself some version of this question. Why does it feel like we're working harder just to maintain momentum? Let me explain. I recently spoke with a founder of a growing brand that was dealing with the exact challenge. On paper, the business looked healthy. Distribution had expanded. Sales were growing. Retail relationships were improving. The team was working hard.

0:35Their brand was gaining traction. But underneath the surface, margins kept eroding. And the more the business grew, the more difficult it became to identify where the pressure is actually coming from. Was it promotions, rising costs, operational efficiencies, retail execution, forecasting, deductions? The answer was yes, all of it, but not in the way most brands think. Are you ready to hear more? Welcome to the Bulk Proof Your CBG Brand Podcast, where we discuss tactics and strategies that you need to give your brand the unfair competitive advantage it deserves. Hello, I'm Dan Lohman. Be certain to comment and subscribe to get immediate access to new brand building episodes.

1:17Please recommend this to friends and colleagues and help me raise the bar in natural. Let me know what your most pressing issues are and I'll do my best to address them on future episodes. There's a free downloadable guide at the end of every episode to help you go deeper into the topics we discussed. Now, let's roll up our sleeves and get started. Margin pressure isn't the real problem. Margins are tighter, costs are higher, shoppers are more cautious, retailers still expect performance. And right now, most brands are trying to grow while quietly leaking runway. And that's the real issue. Not inflation, not tariffs, not just retailer pressure, not just promotions.

1:56The real problem is that most founders cannot clearly see where their business is leaking cash, margins, execution, sales, retailer trust, and decision quality. And when you cannot clearly see the leak, every decision starts becoming reactive. And that confusion gets expensive. Let me explain. I recently had a conversation with a consulting client that really reinforced this to me. He was talking about how margins had eroded as the company expanded. Trade spend kept increasing. Distributor expectations kept increasing. And retailer demand kept increasing. And so did cost. At the same time, shoppers became more cautious and more promotion sensitive.

2:37And the question he was wrestling with was simple. Can the business still scale profitably? Now consider this. That conversation is not unique anymore. I'm hearing versions of this across the industry. Founders are under tremendous pressure from every direction. Inventory pressure, labor, promotions, broker costs, distributor costs, and retailer expectations. And all of this is happening while cash flow is getting tighter. and decision making is getting harder. So naturally, most brands start trying to identify the problem. And that's where many founders unintentionally make things worse because they start treating symptoms instead of identifying the root cause.

3:16Let me give you some context. Most founders begin blaming trade spend, deduction, brokers, distributors, promotions, retailer fees, slowing demand, and rising costs. And to be fair, those things absolutely matter. But here's the problem. Most brands are diagnosing margin pressure too narrowly. They see the financial pressure, but they cannot clearly see where the profit is leaking, which investments are actually working, where execution is breaking down, where promotions are incremental, where promotions are subsidizing sales, where shoppers are confused, whether products are visible, whether timing is wrong, whether assortment is wrong, whether retail expectations were misaligned from the beginning.

3:58Everything gets lumped together into one giant category called margin pressure, but margin pressure is usually the output of multiple hidden operational leaks happening simultaneously. Let me repeat that. Margin pressure is usually the output of multiple hidden operational leaks happening simultaneously. This is the key. Most brands do not have a simple spin problem, they have a clarity problem. And when founders lack clarity, they start reacting emotionally instead of strategically. They throw more money into promotions, pressure brokers harder, cut important investments blindly, chase velocity without understanding profitability, and they fund activity instead of outcomes.

4:39That confusion compounds, and over time, it quietly drains runway. The big misunderstanding. This is one of the biggest blind spots in CPG right now. Most brands are drowning in data. Dashboards, reports, retail portals, trade systems, velocity metrics, shipping reports, and forecasting tools. But data alone does not create clarity. Data tells you what happened. Retail clarity tells you why it happened, what influenced it, what the shop was responding to, what competitors were doing, where execution broke down, and what to do next. And that distinction matters more than ever right now because in stable environments, historical data can often guide future decisions reasonably well.

5:21But this is not a stable environment. Shopper behavior is changing, retailer priorities are changing, competition is changing, promotional effectiveness is changing, private label pressure is changing, and category economics are changing. So if the founder only relies on historical reporting, they start making decisions with incomplete context. An incomplete context creates expensive decisions. Consider this, a founder sees velocity slowing, so they increase promotions. The The promotions temporarily lift sales, and sales collapse afterwards. Now the founder thinks we need more promotions. But maybe shoppers simply stocked up.

6:00The promotion pulled demand forward. The retailers moved their product. The timing was wrong. Competitors were promoting deeper. Shoppers didn't understand the value proposition. The product was hard to find. The display execution failed. The wrong skews featured. Maybe the issue was never priced to begin with. This is why canned reports are not strategy, and this is why many brands accidentally fund the wrong activities, because they cannot clearly see what's actually driving the result. Retailers see this differently. Now, let's look at this from the retailer perspective. Retailers are not simply evaluating your product.

6:36They're evaluating category productivity, shopper response, profitability, inventory flow, execution reliability, promotional effectiveness, shelf productivity, and operational simplicity. Savvy retailers know the difference between true demand and subsidized demand. This is important because many brands believe they are winning when sales spike during the promotion. But retailers often evaluate what happened after the promotion, whether category growth sustained, whether margin improved, whether shoppers repeated, whether inventory flowed properly, whether the brand created operational headaches.

7:14That changes the conversation entirely. Retailers do not reward activity. They reward clarity. They reward brands that understand the shopper, improve the category, create retailer confidence, execute consistently, and solve problems proactively. This is the opportunity for smaller brands. You do not need to outspend larger competitors. You need to outmaneuver them. The Retail Clarity Framework. This is exactly why I built the Retail Clarity Framework. Because founders need a better operating lens for an environment like this. Not more dashboards, not more noise. Clarity. Let me walk through it.

7:52Number one, internal. What happened? This is your operational reality. Sales, margin, velocity, trade spend, inventory, forecasting, shipments, deductions, scorecard, retail execution metrics. This matters, but this is only the starting point because many brands stop here. And when you stop here, you only see the symptom. Number two, shopper. Why did it happen? This is where clarity starts getting powerful. Why did shoppers buy? Why did they ignore their product? What were they trying to solve? What mattered most in that moment? Price, convenience, trust, visibility, taste, health, availability?

8:31This matters because shoppers are changing right now. Many shoppers are becoming more intentional, more selective, more price aware, more promotion sensitive. And that changes promotional effectiveness, assortment performance, merchandising impact, packaging communication, and retailer expectations. If brands don't understand the shopper shift, they start optimizing for outdated behavior. Number three, competitive. What influenced it? Most brands evaluate themselves in isolation. Retail does not work that way. What else was happening around your product? Were competitors promoting deeper, better placed, easier to find, running displays, gaining distribution, simplifying their message, leveraging private label pricing?

9:18Did the retailer reset the shelf? Did assortment change? Did another product steal visibility? Did category conditions shift? This matters because performance is contextual and context changes interpretation. Number four, predictive. What should we do next? This is where clarity becomes strategy. Not reactive strategy, intentional strategy. Because once founders understand what happened, why it happened, and what influenced it, they can make dramatically better decisions. That's the goal. Not perfection, clarity. Because clarity creates leverage. The seven hidden leaks. Now let's make this practical.

9:58Over time, I've noticed that most brands quietly leak runway in seven common areas. I see these leaks in brands of all sizes. The difference is that larger brands have more runway, and that makes these leaks more dangerous as they often remain hidden until financial pressure becomes severe. Left unchecked, they compound over time. Number one, promotions. Question, are your promotions creating incremental demand or subsidizing existing demand? A lift during a promotion does not automatically mean success. This is one of the biggest mistakes brands make. They measure activity instead of profitability.

10:35Number two, timing. Question, are you promoting at the right moment for every shopper, retailer, and category? Even strong programs fail when timing is wrong. A great strategy at the wrong time still fails. Number three, placement. Question, can shoppers actually find your product in every store? You can have strong distribution and still lose because visibility is weak. Shoppers cannot buy what they cannot find. This includes when you're out of stock during a promotion. Number four, deductions. Are you validating deductions or automatically paying them? Many brands quietly lose enormous amounts of margin here, especially fast-growing brands without strong operational discipline.

11:17Paying someone to manage your deductions is an expense if the deduction's invalid. The best strategy is to eliminate deductions before they occur. And remember that cash flow is disrupted until the deductions result. Number five, execution. Question, is your strategy consistently showing up at shelf? A brilliant strategy fails when execution breaks down. Out of stocks, including during a promotion, missing displays, poor replenishment, weak merchandising, disconnected brokers, distributor failures. Execution gaps quietly destroy runway. Number six, visibility gaps. Question, do shoppers immediately understand why your product matters?

11:58If shoppers do not notice you, they cannot choose you. This is why visibility matters more than dashboards. Number seven, decision quality. Question, are your decisions being made with full context or partial information? This may be one of the biggest leaks of all because poor decisions compound over time and many founders are making critical decisions too quickly, reactively, under pressure, and without enough clarity. This is even true in uncertain economic times like we're all living in today. Here's a strategic reframe. Now here's the important shift. The goal is not to blindly spend less.

12:37The goal is not to panic every time margins tighten. The goal is to spend with greater clarity. Because when founders gain clarity, promotions improve, retailer conversions improve, forecasting improves, execution improves, inventory planning improves, assortment decisions improve, margin improves, confidence improves. And confidence matters in difficult environments. Founders are not powerless. Small brands can absolutely compete smarter. In fact, smaller brands often have advantages larger companies do not, with speed, adaptability, agility, authenticity, closer shopper connection, faster decision making, stronger founder passion.

13:18But those advantages only matter when paired with clarity. And by the way, if this conversation resonates with you, make sure we're connected on LinkedIn. That's where I continue many of these deeper founded conversations with margin pressure, retail expectations, hidden profit leaks, category strategy, retail execution, shopper behavior. I also publish a weekly LinkedIn newsletter where I go much deeper into many of these topics and break down real world examples founders can imply immediately. Because the goal here is not dairy. The goal is helping founders protect runway and compete smarter in real-world environments.

13:56Here's some actionable takeaways. So what should founders do next? Let's make this practical. First, stop treating every problem like a trade spend problem. Trade spend is often where leaks become visible, but it's not always where the leak starts. Second, evaluate promotions differently. Ask, was growth incremental? Did margins improve? Did Did shoppers repeat? Did retailer confidence improve? Did category productivity improve? Third, audit visibility. Can shoppers find the product in every store? Understand the value quickly? Locate it where they expect it. Recognize why it matters. Visibility gaps destroy sales quietly.

14:37Fourth, evaluate execution honestly. Are displays maintained? Out of stocks minimized? Are brokers accountable? Distributors aligned? replenishment flying properly. Poor execution distorts everything downstream. Fifth, slow down critical decisions. Founders under pressure often make reactive decisions too quickly. This is where clarity matters. You can't fix what you cannot see clearly. Here's something that will help. That's exactly why I created the free 15-minute CPG runway leak finder. It's designed to help founders quickly identify where their brand may be quietly leaking, cash, margin, execution, visibility, retailer trust, and runway.

15:18No friction, no complicated system, no email required. Just download it and use it. Go to RetailSolv.com and download the 15-minute CPG runway leak finder. You can also get it in the show notes and on the podcast webpage. And if you want to go deeper after that, I'll also invite you to join the free Retail Clarity Workshop where we walk through how to prioritize and fix hidden profit leaks step-by-step. Because the goal is not simply to identify the problems, the goal is to help founders protect runway, improve execution, compete smarter with the resources they already have. Before I go, let me leave you with this.

15:55Founders are not powerless. You do not need to guess your way through retail. You do not need to react emotionally every time conditions shift. And you do not need to outspend billion-dollar companies to compete effectively. When you understand where the leaks are, what shoppers are actually telling you, what retailers actually value, where execution is breaking down, and what is truly influencing performance, everything changes. You gain leverage, you improve decision-making quality, you protect runway, you strengthen retail trust, you compete smarter, and you build a stronger business. If you know a founder struggling with margin pressure, retail execution, or growth confusion, please share this episode with them.

16:37Make sure you subscribe to the podcast, connect with me on LinkedIn and continue building clarity into every decision you make because the brands that win moving forward will not necessarily be the brands that spend the most. They will be the brands that see more clearly. I'm Dan Lohman and this is the Bulletproof Your CBG Brand Podcast. With all the uncertainty in our economy at the moment, many brands are focused on survival, margin erosion, growth, and getting an equal seat at the table. But here's the reality check. Big brands are not going to give up shelf space because your product is better.

17:11Private label is not going to step aside because your mission is stronger, and retailers are not going to do the work for you. Traditional category management often optimizes what's already existing instead of identifying what the current shelf is missing. That blind spot drains runway through weak promotions, poor execution, misdistribution, poor assumptions, and retailer stories that land to fail. Start with the 15-minute CBG Runway Leak Finder. It helps you see where your brand is quietly losing cash, margin, execution, and decision quality before bigger competition exploits those gaps. It can help you see what others miss, make better decisions, protect margin, and compete above your weight.

17:53Get it instantly. No friction, no email required. Go to RetailSolve.com slash guide 30. You need a sharper way to show the retailer why your brand grows the category, serves the shopper, protects margin, and deserves space. Thanks again 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 with 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 320. Thank you.