SFT Consulting

0:00Welcome to the Emerging Brands podcast. Sharing the stories behind brands you'll want to shop next. I'm your host, Kelly Bennett. I am a New York City-based brand strategist for CPG Food and Beverage Brands. In each episode, I'll take you behind the scenes of founders that are building better-for-you products and bringing them to market. it. Also, I talk to brand builders, retailers, industry experts, and tastemakers who help bring those cool products to your shopping cart. You will hear stories of real-life founders, their launch strategies, and practical advice you could use to grow your own brand or simply discover what's next on shelf.

0:42And the best part is you could shop all the brands featured on the show. This podcast is brought to you by Glimpse. Glimpse is an AI powered deduction management tool that disputes and recovers invalid deductions, winning brands, thousands of dollars and hundreds of hours back to founders so that they can focus on what really matters most. If you're a brand selling in retail, go to tryglimpse.com backslash trial for 30 days free and let them know I sent you. Now let's dive into the new episode. Hi, everyone. Welcome back to a new episode of Emerging Brands podcast with Kelly Bennett. Today, I have an industry expert.

1:29She is a fractional CFO for CPG Food and Beverage Brands. Elena Minton is a founder of a consulting company that specializes in helping CPG Food and Beverage Brands really organize and be strategic with their financials. She's the founder of SFT Consulting. And Elena, I'm so happy that you're on the show today.

1:59Elena Minton:Hi, Kelly. Thank you for having me. Very excited to have this conversation. Yes, I am too, because as someone who works with early stage CPG food and beverage founders, getting their financials in order is usually one of the hardest parts of launching the brand, right? The strategy could be really fun and exciting, the visual branding, the packaging, the taste testing, but then it gets down to the nuts and bolts of the financials, which are critical, truly a make or break for a CPG brand. And that can get really kind of like tucked under the rug or look the other way and kind of just try to figure it out as you go.

2:49So when I connected with you. I really was excited to have you on the show to break this down more for an early stage founder to really understand how a fractional CFO can play a role in their business. So to kick things off, can you tell us about your boutique agency? I know that you specialize in CPG, food and bed, but I would love if you could first give us an overview of your consulting agency.

3:19Elena Minton:Yes, 100%. So as you've mentioned, I work with food and beverage brands, and this is by design. Honestly, because that's where my passion is. And I am obsessed with all things food emerging brands and founders who building those products that they're making people's lives genuinely better, or at least more exciting. through food. So, and I've not always been in food. I actually had a pretty standard finance accounting career in the beginning, traditional way, public accounting, corporate finance roles. But at some point, I made a very conscious decision to move into the food space. I already had my MBA, but I realized that I don't want to just work around food brands.

4:18Elena Minton:I really want to fully immerse myself in the industry. So I got my master's in food studies from NYU, amazing program, by the way, and took some venture finance startup classes specifically for Food and Bev, CPG, and Stern. So basically went full food nerd. That is so cool. I didn't know they had those specialties for finance and CPG food and beverage. Yes, Stern specifically. So you just do the dual enrollment and they have amazing classes specifically for food and beverage. Incredible. It is. It is for like, you know, venture financing, just like a lot, a lot of different horses, but definitely amazing.

5:06Elena Minton:So yes, so through that, I learned obviously a ton and build an amazing network of people who are passionate about everything food related and completely immersed myself in a space, which is still pretty much how I approach my work today. And, you know, like I also love the founders in the industry. I touched on other industries without consumer, but just through the years of like advising different brands. but food and beverage founders are like to me are absolutely best I mean the combination of creativeness resilience resourcefulness and passion yes and some of them you know like you go through so much together when you work so some of them really becoming um close friends like Bella from Better Sour who you had yes podcast just now yes yes right right so like I've worked with her during her previous branch, Shaka Tea.

6:16Elena Minton:And so I'm now super exciting working with her and her best friend on building better sour gummies for foodies. Amazing product, super smart founders, fantastic teams. So it's just great to continue this partnership like throughout companies. I love that. And you have a really great portfolio too of CPG, food and beverage brands that you've worked with. Could you share a little bit just to also help people understand the context of Fractional CFO for someone who's really new to this space? Yes. So I work with brands in different stages of their lives, right? So I have some brands in my portfolio who are very, very early on and it can be pre-revenue.

7:11Elena Minton:Okay. So like pre-launch, pre-rev. Pre-launch, pre-revenue. Okay. This is where we really setting everything up to make sure that we are not just diving in the business without understanding a very rudimental things. And that the most important thing is that unit economics actually allows us to go and sell, you know, this amazing product. And on this stage, it's actually some interesting things may happen. So you create the product. The product is amazing. Everyone absolutely loves the product. and so we were like okay I'm ready to launch and that's when let's say I connected to you know a couple brands recently and they're like okay we were selling last year on D2C and it was a big success you know like and you know we raised some money just friends and family like around a couple angels and we ready to go to retail And we're looking at how much does it cost to make a sellable unit and how much you want to see it on shelf at the retailer.

8:42Elena Minton:And we understand that we absolutely cannot go to the retailer because we will be losing money on every unit. and what happens is and the same like with you know continuing with djc because when you're super early on and you sell at you know your local uh food market or you sell on djc just like a very early on right there is no investment into the advertising it's basically you know a thousand people bought it because they are the friends the friends of the friends someone Someone saw the post. So there was like no real investment into selling that product to consumer who has no idea what it is.

9:37Elena Minton:And so when that happens, basically, we go back to the drawing board and we are looking, you know, like a different things. okay is there any way to currently optimize something in the product and if you are if you have no margin or very low margin in the beginning and you think that it will improve with scale you should stop yes and completely rework what you have because Because unless you're going to sell, I mean, of course, you're going to realize some improvements, you know, like the packaging, you know, like a hundred bags cost significantly more if you or then per bag compared to if you're buying 10 ,000 bags.

10:38Elena Minton:Sure. But not to the point of 10 margin points, you know, like and if you have 30 percent margin just on your product, you should not go anywhere. You need to rethink what do you have here? And one of the creative ways to look at it is to think about the pack size, you know? Okay. That's what we've done. That's one of the examples how you can address it. So you have your product and you're like, okay, so that's not going to work. maybe what I need is I need to slightly reduce you know the pack size that work but the other thing or I need to increase the pack size because majority of your cost is a tolling fee so there is a lot of components you need to look at but the most important thing is your unit economics needs to work and, you know, to be at least at 50 % start.

11:56Elena Minton:Otherwise, what's going to happen is, well, you're going to run out of money. That's, you know, obvious, but what also is going to happen, you're going to go to the retailer and you will not, and you're going to open the retailer and retailer is super excited, but you don't have enough cash to support that product on shelf. And so then the product is not moving, you get discontinued, and then you cannot launch in another retailer because your story sucks. Right, you don't have any velocity to then leverage. You don't have velocity, you got discontinued. So you have to be extremely intentional.

12:38Elena Minton:where are you launching when are you launching it and why you know and so that's the conversations we have with the very early stage brands that makes a lot of sense so if someone is and I'm always thinking about the clients that I work with who are in the very very early days right of having the product concept. Maybe they haven't even started formulating yet. What advice would you share with them on starting to maybe get the right information organized or things to have in the back of their mind so that when they come to you to get organized, they have the right information so that you can make the best financial strategy for this brand?

13:31Yes.

13:32Elena Minton:You know, it's interesting when I start working with early on on brands like that who actually don't have the product yet. Right. Right. So and there is like just the concept. I want to make this wonderful beet chips. and so the conversation the first the first conversation we would have around you know like the cost and everything um i would say like okay do you know like did you price it like no not yet i said okay so tell me how much you wanted to be on shelf right how much you wanted the customers see it in the store, right? Like in Sprouts or Whole Foods. And I will tell you how much this bag needs to cost you to make.

14:22Elena Minton:And then we go from there. And then you can see whether or not it's even, you know, workable. What do you think is a good way to go about just coming up with that initial MSRP when someone's in the really early stage? Is it looking at the competitive set, looking at the retailers you want to be at? Probably most people listening are in the better for you space. So their price points might be a bit higher than say conventional, but do you have any best practices or anything that you recommend people doing to get that ballpark number going? yes definitely identify what is your path to retail okay and but what I want to be like what I want everyone to be thinking about that you know the the real big growth is in conventional and conventional it's really moving towards more and more better for you segment in it right and so yes it's good to start in you know like natural stores but you should have a path for it to work in conventional because you know you can price it at ten dollars in iran and you know you can price it in fifteen dollars at iran it's probably still going to sell Right.

15:53Elena Minton:But it's not the indication that that's how you're going to build your brand. Right. I'm so glad that you just touched upon that because so many founders, again, in the early days, you have your eyes on the air wands or the specialty stores that are cool and happening that you can get a higher price point for. However, thinking ahead, you really have to have then an understanding of how you're going to be able to scale beyond those more niche natural channels, right? A hundred percent. Like I live in New York City, you go to bodegas, everything is like 3x of the normal price, right? Yes. So, but this is not the path of growth through New York bodegas or Irwan.

16:47Very niche. Very niche. Very niche.

16:50Elena Minton:It's great as they, you know, like get your product out there. I consider those stores be a great way to really understand the customer feedback, to really understand, you know, like your consumer, like, you know, all of that. Right. Right. With feedback. But you have to have a path to sell at, you know, normal stores, conventional stores or, you know, like a good combination because you really want to be multi-channel. So that's where you really will unlock the growth. Right. Do you have any advice for someone who is, again, CPG, food and beverage, it's niche in the sense that direct to consumer isn't really as strong of a channel, right?

17:49Even if you have tons of ads running, it's really goes against how consumers normally buy their food and beverage products. they are looking at retail. Though I hear a lot of early stage founders get anxious about the thought of going into retail because of the financials. To them, they think, well, it'll be cheaper to go direct to consumer, but not putting into account the other cost of maybe the ads they have to run or the time. Is there any insight or advice that you would share with someone of just wrapping their head around the financial investment going into retail and just maybe level setting expectations a bit more or understanding how this is essentially critical for CPG food and beverage brand.

18:39I would love to hear your point of view on that.

18:42Elena Minton:Yes. So I know brands who grew their sales only in D2C and the Amazon to some point. Right. So, but realistically, and they, you know, like they successfully grew it to quite high revenue. but realistically saying realistically when you look at really large growth for the brand and potential you know successful exit for the brand you have to be in retail because that's where people shop for food right where they discover food and as far as and it's like with beauty it's slightly different right right exactly you go to to buy food in a grocery store or online platform like fresh direct or thrive you know you don't just randomly browse the internet to find the new chips right right so so um and as far as the d2c so the d2c and that is like a very early on founders have very often this misunderstanding of D2C channel.

20:17Elena Minton:So early on, it doesn't feel like it's very expensive channel because early on, it is organic a lot and your revenue is very small and you just get people from somewhere, right? Like a little bit of social posting, you know. But if you actually set to grow that channel, it is a very expensive channel from the digital marketing perspective. Right. And the ROI on that is actually significantly lower than on Amazon. And so - Oh, interesting. Yes. So that is interesting because people think, okay, I'll have to give away 30 to 35 % to the Amazon when I sell there. But your ROI on digital ads and the customer acquisition is actually more efficient on Amazon.

21:21Elena Minton:Interesting. Yes. And so if you are in retail, you also have to be on Amazon because discovery happens in retail. And then people would go to Amazon to, you know, like to replenish. Right. So but as far as the D2C, you have to be very intentional about that channel. Right. And at the end of the day, look, my opinion that if it's a food and beverage brand, it needs to be in retail. But this is like my personal opinion. I believe that that's where the growth, like a real growth occurs. Right. I totally agree with you. And that's something that I really try to help early stage founders understand.

22:20Like, if you really want to do this, you've got to wrap your head around retail. It's just how people buy products, so food and beverage.

22:27Elena Minton:And, you know, there is a lot of, let's say, like misconceptions about going to big retail, right? So people often I hear saying like, well, you know, the big distributor are taking my money. I mean, you have to be very, again, like intentional and strategic of how you go to retail. And the other thing is, no one really is taking your money. If somebody is taking deductions, it's because you, at some point, agreed and signed and put the cross at the contract. With a retailer promotion, with a distributor promotion. like you it's not wild west they know that you know like they don't just go and decide that we are going to take 15 right it's because you agreed on that and of course i mean trade spend is a huge line item on everybody's financials and everybody's pnl and therefore you really have to manage that piece and you need to invest in managing that.

23:49Elena Minton:So a lot of brands, like besides, you know, the early stage brands, a lot of brands I work with actually come to me when they are at the point where growth starts creating operational complexities. So So they really already went to retail and they realized that the cash flow is becoming more complicated. Like they have to make more inventories. So there is this cycle because you work through with a distributor. So your cash cycle gets like longer, right? Like the cash conversion gets longer. So it takes longer for you to get paid and you get all these deductions and you really need to plan and manage and put in place working capital, manage trade spend.

24:47Elena Minton:There is like a lot of different offers right now in the market for the third party who manage the trade spend. Like I like working with Glimpse, for example. Yes, they're the sponsor of this podcast. Shout out to Glyphs. Okay, call out to Glyphs. Yes, I love it. Yes, good. Yeah, I do love the work they do. They also give you a lot of analytical data, which I use for analyzing the ROI on trade spend to making sure that we are not just running promotion and not getting any lift. So I'm always looking back, you know, like maybe a quarter or a couple quarters by retailer understanding, okay, we spent$25 ,000 on, you know, which was, let's say, 25%, you know, like of our revenue.

25:50Elena Minton:And what we spend in this specific week, we spend like we ran this specific promotions looking at spins report to understand, did it have any lift? Because if it didn't, then maybe that promotion is not working for us in the retailer. And the next time we sign up, we need to do something different. We cannot do something over and over if it doesn't work. That totally makes sense. So, yeah. I wanted to ask you, when an early stage founder is putting together the puzzle piece of starting a CPG brand and just trying to understand the landscape, when do you think it's the right time to bring in a fractional CFO?

26:38Is it in that pre-rev or once you get into retail and have an understanding of your numbers? Maybe you're going from the independent to the regional and possibly national, or maybe you're looking to raise even from friends and family, angel investments. I would love to just leave people with some context because, again, what I hear from so many early stage founders of like, okay, it's this huge puzzle piece. When do I bring in certain people and how do I know it's that right time to take that next step?

27:14Elena Minton:Right. So the way my pricing structure work, it's very tiered. So and a lot of brands who I currently work with, with starting, including Better Sour, for example, we started working on when they were very early on. and then we just grow together we we grow in you know like the um different stages of of brand's life uh so what i definitely can help with in a very early on um and that one is not usually like a retainer but like pre-launch I would do a model so first have a conversation uh about what we've just talked about you know like the unit economics you know like just like the strategy around the going to retail like so founder really understand what what it takes right then because you probably would go, unless you're bootstrapping, you probably would do a friends and family route.

28:28Elena Minton:Okay, so what's important about fundraising and it's not the fundraising process itself, which of course I also help, but my expertise is more in the institutional, like early stage VCs, like friends and family. It's your friends and family. Right, right, right. But what's important, like important piece about fundraising is to actually know how much to raise and when. Because it is so important to raise enough money in the beginning and to understand how much that will last you. so you do not find yourself five months along like five months down the road out of money but with nothing to show right so then what it means is somehow then you need to convince people to give you more money when you have nothing to show what did you do with the previous money You know, so it's extremely important to have the fundraising strategy.

29:45Elena Minton:You know, you're going to raise X. It's going to take me to a million dollars. And at that time, I am going to be in this retailers. And then also, you know, like you can always, not you can, you should always try to leverage the working capital solutions. So you have your working capital and your growth capital. So what you are raising from the investors, it's to grow the business. It's not to buy the inventory. Right. For that, I work with the founders of helping to identify what is the right solution at each point of time. Because there is plenty on the market. But there is a right solution and the wrong solution for, again, at the time of the brand's life.

30:47That's such a great point. And I actually connected with you from Lunar Capital, who's also been on the podcast. Jackie, yeah. Yeah, yeah. Love Jackie. And again, it's really great to see how all of you work together as well. Again, for an early stage founder to have a sense of who should be on their radar when they come in. So that breakdown was so perfect. Yeah.

31:14Elena Minton:And you just snapped out. That's how I, you know, like work with the founders. And so then to your point, so early on, you know, like if you can do this, it basically makes your growth so much more organized. if you start working with a fractional CFO early on, you just avoid so many unnecessary mistakes. For example, I talked to a couple of brands last year and they were out of cash while sitting on a very substantial amount of inventory just because how inventory cycle goes. And I was like, why didn't you use, why did not you bring the working capital? Why did you use your cash from your bank to produce this inventory?

32:17Elena Minton:Now you cannot make payroll, but you're sitting on a million dollars inventory. It makes no sense. So I would advise, Because now, of course, you cannot get a loan because your bank is at zero. Right. And you go to the inventory, right? Right. So, you know, the best time to put working capital in place is when you just raised your round. Because then you have cash in the bank for the working capital provider. It's de-risking. and you basically using that to produce your inventory. And it just becomes this, you know, like a really good, healthy cycle. Thank you for breaking that down. I know so many early stage founders right now have like light bulbs going off of like, oh, okay, this makes sense.

33:18I can wrap my head around how this all lines up.

33:22Elena Minton:Yeah. Yeah. And then, you know, like, and then for the, for the, a little bit for like later on when, you know, you're already in retail again, you like made it through and that's very commendable. That's great. So then, but you are, you're scaling and basically what, what you don't want to be happening is that you are scaling your growth and you're also scaling the chaos, which you know like right everyone has very early on but you know like very early on it's you know like the the the mistake or you know like the uh maybe uh you're not sure if it's a dollar or dollar 20 it's like it counts to you know like 200 if you're scaling now right scaling with you and your operational chaos is scaling.