284. How CPG Brands Can Access Senior-Level Advisory, Strategy, and Execution Without Building a Full C-Suite

0:01Welcome to Startup to Scale, a podcast by FoodBevy. I'm your host, Jordan Buckner. Join me as I talk to aspiring entrepreneurs, seasoned industry experts, and everyone in between as we unlock the keys to growing from startup to scale.

0:18As your CPG brand grows, the problems often get more complicated. You need better systems, stronger financial decisions, and sharper strategy, and people who have actually navigated these challenges before. But does that mean you need to go out and hire a full-time executive? Not necessarily, and usually that doesn't always work out. So today, I'm joined by three fractional CPG leaders, Beth with S3 Connect Solutions, Rich with Atomos, and Rachel with Severo Consulting. They represent a much larger informal community that Beth is building out, which brings together cross-functional fractional CPG leaders from across the U.S.

0:56The group supports one another across areas of expertise and helps connect growing brands with the right experienced fractional leaders for when and where they need it. So today, I really want to unpack what it means to hire a fractional CMO, CFO, or COO and how to integrate those within your brand. Beth, Rich, Rachel, welcome to the podcast. Thank you. So I'd love to do just a couple introductions to help set the context. And Beth, maybe you can start and just give a quick overview of what your business does. Sure. Thanks for having us. Basically, I help growing food and beverage brands build their processes, their planning and partnerships within their operations and supply chain areas to get them ready for scale and continue growth.

1:43Excellent. And Rich, how about you? Thanks. Thanks for having me, Jordan. I'm Retro Vigas Maya. I lead Atomos, which is a fractional CMO and strategic marketing consultancy backed by big CPG veterans. So we help brands and founders with their marketing, whether it's just a short project of what we call a strategy sprint, open and close packaging refresh, perhaps, all the way through servicing fractional CMO clients between early, like pre-revenue all the way through 50, 60 million dollars. So, you know, it's happy to be here. Excellent. And Rachel, how about you? Hey, Jordan, thanks for having us.

2:18I'm Rachel Severo and I act as a fractional CFO for emerging CPG brands, helping them understand their underlying business performance and with capital planning. Awesome. Thanks so much for being here, everyone. Excited to get into it. So Beth, we'll start with you with our first question, because I really am curious of, you know, why would a founder bring in a fractional C-suite leader instead of continuing to figure things out themselves or hiring someone full time? Sure. So it's not necessarily that you're thinking about bringing in a fractional exec. It's more about that you need some help with leadership or you need some help making better decisions faster or you're trying to avoid making those mistakes that, you know, you don't have maybe a capability or background in a certain functional area, whether it's marketing or finance or your operation.

3:13So we think of it, and I sort of speak for racial and rich, but we've talked through this number of times that it's really about just trying to bring somebody in to help. And sometimes it's just about what stage you're at and what pain point you're having at the moment. Yeah, I think that's key. You know, one thing that I often see is that founders who are getting into this for the first time that don't come from the CPG world have a vision that like one person or a few people should be doing everything, but that's not necessarily the right approach as you start to grow. And so, Rich, I know you had in your team has experience within larger CPG brands.

3:50Like what really is the role of a higher level leader and value are they bringing into the conversation that maybe someone who's like doing the day to day creation and execution isn't really seeing or thinking about? Yeah, fantastic question. I think that what we bring is the flight hours. My whole team comes from big CPG where it's Mondelez, PepsiCo, Frito-Lay, Colgate, Palmolive, etc. And we've been in the rooms. we face the challenges. And when you come to a fractional, you're mitigating risk, right? Because we've collectively, and if I always say, if we don't know it, if we haven't faced a problem, somebody in our company has or in our network has.

4:29So, you know, just like Beth and Rachel and I collaborate, we have that network to help a founder solve problems that they might not necessarily know even where to begin. And we've lived a lot. So we've seen a lot of it. Yeah, I think that is key, just having that outside perspective so that, you know, as a founder, I say, like, a lot of times you're solving problems for what feels like the first time, when in reality, thousands of other people have already solved those problems, have seen different approaches, and not that there's one way, but they know, like, okay, maybe there's four key ways that you can approach it, and you can decide which one's right for your brand, or if something else, you can decide if there's another approach.

5:06So I think that's key. And then Rachel, you work in the financial world. You know, I always see a lot of brands, right? They're like managing their internal financials themselves. Maybe they have a bookkeeper, maybe an accountant. But what are they kind of lacking without having someone in like a CFO type role? In terms of what they're lacking, it's the time. And, you know, I don't think a lot of founders and CEOs get into CPG because they love finance and, you know, really want to explore that part of the business. But it is integral to developing a company that has legs. So it requires time and it requires, you know, building the correct reports, the correct models, the correct forecasts.

5:45So what I often see with clients is I step into this fractional role. I'm able to show them, as Rish was saying, show them what they should be considering from a financial perspective that they maybe don't know just because they haven't done it before. And, you know, the fractional work then lets them focus on building the brand, building the product and, you know, focusing on all the reasons why they got into CPG in the first place instead of being distracted by things like, am I going to have enough cash to actually get this product on shelf? Yeah, I think that's key. And then Rachel, kind of stick with you, I love to kind of think through, right?

6:20Because as founders are thinking about like hiring some help, they're like, okay, I need to figure out my finances. Maybe I'm pitching an investor. Maybe I want to make sure my business is solvent, right? Like when they're coming to you, what kind of work are you actually doing with them? Is it about the strategy? Is it about kind of advising them? or is your role to actually like put together the cash, like the models and speak with them every day or every week? Kind of what are the different types of engagements that are possible and that you work with? I mean, it really runs the gamut. And I think, you know, one thing that Rich, Beth, and I talk about often is the fact that we have kind of a plethora of different engagements that we offer to clients.

7:04And since we've seen so much in the CPG world before, we kind of know what a client needs after having some initial conversations. So there are certainly some clients where they have a very specific question. They, you know, are raising around and they want to know exactly how much they should raise and how long that's going to last them. And that's, you know, one of the most common questions that I get to kick off an engagement. And, you know, that just involves building, you know, sometimes just a simple cash flow model, sometimes a fully fledged operating model. It depends on the stage of the business.

7:36Sometimes I have clients coming to me initially and saying, hey, we are, you know, getting questions from the board that I no longer have the ability to answer related to the finances and related to the forecast. And that, you know, allows me to delve into the operating model, the forecasting process, and also get into kind of investor relations and stakeholder communication. I find that those entry points then often expose the areas of the business where I can be most impactful. And I'm sure Rich and Beth see this as well, when the question that you answer initially ends up very often not being the question that you end up answering on a regular basis.

8:10So, you know, maybe those are two of the things that start an engagement. But then what ends up happening is, you know, I'm working in the model with them. I'm evaluating their actuals on a actual financial performance on a monthly basis. We're looking at the forecast. We're looking at customer P &Ls, channel performance, SKU, KPIs, unit economics, kind of you name it, depending on the needs of the business. Yeah, no, one thing that I've experienced as well is that different fractional leaders, different consultants have different areas of the business that they work in. And as you mentioned, sometimes it could be multiple.

8:43Sometimes you're thinking about the strategy and then someone else is doing the execution. Sometimes you're kind of doing it all and owning that. And Beth, you and I have talked about this a lot too, right? Like what are the different roles that a fractional leader can come in with? And how do you set up that expectation to align that at the beginning of a project in terms of like what you can deliver and what the team actually needs. And so Beth, I'd love for you to talk to you like different roles that you've worked with and that you've seen fractional leaders do within organizations. Sure, that's a good question.

9:15I would say just to echo what you were talking about before, I think the conversation sort of changes from problem solving early on, like that's typically the engagement start with, you know, there is a specific need, a specific problem, And then it comes down to, OK, how can we find the root cause of that problem? And then it's about building capability or sort of building the foundation so that they can make decisions faster and things become easier. So to answer your question about how do we sort of work or what does it look like? For me, I think it starts with sort of you can talk to someone if they're, you know, Rachel mentioned earlier about they might need some strategy or advisory guidance.

10:02So maybe occasionally you might get a question of we're having trouble answering this question for a co-man or a co-packer. We're having trouble answering it for an investor. So we need some additional help. And Rachel and I actually have a little bit of overlap. You know, certainly naturally in the operations and finance areas, you get into some of those questions around cost and what does the volume look like? A lot of times it comes to me with the I'll give you one example. They say, you know, we have a volume plan, but we're not understanding where we have these cash pinpoints. Like they think they understand the cash flow and the timing.

10:41But what happens is they built out this volume plan, but they don't have it at a SKU level, for example. They have it at a total level or they understand it's coming from, you know, D to C or and they know part of its retail, but they don't have it broken out. And so sometimes it goes from that strategy and advisory piece to then, OK, I need a little more tactical support. So it's OK, I need help making the decision. So that's sort of like one. And then how do we build something out that can answer the question? And then how can I help my team that I already have use that tool or that foundation?

11:20So it's I look at it from that standpoint. It does get into some bit tactical work. coaching and development on a process and a plan. And then the third piece of it, I would say would be, okay, we figured it out. We sort of built the plan, but then how do you bring the team in, the resources in to get the work done? So it would be, what does that look like? It could be internal. It could be, you know, a junior hire that's coached and trained, or it could be something that's outsourced to a team that would, for example, there are teams out there that do day-to-day operational execution. Yeah, I think that's important.

11:56I think, you know, even within there, right, like, you're working with someone who actually knows how things can be set up, how they should be set up so that you don't have to reinvent that process yourself. And then, as you were just mentioning, like, maybe it's you as the founder who's in executing it, maybe you have an internal team member or hire someone who's going to manage the day to day, or maybe you figure out there's a an agency that's going to help with that execution. But then the fractional leader you're bringing in is representing your interests and understanding you as the brand who can then communicate that to other partners effectively and clearly.

12:29I think that's a lot of things that founders can sometimes miss as well. Yeah, it's really just about to make sure we're clear about what stage they're at, what capability doesn't exist, and that we're not only solving the problem, we're preventing other problems from happening in the future. It's that sort of proactive approach that that's what, you know, years of experience like Rich mentioned, you know, I also come from a background of some big CPG companies like Pepsi and Diageo, but I've also worked with a lot of small brands. So I've seen both sides of it. Not everyone has that, you know, like same thing with Rachel and she's seen sort of the big and the small and it's, you're not bringing me in a full-time leader.

13:09You're just helping with experience, judgment and perspectives. Yeah. And I think that to complement what Beth is saying, for me, you're only paying for the strategy and the strategic direction of a senior leader for the hours that you need versus, you know, the alternative would be hiring somebody at, you know, a 10, 20 year experience for 40 hours. Like that, that's very, very pricey, right? So the fractional model allows brands to leverage all of our expertise, our network, our knowledge, and where we add the most value per fraction of the price, really, at the end of the day. So you're just taking those 10 hours and the 25 % of super valuable thought leadership and direction, and then the rest of the stuff that's busier work or lower level or can be delegated, outsourced, we delegate ruthlessly is basically how it works.

14:05I always tell my clients that, you don't want me doing the little work. like that that means like the the easy work you want me on on the big meaty challenges because you don't want to like pay the hours the hourly rate for me to like work on your social media posts or you know something like a very small thing let's let's figure out that big problem that's making you your your business bleed and let's fix it for you once yeah i think that's a big point because i think you know something i hear all the time from founders is you know this all sounds great but like how can i actually afford this level of executive even fractionally And so I'm always curious, like how to think about that investment.

14:41So I love how you frame that, Rich, in terms of what are the things that the value that only I or someone at my level can provide and pay me for those things and then hire other people at different rates and different skill levels to do some of the implementation of of that strategy, because those are two different, multiple different skill sets that that are involved. And so, Rich, I'm kind of curious within your business, how do you work with clients between that? Like, what are the things that you find that you're really good at? And then how do you work with them on the implementation piece?

15:11Yeah. So, you know, I always say that we can service a client as early as pre-revenue. I have an idea and I have no idea how to make it happen. Clients all the way through larger enterprise clients that have been around 50, 60 years. And it's more about the moment in time where all of a sudden, you know, in my face, it's they need to put booster rockets on marketing, right? Or they have a marketing, big meaty marketing challenge to be solved. And so we and we meet them where they are and we push them along on their journey. And we do that whether it's a open and closed project or a multi-month commitment.

15:45Awesome. And then how do you help them in terms of directing them into like, here's this big strategy and idea that we've helped you kind of solve theoretically and then transitioning them to like, okay, now this is how you can help like actually make it happen and get it into the world. Yeah. And, you know, I always tell clients that that's the difference versus like a traditional consultant, right? Like consultants put together beautiful decks and beautiful strategy. They deliver it and they run away before like, you know, it falls apart. And what we say is that we're here through implementation, through execution, seeing it through because there will be curveballs, right?

16:19Like you can build the best strategy. But once you start rolling out, the business might change on you, right? It might be like of like nobody's fault, but we're here to help when that happens as well. Awesome. Yeah. that. Yeah. Yeah, I was going to kind of piggyback off what Rich said. And I think there's also a real benefit of working with a fractional consultant at some of the, you know, execution of the plan versus a full-time W-2 employee, because we're there for the client as an independent party. We are not, they don't have to worry about, you know, our career development. They don't have to, you know, worry about saying the wrong thing and being a good manager.

16:55It's a true partnership at the level of thought leadership. So it makes the conversations that, you know, I think we have with our clients really honest when it comes to the execution side of things. So like Rich said, curveballs happen all the time. But what I found is in working with clients as a fractional CFO, it's very easy to have an honest conversation about, hey, this came up that wasn't anticipated and therefore the original strategy that we laid out isn't working. And we need to pivot in, you know, way A, B, or C, let's talk about the pros and cons of each. And then, you know, let's go and do that instead.

17:27And those conversations are super organic when you're working with a fractional leader in a way that I think can have different implications when it's, you know, a full time employee. So that's just, I think, one of the ancillary benefits that I didn't necessarily anticipate when I started fractional work that I actually really enjoy now having done it. It's that, you know, openness, the transparency and the honesty. It's it's it allows, you know, there to be kind of a single team in a in a really meaningful way, I think. Yeah, I think that's a really good point. Like the additional benefits that that you get from it.

17:58You know, I'm kind of curious, especially Rachel, since you see a lot of the financial sites, right? Like how should a founder begin to evaluate the price for fractional help, which I know can widely vary to the value that they provide? Is it like a dollar value? Is it like how much I can actually afford? Is it that thinking like, okay, if I paying something this much, this is like an ROI that I can get? get from it, right? There's all these different things going through founders' heads, but how do you think about it yourself and then kind of coaching founders through other help that they should kind of bring on financially?

18:33Yeah, I mean, it definitely depends on the founder and their profile and the stage of the business. I always like to have conversations with founders and CEOs of these, you know, exciting companies about what their weaknesses are, whether personally or within the team. And the bigger the gap or the more meaningful the gap, the more you should allocate budget to filling it. Because, and I'm sure, you know, Beth and Rich can talk about this in detail as well, the real fee isn't the advisor's fee. It's the cost of what you're not catching by not having an expert on staff in the areas that you don't have the expertise.

19:08So, you know, just using a real-world example, I help clients with fundraisers all the time. And I've come in after, you know, Series A when, you know, certain terms are not favorable to the client. And you can't fix it at that point. But it's something that could have been, you know, maybe earlier in the fundraising process, you know, raising too much too soon costs you in dilution, raising too little will constrain your growth and raising on unfavorable terms, you know, costs you in other ways. So it's really thinking about what do I think I'm not understanding? What do you think I'm missing?

19:44Because I don't have the experience, I don't have the time. And what's the value of that is how I kind of help potential clients think through it. Yeah. And I see it that besides, you know, what Rachel just mentioned, I also see it where, you know, a client will say, well, you know what, I can hire the end product directly. Right. So in my case, it would be I can hire the advertising agency directly and I'll direct them. Right. But what they don't know is that first, like an agency might try to rob them blind or they might just not deliver because the client is not asking the right things and hasn't had that experience, you know, managing these vendors, right?

20:19So like Rachel can manage finance vendors way better than anybody else or Beth making sure that the co-packer, you know, delivers on the right terms, right? And similarly, a marketing leader knows exactly what to expect from an agency and how to brief them and how to give them feedback and how to talk their language. Yeah, that's just thinking the same thing that, you So we started this discussion talking about like, it's not about the cost. It's can you afford to not have this advisor or this input because you're making such, you know, important decisions, but also decisions that are cost quite a bit of money.

20:58So every day you're making decisions about how to spend the very little funds that you do have, whether it's buying inventory, signing on, signing contract with a copac or a supplier. It's like every day there's financial implications to your decisions. And I think it's just trying to make our job is to try to make sure you're avoiding spending extra cash or, you know, I've seen a couple examples where someone will say I had a bad experience with a copac or a supplier. And it's not necessarily that those partners are bad partners. It's because they didn't ask the right questions. They didn't think they needed to have, you know, processes in place or agreements in place.

21:44So it's some of it is about, you know, just having walked the walk before. And some of it is about just thinking through your cash decisions and making better, you know, sort of proactive decisions with your whether it's third party advertising, marketing partners, you know, before before you make these costly mistakes. I think that's what we say, you know, the most expensive decisions are the ones you either delay or you try to figure out on your own. And then it's either doing rework or coming back and finding out that, you know, you wish you had known something sooner or wish you could have avoided spending this extra money or having these extra costs come into play.

22:23I think that's a good point. I think it could be helpful for listeners to kind of hear examples of some projects like that. And so Beth, maybe starting with you. Do you have any examples of like project that you've worked on that you were able to come into a company and create a meaningful impact? Yeah, I have many, but I'll keep it brief. One is just really understanding more supplier pricing and purchasing practices. I think that sometimes this, or I should say very often this gets overlooked. You can come in pretty quickly, and I'll call it a quick win, small focus project to look at your purchasing and your cost of goods or unit economics and see where there's opportunities.

23:06So just do a mini assessment to understand who your suppliers are, what the pricing is, what the terms are, how often you're buying, and then where there could be savings opportunities. that's probably a pretty easy one. I say easy for me because I, you know, can pick these things up pretty quickly. And then second one I would say is a good example would be also, we just talked about co-manufacturing. A lot of times they do get recommendations or founders will find opportunities to use, let's just call it, some of these services to have a short list of co-mans or co-packers. But once they find them, that's one part.

23:46Then it's the how do you find a way to quickly vet these partners and understand the contracts and the terms. That's another mini project that often gets overlooked. They typically jump into the relationships pretty quickly after finding someone who can just check the boxes of their criteria, but they don't go through kind of the next phase of the process. Awesome. That's really helpful as well. Rich, how about you? Do you have an example of a project that comes to mind that you were able to create a meaningful impact? Yeah, tons. And like I said, we tend to meet our clients where they're at from a marketing perspective.

24:23And I can talk packaging. I think I always tell founders, like, get ready to spend more than you're comfortable with on packaging because 100 % of the buyers will judge the book by its cover. And so it pays in dividends to invest on your packaging. And if done correctly with the right leadership, it pays for itself 100%. I've come in to a brand where they've done a packaging refresh. They hired their own agency. They directed them. And generally, beautiful packaging work was done. It was put on shelf and they found double digit decline. And so Atomos came in and then we started doing the forensic work of understanding, well, what happened?