Unpacking CPG Finance: Ryan Williams, Founder of Northall

0:02Are you going to crush it on Amazon this year? It's such an important channel, but it's so hard to do alone and most agencies are a total ripoff. We can't afford$5 ,000 a month and a commission on our sales. They just don't get it. That's why I love our partners at Daybreak. They are full service, meaning they do the creative work, the listings, the logistics, and of course, all the ads, all with the most reasonable retainer out there. I work with them personally. I'm so grateful we have such a good partner to recommend out to you, our community. They do evaluate your product first to see if it might be a fit.

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0:51I see companies that are searching for capital and they're a little bit unwilling to listen to what the market is telling them. and I've seen a lot of companies sometimes in this very competitive environment where for every one dollar that an investor gives out there's a hundred brands seeking that same dollar can be really dangerous if you're a brand looking for capital and you're a either like anchoring to some publicly disclosed investment of a one in ten thousand company and the terms of that deal I think you just need to focus on your brand and what your brand is attracting, not somebody else.

1:34Hey, everyone. I'm Hannah Dittman, operations and finance host of the Startup CPG podcast. And today I'm excited to be joined by Ryan Williams, founder of Northall. Ryan is a true CPG finance operator and partner to brands. Through Northall, he works hands-on with consumer companies to build strong accounting and finance foundations. from day-to-day bookkeeping and reporting to strategic finance forecasting and fundraising readiness. His background spans operating finance roles inside CPG companies, investment banking, and a long-term career working closely with hundreds of brands across stages, giving him a rare, objective view of how CPG finance actually works in practice.

2:12In this episode, we break down CPG finance and accounting 101, covering critical terms and concepts founders often hear but don't always fully understand. Ryan shares hard-earned lessons from years in the trenches, common mistakes he sees brands make as they scale, and practical advice for building finance and accounting strength over time. We also dig into key metrics founders should be tracking, frameworks for evolving your finance function as the business grows, and how to think about fundraising without falling into the most common traps. If you're a founder who wants to feel more confident in your numbers, build a finance stack that supports growth instead of slowing it down, or understand how investors actually interpret your financials, this conversation is packed with clear, grounded insights from someone who's seen the full picture time and time again.

2:55Enjoy.

3:00Hey, everybody. Welcome back to the Startup CPG podcast. This is Hannah. And today I am here with Ryan Williams, founder of North Hall. Ryan, welcome to the show. Thank you for having me. Great to be here. Yeah, we're so excited to have you here today. I think it's going to be a unique and interesting chat. We're excited to get your perspectives. I'd love to kick off with a brief background from you, your career and path and what led you to North Hall today. Yeah, it goes all the way back to, you know, right after college, I ended up in investment banking and at Houlihan Loki in York. And I remember when I was in an intern there, we were advising on the sell side of snack factory, which people probably more know as pretzel crisps, those thin pretzels.

3:43And I was this intern and I saw people diving over, you know, to get pretzels from the boardroom after our like kitchen eating to them. And we were chatting about this before the call. At the time, I feel like entrepreneurship was very focused on starting an app or something in tech. And I was thinking like, I really like walking around Whole Foods more and seeing startups and Whole Foods more than an app. So where's the intersection of startups and CPG as opposed to startups and tech. And so I just got more and more drawn into the CPG startup world and went from Houlihan to being the CFO of a coffee brand that was a venture-backed coffee company.

4:23And then just keeping tabs on just investment trends and consumer more generally as like this passion project. And all of that kind of eventually coalesce to what we do today at North Hall, which is kind of to end full cycle bookkeeping, controller, financial statements prep through like financial modeling, FP &A advising on really anything that has a dollar sign in front of or attached to it. So we work with a great, you know, mix of brands as they're kind of like one stop shop for all things accounting and finance. I love that and so useful and helpful. I feel like there is a huge slice of the pie about consumer brands that in the early days are a little bit allergic to finance and really need the support and help.

5:09So I love that you're providing that. And I'm sure it's a really fun gig for you to see a lot of different interesting startups and companies along their journey and watching them grow and helping them grow. I'd love to dive in a little bit more to North Hall. If you could maybe give a little bit more context on the scale and the type of companies you focus on and a little bit of the pitch of how you fit into the CPG ecosystem and any sectors you're focusing on or any additional color, I think would be really helpful for the conversation today? So we've worked with everyone from pre revenue, which I would say is kind of the exception because it's rare that pre revenue companies are venture back today.

5:44So for the ones that are, we've done a little bit of that. But I'd say our sweet spot is usually three to $30 million in terms of sales. We have a couple that are approaching 100, which is crazy and speaks to just like the efficiency of that you can bring even if you're quote unquote outsourced to manage that entire function for a brand that's approaching nine figures of revenue. But, you know, we're typically involved on right as the founders and like some external party needs a little bit more financial clarity. So often post a fundraise, I get asked by people and friends with like, hey, do you want to start working with us?

6:23And I do think in the rank order of things when you're a startup, I wouldn't say that finance comes maybe first. Most of the companies we work with, I'm like, just survive with your family friend bookkeeper for a while. We'll clean everything up. So I would say like, there's usually some inflection point that it's time to get this in order. And I think often that's post a raise or like, hey, we've actually found some degree of product market fit. However, you know, you wanted to find that and it makes sense to like, a little bit professionalized accounting finance stack. And then we're all 100 % CPG across food, beverage, beauty, probably have a little bit of extra background in beverage because I was an operator at a beverage brand.

7:10But if it's a physical thing with an inventory line item on your balance sheet, that's our suites five. Yeah, that's so helpful. It honestly makes a huge difference. I don't know if everyone realizes that like not all accountants, not all financiers are cut from the same cloth. You know, the business fundamentals of CPG, the widgets, like the inventory line items like you're talking about, make a really big difference. I mean, in tech, for instance, you're not really grappling with sell-in versus sell-through or the kind of like real nitty-gritty gross-to-net spread that you can get, the accruels that you need to focus on.

7:46There's a lot of nuance in consumer businesses that make a big difference to work with somebody that really knows CBG and like where the different freights go in your margin structure to make sure you're reporting that accurately and a lot of little details. I'm sure we'll geek out on accounting throughout the rest of this conversation. I would say consumer brands are like 90 or 85 percent the same in their P &L structure. But then when we try to make sure we accommodate this, the 15 percent that makes your business unique, otherwise you wouldn't have started it and needs some like unique process or attention or tracking or accounting or cruel or whatever.

8:28I think we really try to make sure that we dedicate and have plenty of time on that 15 % that's some might call it complicated. And then like, have the experience on the other 85 % where we're like, we know you're gonna go to a trade show, we're gonna have an expense bucket for all the trade shows and so forth. Let's not make that we're figuring it out for the first time. So that's been a good balance for everyone we've worked with. Yeah, great points. And it makes so much sense to especially like you're alluding to being able to forecast a business properly and get ahead of some of these things when you have a deep knowledge of like, yeah, well, that's going to be a lot of sampling.

9:05That's going to be a lot of expense on certain things, knowing the scale of certain things and things like that. So obviously, you've mentioned that you're working with brands that maybe got through a fundraise process, maybe they went through a QAV quality of earnings where they're reporting out maybe some margin discrepancies or something once an accountant really gets in there and understands the business in a very detailed way. Sometimes, you know, back of the envelope or homegrown accounting or unspecialized accounting might not be sufficient any longer and really honing in on the smallest level decimal points of margin profile starts to really matter.

9:41What are the evolutions of the businesses you see when they start working with you? Like what are the big changes over time, more inflection points that are happening for brands and what's really driving those changes from the finance side? Yeah, I'd say it's two things. Like on the finance side, I'd say like the first order things make sure we have a good grip of. Everyone's very excited to build a beautiful operating model, which I think we do with great charts and, you know, all sorts of dashboards. But I think even before you get into that, just making sure you have a super solid understanding of your unit economics, which is pricing architecture side and making sure that's viable as you plan to be not just in Whole Foods and on Amazon, but, you know, maybe more broadly.

10:25So just making sure the revenue line of your pricing strategy and then also the cost of goods part of that is detailed and accurate. I think you can operate for a decent amount of time if those numbers are right and you really understand them. And then as kind of the stakes get higher and you need to plan your cash needs and working capital needs and increase the quality of your monthly reporting, then we really make sure that we can layer up into the more exciting, pretty models and stuff. And I think surrounding all that, we only will work with companies where we control the bookkeeping accounting side as well.

11:06Because in my experience, like, it's much easier to plan and have a really good ability to present the finance piece when you're also in control and have a one-to-one relationship of accounting to finance. So for example, I think it's really useful to do budget tracking. And when you have GL that's exactly matched to your model and you can zoom in to like a very granular level of, okay, we missed our gross margin, but which thing was it? Was it our product cost or was it our freight or whatever the thing is, I think just having that process super connected, it increases detail, but it also increases speed.

11:45And I think one thing that is super helpful to founders is, I think, the nearness of reviewing what's going on to when it happened, makes it much more engaging. Because I mean, even my own business, I'm trying to do my 2025 review, like, you know, I feel like it's already February. Like I focused on all our clients and Mike could sit in the rear view. So for our clients, maybe even more than us. I think just that immediacy and detail is very valuable. And I think for any brand, I think putting those accounting and like foundational unit economics pieces in place comes even before finance and a more strategic long term operating model kind of, you know, output.

12:31Yeah, great point. And just to double click and go back to what you said there and pull out some insights. You said GL, which is general ledger talking about like the kind of building block of the accounting knowledge base of your company. And as you were speaking, talking about the connection between GL and your end financial analysis, I was just sitting there like, oh, man, I have been there. I have had to build like I've had to go into a company and parse through a very messy deal and essentially build it up from scratch to try to understand what's going on because your outputs are only as good as your inputs in accounting and finance.

13:07You're starting with a really detailed understanding of essentially like what's every single credit card transaction that happened here? What is every single thing that was paid for or money coming in? What exactly was it used for specifically and when? And then you're taking all of that really detailed granular general ledger information you're rolling it up into the financial statements and then you're kind of making decisions off of that and like you're saying so if you're looking at a lot of times a directive especially post-investment is to expand margins margin expansion is like a huge area of opportunity for most investors or at the very minimum something that you want to watch intensely closely and if there's a change or a swing in margin or you need to get ahead of understanding what's going to impact margin if you're only looking at your highest level operating budget or your financial plan, your model, and the line item is like COGS, you're like, cool.

14:03I know it wasn't COGS. There's like a million little things that were going on there. So knowing end to end detail, like you're saying, and really having a handle on your business, the knowledge of that is the power. So it makes a lot of sense why you all want to focus across the spectrum. Speaking of, I'd love to kind of like break down for maybe the earlier founders that are building out their financial portion of their business for the first time. What's the bare minimum homegrown things that need to be in place in an early stage company? Like if I'm a founder and maybe I'm even doing it for myself, what would you advise me on?

14:38These are the few things that you really need to start doing now and how to do them so that you're set up for success down the road and you're not going to miss something big. Yeah, I would say like main buckets. One is just at least getting the gross to net revenue split. A lot of companies that we work with him just like, for example, booked all the money that's ever come in as their revenue. So, you know, they get a deposit out of Shopify and their revenue. But it's very different than that. There's a lot of different fees that are assessed in the intern that's not really in fact, if you do that, you're understating your revenue.

15:13So it has implications of like, if you present your business on that basis, people think it's smaller than it is. So I think just minimally in the revenue section, like understanding what is your sales and then what are things that are taken off them. And then I've noticed this battle for like years within CPG. And I think I was on the losing team with it, which is what's included in gross margin. And I think 10 years ago, gross margin in every single presentation, every like public company and like most traditional finance people's, you know, viewpoint was included all your fulfillment and like freight out and all of those expenses.

15:50And I think a few companies sort of bucked the trend and started putting those quote unquote below the line on as operations expenses that were so when you exported your financials from QuickBooks or whatever system, COGS only included the cost of the product itself and maybe freight in. I think that's like where the industry settled. So I think you shouldn't go against that, especially because it's going to make your gross margin look worse than it is of what everybody's now used to. But I think regardless of what you do, you minimally need to be able to separate what's the cost of my product, and then what's the cost of moving around.

16:30And if you can go even just one level further than that, for I think quite some time um it's sufficient which is like okay not just what's the cost of the product but matching up okay what was the cost of my product for the product that I sold on Amazon versus that I sold to distributors versus that I sold to I don't know direct to Target and I think then as you scale I think there's always this important balance of like People are very excited to be able to like infinitely drill, myself included. But I think you want to take stock of like, what's the incremental effort to be able to go one level further, which is an order of magnitude more of complexity.

17:13And then like, how often do I actually use that to make a decision? and you know i think you need to just be careful of not just adding false precision where you can keep drilling but you don't even know if it's so many little things touching the gl is it even right at a certain point so i find being able to like tell someone detailed channel level margins as the right kind of level for probably like sub eight or nine figures or so and that i think there's what I would say is the next step for a brand like I think you should probably only go through three I think like a CPG brand should basically go through like three steps in its accounting finance life cycle one is my uncle does the books and there's total disaster but I got paid and it like it works for a while which I would say is a very long window is one to like approaching a hundred million of we use a simple ERP or QuickBooks with quality spreadsheets we have understanding of our channels and margins.

18:15And we've gotten really far without putting in software systems that not everyone necessarily knows. And then three, which is the final stage would be like, we're a huge company, and we need to really, really detailed reporting. And we have a full time team that knows and understands how to put that together. And I think if you add more steps in that chain, you spend so much time like setting stuff up that you're never really like making decisions with what you have. So, you know, we're stage two. Yeah, that's really helpful and a lot to unpack there too. To your last point, I totally agree. You don't want to wait too long.

18:52A lack of diligence and process gives you blind spots or holds back your business. But at the same time, you don't want to over-index so much on process and perfection that you're losing sight of the North Star, which is to build the company and drive it to a place of success. So that framework makes a lot of sense of three-stepping the process. We'll be right back. Friends, did you know that a party has been going on this whole time with 35 ,000 people and you're invited? It's our Startup CPG Slack. You hear about it all the time on here. And if you haven't yet joined in, this is your moment.

19:29Take out your phone, type in startupcpg.com and then click to join our community. You'll be at the party. You'll hear about all our events. You'll get in front of buyers, investors, brands, whatever's most important to you. We have such big plans ahead, but you got to be in the community to hear about all of it. See you on the Slack.

19:54Earlier in the conversation, you mentioned, you know, a couple of things that early stage companies should really make sure they have right and focus on is gross to net sales reporting being super accurate and understanding the payouts from Amazon or Shopify you might be receiving might not fully reflect true gross sales. Could you maybe, you know, for anyone out there that has no idea what could be in that bucket or how to go about it the right way, could you maybe give a walkthrough of how you would best approach a situation like that or the things that they need to specifically be looking out for or double checking on?

20:28Sure. So I would split like that, you know, kind of gross to net bridge minimally of what we call online offline. I know a lot of people call D2C or whatever. I just call it online offline. Online, you're selling the product online. Offline, as the name suggests, you know, offline. On the online piece, you just need to look at whether it's Shopify or Amazon, your statement, and reconcile like there will be a line on there that shows your revenue. and then it will show all these different things that are taken out of what actually comes into your bank account. So for Amazon, as an example, any FBA fees, the Amazon commission, all of those things need to be parsed out and put into other places in your GL, the list of accounts that you have set up in order to get like an understanding of at least the economics with Amazon.

21:18Shopify, there's not quite as many fees but still like if you sell something for$100 on Shopify and then Shopify keeps 3 % of that as their fee and you get 97 your revenue is still 100 but you need to look at the statement or there's some great software that kind of does it for you which is always this might open a second point which is I would be really weary if I'm a new company doing it myself of setting up or implementing software. I think there's so much great software, but if you don't have someone that's super experienced implementing it, I think it actually often does way more harm than good.

21:56For online, those are kind of the, you know, the things that you've got to watch. You mentioned your accounts, and I think what you mean by that is chart of accounts. Yes. Versus actual sales accounts. Could you maybe explain chart of accounts and get that into a little layman's terms as well. So we're all on the same page. 100%. Yeah, your chart of accounts, which I think is kind of a synonym for general ledger, your GL, your chart of accounts, all kind of interchangeably used. It's just like the long list of all of the different slots, essentially, where you can put financial things, track financials for your company.

22:31So within your chart of accounts, you have accounts that create your income statement and you have accounts that create your balance sheet. And then within the income statement, there's various accounts that on the revenue side are like gross. And then you've got deductions or trade spent, we call them just broadly deductions. And then all the things you put into your gross revenue accounts or your gross revenue GLs, less all the things you put into your deductions GLs gets you to your net revenue. That's such a great explanation and super helpful. So you want to go through all of the gross sales that you might be getting.

23:09Make sure that you're not just focusing on the payout coming into your bank account, the cash that's moving into your bank account. Find out the discrepancy between the payout and the gross sales that you made. More or less, those might be deductions, although FBA fees might go into COGS or somewhere else. So make sure you're accurately accounting for which line item is which and then understanding your gross to net spread, as we would call it, so that you're not underreporting your gross sales. And you're also understanding as I mean, less so maybe online, but for sure on the offline channel, as you were alluding to breaking it between offline and online.

23:42Obviously, everyone, everyone in brick and mortar knows you've got your TDPs, you've got a lot of things going into deductions that you want to watch like a hawk. So that is super helpful color. Yeah, well, and then just on the offline deductions thing to just as as you were saying, all those different, you know, when you when you get your first order to UNFI and or KHE or whoever, and you got a check that's a little smaller than you thought. Those are usually deductions that are happening in between. And again, at the earliest stages, maybe you don't need or just have, you know, every company's operating with fixed resources and time.

24:19So realistically, maybe those first orders, you don't have time to parse out exactly what it was. But at least, you know, I sold 100 and I got back 70. I can match the 32 offline deductions and you can kind of know your offline trade rate, which is, you know, very helpful. And then I think thinking sequentially of, okay, this is an area where it's large enough and important enough that we need to like, open the level of detail that we track this in, then you can kind of just gradually like, break things out. So within offline deductions, maybe like a step that we see a lot of our brands go through is maybe first from just booking stuff cash, which is totally wrong, to like, okay, I had 100 of revenue, 30 of deductions, but I don't know what they were.

25:09To I had 30 of deductions, and I have a piece of software, you know, I'm on the board of Floret, there's a bunch of great companies in that space on what were those$30 of deductions and were there some of them that shouldn't have happened. So, you know, I think just taking things as many projects as you expand the accounting finance function, I think is also just a very digestible way of having that side of your business kind of keep up with the overall growth. Yeah, I love the way you're explaining it peeling back the layers of an onion essentially and really I guess in finance as we would call it the value creation that you're finding as you go and the first layer of that onion is just landing on the moon and understanding where you are it's just the knowledge base of what is going on here I kind of always think about it as like when you start a puzzle and you're dumping out all the pieces of the puzzle and you're kind of just like flipping them over organizing, okay, I've got edge pieces, I've got corner pieces, I've got all the pieces, but you're not really making sense of it yet.