Every month, Accountfully interviews a CPG industry pro on our podcast The Month End. Many of our guests are those we have helped with our outsourced accounting services, and others are industry stakeholders and strategic partners that we have met in the industry. The one thing they all have in common is their wealth of real-world knowledge to share. Each thirty-minute episode is jam-packed with advice, and we encourage you to listen to each episode in full. For those who just need the “bottom line”, we narrow down two key items as takeaways for the listener; one CPG “do”, and one “don’t”.
Volume six guests are some of our more wide-ranging CPG professionals, and the advice does not disappoint. We’ve got gems from brand founders and investors, all ready to support your journey with their lessons learned. Here is your recap of the two most important pieces of advice we get from each episode: one do and one don’t, summing up the most notable aspects of running, starting, and growing an inventory or product-based business.
For more context and to experience the full episodes and show notes, visit our podcast page.
Ever wonder how some of those manufacturers in the CPG world finance those big purchases? Bridge Finance Group specializes in supporting these types of transactions. They know the needs of the CPG industry and are experienced finance professionals. The company was born from the struggles Grant and his brother saw when small businesses attempted to finance or lease business-essential items. Grant shares his insight into how a brand can best set itself up for success and maximize its potential to successfully growing through some strategic purchases and leases.
Grant’s “do” can extend across relationships in more than just business. From his experience in the CPG world, he prefers working alongside humble, open-minded people. Not only is it an easier relationship, but it also lends itself to becoming more successful.
“I think that if you are within CPG, and this kind of goes to more so on like founders or management teams, I would be more of a learner and a listener than a knower. That's the kind of people that we'd like to work with. That would be my piece of advice on doing more would be. Be more of a learner or listener type attitude, as opposed to just thinking that you know everything...
"There's a reason we've got two ears and one mouth, you know.”
Grant recommends mastering your local market and expanding from there, if at all. Too much too soon can overwhelm you on multiple levels and doesn’t necessarily equal success on the investor side. From his investor background, he prefers this as well. Especially with the changes that came from COVID, a lot of brands earned success that led to a sale of the business, even when they were fairly region-specific.
,“Don't think you need to be in all 50 states. I would rather be partnered or on the equity side invested in a company that's deep and narrow within their market, as opposed to shallow and thin.”
Craig Lewis, or “Lewie” as he likes to be called, does not shy away from risk. He created his award-winning CBD beverage brand as an homage to being active and living your best life without compromise. When the big brands he provided marketing consulting for started reining back their innovation efforts, he led the charge himself and created Flyers Cocktail Co.
There are generally understood rules and processes when it comes to starting and growing a business, but to be successful, you need to apply your specific view toward things to make it work best for you. While it is good to understand these ideas and concepts, there may be aspects of your business that won’t fit into the norm. As the vision behind your brand, you may need to do things for you, versus fitting into a profile that may or may not work. Lewie experienced a lot of this, especially navigating the CPG world with Cannabis involved; from advertising to online payment processing. For him, year one was more about proving the sales model, not dictating margins and being profitable.
“You've got to grow and prove that your model is going to work, then you'll unlock economies of scale and you'll be able to able to produce 10 times as much. So for me, it's kind of like just take it all with a grain of salt and put your own relevance on it for me where I'm at, in my own stage of the business.”
On the flip side to Lewie’s “don’t”, he recommends that even when you do unlock the code of your product sales strategy, it may not stay perfect or even the same forever. He recommends using a build, test, and learn model. Once you get in the swing of it, you will find success and pivot as needed.
“Don't expect that that is going to stay the same. The build, test, learn model, and know that experience, you're going to get market feedback, you're going to pivot and you just, if you build that in from test, learn and iterate, then you're going to be able to find product-market fit. And obviously, that's going to be business.”
Adam Kost has a successful track record in marketing for big beverage brands like Heineken and Waterloo. He even worked on the famous “Most Interesting Man in the World” ad campaign. When he set out on his own, he aimed to capture the laid-back Texas gulf coast vibe with his hard seltzers called Country Luau. In line with his big marketing background, he shares some classic do’s and don’ts that apply to all sizes of brands.
Adam recommends a deep dive into the insights of who the customer is, and how they respond to your product. Then, validate your findings until you are dialed in completely. This “do” rings so important to Adam, he refers to the art of learning your consumer as “supercritical”.
“Understand your consumer and you know, if it's a two-part answer, understand your consumer, understand your market and your market size. Supercritical exercises; do the research, spend the time, validate your insights, do research on the insights again and revalidate them before you push off the dock, supercritical”
We appreciate this answer as accountants, but Adam has spent a lifetime marketing brands. He recommends you stay away from copying others or getting distracted by things that may not support your goals and best interests.
“So I think it's you know, don't spend money where you don't need to spend money. I think you know, again, it's about patience. When you're starting a new business. You can get attracted to a lot of shiny objects.
"You can look at the competition and get lured into doing you know monkeys see monkey do strategy and don't over-invest in things that don't produce revenue? Be smart with your money.”
Jeff started his company as a way to enjoy good coffee out in nature. He and his brother share a love for the outdoors but were not fans of the instant options available. Kuju Coffee is an easy-to-use, high-quality coffee that matches the quality of the outdoors.
Jeff notes one of the keys to a successful brand is to focus on that one “thing” that sets you apart from the competition. Staying true to that will translate into success.
“I'd say stand for one thing. There's a lot of stuff out there, but you can only stand for one thing. And I would even say that is for the lifetime of the company, one thing and if you can own that thing, then you'll accompany equity with your brand. Even if the revenue is low brand equity and owning that one thing will eventually turn into sales. It's just the way it works.”
While this is a super-specific don’t, it applies to all industries. Jeff reminds us that a lot of the press releases and general banter happening across the internet is not always indicative of a truly successful brand. Oftentimes, this can be the result of a healthy PR strategy or a big show of investor status. It is not something that should distract you from your focus.
“The CPG industry is has a very low barrier to entry, so anyone can create food, go to the farmers market, and say, 'Hey, I'm in CPG'. But I think it has a very high barrier to entry to profit-driving enterprise and network capability. And a lot of the companies in the space tend to be venture capital-backed and those incentives that accompany that as V/C backed has in the way they grow, market, and leverage PR is not always necessarily indicative of the best ways to build a long-standing profitable business."
"And so when I say ignore the press releases on LinkedIn, it's really about if you understand your business supremely well, and understand the customers who are buying from your business and serving them. I just genuinely don't think any press release matters at that point. You can have a competitor and land on the front page of the Times. But I think you ask anyone who's had a press. It's like a party like it was great that night. And then the next day, the sales didn't really uptick, but people thought I was cooler. That's what the press is like to me.
"So don't get distracted by what you see, get focused on serving your customers and maintaining your margin. It's not sexy, but that's how you will make money, and that's how you serve more people over time.”
Manny specializes in accounting and automation but quickly found a need for a more sustainable snack that kept him alert and focused without a crash. He created the Excalibar and a business was born. The ingredients were inspired by two simple things his parents would give him when studying; nuts and fruit.
Manny reminds us that it is truly important to always focus on your reason behind being in business; to help people, not to extract as much value as you can from them. Having a large focus on the experience and value you provide will go a long way.
“I see within the CPG growth life cycles. A lot of times as companies get larger and larger and larger, they start to lose touch with their mission, they start to lose touch with the wider business, and the business will not survive. Unless every day when you wake up –the leadership wakes up in the morning and asks themselves, What can I do to provide a better experience? Whether it's the product or the customer journey, how can I provide a better experience to my customers, you have to obsess over the customers.”
Always keep the endgame in sight and don’t let yourself get lost in the details of the short term. Each successful step now will translate to overall success in the future.
“Don't be pessimistic and focus on the short term. You always underestimate what you can accomplish in the long term. But people, as a rule of thumb, always overestimate what can be done today or this week. So you want to focus on quarters, and you want to focus on yours, as well as what I'm doing in the short term, pushing the needle in the long term. Because success is built over a series of long-term improvements.”
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Look at all of that insight, and that’s only two questions highlighted from four episodes! Make sure to check out our podcast page and subscribe to your favorite streaming channel. We also share each episode on our YouTube page, if a video is more your style. If you are a founder or think you might be a good guest, please feel free to reach out to us!