Ep #262 Know Your Why

Stephanie sits down with Sari for a conversation about how CPG founders should decide when, and whether, to move into a new sales channel, emphasizing self-awareness, true costs, margin analysis, and strategic patience over comparison and FOMO-driven impatience. They close with a shared reminder that discipline, facts, and knowing your "why" beat chasing every opportunity, and tease a future episode on fear and false urgency.

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Transcript

Stephanie  
Welcome to Food Business Success. This is the podcast for early-stage entrepreneurs in the packaged goods industry, ready to turn that delicious idea into a real business. I'm your host Stephanie Robbins, and for nearly 30 years, I've been building and growing brands. Now, as a coach and mentor, I help founders sidestep the most common and avoidable mistakes. This podcast is about helping you see those pitfalls before you fall into them. In each episode, we'll bring you practical advice, information, and industry experts who focus specifically on early stage brands, so you're getting what you need for where you are today. Now let's jump in. 

Stephanie  
All right, hey everybody, it's me, Stephanie. Welcome back to Food Business Success Podcast. I'm so excited. It's my inaugural issue as your host, and of course we still have Sari here because she's always here with us, and she's our guest today. We're going to be talking to all of you founders who are thinking about growth and your next stage of growth. We're going to look at the CPG roadmap and get to an understanding of how we can see signal versus noise, how we can understand how to plan our business and think about what is the next stage? When can I jump? When can I go to the next stage for growth? So we're going to jump into this. It's a great topic, one of my favorite topics, and one of the key things to me is to always start with your strategic plan and to know what your end goal is. So, are you building a brand that you want to keep relatively small and contained, and you want to just own that and run that? Maybe it's a side gig, or maybe you're semi-retired. Do you want to build a brand that becomes a regional darling, you're built into all your regional retail, and everybody in the area is so proud to have your product representing their region. Do you want to go national and be at all the big retail and start building into club? Do you want to build and grow and sell to a big company? All of those decisions about what you want to do are going to define when and how you're going to jump to the next level, or if you're going to jump to the next level. So one of the things we've got is we've got our roadmap, and that helps us to think about all of the different channels. And so, Sari, what are your thoughts about how people should be thinking about growing and jumping, and where to go with things?

Sari  
Yeah, thanks, Stephanie. It's fun to be tables turned here on the guest on this podcast. I love it. So, yeah, I think sometimes as entrepreneurs we get really caught in the growth trap, for growth's sake, and I do find that people spread themselves way too thin. They're trying to do all the things all at once, and it's really important to also, like you said, I talk about that a lot. Like, what you know? Why are you doing this? What's your end goal? And then we can reverse engineer it. But really understanding what each of those actually mean for you, for the work, for the investment, for the resources that you're going to need. Because you know, when we talk about building, if you want to build an e-commerce brand, I mean that's a very different skill set than going to a farmer's market or going to retailers. Like you need different skill sets, and it's I think it's so important. We get, I think sometimes we can just we look at other brands. There's the comparison. We think, well, I can do that. If they do that, I can do that. Like, how hard is that? But being willing to look at what are my strengths as a human, where what what do I enjoy doing? What's my personality? I mean, that's why, you know we do talk a little bit about human design, or we use the Colby in Food Business Success. We talk about zone of genius, like really helping you understand where do your skills live. Because if you hate just sitting on a computer and you hate being on camera and you hate like being digital, you're probably not going to be very aligned to do an online business because that's kind of what you do, right? And so, really understanding like what are the traits that you need in each of those sales channels to be successful.

Stephanie  
I love that. I love that thinking that even before you start looking at your strategy, know what makes sense for you. And as you build that into your strategy, then know what people you might want to be bringing in. So, you know, maybe you love farmers markets and you do really well at farmers markets, and you want to keep building in that initial launch direct to consumer phase, which farmers markets is in, and you say, "Great, I do want to do a website sell direct to consumer through my website, but maybe I don't want to manage it. I want to have someone manage it because I hate being on the computer, or I'm technically challenged, and I'm okay with that. You'll hear me say, I've said it actually on this podcast, and I'll say it again is know your strengths and lean into them, and bring in good people for your weaknesses or places you don't want to be. And I just love that. And when I think about you building your brand to live your dream, that gets so important, right? Like I love the corporate life because I didn't want to be on a computer all day. I love being in the kitchen and I love you know making the product and I love selling it at the farmers market. So maybe my business partner or somebody I can hire or somebody else can do the direct to consumer. Maybe I get a Shopify person to make my site and we have a three PL. All of those decisions, of course, also have other repercussions that you want to build towards. So, what is the cost to have someone do that? What is the cost for a three PL? Can we build that into our COGS? Of course, we can. And what does it look like for a profit? And that's where, for me, that end game, knowing where you want to go is so important. So knowing where you want to go, and then what you're saying there, how you want to get there, and now you're starting to build a company that you want to build. The other thing I love that you brought up that's so important. It's got to be repeated a lot. Is comparing yourself to others. Is the idea of looking at somebody else's brand. You know, there's an old saying. I think it comes from CPG, but I could be wrong. And that is, we were an overnight success of five. It took five years, right, to be an overnight success, because nobody launches on day one nationally, and has the consumer base to activate consumers. Has that brand love that people are out there sharing. Has you know, so never assume that just because you saw that brand, they just started yesterday, and now you should be where they're at. And you also don't know what their funding is behind them. You don't know what type of support they have. Like, there's so much you don't know, and you just you have to go with the the pace that you can manage.

Sari  
Yeah, and it can be very different for very different people. I think you know what did they say? Never compare your beginning story with someone's end story. And oftentimes, we look at other brands and other founders, and we're like, "Well, I should be there. And it's like, we don't know their story, we don't know their access, their resources, the things that, you know. And even just it was a different time. I mean, if you started 15 years ago in CPG, it was a very different industry. You know, we went through COVID. We went through like all these things. Like, it's a different landscape. I love using. I love digging into stories about founders and like getting the real, raw, dirty stories. And like, I love it when founders are willing to share the hard stuff and not just the Instagram story, you know. And so, that's if you're going to go compare, like look at any other founders, go do the real research to under like, wow. So a lot of times it's timing, you know. It's a willingness, like, what's your tolerance for risk? You know, I have some brands that we have been in Food Business Success and been members for five years, and we're just now starting to take some big, bigger risks. You know, and you have to look at your own season of life and what you have going on around you. You know, if you're a mom with young kids, like you might need to. There's, it's not that you can't do things and get started, but you may have to wait until you know. Or if you're caretaking for parents, or a whole number of things that, like, your business is not separate from your life, right? 

Stephanie  
Right. And you might still have your full time gig at the same time, and what does that mean? And that for me brings up so much around. So okay, maybe I am wanting to look at what the next stage is. So what does that look like? And for me, whenever a founder says, "Okay, I want to." I want to move to this next channel. My first question is always why. So let's get into the why, and let's understand what that looks like. So to your point, now we can get into are they comparing against someone maybe that is not serving them well, or are they hearing signals from that channel? They've got some local retailers sniffing around, going, "Hey, I'm kind of interested. I'd love to talk to you. Now, you know, now if we've got a good why, what does that look like? And we looking at our roadmap, you know, thinking of each of these stages in our roadmap as the next channel option. I mean, they're not technically, because, but you get the idea. Everyone gets the idea. Understanding the cost, and there's several ways to look at the cost. There's the obvious. You know, what is the margin stacking? And for anyone who doesn't know what margin stacking is, is if I'm selling on my website, it's my margin alone that is in my cost of goods. How much do I need to make, and then whatever the costs that are associated. If I'm going into retail, but I'm going to deliver myself, the retailer is going to stack their margin on top of mine so that the end price to the consumer has gone up by that much. If I'm going into retail and I use a distributor, now the distributor stacks a margin, and that gets added to what the retailer pays, and the retailer stacks their margin on top of what they paid for from the distributor. And so, understanding what those amounts are and what they mean for your brand and how much your brand now will show up as there is its cost on shelf becomes really important, and so being able to build an understanding of the costs: what's the cost of the margin stacking? What's the cost of promotions? What's the cost of filling the pipeline with product that you have to fill to to get into that retailer through that distributor or Amazon or whatever that looks like, because when you move past selling directly, you've got to have product out there getting you know so people can sell. They're not coming to your warehouse. You know, Amazon isn't going to send that driver in their little electric truck to pick up from your warehouse because there was an order, right? So understanding how much can I invest in production, how much can I invest pre-invest in packaging, how much in ingredients, how much in advertising, and knowing what each channel requires, and so when you're thinking about that, Sari, how do you tend to have that conversation and where do you want people to be thinking about and so that they can move themselves to the answer that works for them?

Sari  
I think so much of it is really understanding everything has a cost, right? Every action that you take in business has a cost, and being willing to set aside your ego for the moment and say, "What is it that you know? Like I said, I'm good at. What am I willing to risk? What do I, you know, do I have the time bandwidth? It's like looking at all these things, and yeah, you need to be realistic. Really understand how do all these margins work, and you know there's a reason why they say, especially in grocery and in wholesale, like it's the CPG industry is a death by 1000 cuts because everybody takes their part. And then if you want a broker, and you want a sales team, and if you are using yeah three PL or all these different things, everybody takes their percentage, and at the end of the day, what are you left with? And ultimately, a lot of times, you know, for it to work in wholesale when you are on retail shelves, it's about velocity. It's about high volume going through, and that's a very different business model than I'm going to a farmer's market or a pop up, and I'm making it you know my product for that event. So I think there's very much the like, you know, it's getting in touch with yourself as an entrepreneur, and what are you willing to risk? What's your investment level like? Are you willing to go seek investment from others? Right, that's a whole other conversation. But you know, just looking at all those factors of your own life, but then also putting on that business hat, and I love love love the tools that we have in Launch and Grow. I mean that pricing for profit sheet that I worked. I mean I developed it years ago and have improved it over the years. And you know people in Fuel are like they'll post frequently and be like this spreadsheet is a game changer. Like the ability to really truly map out your cost of goods sold, because I talk with so many people that are like, you know, I'm selling at a farmer's market and my margin is 50%. I'm I'm making 50% and I'm like, that's not going to cut it. And they're like, why? I mean, I'm charging double, right? Shouldn't that cover it? And so, being willing to, I know it can feel scary sometimes. I know not everybody is number inclined, but we've tried to make these tools incredibly, you know, very easy to use and foolproof as much as possible, right? It's like you can download the spreadsheet, follow along with the video that I created. You have a really great next level tool as well in there, so that you can really start looking at these things. And again, coming into Fuel as a member, then post about it, ask about it. Like why do I need a 75% margin in my direct to consumer, right? And I love. We were talking about before we got on this call of like your, and it's also about your strategy, right? Like your strategy of am I going to sell to wholesalers? Am I going to sell 6 or 12? I going to sell or 24, right? Or like, how many is in a case? What's my minimum order? How do I actually make these numbers work? Or if you're selling online, you know, we've developed, we've put out some really great tools for e-commerce. That's like, and I'll just give a shout out to Alex Hermosy. If my favorite book is 100 million dollar offers, and so we've taught that strategy in some of our courses around you need to create a grand slam offer. Like if you're selling online, you're not selling one bag of cookies or one bag of coffee or whatever it is. Like you need to really think through your strategy on how are you really going to make these numbers work, and they're you know because I think as when we step into the role of being an entrepreneur, we just kind of think of this like one to one, like you know if you're at a market or something, you buy one bag of coffee, but how do we actually get people like buying more, committing to subscriptions, like that whole thing, right? Or if you're on Amazon, again, a very different strategy. How do you make those numbers work? And in all those scenarios, like really understanding what is those, what are all the the costs, all the things that go into it, all the margins, and then how do you really set yourself up for success as much as possible as an early stage brand in each of those scenarios?

Stephanie  
Oh, it's so true. I love that. I love the thinking in terms of if I'm selling, let's say, a box of cookies and they're $3. Thinking in terms of so, how am I going to actually be profitable and make money if I'm selling a $3 item? And this is where those spreadsheets and knowing your facts. I always tell everybody, facts are what keeps you out of fear because when you know your facts, you can now make decisions and you can plan, and you never want to make plans out of fear, and so having a good spreadsheet. You know, when I first joined Food Business Success, I met with a lot of the founders in our Fuel community, and every single one of them talked about how much that COG spreadsheet and those and the forecasting spreadsheet transformed their lives and transformed their businesses, and it's all because it puts you in control of the numbers, of understanding them, of seeing the picture, and I can't stress this enough. You don't have to be a spreadsheet numbers person. You created such an easy spreadsheet for people. I love it. It's such a great tool. And then, when you work those and you get those where they make sense, you now have the information to understand what does the next channel look like? How can I grow to the next channel? Does it make sense for me at this time? And if not, what's missing? And then you can start building what's missing, and that is that is such a gift because so many founders, so many early stage brands don't think in that, they are very reactive. Everything they do is reactive, and that's how you get into trouble. That's how you oversell. You know that's great that Kroger or Safeway came to you and said we saw you at this event and we love your product and we want you. It's okay to say I'm so flattered. We're not ready yet, but can we talk in a year? And now take that year to build to get there, right, understand what it means and keep in touch with them because they liked you. They're interested. It's okay to say no. You just have to. Well, I always joke in business. The answer is never no. The answer is here's what it'll cost. So you're not really saying no. You're saying this is great. You're telling them the truth and you're being transparent. And that's the other thing.

Sari  
No, right now. No for now. 

Sari  
Yeah, we get caught up in the like, oh, everybody, I saw this on some channel or somebody else is doing this. I need to do this, or, or yeah, I got invited to do this thing, and I've definitely worked through a number with other Fuel members. We've worked through those scenarios. They come and they're like, "Okay, you know, such and such wants to take me on in their new founder, you know, their local program or whatever, and we do the numbers, and now they have real facts, and we say, okay, if you're going to make this investment, here's what it's going to cost. Here's the margins, you know, and you get to make a decision. Like there are definitely times that I've had founders decide on purpose to be willing to lose money for an opportunity, but don't do that blindly. Make you know. Go in knowing full well I'm willing to. It's basically I'm making an investment in this opportunity, and we do that all the time, right? That's what entrepreneurship is. But we're going in with eyes wide open. We're not like in the you know the daisies and the unicorns and like oh my gosh, it's going to be so amazing! I'm going to make so much money. It's like, no, I'm purposely investing loss here. I'm going to lose money, or I'm going to break even, or I'm, you know, I'm probably not going to make money in order to facilitate the next level of growth. And you know, knowing that if you're working with a co-packer or something, you're like, okay, I'm going to make this investment to go get on shelves at this, you know, with this regional chain, for instance, so that I can then get my, you know, my orders up and create a lower cost of goods sold. But you're willing, you know, like there's a gap there, and so, you know, it's usually you as the founder who's got to make an investment of like I'm only ordering this, and it cost me this much, and then how do I close that gap? And so, you know, that's part of the the strategic decision making that we all have to do as entrepreneurs. But you need the right facts, you need the right information, and I just want to like say a little note about you know when I started food business success in 2019, there was no AI, right? And I know that it can be so tempting to try to use AI to fill in all the gaps, but AI only knows like what the information you tell it, and it's pulling from limit. You know, it's like not everything is online, and especially in this business, so much is built through connections, through relationships, through anecdotes, through behind closed doors. People aren't posting the real truth that AI is searching, right? And so, being mindful that you know having real humans who've been in the business, who understand what it you know what the real story is. I mean, AI is such a great tool, but being careful that you know supplementing it with humans and the real situation. 

Stephanie  
So true. Whether you come into food business success and join our fuel community, or find other founders. Definitely make sure if you've got a brand, you've got a community, you've got people you can ask questions to. 

Sari  
Validate it. Like, is this true? Is this because we all know AI can make mistakes for sure, and I've tested it. I've tested it on FDA stuff. I've tested on margin stuff, and if I just give it some basic information, it's a mess. So you you don't always know what to put in, like what are all the things to put in, and so that's why I love the tools we've developed because they include all the things that maybe you didn't know to think about. 

Stephanie  
Because you might not even know what questions to ask, how to build a prompt that can get you to the right. I mean, I use AI for things, and I can't tell you. There have been many times where I come back and say, "No, you're wrong. This and this and this, and then all comes back and says, "Oh, you're very sharp. You know, it loves to compliment. You're very sharp. 

Sari  
Good catch. 

Stephanie  
Good catch. You're right, but now we can get to the right thing. But I had to have the expertise already to know what to do. The other thing I love about what you're saying is all of it is absent of fear, and that's always a theme for me: is ensuring that we are thoughtful and strategic, and not being reactive and fearful, and that again, that goes back to what is our goal. So, if I know I want to go national, or if I know I want to get big and sell, or I know I want to hit a certain plateau for a certain reason, it is going to be worth it to me to maybe sell at a break even instead of a profit in a channel that I can then grow. And I've actually been at brands, and that was our strategy. Moving into a new channel, we went in and we sold. We were able to get to break even. We didn't make money for five years in that channel, but what we did was it grew our brand enough that by the time we hit those milestones, we were not only growing in our other channels, but by the by that time we then could be profitable. We could build economies of scale in other places, and we could be a powerhouse brand enough to be able to now build in what we needed to be profitable. And you know that's a strategy based on goals of where we knew we wanted to get to. 

Stephanie  
Yeah, and that is a strategy that requires so as an individual entrepreneur. I mean, it's one thing when you're in a business and you have you're like we're strategically making this decision and you know it, but as a solo entrepreneur who's new in this game, right? It is mental game as much as because you can make the decision. But I coach, you know, you guys know I'm a life coach on purpose because so much of it is mental. It's like, oh yeah, I made this decision on purpose, and how do I make decisions and respond not from oh my god I just looked at my bank account or my bottom line or you know looking at the numbers it's really doing things with yeah information making decisions and then how do you mentally stick with it and and not you know it can be so easy to flip flop and be like oh yeah you know this reaction of like, did I really decide to to break even? What was I thinking? You know, and then we flip flop or we go chase. You know, I wish over the years I've seen so many people just lose steam out of because they're chasing too many opportunities at once, and it's like if you just think about your business and your life as like a battery, and you just have so much energy in a day, and a week, and a month, a quarter, whatever. And I was actually just coaching a founder this morning before we recorded, and we met 15 months ago when I was doing the sales channel challenge, and he's like, you said it then, and I keep reminding myself like these things just take more time in this industry than you think that they will, and to remind yourself that it's not meant to all happen at once and that you know you have a long road and hopefully we can make it a fun road and a profitable road, and that, but like you're in a game, and you gotta like, how do I stay on the board? How do I stay in the game? And that we don't, you know, if you're playing some board game, you're not playing three strategies or eight strategies all at once. You don't have enough resources for that, and so being very strategic and the discipline that it takes to, and we we see that in fuel all the time. People are like posting, oh, has anybody heard of this thing? And should I do this? And I'm like, and often my response is, what have you already committed to? And like making sure that you are staying focused and dedicated, and like have a parking lot list. Have the thing that you're going to revisit for next quarter. But let's not operate out of FOMO and fear and false urgency that people love to sell you in this industry. It's like, and that's why and I told you from the beginning. I'm like, we don't sell on false urgency. Like, there's no like doors only open for this month. You know, it's just like when you're ready, we're here. And I think you know, and we find people to that we refer and in our network that operate in that same way. So it's getting out of yeah false urgency and fear and scarcity and you know, I got to do this, and then it is, and then you don't, you can't get anything over the finish line, and then you wonder why you run out of resources, run out of fuel. 

Stephanie  
And then why didn't I get there? You know what? I think we should do a whole episode on FOMO and fear and urgency and how to leverage that in your strategy. I think we're going to do an episode on that.

Sari  
All right.

Stephanie  
I always love to end a podcast with key takeaways. So, Siri, what do you feel your your hoping key takeaways for people are today? And then I'll share mine.