How Founders Can Support Their CPG Companies With Finance
Striking a balance between growth and profitability is tough for any company, but it’s especially true for a CPG brand. Founder Kevin Griffith, VP of Business Development John Waller and special guest Alison Cayne, founder of Haven’s Kitchen (and host of podcast “In the Sauce”). Alison discussed how important it is to have plenty of financial guidance as a founder, and where to find it.
Our hope is to provide a little insight into how to support your business (and you, as a founder) with finance hires and how to become a better capital allocator in order to build sustainable growth. Check out the video for the full conversation below, and keep reading for more thoughts.
The problem: with growth comes complexity.
We talk about this a lot with CPG brands—the bigger you get, the harder it is to keep a sustainable pace of growth. If your products are hitting the national level, as Haven’s Kitchen has accomplished, there’s a LOT to budget, forecast and adjust to as you adapt your supply chains and decide where to allocate resources.
Founders of CPG brands are always going to be challenged with unexpected costs and complexities. And we’re not just talking about finances! The complexity goes beyond just untangling the ever-growing web of capital-allocating decisions. On top of juggling vendors and suppliers, you have to stay on top of marketing trends, operations and everyday responsibilities.
If your strong suit is marketing or sales, it can be easy to lean into that strength and neglect some of the more tedious financial duties like forecasting, modeling and making use of data. This can leave many founders unintentionally operating in the dark—sometimes not even knowing when they’re out of money. Haven’s Kitchen founder Alison Cayne aptly compared this process as a game of whack-a-mole—without the right knowledge and perspective, it can feel overwhelming to know where to spend money, and where not to.
The solution? Know your strengths and weaknesses and hire accordingly.
The most effective way to support your company’s growth is to assess your team’s strengths and weaknesses. This sounds obvious, but when you audit your team’s specialties, you’ll be able to identify where support is needed. Take Ali of Haven’s Kitchen for example. Ali’s strengths are in sales and marketing. She knew her first hires needed to be people who could make the actual product (if you shop at Whole Foods or Target, you can find Haven’s Kitchen’s delicious sauces!). She also needed support with logistics: people who know how to get the product on trucks and help inform budgeting.
A common problem founders have is overestimating sales and underestimating costs. This is why having the right financial support is so crucial. Having the right financial insight, whether you insource or outsource, will provide what Ali considers a “sanity check” to founders who may overlook some of the nitty-gritty detail of CPG operations.
The case for outsourcing
Hiring internal team members can become too costly for many CPG companies. Once you hit the $10 million in sales mark, you need support from operations, repackaging managers, freight managers—and all of these roles need to be cohesively managed in a way that supports your long-term strategic vision. All these moving parts can lead to obscured financials, which is why having an outside perspective to compile and analyze data can make the difference between operating in the dark and being empowered to direct capital in a more effective way.
Before you outsource, be sure you have the most integral business functions built out internally. This means covering sales, basic administrative operations and accounting. Deciding which services to outsource will also depend on your budget, and what will drive the greatest ROI. For instance, it might be well worth it to invest in someone to handle your logistics even if the upfront cost is a little daunting.
Your team must understand your business model and strategy, but once things become complicated and your people aren’t able to perform in their own roles, you need to start bringing on outside support.
Find financial support that connects day-to-day with the big picture
No matter how much you think you understand your business’s finances, there will always be complexity that gets in the way of executing your vision as a founder. Having an outside financial advisor or service provider to analyze your data in a way that’s usable will pay dividends in the long run. At AmpliFi, we talk a lot about becoming a True Capital Allocator as a CEO. You can’t direct your company and make big decisions when you’re bogged down in the day-to-day decisions that should be managed by a trusted financial partner who understands your vision and can connect it to the small daily decisions.
The most important thing you can do as a funder is to surround yourself with trusted partners. Can these people point out red flags? Can they ask the right questions based on your data? Things won’t always be perfect as a growing CPG company, so you need to support your company with an honest team.
AmpliFi’s Modern Office of Finance is specifically designed to do just this. Our proprietary software uses data past the capabilities of an accounting team or even a top-shelf CFO. Our team of experts can help connect the daily complexities of logistics, vendors, suppliers to your long-term strategy, giving you more time and space to direct your company in the right direction. If your vision of success is becoming blurred by daily complexities, it might be time to reach out to AmpliFi’s team.