Scaling Profitably and Sustainably Part 2: The Sustainable Growth Tactics You Need
While the hare was sleeping, the tortoise slowly but surely made his way to the finish line, against all odds, beating the hare, who carelessly assumed his faster pace was the better pace. The moral of the story: slow and steady wins the race. This moral isn’t just for kiddos. It applies to your CPG biz more than you think!
There are major benefits associated with sustainable growth over time. CPG businesses are shifting from quantity to quality in measuring success. In this shift, profitable growth goals are a part of what you need to grow.
As part of your toolbox, I’ve got some key tactics and mindsets to help you scale sustainably.
The importance of creating sustainable growth
Profitable growth goals correlate with your ability to create sustainable growth in your business. Businesses that fail to center their business plan around profitability and sustainability may lose the race. In fact, according to BLS (Bureau of Labor Statistics), approximately 20% of businesses fail within the first two years, 45% during the first five years, and 65% during the first ten years.
Want to know one of the most common reasons they fail? Instead of focusing on sustainable growth, they pursued fast growth.
The benefits of slow and steady wins the race
My advice is to be the turtle in the race to achieve your profitable growth goals. There are many benefits to sustainable growth that your business deserves. These are some worth noting:
You build a better experience that leads to retaining customer satisfaction
You add value to the customer through consumer-centric brand positioning.
Goals are clearly defined and articulated, with room to grow as your business grows
A growth mindset is one open to new ideas and innovation
Sustainable growth tactics and mindsets every CPG business owner needs.
If you aren’t sure how to pace your growth with your CPG business, you aren’t the only one. I’ve done some groundwork for you with the help of one of my favorite podcasts, Alli Ball’s Food Biz Wiz Podcast.
Ali (Retail Ready), Adam (Rodeo CPG), and both Karin and Alison (Umai Marketing) discuss many topics surrounding the CPG business from both a buyer and marketing perspective. To successfully reach a buyer, get on a shelf, and grow, here's some advice:
Current product movement is more important than retail shelf expansion.
If you aren’t profitable it doesn’t matter how much you sell.
You’ll never expand without a plan that includes pricing, projections, and distributions.
Your retail strategy should always be buyer-focused.
Throughout these tactics, you will learn to strategize on how to overcome your business obstacles. I provide detailed tactics that help you scale profitably and sustainably.
Make your current retail locations a sales priority
As a brand, it is your responsibility to move your product; It is not the buyer or the retailer. You commit to doing what it takes to move that product when you land a spot on their shelves.
Keeping up profit margins and running a sustainable business is complex. When you focus on too many locations, frustrations can happen. Instead of looking for new shelves, focus on implementing strategies that increase your presence on current retail shelves.
Need some suggestions on how to accomplish this?
Try a product pop-up in-store
Demo your product
Drive your online community to purchase in-store
List your stockists on your website and make it searchable
Make sure you are priced competitively for your target market
Profitable growth goals trump sales goals
Repeat after me: if you aren’t profitable it doesn’t matter how much you sell.
If you’ve planned it out well, as your sales grow, profits should too. If this is NOT the case–don’t panic–I have a few tactics you can try to get to the bottom of your profit problems, courtesy of
The Food Biz Wiz podcast Episode 107: 4 Steps to Implement Profit First in Your CPG Business.
Making profitable growth goals means you must build your business from the inside out. If your backend is improperly set up, it won’t matter if you sell more and more. Establish your backend to be profitable.
Also, keeping COGS (cost of goods sold) at the forefront of your mind is necessary as you build your business. Creating a COGS target percentage will help you determine a financial success percentage.
To turn a profit, you need to consider every piece that goes into creating and selling. Then, deduct this from top-line revenue. These pieces include:
Ingredients
Production costs
Packaging
Freight
Paying yourself
Operating expenses
Bottom line: a profit-first business is a sustainable one. Once you improve workflows and structure to support distribution and have the backend running like a well-oiled machine, things will steadily move forward.
Develop an operations strategy that supports expansion
One of the essential elements in creating a sustainable operations strategy is knowing how demand forecasting helps your business and then using that information to expand your reach.
Additionally, as covered in Episode 153: Operations Strategy for 7-Figure CPG Brands, knowing the proper tools and time to expand is crucial. Before you expand your reach, ask yourself:
Am I prepared to support distribution?
Are my margins in check to handle expansion?
Am I ready for the start-up costs that come with launching in a new retailer?
Do I have a firm handle on competitive pricing and projections?
Can I get the materials and produce enough products to deliver on the POs?
Your business may not be ready for expansion if you cannot confidently answer these questions. Pivoting back to moving products on existing shelves is more imperative than immediately expanding your retail relationships. Once your ops plan is in place, you can determine when, where, and how to scale for profitability and sustainability.
Create a buyer-focused retail strategy
Why is buyer-focused retail strategy present in top-selling brands? One of the key takeaways from Episode 154: Retail Strategy for 7-Figure CPG Brands is that pitching to buyers is much different than your marketing strategy. One crucial (often overlooked) difference is that buyers don’t care about your brand’s mission or value proposition.7-Figure brands have this all figured out, so take some notes from their success.
Your buyer-focused retail strategy needs you to:
Plan for moving products off the retailer shelves (getting on the shelf is only the first step). What you do after this step is what counts. Also, make sure your products are priced competitively to move inventory.
Pitch about projected sales and profit margins. Remember that you and the buyer have the SAME goal: you both want to move the product.
Be the squeaky wheel to the buyer because most brands will reach out less than three times before moving on. That is NOT going to cut it. It can take months, sometimes past a year, to get your product on the shelf–you need to be prepared to keep yourself in front of the buyer. Give them any reason to keep your brand on their mind.
Scaling your CPG business with Virtual Sidekic
Scaling your CPG business isn’t hard. It simply requires precision and dedication in the right areas. The backend of your CPG business can be overwhelming, and it can be easy to want to take the quickest way out. A blossoming business does not happen overnight. You have to cultivate it over time.
Focusing on profitability over sales, creating processes for growth, and putting both operational and retail strategies in place means you control many moving parts. As your Virtual Sidekic, I can make sure all the operational pieces are in place so that you can make big, profitable decisions for your business.
Sit back and watch your CPG business growth with systems organization and operational management from Virtual Sidekic. I will help you create and maintain the processes that scale your business sustainably and profitably.
Let's leverage a smarter way for your brand to scale successfully and sustainably.