When the Going Gets Tough: 5 Ways to Strengthen the Foundations of Your Business
From solidifying financials to utilizing technology to maximize efficiencies, here are 5 actionable steps to help you gain perspective and implement strategies to overcome the inevitable challenges that may be thrown your way.
For CPG brands, uncertainty is a daily reality. The day-to-day grind is full of highs and lows. Competition is fierce and opportunistic. The market constantly fluctuates, as does supply and demand. Disturbances can occur along the supply chain at any moment. The list goes on and on. In short, nothing is guaranteed. It simply comes with the territory.
So does the pressure. Some circumstances undoubtedly pose greater economic challenges than others, such as a recession, natural disaster, or global pandemic. Though it’s difficult to predict the exact obstacles that may unfold during these events, it’s certainly not impossible to prepare for them or hatch a plan at a moment’s notice.
Below we detail 5 steps for CPG brands to consider when various uncertainties imperil the viability of their supply chain, from managing financials and staff to finding time to gain an actionable perspective about the road ahead—where growth and accretive margins hopefully await. We want to note that this list is not exhaustive, nor does it intend to present a hierarchy of importance, given the potentially enormous toll that some circumstances may have on a company’s ability to maintain staff. Instead, we focus on providing strategies across 5 areas that can help CPG executives, and the companies they’re responsible for, remain resilient and viable through thick and thin.
1. Take a hard look at your business. Ask the hard questions.
Drastic times call for drastic measures—at least, that’s the adage. But even in times of crisis, it’s important to build up the ability to be in control of one’s own actions. This isn’t to say a quick, calculated response isn’t essential. It very well might be. However, a stressful situation does not require a stressful reaction. In times of uncertainty, stress may rise, but must be managed. Use urgency as inspiration to act, and act fast.
As much as time allows, zoom in on the landscape of your business and supply chain, from your suppliers and customers to your relationships with your financial supporters, including your banks to your investors. What projects or areas of your business have you kept on the back burner that, with further examination, could yield quick financial wins? For instance, consider outlining how your suppliers are used along the supply chain, and the terms under which those relationships exist. Can your suppliers offer flexibility? Have you long thought about moving your vendors domestically, or “RFP-ing” various aspects of your business in part to keep current suppliers honest, competitive, and responsive?
2. Get your financial ducks in a row.
It's time to get cozy with your financial statements. This is ground zero for finding ways to save money and lower costs when faced with an unprecedented situation. The ultimate goal here is to gain an unbiased, clear-headed, deep(er) view of your financial foundations across your entire business so you can better understand where to spend your time and energy now.
Start with your P&L and cash flow and then spend time examining your balance sheet and all the applicable ratios. If you don’t have the granularity in your general ledger to understand business drivers, now might be the time to build this out. From here you will be able to determine any accretive or dilutive revenue or expenses to your business. When you identify this, act quickly so you can put those revenue and/or savings in motion!
As a “sanity” checklist, below are a few questions for yourself and the extended team:
- Working Capital. What are you doing to help realize cash sooner, move through your inventory quicker, or push payables back farther?
- Vendors. Is there flexibility in your vendor relationships to extend terms or temporarily renegotiate payment terms with your customers?
- Customers. Do you have the flexibility to realize cash sooner? And, for the channels that you control (like E-commerce), what can you do to be more aggressive here?
- Existing Products. Are you focused on getting the most out of your existing items to help with margins and buying power?
- New Products. As retailers are more focused on existing items, can you postpone or push back new product launches?
- Data. Are you generating or purchasing the right data to help make more informed decisions in all areas of your business? Does this data lead to actionable insights your team can make on a day-to-day or week-to-week basis?
- Technology. How can we centralize and automate daily operations to save valuable time and resources? Which vital planning processes, such as demand forecasting, can we execute (and ideally automate) with the right planning software and technology?
For some perspective, learn how High Road Craft Brands developed a luxury product for one channel (food service) in order to make huge waves in another (retail).
3. Thinking of moving your business to the cloud? Do it now.
People are the engine of any organization and it’s important to take care of them, especially in challenging times, as well as keep them motivated. Should the need arise to work entirely remotely, it’s essential to enable staff to continue to perform a majority of their job functions to the fullest capacity—regardless of geographical location—to keep business humming.
First, CPG brands should make sure a majority of their business operates in the cloud. CPG is one of the most competitive spaces in commerce, where razor-thin margins dictate both online and offline sales channels. To realize efficiencies, key decision-makers should seek to partner with a SaaS company whose technology both centralizes and automates vital business functions, including the ability to execute all sales and purchase orders; view sales performance by location; view inventory in real time across all warehouses; and automate demand planning.
4. Use technology to optimize resources and working capital.
Consider just how many tasks brands execute on a daily basis—from issuing scores of SOs and POs and gaining inventory visibility, to tracking down shipments along the path to customer fulfillment. For many brands, a majority of these tasks are executed manually, from using spreadsheets to sending emails and texts and picking up the phone. Whatever is needed to get the job done.
Now, imagine if those tasks were automated—completed in many cases without lifting a finger—and centralized in one platform. Using software that seamlessly integrates with a CPG brand’s business (QuickBooks, Shopify, Amazon, 3PL’s, warehouses) can help you quickly realize efficiencies. During uncertain times, this is an imperative.
It’s equally important to realize efficiencies by automating demand planning functions. Think creatively. Look into new technologies and don’t be afraid to invest in modernizing your supply chain, inclusive of your day-to-day operations and demand planning functions. Being able to automatically gain accurate sales, distribution, inventory, and manufacturing forecasts can help brands save on costs across the entire supply chain while improving service levels. It’s vital to partner with a software company that offers the technological capabilities, including a data science team and data partnerships, that can help you achieve maximal forecast accuracy and identify key demand drivers.
5. Rally the troops!
Unless you’re superhuman, accomplishing even a fraction of the aforementioned suggestions would be nearly impossible. Which is to say: motivate your team—top down and bottom up—and bring them along for the ride. This includes everyone from members of the board to new entry-level hires. Perseverance and success takes a village. Hold everyone, including yourself, accountable. Empower teams. And move quickly!
Of course, uncertainty can bring on incredible amounts of stress and other intense feelings that can inhibit focus and productivity. This is to be expected: we’re all human. Eat healthily and well and do other things to treat yourself, your loved ones, and your employees right. Maintain a positive attitude. And give yourself props for building a business. Seriously, do it right now. We can wait! Pat everybody else on the back too. Again, this is about teamwork and buying into a system fueled by a steady sense of urgency. Get everybody on the same page.
It’s also important to develop and maintain mental and physical acquity. Some advice in this regard revolves around finding balance every day. If and when time allows, take a few moments to step away from the grind and quiet the noise. This could mean shutting off your phone or shutting a door. Breathe. If possible, develop a routine. Salim Najjar, co-founder of SOUND brands, maintains his wellbeing through a variety of repeated, learned actions focused on training his mind, which he considers to be “the only barrier preventing anyone from achieving their dreams.” Najjar’s energy and business acumen stems from this perspective. Thinking positively, eating well, and practicing meditation rounds out his approach. Mimic him or develop your own rhythm!