Full Transcript

Sari 0:00
Welcome to your Food Business Success. This podcast is for early stage entrepreneurs in the packaged food industry ready to finally turn that delicious idea into reality. I'm your host, Sari Kimbell. I have guided hundreds of food brand founders to success as an industry expert and business coach, and it's got to be fun. In this podcast, I share with you mindset tools to become a true entrepreneur and run your business like a boss, interviews with industry experts to help you understand the business you are actually in, and food founder journey so you can learn what worked and didn't work, and not feel so alone in your own journey. Now, let's jump in.

Sari 0:46
Well, welcome everybody back to the podcast. Really excited to have you here, and I'm really excited to talk with my guest today, Lisa Thorson. She has her own business called Run The Numbers. She is a 14 year veteran of the Natural CPG food industry, after years as a broker selling in Sprouts and Safeway and then growing brands to launch IPOs. She built a company that strengthens brand foundations in this grocery retail space and really helping them run the numbers, right? Really know their cost of goods sold, contribution margin, trade spin, and data analytics, and all these things are so important. And I'm really excited to have this conversation with Lisa, because she's an incredible woman and doing incredible things in this industry. So welcome, Lisa.

Lisa 1:39
Thank you. It's great to be here and get the opportunity to share.

Sari 1:43
I'm excited for you to be here. I was just saying before we started recording like I feel like we're having some sophomore, junior, senior level conversations. We had Caitlin Wilson on last week or two weeks ago, I loved speaking to people who are just starting out. But I also want people to understand what does the journey look like, and you know become more knowledgeable about the industry and the different ways that they can piece their business together, because there's lots of ways to run a business and put together a CPG brand. But we're going to get into some numbers, and data, and some of my favorite things.

Lisa 2:22
Are you a data dork too? Because we all love each other.

Sari 2:25
Yeah, I am. I do really love a great spreadsheet. I get a lot of respect from people who know how to build great spreadsheets. But why don't you tell us a little bit more in your own words about who you are and what run the numbers is all about. Like, why do you do what you do?

Lisa 2:42
I got into this industry again about 14 years ago through Naturally Boulder, which is now Naturally Colorado, and I always laugh about it with people when we first got started, it was like 30 of us in a room drinking margaritas, trying to figure out how to save the world with natural foods. And now it's like put on like, 1000s of people, millions of dollars, beautiful hotels. You know, like, it's this huge industry. There's Naturally Boulder everywhere. So as a emerging brand, I definitely say part of the Naturally Network, I think it's incredibly important to, like, get connected. So that's how I started. But going into that, I actually went in as a broker, and working in the broker world for most of my career, I really saw how many brands were like, yeah, I want to go into Sprouts and Safeway and Whole Foods, and I want to go into all these. And as a broker, you say, okay, and you put them in there, and you tell them how to be successful. And then what I saw was everybody's like, well, wait a second, I'm not making any money, or I ran out of money because of slotting. Or, wait a second, why does it cost so much money? You know that conversation kept coming up from the broker world. I went into a company that went IPO during COVID, that was fun, and going through all that experience and seeing even a $20 million company needing to understand their trade spend and their contribution margin, and seeing that really helped start run the numbers. Originally, we started it as focusing on emerging brands, just understanding their costs of getting into retail, understanding the market, understanding, you know, what their price point should be. We had companies that would come to us and be like, I want to go into Whole Foods in the tea category, and they were a $20 tea. Well, there was no $20 teas in that category, so we helped them understand that. And over the last four years, we've really built out a business to help brands understand the foundational costs of being into business. So that's where a lot of my conversations today will come from. Is helping them know, like, who do you say yes to, and who do you say no to? Who do you say yes, I'll do that promotion, or I can't afford that promotion? And that's where we really have come together between we do an emerging brand program that does a training for two to three months, helps brands understand that, and then go back into the market with a strategy. We found that when you go through everybody says they want fractional sales, and we realize you need your operation solid before the sales. And then as brands grow, they're going to keep hearing, so what are your numbers? The read a little bit. How are your sales going? So we've led that into data analytics and deductions, which nobody likes to hear that word anymore. If you've ever worked with Ke and Unfi. But our business has been built to kind of help brands understand that, and coming back to kind of that, know, we talked about the junior, senior, sophomore level at the beginning we I think the passion that comes from, and all the consultants that we work together is making sure that brands are fully aware of their numbers. Are you making money? I mean, even as myself, like, I'm passionate about my business. I love my business. I love what we're doing, and I need to run my own numbers. Like, it's important to you know, are you being profitable? And it's the same thing we do. It's kind of like the gardener who, you know, forgot to pull their weeds in their own garden. So that's, that's where we're coming from, is the passion around there's so many brands that go into this business, so excited and so passionate with amazing products, but there's a lot to grow in this industry and getting the support you need, and not just trying to figure it out all on your own. That's, you know, honestly, a lot of my consultants, they started consulting because they were giving a lot of free hours away all the time. Because all of us, you know, we're passionate in this industry. That is our industry. We're passionate,

Sari 6:54
Yeah, it's a very generous industry. I find people really want to get together.

Lisa 6:59
I think we genuinely like it. I think that's the big difference, is that we genuinely like being here, working with the people like I still remember being at Expo West, and I asked the bartender, hey, is everybody treating you well? He goes. The natural products industry are the nicest people. I thought that was such a cool thing for him to say.

Sari 7:22
Yeah, we have a lot of passion and want to change the world through better food and better care for ourselves, which is an amazing, amazing industry to be in. And I love that. There's a couple things that came to mind when you were talking is like, you know, when I was at Whole Foods Market, I would bring on new brands, because we would go and kind of pre forage our role and, like, find local brands to bring on store shelves, and that exact thing that you were talking about would happen. Unfortunately, it's like, you find these cool Farmers Market brands or very small, you know, retail brands, and then they weren't prepared. They had not run their numbers. They didn't understand that their cash flow model and have, like, the capital and be able to withstand that, you know, that cycle of like, I had to go make all this product, get it on the shelves. The store isn't even open yet. Now it's open, but I'm not even going to get paid for another, you know, 30, 60, 90 days, and then they can't hang on, or some of the different requirements and certifications and all of that stuff. And it just, it's like, it just breaks my heart, because so many people are getting into this because of this passion, this deep desire to change what we eat or put on our body or drink, right? And what goes into our bodies, and it's at the end of the day, it's still a business. And it's like becoming that, I talk about all the time in Master Your Business, right? It's going from the maker mindset to becoming a CEO, to becoming a business owner, and you don't have to go in the weeds, on, like, all the details. That's why we bring in people like yourself and have some. You got to be able to understand a high level, at least, like, really understand your numbers.

Lisa 9:16
Yep, that really was the biggest thing I saw as a broker, yeah, like, just really cool brands, even great packaging, great flavor, great packaging, everything in mind, and the cash flow. And I really saw when COVID happened, the switch. There was just this switch. I mean, everybody saw switches in every aspect of their lives during that time, but this switch to numbers. Like, I talked to retailers pretty much weekly. And I still remember when I was talking to Sprouts, I was like, so how often I was talking with one of the manager's managers? I was like, how often do you, you know, what's your use in numbers? And she's like, I'm in it every single day. That's all, like, all the time I'm looking at them and trying to figure out what works and what doesn't. And so for an emerging brand who's coming up, the first thing I hear, well, I don't have numbers, what am I supposed to say? Go to that emerging sector, an idea that I'd love to throw out to people.

Sari 10:14
Could you define emerging to what how you see it?

Lisa 10:17
Of course, and I will say it does change. But I kind of look at a zero to 2 million in sales as an emerging brand area. Now, that being said, because of COVID, a lot of brands are going online, and can be, you know, 4 million in sales, and they're still emerging, because they haven't gone into grocery retail yet. One of the biggest things I've seen is a brand that's primarily an online is shocked by what the requirements of our grocery retail. So your price point online is not going to be, shouldn't be even the same price point as you're going into retail because of all the extra costs involved, distributors, retailers, promotions. You know, you have an idea, you might have a product in hand, you might not, and you're trying to figure out, how do I get into grocery retail? That's really our expertise, so we focus on that one. Okay, so we're talking about how Sprouts was saying they use numbers all the time, and brands that don't have numbers are like, what am I supposed to do? So there is free data out there to help you. So when you go into, say, you're going into, like, you might have a couple, say, 10 retailers, independents, and you're going into, like, your first Whole Foods, local, regional conversation, and you're going to get into 30 stores, or, like, a lessons in Southern California, or you're going to look at Central Market in Texas, and, you know, they're going to want to see some numbers. So you can actually go to, you know, you got Spins, Nielsen's IRI, they're both data sources. Some of them have blogs. And you can actually Google, like, say you're a tea company, tea blog for Spins, and they'll have data in there showing, hey, here's functional tea that's growing, and you can use that in your presentation as market data, and you can show the retailer, hey, here's market data that's showing that this category is growing, and this is how we fit into that category, just one slide. And so that's a way for brands who like, I don't have any data. I don't have, I'm not spending money on buying. You don't have to. It is out there. I'm a big Chat GPT person like, I like, look on there. Just ask questions. You can find free data out there that just shows how your market is growing and then how you fit in it. And that's a really good way a brand who wants to kind of start to expand into more of those regional retailers.

Lisa 10:59
Yeah, and we did have Benji Fitz on the podcast, and he came into my membership from Spins, which was super great, because he and I used to, we actually used to work at Whole Foods Market together. We both had the same job and at different stores and but they have some free data that you can now get. Yeah, so there definitely are places you can get data. And I had a podcast a long time ago with Doug Helbig, who I'm sure you know, about building your data story, right, and like the things that and what do you do when you're a brand new company? But there are ways to still build a data story.

Sari 13:36
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Lisa 15:20
Yep, there definitely are in those. The reason I like those blogs is that graphs are already made for you. Sometimes they'll just give you kind of raw data. And you're like, how am I, what am I supposed to do with this? But you can, yeah, you can get the graphs that are already done too, so that always helps for a small brand getting started. Yeah, you're just trying to, like, help the buyers connect the dots, right? And like, yep, oh, here's what's happening in the marketplace. And now you're connecting the dots to, like, how your company fits in.

Lisa 15:51
Exactly, yeah. And the other thing, I know a lot of these, like the bigger retailers, so we talk about, like, a Sprouts, because there are a lot of merging brands going after that as their first retailer. The big thing, I think, that always surprises the one comment is, if you're going in through KE, you may not get paid for the first six to nine months, and you still have to replenish the product. And that is a big like eye opener, because a lot of people think, oh, I got in. I'm going to make all this money. Well, not for a while. And do you have the cash flow, or, you know, there's loans out there, just for those type of situations, to help you through that? You know, that's really important to a brand that's growing. Then to backtrack a little bit for like, a younger brand, run your numbers, go through them and say, okay, this is how much in my operations. Here's my COGS, right? What are your cost of goods? How much are you selling them to the distributor for? And where's your contribution margin in that? And then add that 45% on top of it for the retailer. And get your SRP ahead of time, and then say you're at $8.99, check the store you're going into. Are you pricing yourself out of the market, or are you right in line? And doing that before you say yes. And that's pretty straightforward. It's like, and it just even the bare minimum of, I'm going to charge the distributor $1 they mark it up, let's say 25%. The retailer marks it up, they're 45, is that the right cost for you? I think that's the part, even if you just going into one store.

Sari 17:36
I mean, I have a tool in my Pricing For Profit. I'm sure you have tools like, there are tools that are already built that will help you understand this information. And I think the trick is, and I just did a workshop for Colorad, proud on this. It's like, what is your pricing strategy? You mentioned that you see people coming from ecommerce brands, they're predominantly, they're only ecommerce, and then they try to get into retail spaces, and they might not be charging enough, but I actually find that there's a limit of what the consumer will pay, and so you're kind of a little bit stuck, like, maybe you can be like an outlier, where you're, you know, a $20 tea. It's tough, right? Because there's going to be a limit, you know, a threshold that a buyer is going to be like, yeah, we can't bring you in at this and so ultimately, it becomes about, what is that path to profit over time, and can you bring down your cost of goods sold enough that as you scale up? But it's a long road, and it's going to probably require capital, unless you just have some bank rolling, right? It's a tough, tough game, to your point, about like, you're not going to get paid for six to nine months, and then that check that you thought was going to be X after deductions and all these things, you're like, you're looking at this check. I'm sure. You know, I've heard horror stories. I know. I'm sure you've seen them and heard them and like, this is half or quarter, or whatever the amount that I thought it was going to be. I think you and myself and people like Julie, like we're all trying to change this industry to make it more sustainable for young, emerging brands to be able to work in this system.

Lisa 19:24
And I think that really comes down to being able to say no when you know, I think that's the biggest thing, because we can't change the retailers. We can't change the distributors. There's the new, well, I guess they're not that new, pod foods has been out for a while. They're trying to do it differently. Instead of that six to nine months. They do it where whatever leaves their warehouse, you're paid two weeks later, which is great, you know, but they don't have all the retailers. But do you need all the retailers? And so you have to figure out, like, what's the right distributor for you? No, I'm with you. I wish I could change things. I instead, I have to be like, I've brand's like, okay, I want to expand into this many regions. It's like, okay, this is how much that will cost you. Are you prepared? Okay, well, maybe let's pick it up. Let's start in one region, and we'll go after 20 stores instead of 200 and then get that established and start to build. There's opportunity out there. I do think, I wonder, it'd be fun to, like ask Julie about this too. But like with what you've seen, we've been seeing online food service retail, so having that kind of like three trifecta of making sure that you're working in all of those department, that will help cash flow as well. Becauseonline food service is very different.

Sari 20:40
Yeah, that diversification of sales channels can definitely be, you know, a real perk. You know, obviously you need people to manage all of those. None of them just happen without you managing them, touching them. So you need, you know, some resources to manage them. But it definitely can help to pad, you know, your business. And just like, you know, farmers markets, like, I'm a big advocate of farmers markets and even some emerging brands. And, you know, I see even people million dollar marks, sometimes they're doing farmers markets because you get cash up front. There's cash coming in right away, immediately. And that cash flow statement, you know, the very first thing we do in Master Your Business, which is my next level program is I make everybody finally do their cash flow because they know they're supposed to. They know they should. And now, like, come on, we gotta get that going because what I've heard when people finally do it, they're like now I feel so empowered. Now I'm starting to know my numbers, and I can make better decisions.

Lisa 21:52
So Run The Numbers is a name or something I've been told since early days of high school. It actually came from there, and I still remember the effect it had on me when I was trying to go through something and then be told, we'll run the numbers. And there was, like this calming effect when I did it, and that's really where our name came from was because you do, you get like, the chaoticness of the business. It's go, go, go, go, go, go, go, and then all sudden, you're like, do I have the money to do this? I'll just say yes to them and figure it out later. And there's that angst that happens with a lot of brands. But when you actually know like of you go into a meeting, and this is my ideal for our clients, this is what we try to get them to it's like, you go into a meeting and they say, we want this promotion, this promotion and this slotting. And they say, that's great. We love the opportunity. This is what we can do. Yeah, talk about being empowered. Like coming in is like, well, I can only do this, okay. Well, thank you. We'll try again next year, or something, you know, like, right? Finally, putting power back into the brands instead of just being steamrolled like, that's I think, how we can make a difference.

Sari 23:09
Absolutely, and I think some of that, you know, that's why I'm a life coach and mindset coach as well, is because helping people understand like this isn't your only shot, right? Because I think we all want to say yes, yes, yes, because we get wrapped up in the scarcity of like. But this is it. This is my one shot to get into Sprouts or Whole Foods. And like I said, I mean, I saw people go out of business because we brought them into Whole Foods, even direct store delivery, not even going through distributors and things. They didn't have the cash flow and the foundations, and they didn't know their numbers. They weren't coming from an empowered, yes, I know I can do this. I know I have the funding. I know my numbers right, and here's what I can actually do, or even, like, here's what I'm willing to do, and that might mean that you have to supplement with, you know, you talked about additional loans or other capital, but you want to know that ahead of time. You don't want to be blindsided in those meetings and then feel the pressure of like, this is my only shot, right?

Lisa 24:16
Well it's hard too. When is there some brands that I've talked to that like they're having, like, quick success. And that's not normal, you know, like it takes a while, but when they're having quick success, it's hard to say, no. But no, I think that is, that's a huge thing that we can contribute to the business world. And we actually just hired on a new consultant, which we'll be announcing soon. We're excited about that, but all of our consultants come on with that same passion of like, oh my gosh, we've seen it. You've just seen it so many times, time and time again. So that's great. I love that you have cash flow as part of your system. I think that's huge in that calming effect. I mean.

Sari 25:00
Right? 30 minute exercise that will, like, you do that every Monday, you'll be like, at least I know what's coming up, and I can negotiate outgoing money, and I can go find the incoming money, and I say it's like, it's math, not drama, right? Like, let's get the drama out of it, and get into, like, what are the numbers? Just know.

Lisa 25:23
I think that's where the calming comes from, is you're right, because the unknown and trying to make it work, and what do I say or not say? Then you know for sure.

Sari 25:34
I'm all for people saying yes at the beginning, like, when the risks are small. And you're like, okay, so if this one pop up market doesn't pan out, you know, it's like, okay, I'm out 200 bucks or something. But like, the stakes get really high.

Lisa 25:50
And you can figure these things out. So, like, there's another kind of trick to pull it in there as well. Besides, like, pulling data from blogs like, or like you had the Spins guessing which I do the Spins blogs are great. It's free data. It's right there. Go grab it. But then also, like, when you're going in, before you go into a meeting with anybody, go into the store and look at who your competition is, where are you going to sit on the shelf? So let's focus on tea again. So say you're a high tea product, like, you're a long, beautiful cylinder, and you're like, I sell great online. That's a good example. Actually, beautiful. Everybody loves it online. Well, if you're tall, you're at the very top, no matter what, you are not going to be in the middle. And what are people willing to pay for something so beautiful? I think that going to visit the stores. I remember that as a broker, one of my first like, I started, by the way, paper pushing. That was my first job in the industry. I was submitting promotions to, like, Sprouts, Whole Foods, Natural Grocers, and like three other ones. And I remember going in the store with one of my managers at the time and just looking at things. And they kind of walked off, they left. And I'm all by myself. I'm like, that's okay. And I started looking and seeing how the shapes of things, the colors of things, how a yellow tag makes you look at it first. That's why people need to go on promo, because the yellow tag brings attention to you. And so that's another like, beginning trick of going into stores in hey, bring your own product. I did have a brand do that once. They brought their own product and somebody thought they were stealing it. And I'm like, oh my gosh, come on, it's not even on your shelf, right? But go in there, put your product up on the shelf next to your competition, take a picture.

Sari 27:35
I think, yeah, packaging and things like that. It's just a different world. And we have to think about the psychology of buying is very different on ecommerce, and the things that the story you're going to be able to tell, and you're probably not in comparison to a whole bunch of other brands, right? Versus a grocery store shelf where, oh, there's, you know, 30 teas, which I have all these options, and now I'm comparing price and other things and that location on the shelf. And I encourage people to do that too. I say, if this is the packaging you're considering, go take it into the store and compare it to the other products and I love the idea of like packaging as a disruptor, using color or shape or different kinds of packaging. But at the same time, we can also get, like, go way too far on that. My story was, when I was at Whole Foods Market, somebody brought in these cleaners that were in these tall glass bottles that were beautiful and they had really nice labels and everything, but, like, they were very tall. And I said, I took her over to the shelf, and I was like, here's the problem. Like, these are totally different. There's not a spray you like, just pour it on the counter, like an all, it looks like an olive oil bottle, but tall, extra tall. It's got to go on the top shelf because it can't fit anywhere else on the shelf, and it's glass. So grocery is not going to want to put a tall thing on the top shelf that's glass, and then it's going to be out of people's price range. And there's this education. It's just like, it's just a little too far. Now online, you might be able to, like, sell all of the benefits and the features and all of this. But in a grocery store, it's going to be really challenging to get to move and so take your product and what you're thinking of and see, does it fit on the actual store shelf? And, like, how many can you get on there? And you know, it's great if you want, like, I'll have people that want kind of more short and squatty pouches for various things, but if it takes up one and a half units compared to their competitor, like those inches on a shelf are very important, and so finding the right balance there.

Lisa 29:54
Well then you your velocity has to be one and a half times. It's really interesting to think about. Like, this is $1,000 space, that big. You add extra now you're a $1,500 space. And how do you make up for that? Yeah, that's a great.

 

Lisa
And you're right with the online. You get a whole page online to sell, yeah? Like, that's the difference too. You get a whole page. You get all this in grocery stores. You just get a blink of the eye. And again. That goes to that yellow tag, that promotion. Or if you have an eDLP everyday low price, you can get a tag on there. Sprouts has a lot of those. Sprouts does have quite a lot of tags, I will say.

Sari
But I'm like, I mean, I was on sale, and I'm like, oh, wait, no, they fooled me with the tag.

Lisa
But now I'm looking at the product and reading the back of it, it worked.

Sari
That's true. It did work. And now I'm mad, but I'm like, wait, I thought this was on sale? Since we're on the subject of like, stores and tags and all of these sales, what is the difference? Because I get asked this a lot when people are thinking about hiring help to help them in the grocery store, what's the difference between merchandisers, salespeople, brokers, like, can you break those down? And then, of course, when to hire what?

Lisa
Yeah, sure, well. And so I actually, I did a post on this recently, because one of my clients asked, and she was trying to decide, like, where do you want to go? So everybody's going to have a different scenario. Merchandisers, you can hire outside of a broker. They just go to the store and take care of the individual stores. So if you think about it, they have people all over the United States going into stores, making sure your shelf placement's correct, taking a picture, making sure your price or your sale price is on. If you have a display, they'll check your display. If this display is not up, they'll go in the store and try to make sure it happens. They are very valuable for that, and I've seen a lot of now, younger brands, it might be best to hire them for like, a one time launch. So say you're launching into, like all regional Whole Foods, hire a merchandiser if you can't do it yourself, and have them go visit all the stores. The reason that's so important is that if you're not on the shelf, you can't sell anything. And so that's merchandisers. Now there is the couple merchandisers as well. There's one merchandiser out there right now that is doing a lot of data behind, we actually met with them as well. And so they actually keep track of data across the board of their visits. So that's a little bit more intense, but it is an option as you grow. Then I'm going to go straight to broker. Brokers good at four things, and I say this a lot, a broker is good at knowing when the review schedule is, having a relationship with the buyer, getting your product in, like presenting it, getting your product in front of the buyer, and once you're in submitting your promotions. These are the four basic things that a broker does. Now, there's big brokers, there's medium brokers, there's small brokers. A lot of them say they're going to do a lot of different things. One thing to remember, how many brands do they have, and what ranking are you on that scale? So if you go to a broker that has 100 brands, and you're a smaller brand, you're not going to get a lot of attention unless you're the squeaky wheel. And I know this from personal experience. So when I was selling, I was selling to Sprouts and Safeway at the same time, which was a great experience for years of doing that, because I'm selling to a natural and a conventional set, and the brands you know, you have as a broker, you have your 10% you gotta, like, make sure everything's perfect, and then you're trying to manage everybody else at the same time. And any brand who, like, you know, engaged me, followed up with me, made sure I had the right materials, didn't give me the wrong materials, made me more effective. And I think a lot of times brands hire brokers, being like, well, I hired a broker, but nothing's happened. It's like, well, when's the last time you talked to them? You have to talk to them. It's a lot of work, and so I you got to manage your broker. You don't just let them go. You need to make sure that you know the retailers they're submitting to. You make sure they're going after the ones you want. So that's an important part. So a salesperson, either a fractional salesperson or an in house salesperson, they are going to do much more than that. So they won't necessarily go to all the stores like a merchandiser. They will not necessarily have all the relationships as a broker, because the broker has like 50 plus people working for them, but they will make sure that your COGS are right. They will make sure that your sale price is right, that your promotions are lined up, that your operation, they're talking with operations. So that's why we opened up, by the way, fractional operations and sales, because our team now talks to each other for young brands, because you need that. You know, say, hey, I just got into All Natural Grocers. I need this. I need three products, two cases to each one by April 1. You got to tell operations that, and make sure they can do it as well. Have that communication.

Sari
Manufacturing, you got, shipping, you got to bring in all the ingredients and the money. You need the money for all of them.

Lisa
And your sales person should be managing that on the sales side, not your COGS, that's your operation side. But they are given a price that they can sell to the distributor, and they need to figure out what sale price is best. They are also doing pretty much everything the broker is doing, or they're working with the broker. So a lot of times what we recommend to like small brands is don't get a broker right off the bat, just so you know it's going to take six to nine months for things to get start rolling, to have that expectation there. Because I think a lot think it should happen right away, and it doesn't. Hire a good either in house or fractional salesperson to help you get some leverage by getting you into a couple stores. So whether it's 10, 100, a launch in Sprouts, once you get that, going to a broker, you have leverage to talk to the broker about managing, you know, percent of sales or a retainer a month, and that puts you in a more solid place to also be able to pay them. So that's kind of the difference is your sales person is going to be kind of this all encompassing person within your company, the merchandising and the brokers hold their own sectors of the business.

Sari
And sometimes brokers will have a merchandising department. I feel like I've seen that. So there might be some overlap, depending on the broker. Well, there's Ying Yang Naturals does that, they have it where you can hire them just as a broker, or you can bring on their merchandising team, which the merchandising team just rocks. It's amazing, but it depends on what you need.

Lisa
And

Sari
And this is why, as we talk about all these different roles in your business, this is why it takes years for businesses to break even and make a profit, because at every stage that you scale, cool, I'm in all the natural grocers, but you need somebody on the ground. You need additional support. And so every time you scale up in sales and you bring your COGSdown, awesome, but now you you got to bring on some additional support.

Lisa
I think that's the big one I hear a lot, especially from emerging brands, is like, well, if I sell 10,000 units, I get a price break. Like, okay, well, once you're selling 10,000 units, let's figure out how many stores that is. Okay, you're moving two units per store per week. How many is? So you're going to divide that 10,000 into half. So now you're at 5000 and then how many stores do you need to sell that into for 52 weeks? And all of a sudden, you know, I'm not doing the actual math right now, so don't hold me to these numbers, but let's say it's 100 stores you need to be in. Can you manage 100 stores on your own? And honestly, are you good at it? So that's the other thing, talking to different emerging brand owners, it's like, what are you best at? Let's make sure that you're doing that. Some are sales, some are actually more operations, some are actually accounting, or have like, you know, analytical background, different kind of, like, marketing. So it's like finding what you're good at and then hiring. And that's, you know, I think that that's the part I really like about this fractional side. And I'm not saying it just because we're in it. I'm saying it because I think it's a great concept. You need somebody who's 150 to 200,000 a year. You can't afford that. Hire an expert that's fractional. Use them for four seven hours a week. Use them for 10 hours a month. But at least you're getting advice that is like, tried and trued and not being detoured into an area where somebody's like, I think this might work.

Sari
Every time you scale up, you're going to have all new set, you know, if you go onto Amazon now, you have a whole workload of things related to Amazon and I think, as you know, entrepreneurs, I just see people pile on and pile on until the point where they just break and they're also so worried about making investments in their business and the cash flow and the, you know, the finances that is needed. But I'm just curious like, what would you say, if you, you know, you probably wish you could say this directly to brands. Or maybe you do, what do you tell people about making investments, like hiring fractional or hiring a consultant, or, you know, working with somebody like myself, or with you like, what do you tell people about making investments in their business?

Lisa
Really depends on the type of investment. So I'll be honest, I've talked people out of working with us because they're not ready, and I don't want to, like, if so, there's been a couple brands that I've talked to where it's like, okay, we're going to give you the tools. We're going to help push you in that direction, but until you get the investment money you're going after, do you have time to do this on your own? They're like, I think I do. Okay, go do that. Know, we're always here for you, like, when you're ready, come on back. And also, I'm going to check up with you in a month and see how you're doing, because it to be honest, like, psychologically, this is hard. You're passionate, and you're getting hit with a ton of boundaries. So what I would tell is, I mean, I find out personal information from them. Do you have four kids, or do you have no kids? Do you have the cash flow? Do you have the time? Do you have a car? Like I find out those things and to say, here's what's required if you hire us, or if you're going to hire this person, or if you're going to invest in this manufacturing plant, this is the responsibility and the financial response. So there's emotional time and financial responsibility of all these different decisions. And can you handle that? So it's like, you know, I've seen enough being a broker, like I'm never going to bring somebody on that's not in the right space for it. We'll always be here.

Sari
Yeah, I feel the same way. I've definitely talked people out of you're not ready. This isn't the program for you. I'm not the right person for you, for whatever reason and maybe just when I think about like, evaluating what investments to make and whether like that should be one of them. Like, is the person basically, like, you have to work with me or you won't be successful, and you have to do it now. And like, the urgency versus like, let's have a personal conversation and make sure this is the right fit.

Lisa
That's a great point, by the way. So I would say, because I've talked to brands who have talked to brokers. So brokers, if you think about it, they have full time people across the board, across the US, they have to have a certain amount of brands in there, and the bigger ones are able to balance that. The smaller ones have to have a certain amount, especially if they have it across the board. So you got to, you know if you're getting pushed into doing something, when asked why. You know what, what is really the point? If they can't say something that aligns with you or is about supporting you, then maybe take a step back.

Sari
I believe in offering value, and you like, really, you know, making that clear what the value is. And so I'm just curious, though, like, when you, you know, let's say somebody coming to work with you is a fractional sales person. Like, obviously, you have that service, but then you also have the hack the service of, like, helping them understand their numbers. So how do you explain, like, why investments need to be made in their business? You know, when you slot in that investment of this fractional sales company into their cash flow or their forecast, and they're feeling nervous about it. I'm just curious, you know, since you're seeing both ends, both sides of the business.

Lisa
So investment is about their goals. That's the first and foremost. A lot of times I have to bring clients back and say, what is your goal? Are you trying? So let's try an example. Should a client go into Sprouts and hire a fractional salesperson? That's a common experience we have, so I'll ask them, okay, you know, right off the bat, in Sprouts, you probably aren't going to make, you want the best scenarios, you break even the first two years, that's what we're going for. And then you will hope to build on that. Sprouts can also because of it is expensive. You need somebody to help you along and manage that. So here's a cost involved in that. But what is your goal? And so are you planning to grow your business in five years and sell it? Are you planning to grow it and hand it off to your kids? Are you looking to just build it to 500,000 in sales and stop there? Or do you want to be 500 million in sales? Finding out their end goal helps me understand if what they should invest in. So if they say 500 million in sales, then 100% you need to get some investors, and you need to go into Sprouts, and you need to hire somebody right now. You can hire them fractionally, but you're probably, in one year, going to have to hire a full time person, because you're on a growth trajectory. By the way, if they said 500,000 that would be a warning bill to me, but just for the example. But then that's how I do it. I take a step back from the little details and come back, what's your big picture? What are you trying to accomplish?

Sari
I always say, like an investment has, it's about creating an ROI, a return on investment and so that's what you help people understand. I mean, some people probably just lost their mind when you said two years breaking even is the goal here in Sprouts, they were like, wait what I thought.

Lisa
Well, let me add on that. So if somebody said that they were going into Sprouts during that two years, you just opened up a ton of Kedcs. If you go into Sprouts and you want to start continuing to grow. So then you can go after these particular stores in these regions, because those DCS are open. Once you hit more stores, then you need to hire a broker to help manage all this and a salesperson to help manage them. I know that sounds crazy. I've heard people be like, why do I have to hire somebody to hire somebody to hire somebody? I'm like, I know it's just how it goes. That's why I told you the four things a broker is good at. Yeah, you might break even at Sprouts, but then you're going to be opening up a bunch of other doors. I will add the disclaimer. Once you open more doors, you're paying more slotting, so it's bringing down your profitability in that year again. Then let's go back. What's the big goal? What do you want to do?

Sari
And that's why, in Master Your Business, we talk right away about, like, what's enough here, right? And like, really understand, because the goal shapes the process. And not everyone needs to have, and should have a 500 million business, or a 50 million business, or even a $5 million business. Like, if just depends on the kind of person you are, what kind of business you want to run, and the bigger you are, the more you just become a manager of people. The product is like, so secondary. I mean, it better be good. But if you think all you're going to do is, I hear this a lot, is like, all I want to do is spend time in R&D, making new products. Yeah, well, you get the business to a place where you have a CEO now, and now you can go.

Lisa
That's not a horrible idea, no, if that's what you love. I mean, you're going to have to do some accounting, you'll have to do some sales in between, but build it up and then bring somebody in that can start doing, by the way, there's fractional CFOs, fractional CEOs, like, fractional is everywhere. It's like, and I feel like it's meant for those emerging brands to, like, really help them grow with those ideas.

Sari
Yeah, it's an incredible feel that we even, you know, I mean, 10 years ago, 20 years that didn't even exist. And so what a cool thing that we have, that emerging brands can take advantage of this. Like you said, I mean, that's amazing. You know, hiring a fractional salesperson through your company for 10 hours a month, like that'd be incredible, right?

Lisa
There's a stigma behind it. People feel they need a person in house that they can control and hang on to. By the way, I'm also an entrepreneur. Totally get it, but the tighter we hang on to our people, the less we're going to get. And I think that's that's a big awareness for all entrepreneurs to like, don't hold so tight.

Sari
And what people I'm doing is they're like, Well, I'm gonna hire my neighbor, my friend or my cousin, or this person I found on Craigslist or whatever, who says that they can do it, at this lower rate that I can, you know, because if you're gonna bring in so many parts, even like a, you know, 30 hour a week or 40 hour week like, that becomes a whole salary, and that becomes expensive, and what you really need is somebody, like you said, at like 150k-200k level of salary, to get you the results that you want. And so then we end up bringing in somebody who doesn't actually know what they're doing, and they're learning on your dime at a much lower rate, and it's going to take you so much longer, right? You're still making an investment. Maybe it's half the price, but it's going to take you twice as long.

Lisa
So I dealt with that as a broker, and I still remember multiple times training the salesperson. What a OI is. It's off invoice. What an MCB is, manufacture cash back. What does it mean to submit a promotion? How to do like, I was training their people. I remembered, I got a little insight from my brand once, where they're like, well, I can't they said the exact same thing. I couldn't afford the 150 so I got this guy was at 80, and he said he could do some things.

Sari
Go bring in a VA from Tal.

Lisa
Yeah, that's true.

Sari
To deal with all those, those little data things, hire a fractional salesperson through you, and like, put this fractional team together that's taken care of at the level you're at. And then the beauty is, then they can grow with you.

Lisa
And interact. So yeah, I got to talk to Tal because we work with companies like that. So one big one, we work with accountants. So accountants are asking us things marketing, fractional marketers are asking us things fractional operations or sales that if they're not working with us, but on another aspect, it's completed, because we can all work together. I mean, we're professionals, you know, we can figure this out. But the scary thing that was hard for me as a broker scene is like when you hire that 80,000 person a year that doesn't know much. They're making mistakes that have to be fixed, so they're much more expensive than 80. Put them in a role that's good for them, that hits their, you know, capabilities. And then if you want them trained, I mean, I've trained a couple different people in sales and in data to help a brand grow those departments. It's actually worked really well.

Sari
They could potentially be making mistakes that actually, your business goes down because of it, or you're just, they're just making mistakes that you have to clean up later, and it's twice, three times as expensive to clean it up.

Lisa
It's hard as an emerging brand, because you won't see it right off the bat. Yeah, like that paperwork, like when you first get into KE or you first go to Pod Foods, if your numbers, and I don't mean mathematical numbers, I just mean straight up, say your SRP is wrong, or say you put in the wrong UPC, if those are wrong, how much of a chaos that can be later down the road. These seem like really basic things, but they can cause a lot of trouble for an emerging brand.

Sari
They really can, yeah, absolutely. I mean, Amazon's the same way, like I would just, if I was doing this, you know. I mean, I have my own business, and I hire experts that help me in my business. But if I was doing a product based business and doing this work, I would totally find the money ahead of time. And doesn't have to be huge amounts of money, but I would find the money to then hire the people who know what they're doing and can speed things up and get me momentum so much faster.

[email protected]
There is one thing I think with fractional people have a hard time. Was like, well, can't I, you know, they can't call them at all nights, like all days and all nights, and not 24/7, where sometimes, I think in people feel employees are that since, but I look at it as it's a healthy boundary for everybody. You get in that five.

Sari
I actually think it's better, like creating some constraint and then, like, I teach a lot of tools in Master Your Business, about, like, how do you actually communicate with people in a way that gets it out of your brain and that you get the results that you want? So if you do a good job of communicating and laying out the project, then you're going to need a lot less of, like, urgent middle of the night weekend calls, because you've already set them up for success, and they know exactly what you expect. And then constraint is going to make you guys way more efficient, instead of like, I just think it's kind of lazy to be like, well, I can just call this person anytime, you know, to have that much access. So I think it actually makes you a better CEO, run a business better.

Lisa
I think it's a great point that you're putting out there, because it's the same thing as managing brokers. I mean, I think it's so I've been reading some books on this as well about really how to manage multiple people as you're growing and I just think that you're right. I think it goes the same thing with work at home or work in the office. If you can't manage a person at home, how are you supposed to manage them in office? Just by looking over their shoulder the whole time?

Sari
Exactly. And that's the lazy way to do it, for sure. Oh my gosh, yeah, all right. Well, we talked about data, we talked about some stuff around numbers, and, you know, we got to wrap it up here, so tell people how they can find you and anything you want to offer?

Lisa
You can find us at runthenumbersconsulting.com, Yes, I did find out that I could have made that link a lot shorter after I bought the name. So sorry about that. We work with emerging brands, fractional ops, fractional sales data and deductions, and we are offering 25% off of anybody just mentioning this podcast, the first call. There's no obligation. It's mainly just to meet us. Hear what we do, hear what you need, and what you're looking for, and if we don't have it, we know people that we can refer you to. So that's kind of the point of all of this is bringing everybody together.

Sari
I love doing is being a connector, and like finding all the cool people who are doing great work and offering a ton of value, who are high integrity people, and just really want to serve and help make this industry better and more successful for all the young brands out there. So thank you, Lisa for coming on. We'll put all the information in the show notes.

Lisa
Well, thanks for the great conversation, and have a great day.

Sari
Amazing. Thank you. You too. That was such a fun conversation for me. I hope you got a lot out of it, a lot of back and forth there, of exchange of ideas. And Lisa really knows her stuff, so don't hesitate to reach out to her, learn more about what she offers. I feel like she and I partner really nicely together, like, let's get you launched in Food Business Success. Help you grow and scale to 300k and then go and work with somebody like Lisa with Run The Numbers. Start working with fractional sales. People, like this is the space you're going to need help. Go make wise investments that will get you to the next levels in your business, and take some of the hats off of you so that you don't burn out and end up resenting your business. So amazing conversation. Thank you agai to Lisa. Go check out all of our information below, and until next time, have an amazing week.

Sari
The smartest thing you can do as an entrepreneur is to invest in a who to help you with the how to speed up your journey and help you skip the line. When you are ready for more support and accountability to finally get this thing done, you can work with me in two ways. Get me all to yourself with one on one business coaching, or join Food Business Success, which includes membership inside Fuel, our community of food business founders, that includes monthly live group coaching calls and so much more. It's one of my favorite places to hang out, and I would love to see you there. Go to foodbizsuccess.com to start your journey towards your own food business success.