You’ve shaken hands, signed distribution agreements, and are ready for your first wholesale orders to ship out. This is the point in the game where for most there’d be high fives and shouts of, “We made it!”. While reaching this level is certainly an admirable feat in and of itself, there’s still much left to take into account if you want your fledgling business to stay afloat.
I’ll pause for a moment to say that this probably doesn’t fit the tone of most self-help content out there, the tone is more cautionary than encouraging, but it’s for a good reason. There’s not a ton of room for error in this industry. When it comes to the mental image for how wild things can get, think less Lifetime romantic comedy and more Discovery channel nature documentary. The importance of handling your logistics properly cannot be overstated and will define your business’s reputation, ability to take advantage of new opportunities, and ultimately its success.
.svg)
You Didn’t Know It, But You’re a Bank
Hey, while you may not make the same money, work the same cushy hours, or have the same fancy building as your local banker, if you sell on credit you’re the bank. Banks need to manage deposits and loans in order to appropriately manage their liquidity, well you’re the same. You need to manage your inventory and cash flow as you’re buying supplies or products in bulk and having to pay for them before you turn them into revenue, and sometimes that’s a very long time.
Chasing accounts receivable (“AR”) isn’t fun, it’s a slog and sometimes you feel like Emilio Estevez in Repo Man (if haven’t seen it, it’s worth a watch). Do yourself a favor and take a banker’s approach to the AR and don’t make it personal, but don’t be flexible. Having a customer owe you a couple of thousand dollars and get a couple of deliveries behind on their payment doesn’t do them any favors because they’re probably digging a hole they won’t be able to get out of and you’re definitely not doing yourself any favors. The only thing worse than not hitting your sales numbers is not getting paid for what you’ve sold.
Too much sales?! Is there even such a thing? Sales team success can lead to finance and operations nightmares too. The more and faster you grow the harder it’s going to be for the rest of the team to keep up and if you let your AR start to slip it could all get very messy. If sales start growing month over month, take a moment to celebrate, and then start digging into your AR and then your inventory forecasting.
A word for those of you who are not allowed to sell on credit. I know it’s painful to work with big government bodies, but chasing 250 customers who each owe you $1,500 is also exhausting… so take the good with the bad.
Nostradumus has Nothing on You
We’ve touched on the pitfalls awaiting you if you’re growing too fast (still not a bad problem to face), but not having any product to sell is just as frustrating. As global shipping lead times continue to stretch longer and longer, everyone is having to keep more stock on hand and that means more capital outlay.
If you want to hit your sales targets, you simply have to have product on hand to sell. Good forecasting is a delicate blend of art and science or data and psychology and it’s so hard to get right. Looking at historical data is helpful, but if the past three years have taught us anything, it's that things can change very quickly.
Factors like seasonality, current growth trend, planned marketing spend, and changes to your sales team are all going to impact your sales forecasts, but having enough product isn’t just about overall sales, it’s also about the product mix that makes up your sales. Without good data to pull from, it doesn’t matter how good your intuition is about the sales figure if you’ve get the product mix wrong.
So what can you do in order to be a better forecaster? You can set reminders, review stock levels regularly, check pull thru, but you can also leverage technology. Systems like OrderEZ allow you to set PAR levels, in our case you can set it by product and by warehouse. PAR levels remind you that you’ve hit some pre-determined threshold for your stock levels. You’ll also want to review these from time to time as shipping timelines change and any production lead times can change.
Don’t Forget About the Basics
A keystone ingredient to success in this game is consistency, whether it be in taste, design, or delivery logistics. These things are critical in building your brand and ensuring the pathway for future growth. Making a delicious product is hard. Opening new accounts is hard. Getting menu listings, tap placements, and winning over new customers is hard. Moving a box from point A to point B at a specific time shouldn’t be hard. Your customers want to know that when they place an order with you, they’re going to get what they ordered, when they asked for it, and if they’re not going to, that they get exceptional communication about how it’s going to be remedied.
Maintaining consistency also means making sure to maintain the necessary amount of product on hand, as well as the necessary amount of capital to secure it.
Clock Watch or Get Clocked
Through the lens of modern media, we’ve seen pop culture portrayals of the “one that got away” countless times - the flight takes off before the protagonist can proclaim their love, the boombox runs out of batteries, or someone never gets the chance to tell their crush how they feel - leaving them to live and languish in regret. You wish you could scream at the screen, “Do it, before it’s too late!” When it comes to lost business opportunities, it’s often the same way - timing can make all the difference.
You never want to have to turn down a big opportunity because you don’t have enough bottles on hand. Full stop. Lacking the ability to run with an order in a reasonable amount of time indicates your brand lacks the maturity to handle business at that scale. If it’s an order outside your scope that’s perfectly okay, it’s best to scale too late than too early, but if it’s an order you could have fulfilled with better planning you’ll never forgive yourself. I still kick myself when thinking about lucrative deals that got away while we waited for cases to clear customs, and learn from others’ mistakes. Time kills all deals, so always remember that clock is ticking.
The industry can be cutthroat one day and collaborative the next, congenial and easy-going on Tuesday and stressed to the max on Thursday, and things are going to happen that you never could have foreseen (ahem, a global pandemic for example). With all the things that we cannot control, there are a lot of things we can. Take the time to build standard operating procedures for the mundane tasks, build a monthly calendar of what you do and when you do it, from checking inventories to reviewing forecasts, and put as much of the “easy stuff” on autopilot as possible so that when life invariably throws you a curveball…you’re prepared.
