Ep #197 Right Sizing Your Business with Sarah Delevan

Sarah Delevan, a CPG profitability expert and host of the Good Food CEO podcast, and I have an engaging conversation about what it takes to create a sustainable businesses on your terms.

We discuss the essential financial strategies and the intentional approaches founders need to build successful ventures including what your COGS need to be and right sizing the business based on your goals.

To watch our conversation, go to the YouTube video here.
Breaking down product margin video (why 50% margin isn't enough long term)
Getting out of retail episode

Get the CEO checklist at https://www.foodbizsuccess.com/ceo and know exactly what to do when you put on the CEO hat 🎩 in your business.

If you would like help to create this foundation to create your own beautiful business, Master Your Business is now open for applications. We will officially start in January, but you don't want to miss the Q4 bonus classes to get your business ready!

Food Business Success is my signature program that helps you launch your delicious idea and grow it to $100K. Includes step-by-step videos, tools and 5 months inside the Fuel membership for coaching + community. And it's guaranteed to make your program fee back or I'll refund your money. Learn more at https://www.foodbizsuccess.com/program

Pick up your copy of "Key Ingredients" on Amazon here.

Check out my YouTube channel at www.foodbiz.tube for how to videos to start and grow a packaged food business.

Transcript

Sari  
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!

I cannot tell you how excited I am for you to listen to this episode. It's a really good one. Sarah Delevan is an incredible thought leader in the CPG industry space. And she is really helping founders to create businesses that work for them, and doing it in a really intentional and meaningful way. And I can't wait for you hear this great conversation. If you want to watch our conversation and see us on video, it is over on YouTube, I'll put the link in the description. It's kind of fun to see us engage with each other and since she already is on YouTube, she agreed to be on video, which was very cool of her. So without further ado, here is my conversation with Sarah Delevan. 

This is going to be such a good one for all my folks who are a little bit nervous about talking about money or learning about it. We got two people here who love to talk about money. I'm really excited to welcome Sarah Delevan to the podcast. Sarah, welcome.

Sarah  
Thank you Sari, I'm so glad to be here.

Sari  
You are the creator of The Good Food CFO podcast and you have a long history in the food system, in entrepreneurship. You have an MBA. You want to just tell us a little bit more about your background and what makes you so qualified to talk about finances and help people become better stewards of money in their business?

Sarah  
Yeah, definitely. So I do have an MBA, it is in interestingly, Finance and Entrepreneurship. The school I went to is called Rollins College in Florida, they offered this entrepreneurship MBA and I was like, I want that. I knew someday I would be an entrepreneur, didn't know what kind of business I would own. But I was like, yeah, I definitely want to participate in that. I worked in the corporate world for a long time, I struggled with acne for a long time, really painful, debilitating acne. And when I moved from Florida, where I was getting my MBA to Los Angeles, I met a new dermatologist who for the first time was like, let's not prescribe you medication. Let's instead look at what you're eating. And I say this, like my body is not great at being vegan or vegetarian. It does not respond well to soy or corn or many of the things that go into, you know, vegetarian products and I was eating a lot of soy at the time. So the doctor was like, let's cut out the soy, let's bring back real meat if you're comfortable with that, you know, grass fed, etc. I was eating vegetables as well. It was sort of eating a "healthy diet". But she just sort of changed the way I thought about like, where I buy and how I buy. I read Michael Pollan's Omnivore's Dilemma at the same time, and I was just like, hold on. Food really is medicine, I need to better understand where my food is coming from. My skin changed like seemingly overnight, like it was an incredible change that I was experiencing. And so I was all in on like the food industry. And so I had my corporate job, which I was working from 6am to 2pm, like California time, it was based in Florida. And so in my spare time, I was volunteering at farmer's markets and just getting into the food system here, locally learning everything I could. I owned my own food business with a co founder for a couple of years where we sourced the best products we could possibly find from around California and sold them in different neighborhood pop up markets. We learned a lot from the business. The foundations, I think of how I understand like what it means to be a foodpreneur and what we get wrong and sort of like the misconceptions and misunderstandings that are so easy to have. But from there I went on to be a buyer at this large catering company here in LA that was really focused on sourcing sustainable, local, regenerative. And so I got to expand my sourcing there but that's also where I really got hands on experience in the finances of a business. They were struggling with the same problems that I was in my food business, I started asking questions like hey, what if we don't hit the sort of like, you know, industry targets that people are telling us we should hit. What if we modify our targets, maybe we'll have better outcomes. And we did that and it worked. I kind of worked myself out of a job there and then eventually went on to consult for other businesses. And I guess as they say, the rest is history. 

Sari  
Here we are and you became an entrepreneur.

Sarah  
I did. Thought I would own a food business, thought I would have like a little buy right shop or something of my own. But that was not meant to be. 

Sari  
You so eloquently talk about money. And you and your producer of the podcast, Chelsea, have such good conversations, really breaking down, like how many podcasts can you have about money and financials. But you guys do such a great job and I really look up to you as a thought leader in this industry. And I love how you've niched down to really talk about the financials. But ultimately, how you do one thing is how you do most things. And so, if we don't have a healthy bottom line, the financial forecasts, we'll not be in business for very long. So thank you for being here and we're going to have a great conversation. I wanted to start by just hearing from you, and we'll go back and forth. But what are some of the pitfalls were like when you're just starting out? You know, because I work with a lot of early stage, I have that delicious idea in my home kitchen. Folks that we both love, they're going to change the world. Never run a business before. And so what are a couple, you know, two or three things that you feel like, man if they just knew this.

Sarah  
Well, I think, ultimately, the biggest struggle that founders have in business is cashflow. And by that there are like several things that fall underneath the umbrella. So at the earliest stage is really making a projection as best you can about how long will it take me to have a business that is financially sustainable. And the reason that that is like such a key thing to do is because what we've seen and like, through my work, like directly with founders, and in conversation with other founders, is that if you don't know how long it's going to take you or like what level of production you need to be at, like for things to get profitable, means you also don't know how much financial investment it's going to take to make your business profitable. So you're missing these two key components of how long and how much money. So if you get two years in, and you're like, oh my goodness, I can't fathom this idea of investing more money into this business because I don't have a clear idea of when I'm going to start to pay myself or when I'll be able to hire a team or when I will stop being able to invest money, it's really hard to make that decision to do it. Just like if you don't know how much you need to produce and sell in a month to sort of, we call it the tipping point to become financially sustainable in your business and stop, kind of like continuously having to invest, it can be hard to keep going. And if you add to that, that you're not paying yourself, which is a reality for so many founders, I think that's why the number of food businesses in particular, but small businesses in general, don't make it past the three to five year mark. So it's just that understanding of like, what is the financial outlook of this business? And what is my best projection of the amount of money it's going to take me to hit profitability, or financial sustainability and the amount of time that it'll take me to get there?

Sari  
I love that. Because I think, this is an industry where people go into very idealistic, they see some unicorns out there, that hit it big. And it's so easy, right? You can get on Amazon, there's farmers markets, there's so many ways. If we were having this conversation 15 years ago, we'd have a very different conversation about the cost to get started, and the timeframe and all of that, and how difficult it would have been to get on store shelves, but now there's so many more sales channels, but I still see it's like, you either have to pick two kinds of people, either to sit around and do everything in thought, and overplan and really research and study but they never actually get started. But they really want to. Or the ones that just jump in. And to your point, they haven't done any you know, for those of you listening and you're like that's me, but we haven't done any thought about what is it really going to cost me? Because just because you have $5,000 doesn't mean that's what it's going to cost. 

Sarah  
And there's also like there's these stories of like, you know, Bootstrap the Business started at, you know, with $3,000 in their bank account, and now they're successful. It's like, that's awesome. But just like any other thing, we're missing some of the details, right? So like some of the details that I would want to know about that situation or any like success story too like, what channel did they start in? What margins were they selling their product at? What was the pace and the path at which they grew? Because I think going back to your initial question, I think another thing that founders and this is like the fault of, like for me when I got my MBA, I realized in hindsight, and I would do it again in a heartbeat because it provided a level of like, education and collaboration that I don't think I would be in the seat I am now if I didn't, like go through that part of my education. But what I learned there was not really how to be an entrepreneur, or how to run a small business. I was learning how to be a good entrepreneur within a corporation. I remember doing a case study on Tyson Foods, like no one who's starting out should be like emulating anything about Tyson Foods like not their margins, not their debt on their balance sheet, like none of it. And something that we're told is and I believed it, and I had to be shown so many times to really go, okay, this is wrong, and I need to talk about it, is that a 50% margin while it is profit, right? It's not going to actually create the kind of cash you need in your business to grow it. So if you start a business with, say $5,000 or even $50,000, it's only going to get you so far, and your margin is going to be a big determinator of how far it gets you. So it's like 50% margin is good once you've hit a certain point in your business, but not from day one. And I think that that's something that like we need to just like, however many ways I can get that message out to people, I want to. Like shout it and help people understand the why. 

Sari  
I'm so glad we're going to talk about this because I listen to your podcast, I told you, I was binging at the gym to a couple of them and you broke that all down so eloquently. And I agree a 100%. But here's what I want to, like have a conversation about is there's a part of me that says.

Hey there, if you are ready to stop feeling so alone in your business, to stop the overwhelm and the confusion and wondering, am I doing this right? Is this okay? Is this the best way possible? It's time to stop that nonsense and come and join us inside Fuel. This is my monthly membership community where you get access to me and our Fuel coaches via coaching calls twice a month. We have a Power Hour working session, and you have access to the 24/7 Fuel community feed to ask your questions, to cheer other people on and feel really supported in your journey. If you have been on the roller coaster of business of that starting and stopping and starting and stopping, and you're just getting tired of it not working, then it's time to do something different. Come and join us. Come check it out for one month and just see if getting the expertise, getting coaching, getting the answers, and feeling more part of a community is exactly what you have been missing in your current business. Usually the only way to get inside Fuel is through the program Food Business Success. But I have opened up the membership through the end of May only. So on June 1st, you won't be able to join us for the summer. We are getting to work on our business, we're not letting the summer slow us down. You can join us for as little as $57 a month. I would love to see you inside, go to foodbizsuccess.com/FUEL. 

Get it out there, start proving your concept. The margins are probably going to suck at the beginning when you're buying your stuff at the grocery store or, you know, you're not able to get the economies of scale and so my mentor always talked about path to profit, right? Like is there a path to profitability, and 50% margin in the long run is definitely not going to cut it. And I don't teach that, the margin. But when somebody's just starting online or just starting at a farmers market. I'm like, okay, season one, year one. Let's just get it out. So what do you think about that? Like, where do you fall in that?

Sarah  
I think like, you can definitely do that and get it out, especially if the purpose of that is proof of concept. And to get feedback about, do people like this product? Is there a use for it in their day to day, right? Like that sort of like, figuring out is there a need for this? Is this something that we can grow and that people want and need this product, but the moment you then take that model, and you try to grow it, if your margins are 50% or less, you will absolutely need to invest more money into your business to grow it. There is always a path to profitability. The question is, how much money is it going to take for you to get there? So something that we talk about is that we pick on a 50% margin, because it's so like prominently talked about as like, the place that you want your margins to be? But it's like, in what channel? And do you have the debt tolerance to have your product margins at that level and to take on the necessary amount of debt needed to get your business to profitability? So it's like, I would be curious, like when you say, like path to profitability, like what does that really mean?

Sari  
Right. And how I usually talk about it is okay, let's get it out the MVP. For instance, I mean, this is kind of an extreme case, but I worked with someone who wanted to do gummy snacks made from fruit juice. They weren't like edibles, like snacks. But you know, going to a co packer, like minimum of a million pieces. So we had pretty terrible margins, like below 50% at the beginning because we had to start with a really small maker, who was just like, you know, just do small batches. But just to get it out and prove the concept. And, you know, you need time to like, tweak the packaging, and how, you know, is this the right size of the packaging, what's the messaging and the brand identity and all of that. But we had a, you know, we knew, like, a co packer, we had done the research. We knew where we could go and what it would cost, like you said, there would be debt. You know, whether she's going to borrow from friends and family or bank or whatever, but there was a path to get to a place where this would actually result in profit, but at the beginning, you know, losing money.

Sarah  
So I think this is great because there's a couple of things that I can like point to here. One is, you're not saying the path to profitability, profitability for this company was just to move to another co packer. Like, it wasn't like or just to scale the business. Because once you reach a volume, that then you'd be profitable, which is the level of planning that a lot of people do, where it's not an actual forecast of financials. You're not actually forecasting. Okay, if I moved to another co packer, have I done my research to identify what will my cost dropped to? And what can my margins increase to here? If you haven't done that work, you don't have a path to profitability, you have a desire for profitability. But you haven't actually done the work to figure it out. And you had done the work with that founder to figure that out. I think the other thing that is important about the story you're telling is that you weren't about to grow, I'm assuming, you weren't about to grow into retail, utilizing the co packer that you were using, right? So you weren't like, there was stepping stones from okay, when we are working with this small co packer, this is the channel we're going to sell in because our margins are not great and we know our margins are going to be even smaller if we start selling to a middleman, right? So this is where we are now, we're going to prove our concept. We're going to get our branding right. We're going to get our messaging right, which I totally agree with, unless you invest a lot of money. I mean, even when you invest a lot of money, like people missed the mark the first time out, I feel like there's a story about like Olipop, right? Where like, their first branding like it didn't hit, and they redid it and they figured it out. And then they, you know, they saw the success that they're seeing. So it's like, you're not going to get it right the first time, most of the time. So getting started, trying it out. You know, if you don't have perfect margins, like that's okay, but recognize that and then proceed with a plan, then proceed with an awareness of how much money am I going to have to invest and what is that sales number like that number of units produced and sold that's going to get me, you know, that positive cash flow and that financial sustainability. That's the difference between the two ways to kind of go about it. 

Sari  
And can you just like walk us through a really simple model? Because I bet some people are still saying like, what? Fifty percent should work, right? Can I point people to a YouTube episode? 

Sarah  
Yeah. I wish I had the number in front of me, maybe you can share it in the show notes? Okay, but we did a podcast episode, Chelsea and I were we built a model and we looked at the same business, the same financials at a 40%, 50%, and 60% margin. And what we show there is the level of investment, the amount of investment needed, at what point you become cashflow positive, right? And so everything held the same. But just changing the profit margin, we wanted to illustrate like how that actually impacts a business. So the the best walkthrough is going to be there. But one thing I think that's really important for people to understand is that in the beginning, no business starts with money. Every single business starts with debt, right? And no business, I shouldn't say no business. Rarely is a business starting out where they have enough sales to cover their operating expenses. So if you're just getting started, you've got operating expenses of $1,000 a week, and you're selling $1,000 a week of product, and you're at a 50% margin, that's $500 that can go to producing the next round of product, and $500 that can go to covering your operating expenses. It's not enough, you have $1,000 worth of operating expenses. So that additional $500 has to come from somewhere. And that goes on, and on, and on, and on until you reach a point where you're selling enough product to generate enough gross profit, essentially, enough money to pay your operating expenses. There's some moving targets in there, right? Because like, your operating expenses may increase as your production increases. By the way, as you increase your production, you need more money to produce more products. So these are the things that don't get talked about, right? Is that like 50% is good at a certain point. Is there a point it's like you're swimming in money, but you don't have enough money until you reach the point where you're swimming in money. It's like, there's these two polar opposites. And I think we need to talk about the amount of investment and the amount of time that it takes for a business to be selling enough that they're generating enough to produce more product and cover their operating expenses. Because if you look at a P&L, it's like here's your revenue and then your cost of goods sold, you're like, well, that's what we already sold. And then I have my gross profit, which is going to cover my operating expenses. And it's like, okay, well, where's the money to make more product?

Sari  
Hmm, that's where the like, right? The room falls silent. 

Sarah  
And I think it's another like, the more and more time I've spent in the industry. And I think why we have so much to talk about on the podcast is because I think we need to shift the way we understand a P&L. We need to shift the way we understand how and when a margin, like impacts your business. You know, I used to talk about build a financial forecast, write a detailed financial forecast, and I'm like, listen, I understand that no one wants to do that. No one is going to do that. So how do we create a simpler model? That just is going to give us the nooks and crannies of how much money do I need to invest to make this thing profitable? Because if people will do that work, I'm happy.

Sari  
Yeah, let's just go into it eyes wide open. Is this going to be 100k? Is this going to be 500k? A million? Like several million? I mean, lots of founders with big businesses tell me you got to spend a million to make a million. 

Sarah  
CPG is expensive. But one of the things I talk about a lot is like, not every business needs to be a national brand. I'm really big on like being a part of the slow food movement. I'm really big on regenerative farming and, you know, local economies and all the good that local and regional businesses can bring not only to the local economies but also to the founder and to the team that they employ. And I haven't really said this publicly, I don't think, but there's not enough room on big retail shelves for every brand that exists in this country. So if every brand was aspiring to hit to be a national brand, like not everyone's going to make it like there's just not enough room. With that in mind and with the amount of value that local and regional brands can bring, like I encourage founders to like really sit down and go, what kind of business do I want to build? And we've seen time and time again. And before we started recording, you were mentioning another episode of the podcast. We called it pulling out of retail. It's really about right sizing your business and identifying what do I want to build? And how can I build that and make it profitable? I'll tell you what, you can build a regional brand and make it profitable a lot sooner than national brands.

Sari  
You're going exactly where I want to go next. You segwayed yourself perfectly. Because I love this conversation, I want to talk about, what does it look like? What are some other models? Because I think a lot of people come in, you know, very bright eyed of like, I'm going to be the next Justin's or Purely Elizabeth or whatever it is. And that's cool, you can work towards that. But there's a lot. I mean, as we're talking about all these nuances of business, I mean, grow that to like, a giant scale, right? Millions and millions of dollars. I hadn't listened your podcast in a while and somehow that that fell on my feet. And I hit play, I remember exactly where I was. I was like making dinner. And I just was like, oh, my God, you're blowing my mind with those vodka. It was so good. Because in this, you know, I think was that like late 2023, or early 2024 is like, I think that there does need to be this shift in conversation about what is the right size for your business. And just the question that you were talking to the pasta woman, and she said something like, when I did the math and did the model for scaling to that big national brand. It was like, you know, a million pounds of pasta. And I thought that was such a good way to look at it, if everybody translate it, because sometimes dollars feel like really vague and non material. But if you actually translated that to like, how many bags of granola is that? How many jars of sauce is that? I thought that was a great way to look at it. 

Sarah  
I'm so glad that you bring that up. Because it's like when we're talking about the models, right? It's like, there's a dollar amount there. But yeah, you absolutely have to go okay, what is $10,000 worth of gummy bears? Like, how many bags am I selling? And who am I selling them to? What is $100,000 worth of gummy bears? What Leah was also talking about, there's like, she had the infrastructure to be a small business and there is an infrastructure to be a really big business, but there's no infrastructure for the in between. And so for her particular business of making high quality pasta, she was going to have to invest or find investment, find partners to create the model, like the literal equipment, storage facility, like all the physical things, to be able to be a like "medium sized" pasta brand and then be able to grow to a large size and what she did and it's not an easy process, like I think she's okay with me sharing this with you guys, because I think she shared about it on our podcast as well. And I know that she wants to support other founders in this ways. Like, she really felt the discomfort, the I think sadness in like being out of alignment with what she really wanted to create. And it's a tricky seat to sit in as a CFO because I don't tell my clients what to do. My job is to run the numbers and help them make decisions and so she had been struggling you know, investment, investment, more investment because her pasta brand was growing in distribution. And she had great distribution partners. It wasn't like we were working with people who were having crazy chargebacks or anything like that, like she had really good partners, but to grow even at good margins, we needed more and more and more money. And she started to feel like I don't like this borrowing. I don't like the nonprofitability on the P&L. I could hear her saying like, I want to be a part of a community. She had like a little shop as an extension of her pasta production. She said, I want people to come in here and to talk about what they're making. She longed for this level of community. And she phoned me one day I remember where I was, I was in my mother's car. I was in Pennsylvania visiting my family. I was pulling into my grandparents driveway to visit them and she had text and she said, can I call you? Were just like, you know, something's up right when someone is like, can I call you? So I said sure. And I'm sitting in the driveway, and she's in tears and she's like, what if I blow this up? Like what if I say no to distribution and no to wholesale, and I go all in on DTC and creating this shop? And I said, let me run the numbers. You know what I mean. And like, I think that, you know, whatever kind of supportive words I came up with at the time, and we ran the numbers, and it was very easy for us to see that the sales target of you know, X 1000s of dollars a week in the shop, with some small, you know, wholesale clients like under $5,000 a month in wholesale, like she could run a profitable business that would have a much better cash flow situation than what she was dealing with, you know, in the current structure of her business. And so we we ran the numbers, we figured things out, we did not implement this change overnight, was very thoughtful. She communicated it extremely well to her partners, and was very transparent about everything. And when I tell you and I shared this in the podcast episode, that we saw her cashflow change overnight, it was like literally overnight, within a month, everything was different. And it hasn't changed. It's just gotten better and better and better, because she's figuring out who am I in the community, and what do I want to offer. And she's really able to focus in on the thing, instead of being in a million places, trying to grow distribution and have wholesale accounts. And you don't mean all of those things. And when we look at her P&L, because this is important, the amount of revenue that she made, like we just looked at Q1 of this year versus Q1 of last year, she's making less money in terms of revenue, she's making a lot more money in terms of profitability. And I think that that's something that people don't think about is like, well, I'll make less money, if I get smaller. And it's again, you might on the top line, but your bottom line can be bigger. And that's exciting. 

Sari  
I actually did that in my own business. So I had, but you have to get over an ego thing of like, my top line revenue is this, but I changed my model. And it was like, it felt so much more in alignment to with who I was and wanted to be in my own business. And I talk a lot as a mindset coach, business coach about, we're not just starting this business for the accolade of like, you know, hitting a certain revenue target or being on whole foods shelves or something like that, like I know, that drives some people, but I think you and I both want to work with people who have deeper missions, deeper why's, and we get distracted sometimes by those bright shiny objects. Coming back to like, what feels really good for me, I'm not saying don't do that, but make sure you're in alignment with it, and that you're comfortable with what that's going to take. 

I think in today's day and age, it takes work. And I was actually going to call out your mindset coaching and the importance of that in making decisions for yourself, right? Because there's going to be always people who, especially people who don't understand the food industry and the food business, who are going to say, oh, you should be on whole food shelves, you should be here, right? Like, they're trying to be encouraging to you. In the media, we're seeing, you know, people who raise money, those are the ones who get celebrated. They don't talk about, like the level of profitability of a company, right? They're not celebrating the fact that like, we've employed people for 15 years, you know, and it's consistently and steadily and paid them bonuses. Like no, that doesn't get attention, funding gets attention, Shark Tank gets attention, not the longevity, and the financial sustainability of a business. And so it's no wonder that people are aspiring to things they think they should be aspiring to. Like, we were talking about therapy before we started recording. Sometimes you need help from a coach or a therapist to get back in touch with, what is it that I want? What do I want my day to day to be like? What kind of relationships do I want to have with the customers that I'm choosing to have? And answering those questions helps you figure out the right vision and the right size for your business. The math can come next, that can all be figured out, you know. And that can be a fun process too. But I think, you know, for many of us, having a bigger business is not going to make us happier, right? Having a bigger top line is not going to make us happier, but maybe being debt free. Maybe bringing home a bigger paycheck makes us happy. But like figure it out and do what's right for you. 

Yeah. And I think that the numbers and your own personal alignment and getting in touch with that, they flow together because our brain is a jerk, basically, right? And it conflates things. And it can only handle so much information. But there's something beautiful about math, that when you do this work that you do with your clients and your members and I do inside Food Business Success, when you at least look at the numbers. Now you can see like, what is it really going to take? And what how does that feel in my body? And you're not just making assumptions. You're not just guessing at things and like, well maybe. Like you said, you don't have to have every penny accounted for. You don't know exactly. But people like yourself and myself, like we have seen enough businesses that we can make some assumptions and create some categories of things and really help to shine a light on it so that you can say, okay, I feel good with that path. And then you're going to be so much more energized about it, it's going to fill you up, you're going to have more fun. I hope most people don't get into business to feel resentful, overwhelmed. 

Yet we will find ourselves there, I think, from time to time. I've shared on my podcast, if you listen to the first 50 episodes, they sound very different than the second 50 episodes. And I think it's because much like what you were talking about with the MVP and that food brand launching, it's like, you know, I knew I wanted to talk about finance. I knew that I was having conversations behind closed doors, like one on one with people that I wanted to be having, you know, externally and I was coming from a position of I called it the other day, like more of a cheerleader like, you can do this and here's some helpful information for you. And I found myself out of alignment and really frustrated with what was happening with clients in the industry. I found that like, there were some really ugly things that were happening, honestly to people that were completely out of their control that were really affecting their financials, really affecting their relationship with their end consumer that they don't have a direct relationship with, but obviously have a relationship with nonetheless. And I just felt like, I got to start talking about these realities, because it's not fair that I'm not doing that. And I'm saying, but you can still succeed. It's not fair that I'm seeing all of this and not exposing it. There became a point where I woke up in the middle of the night, and I was like, it was literally woke up and I was like, you won't be able to sleep at night, nor will you be able to live with yourself if you don't do this, because there was a fear for me of like, speaking out of fear of like, saying something different than someone else, like three years ago, I never would have said 50% margin isn't good, because other people say that it is and I don't want to get into like, a conflict or like a disagreement with them. So it took a lot of courage is what I'm trying to say to like, and a mass misalignment, to create the change. And so I think sometimes you have to go to that place, you have to try and then realize it's not right in order to make the shift, because we don't always know what our future business or our future selves.

You've never done this before. Right? Well, my niece just graduated from high school, and my nephew just graduated from college these last two weekends. And in both our cards I wrote, here's the secret to life: Nobody knows what they're doing. Go have fun, and go mess it up. 

Sarah  
That's amazing. That's so beautiful. Yeah. 

Sari  
But that's the contrast, right? And so sometimes you got to get out of alignment. But I think that looking at the numbers can help you realize, oh, like this is what it's really going to take, and am I willing to suffer for that long? I mean, if you're in go all in, I'm amazing. I'm not saying be the next Justin's, go do it. But it's not for everybody. And so that's why I love that podcast because of inflation because of things going on, you know, cost of goods sold going up. I think it's forcing people to do that inner work, hopefully, and really look at the numbers of even whether it's, you know, on the extreme end, do I still want to be doing this business? Or do I want to, you know, right size it. So maybe talk a little bit more about how you see what right sizing? Like what does that mean in your opinion? 

So right sizing. That's a great question. I don't know if I've ever answered that question. Exactly. But right sizing to me is like finding the size of your business, that feels good to you, kind of that idea of like, do I have the relationships with my customers that I want to have? And also looking at, like, in a way, how can my business be profitable the quickest? That is an element of it, right? So the other brand that we talked to in that episode was a tortilla company. April is one of the co founder of the company, she was on that podcast. And that brand was growing nationally. They had national distribution in a store called Sprouts. And I'm not going to go into many of the details here. But it was a huge financial drain on the business and the execution again, out of their control. The execution of that didn't go well. So all of this money, seeing how this like expansion was kind of playing out. And then asking themselves the question, do I want to try to do this again? Am I going to commit more money to this? Or is there a model where we pull back and we're a regional brand, where we're in every, you know, Co Op, in every store, in every Mexican restaurant? And you know what I mean, like is, is there a model where that's who we are, and we can be profitable. So again, it was the story of like, we thougt this is what we needed to do. And we got there and it was like, this is what we thought, it doesn't feel great. We have a lack of control over our product, and if it makes it to store and a lot of other things. And so they made the decision to pull back and we looked at that model as well and said, okay, what do we need to do here to make this profitable? Is the business profitable every single month? I want to be clear on that, like, no, not necessarily but over the course of a year. If your business is profitable, if you can have positive cash flow, that's a good thing. And for them, they want to be a part of their community. They want to change the way that people are eating. And if you think about it, there are other tortilla companies doing the same thing. And so it's like, how amazing to have all of these regional brands, you know, with regional ingredients kind of just like blowing up in their area and being successful. And I guess I'll say this too, like right sizing could be looked at, you know, when you create this model, and you're like, okay, I want to be a $5 million brand, right? Then that model looks like one thing, and maybe it takes a certain number of years, it takes a certain amount of sales, it takes a certain amount of investment to be able to be that. And there are going to be some people who have the tolerance, the wherewithal to do that. And there are going to be other people who are like, no, it's too much money. It's just doesn't feel like me. And then you can say, in that case, let me right size it. Let me pull this back. What if we aspire to be a $1 million company in our region? What does that investment look like? And then you figure out oh, that can work. That's what I will do. So I almost think like right sizing can be thought of as like, what is the right amount of debt? What is the right amount of growth? Was the size that you want to be, right? Who do you want to be in your community or your region and asking yourself those questions and building a model that works, because the right size for some people will be national. The right size for Leah is one store, and her pasta brand right being sold throughout her community. For Vermont tortilla, the other brand, they're much more regional brands. So there is no one answer, right? It's very unique. 

That's the whole point like know thyself, right? Do that work. And my program, Master Your Business, we talk about primary aim and like, how does this business serve your life? And not the other way around? 

I suppose is something you can't do unless you are the wrong size. So it's like an interesting approach to it. But you can do the work from the beginning. And it sounds like those are some of the things that you tackle, right? It's like, talking about what is the vision that you have for your business and your life with you in it? And then building that business and then having the confidence, and the mental wherewithal to say, no, I don't want to be in Whole Foods, or no, I don't need to be a national brand. Or, nope, I'm happy with the size that I am. And I think that that's the tricky part is like staying committed to what your vision is. And I'll share, there was a time in our industry where like, everything was going sort of course based, right? It's like, it was almost like one on one consulting was like a bad thing. And it's like, you're going to be tired, and you're not going to be able to make any money and like overworked, and so turn your consulting business into a coaching business. And I was like, well of course, yes, I need to do that. That is like the right thing to do and I invested a lot of money and sort of learning how to execute this type of business model. And I put it all in place. And I was just like, nope. It didn't work for me so it didn't work for my customers. Because my customers were like, this course is great but like, I have questions for you and I need things from you. And when I sat down with myself, and I asked myself the question, what kind of relationship do I want to have with my clients? I like the one on one. I like being there emotionally for people because that's a big part of being a consultant. I think no matter what part of the food business you do, there's an emotional component to it. And I've like holding space for people. I also like crunching the numbers and doing the analytics. It satisfies me, it makes me feel good. Why am I going to give that up? Because I'm being told that there's this other way to do it. And so now with the Good Foods CFO, I think we found that balance of I still maintain my one on one consulting and for people who don't need that level, who don't want that level. There are tools and resources that you can access and also get one on one support. So we built the model that works for us. And there are some people who are like, that's crazy, right? Or like why are you offering group coaching, and it's because it feels right for us because it feels like the kind of support that we want to give and so it happens to all of us, I think or maybe not all of us but having so many of us that you try it and you find what doesn't work and it helps you find what you do want to do. 

I love that. And I love introducing my listeners and Fuel members to you, tell us really quick where people can find you and kind of what, because you do have a really fun I was on your website earlier, I'm like, you know, yeah, you're doing some things like a little, you know, like little one off or kind of against the norm of how these businesses work. But if people wanted to connect with you, get some additional support with you, because we do this work in Food Business Success. But I know you, you know, this is all you do. This is like a part of what we do. And this is like, what you do. And I love your frameworks and your smooth podcast voice and how fine you are. We definitely like really aligned on a lot of the ways we do.

I agree. Yeah, it's been a conscious decision, because there are so many people who are great at other things, like, I know that I can't do what you do, right? That is not my area of expertise in like, you know, helping, like brands, like really get started. Like, that is not my area of expertise. And I was like, let me just be where I am, you know, the most impactful. So thank you for recognizing that. I think it's important to highlight people like as we do you and others in the industry, the consulting industry, go get the kind of help you need from the right person. Like so many women here in the industry are just so amazing. It's like, we love to shout out other folks, too. So thank you for having me on your show. And people can learn more at thegoodfoodcfo.com. We're actually in the midst of a website revamp. I'm going to say it's a little bit sparse on the website right now. But it's coming together. And then on Instagram, @thegoodfoodCFO. We do a lot of kind of sharing and posting there, we have a bit of fun, we share about the podcast there. And then anywhere you listen to podcast, you can find The Good Food CFO podcast, we release new episodes on Mondays, and yeah, we want to make finances less scary, easier to understand. And our mission at the end of the day is to change the food industry. And that means successful good food businesses and more good food businesses staying in business for a long time. So that's what we're striving to do through the financial work that we do. 

Amazing. Well, I could talk to you all day, but I honor your time here. It would be so fun if we're able to bring you into Fuel and maybe have a calmer, more intimate conversation there if you'd be up for that.

Sarah  
I would love that. Yeah. I love, you know, yeah, if it's interactive, especially I love to answer questions from founders and stuff. So yeah, totally. 

Sari  
Get you on the books for later this year. Wonderful to have you in there. And I just really appreciate this conversation and being able to go back and forth about all these things, numbers. 

Sarah  
I know well, I hope it's helpful for some folks who are listening. There's a lot that we can cover. And I think we covered some really kind of important essentials today. So thank you again for having me.

Sari  
Wow, wow. This might be one of my favorite episodes. I just love Sarah, I love everything about her. If I lived in California, we would totally be friends. She doesn't know that. But I do. Please go check out her podcast. And I am definitely going to bring her into Fuel so we can have this conversation more in depth and specifically about your own businesses. Because the more empowered you feel to own your own business, to take control to right size it, to decide ahead of time, so maybe you don't have to wrong size it first and then decide what is an alignment for your life, and how do I want to create this business so it actually serves me and fits into my life. And it feels really in alignment, which makes it more fun, which makes me want to actually do it more. It's weird how that works. So definitely go listen to The Good Food CFO podcast, I will link to the two episodes that we mentioned down below in the show notes. And also be sure to check out this episode over on YouTube. It's actually the video of us talking so you can see us interacting. Until next time, have an amazing week!

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.