You’ve suited up, got your ballcap on, your mitt is snug on your hand, and your batter’s glove in your back pocket. You trot out of the dugout and find yourself on a football field where everyone else is decked out in shoulder pads and helmets. I am not a big sports metaphor fan, but this one just felt appropriate. It is not just the rules that have changed; it’s the entire game. As an entrepreneur, you need to recognize this sea change moment.
While covering all the changes in this article is impossible, I’ll focus on four key areas: capital efficiency, go-to-market strategies, fundraising, and support. For each, I’ll provide practical advice you can implement to feel empowered and capable of navigating these changes.
Capital efficiency
What if the dollars you have in the bank today are the last dollars you’ll ever get other than from the sales of your products? That needs to be your mindset. How do I make every dollar I have today become more dollars tomorrow? It doesn’t mean you don’t take risks or work to grow your business; it means you do so with focus and discipline. Paraphrasing my good friend Andy Whitman, cash is king or queen, and it sits higher on its throne at no other time.
Negotiate all your terms with your suppliers. Consider trading a few margin points for more days of credit. Be dogged on your receivables, don’t allow anyone to extend payments due, and be diligent in reviewing your deductions from distributors (more on that later). Liberate “locked” cash in your business. The most common source of that is in inventory. Many of you have high MOQs with your co-manufacturer. Find a home for that inventory, even if it means selling it cheaply.
Review all your spending and ask the tough questions. Is this critical to my business now? Am I getting a good return on my investment? Is this something that I am doing just because everyone else is? Spend on the things that make sense and stop spending on those that don’t. It’s that simple.
Go-to-market
The good news is that you are entrepreneurial, which means you think differently from most people. Use that to your advantage. Dare to be different in how you take your product to market. Let’s start with retail. Establish your minimum “Yes” requirements. This would include merchandising, assortment, retail price, ability to activate consumers, and time to do so. I would encourage you to build a rubric to evaluate every opportunity.
Further, I would push you to be courageous enough to say “No” to most opportunities. If you are going to be faced with free fills, a six-month window to hit velocities that are on par with brands that have been on the shelf for years, and you are going to be on the top shelf, walk away. You can’t afford to underperform. You can only say “Yes” to the opportunities for which you are confident you can win, and those are few and far between.
Look at different channels and for alternative distribution. Think of it as a parade route, where everyone congregates at the start or finish of a parade. Find a side street in the middle, and you’ll get a better view. You can explore food service, travel, hospitality, and non-commercial outlets like corporate campuses. You could also investigate second-tier distributors. Most markets have good options. What if you only go where you can ship directly to the store? Some of these ideas are radically different than the norm, but now is the time to be radical in your thinking. Entrepreneurs do that best.
Fundraising
Stop showing up at investors’ feet with the same thing everyone else does, a binary offer predicated on an exit. You need to be sure that you are building a rocket ship, or else you’re going about the process incorrectly.
It is time to focus on alignment funding. This necessitates that you and an interested investor align and have a shared vision for an outcome. Then build the structure and terms of the investment around that outcome. Rather than get into that here, I suggest reading this article.
Become a student of capital and learn about various sources such as venture debt, asset-based lending, revenue-based financing, and all the other structures I write about. These are all potential arrows in the quiver and will make you far more likely to find the funding you need. However, be realistic in your expectations of the amount of capital and its cost.
Support
What I am about to write might contradict my first section on capital efficiency; it is essential to invest in support. Not in the form of programs or people that encourage you to run the same playbook that has been run for years. Instead, invest in those who can help you think differently and who can ensure that you see the potential unintended consequences of any action. I suggest this because you can’t afford costly, unforced errors, and it is too easy to miss important information when you attempt to do it alone. I know this comes off as puffery or self-serving, but I don’t care if it is TIG Brands or someone else. Just don’t do it alone!
