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January 31, 2024
Much has changed in the natural and organic products industry over the past few years. One of the biggest drivers of that change is the scarcity of early capital. Data has shown that this pullback has resulted in fewer brands launching in the last 18 months than in any other period in our industry’s history. This is an opportunity. The playing field has more room for growth. It has more room for you to find your consumer and more room to win. However, growth needs to come differently.
Forget the hockey stick. Chasing that growth curve won’t serve most of you. It requires your being far out over your skis, spending money to drive topline revenue, solving for profit later. Instead, I want you to climb the staircase.
Building a CPG brand and business requires risk-taking and calculated bets. But those risks and bets should be smaller and come in chunks. For example, a risk might be launching in a Whole Foods Market region or on Amazon. If you take a staircase approach to growth, before you go out and try to get your next Whole Foods region or launch your DTC site, you’ll figure out how to win where you are.
The principle is simple: You take a risk or make a bet, and before you take your next one, you figure out how to make the first one profitable and sustainable. This approach isn’t sexy or easy; it’s a climb. It is arduous, a grind. It takes time, discipline and patience. But doing it gives you more self-determination and a better chance of being around tomorrow and the next day.
Taking a risk and building back to homeostasis before taking the next step is smart in an environment like the current one. It requires less capital, puts less burden on the business and allows you to learn, iterate and improve. All this make your natural and organic brand inherently more capital-efficient because, with each step up, the time it takes to reach homeostasis becomes shorter. Growth becomes sustainable, and the business becomes stable.
If I were to draw out this staircase, it would look uneven. The first few flights would have a wide landing, while those at the top would be narrow. The cool thing about this approach is that you’ll get better as you climb. Over time, you become more assured and efficient in your steps. You know what it takes to achieve profitability and sustainability, and you can do it faster.
This approach to growth allows you to be more planful, prescribed and prepared. It affords you the opportunity to raise less capital and be more targeted and specific with its use. All of this makes the business a better investment and well-suited for alignment funding, which allows you to raise money under the optimal structure and terms to support your metered approach to growth.
Forget the hockey stick. Don’t chase topline. Climb stairs and build a great brand and a real business. Build a nimble, capital-efficient and resilient business. There is more room in the market than there has been in a long time.
Read more about:IdeaXchange
Founder, TIG Brands
Elliot Begoun is a 30-year industry veteran, author, podcast host, founder of TIG Brands, and champion of Tardigrades. TIG Brands supports a community of entrepreneurs interested in building nimble, capital-efficient, resilient brands that become Tardigrades, not Unicorns. Learn more about TIG Brands’ programs here and catch Elliot at FoodBytes, the Hirshberg Entrepreneurship Institute, and the Natural Products Business School. Tune into the TIG Talks podcast and find Elliot’s articles in publications such as The Huffington Post, SmartBrief and New Hope Network.
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