Where would you invest if you could improve your gross margin 500 bps? On $20M in revenue, that’s $1M in savings!! Julie is taking insights from a financial model that I rebuilt to drive COG reduction and margin renegotiations with retailers, which will yield a 500 bps margin improvement in a short 2-year period.

Before I arrived, they used a financial model that had been designed for “standard” CPG companies instead of for their retail-first business model. It made broad assumptions of the same margins across all retailers, rather than accounting for the specific pricing, margin, and selling expenses for each retailer. As a result, they couldn’t understand the financial impact of making changes to their COG or retailer margins. My model allows us to drive strategic negotiations with our manufacturers and retailers, backed by data.

Your team is hustling to design, produce, and market your products; but you get to the board meeting and find yourself stuck explaining why you burned so much cash rather than celebrating all the wins. I have driven significant cash flow improvements and even helped generate cash using a few tactics: 

Spend management - This seems obvious, but managing spend to a budget and setting operating expense controls and benchmarks enable you to manage and reduce spend, putting more cash in your pocket. I’ve managed significant spend reductions at Julie and Canoa, extending their runways by more than 3 months and buying them more time to fundraise.

Leverage lender money - At Away, I moved millions of dollars in spend to credit cards, which generated $300K in cash rebates in the first year alone and deferred spend on shipping and marketing to align cash outflows to cash inflows. I also secured asset-based lending, which enabled us to borrow cash to pay manufacturer deposits, then pay back that cash when we got paid by customers; this meant we could spend all our growth capital on growth, rather than inventory.

Tax credits - At Canoa, I ensured we filed the proper documentation to support an R&D credit, resulting in real cash credits that we applied against our payroll taxes even though we weren’t yet paying income tax.

Do you run your entire business in Google Sheets and Airtable? Or did you pay big money to implement Netsuite, but you can barely generate financial statements? I’ve seen it all; from botched ERP implementations, to standalone POS systems at each retail store, to running the close for a $100M business in Excel. Can it be done? Sure. Should it be? I’ll let you answer that.

I am a systems and processes nerd, and I love helping companies think through the right systems and processes for their business today, and where they want to be in the future. I’ve implemented systems at every startup I’ve worked with, most of which are still being used today, years later.

At Le Labo, each of their six retail stores used a standalone POS system, and each store manager input SKUs and pricing themselves, creating discrepancies in reporting and sales. A simple report like sales by SKU or sales by scent took hours to run because we had to cleanse and combine the data. Even worse, there was no inventory reporting because the perfumes were fresh-blended, so each store manager had to perform a full inventory count of ingredients every month. Woof. I implemented a cloud-based POS system with centralized controls, allowing us to run insights at the push of a button (hours to seconds!). Because of the unique inventory problem of fresh-blend perfumes, I selected an unconventional system for a retail store; we used a POS that bars and restaurants use, since we had to report inventory of raw ingredients, but report sales of finished creations. This system enabled them to scale from 6 stores to over 50 doors in more than 20 countries; and Estee Lauder ended up rolling the same system out to many of their other brands.