A client of mine who is the founder of an up-and-coming DTC brand recently asked me, “How can I get to profitability when it feels like I’m stuck in the mud just trying to break even?” I know; I’ve been there before… Can you relate?
Some of the biggest issues I’m hearing about today concern the heartbreaking choices DTC consumer brand leaders face as they are forced to pivot toward profitability.
Gone are the days of easily fundraising every 6 months on future cash flow projections. Today, every penny counts and effective budgeting and forecasting can make the difference between staying in business and going bankrupt.
Budgets are getting tightened as costs are rising. No one is immune to current economic and market conditions, from early-stage startups to mature businesses. In the future, access to growth capital will be closely linked to profitability. Forecasts will need to survive new-found rigorous scrutiny.
If you have a forecasting problem, you will have a revenue problem. And it will impact all aspects of profitability…
- You won’t be making margin (because you need to clear the inventory at a discount)
- Forget about investing in new inventory (because your capital is tied up in the old inventory)
- Improving repeat sales will be difficult (because you don’t have any new merchandise)
- Attracting new customers will be a big issue (because you need to slash the marketing budget)
All too often, I see the marketing, sales, and finance departments of a business operating in silos. It causes so much frustration at every level in the organization. Being protective of turf and budgets combined with a lack of transparent communication causes culture clashes that cost the company time and money.
Learning how to break down these silos and connecting the groups properly will greatly enhance your ability to budget expenses and forecast revenue with rigor. Getting these elements on the same page and in agreement will help you make better, more informed decisions on budgets and revenue targets, which is necessary to achieve and maintain profitability.
I’d like to help you turn your “profitability anxiety into agility” by applying a simple forecasting framework I have repeatedly used successfully.
You are not alone! Schedule a call with me to learn more.
