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A few weeks ago I was asked by an industry peer what causes most businesses to fail, and what can they can do to avoid failure?

That's a pretty big question! But the answer is actually fairly simple...

Most Businesses fail because founders launch without a clear picture of: 

1. The type of business they want to build

2. How and when the business will be profitable

3. How much money it will take to reach profitability

It All Starts with Your Vision

Creating a vision for your business is much more than just an exercise in wishful thinking or day dreaming, it informs critical elements of your business and enables you to make decisions from day one that will create financial confidence and set you up for financial success.

Determining if you want to be a local, regional or national brand informs who you will sell to, how your product will get to your customers and the partners you'll need in order to reach your growth goals.

For example:

• As a Direct to Consumer business, you have a direct sales relationship with your end-consumers.

• In Wholesale Direct channels, you sell to Retailers who then sell to your consumers.

• With regional or national distribution, you may sell to distributors - who then sell to retailers, who then sell to your consumers.

• Via B2B E-commerce sites you sell (and ship) directly to retailers who then sell to your end consumers, but the sites also take a % of revenue.

The more businesses between you and your consumer, and involved in each transaction, the smaller your margin and the less you make on the sale of each unit. Knowing who you'll sell to today and in the future informs how you price your product in every channel - even those you aren't selling in yet - and the margins you'll hit in each. While we do have margin benchmarks for creating a financially sustainable business, the most important thing to know is how your margins will affect your overall financials - particularly how many units you need to sell to be profitable, as well as if (and how much) you'll need to leverage debt to scale and grow your business.

When you have a vision for your business and use that vision intentionally to identify your customers and the partners you'll need today and down the road to achieve your vision you're able to make informed pricing, margin and growth decisions today and eliminate many surprises down the road.

Looking for More Support?

Let us complete your Profit Assessment, we’ll dive deep into every aspect of your business’s finances to analyze your performance, diagnose problems, and strategize a clear path towards your profit goals. 

CFO Profit Assessment - We’ll do the work for you so you can focus more on what you love to do!

If you are looking for additional help in getting clear on your vision and creating a financial plan to achieve it, we have a suite of courses and tool kits that you can access inside The Good Food CFO Community , including our Vision & Goal Setting course.

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serves clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program as well as the host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

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IT’S TIME TO ADDRESS THE NEWS OF A RECESSION AND RECESSION-PROOFING YOUR GOOD FOOD BUSINESS.

As costs continue to rise, and talk of the impending recession heats up, good food business owners have finances and profit margins at the top of their minds. And understandably so!

In my last blog post, I told you about 2nd of 3 main fundamentals in maintaining a healthy profit margin These are, by no means, the end-all-be-all of recession-proofing your business, but they are a great place to start, here is #3.

Spend Intentionally

As business owners, there is so much that is just completely out of our control — this recession included! However, how we spend our money is firmly under our control, and when you create a budget and spend with your eye on the ROI, good things happen — like profitability!

Now is the time to make informed, strategic decisions for your company around pricing, labor, and COGS, and my goal this month is to provide you with as many tools as possible to make your business recession-proof.

I’M HERE TO SUPPORT YOU — SO JOIN US IN THE PROFITABLE FOOD BUSINESS COMMUNITY TO ASK QUESTIONS AND GET MORE GREAT INFORMATION AND RESOURCES TO GUIDE YOU TOWARD PROFITABILITY, EVEN DURING A RECESSION.

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program as well as the host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

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IT’S TIME TO ADDRESS THE NEWS OF A RECESSION AND RECESSION-PROOFING YOUR GOOD FOOD BUSINESS.

As costs continue to rise, and talk of the impending recession heats up, good food business owners have finances and profit margins at the top of their minds. And understandably so!

In my last blog post, I told you about the 1st of 3 main fundamentals in maintaining a healthy profit margin. These are, by no means, the end-all-be-all of recession-proofing your business, but they are a great place to start, here is #2.

Protect Your Margins

The levers that most good food founders can pull to protect their margins are:

-Improving Production Efficiency

-Changing ingredients and/or sourcing

-Price Increases

All three of these levers must be seriously rooted in data in order for your efforts to be effective. We’ve seen business owners go through all the trouble of raising their price $.25 only for them to report back that it didn’t impact their finances because it wasn’t a large enough to boost their margin. However, that price increase when coupled with more efficient production practices, did ultimately make a meaningful difference.

Now is the time to make informed, strategic decisions for your company around pricing, labor, and COGS, and my goal this month is to provide you with as many tools as possible to make your business recession-proof.

I’M HERE TO SUPPORT YOU — SO JOIN US IN THE PROFITABLE FOOD BUSINESS COMMUNITY TO ASK QUESTIONS AND GET MORE GREAT INFORMATION AND RESOURCES TO GUIDE YOU TOWARD PROFITABILITY, EVEN DURING A RECESSION.

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program as well as the host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

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It’s time to address the news of a recession and recession-proofing your Good Food Business.

As costs continue to rise, and talk of the impending recession heats up, good food business owners have finances and profit margins at the top of their minds. And understandably so!

Through the years, I’ve identified three main fundamentals in maintaining a healthy profit margin. These are, by no means, the end-all-be-all of recession-proofing your business, but they are a great place to start, here is #1.

Know Your Costs

Do you have a system in place that enables you to track all your costs so you always know exactly how much you’re paying?

Tracking your ingredient and packaging costs is fundamental to keeping a healthy profit margin — you can quickly assess whether that $2/lb price increase *really* is affecting your bottom line. It could be minor, but it could be catastrophic. By tracking each and every cost, you’ll be able to quickly assess what moves you need to make accordingly.

I can’t stress enough how important it is to have accurate data . We’ve had clients go through all the trouble of raising their price by $.25 only for them to report back that it didn’t impact their finances because it wasn’t a large enough to boost the margin. However, that price increase when coupled with more efficient production practices, did ultimately make a meaningful difference.

Now is the time to make informed, strategic decisions for your company around pricing, labor, and COGS, and my goal this month is to provide you with as many tools as possible to make your business recession-proof.

I’m here to support you — so join us in the Profitable Food Business Community to ask questions and get more great information and resources to guide you toward profitability, even during a recession.

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program as well as the host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

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I've got big news for you:
You CAN be in control of your cash flow.

Do you feel like you're controlled by your cash flow instead of the other way around?

I'm here to tell you that it doesn't have to be this way. In fact, it's a common misperception that food founders can't achieve control of their cash flow prior to profitability. This is a myth!

You don't need to be profitable before taking control of your cash flow. What you do need is:

1. A profitable product
2. The ability to achieve gross profits at least 8 months out of the year
3. A diligent eye on customer invoices and follow-up for timely payments

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If you've already got those three essentials squared away, here are some additional tricks and tools you need to effectively manage your cash flow.

Ignore Your Bank Account

Yep, you read that right. The most successful way to be in control of your cash flow is to create a budget (we love YNAB!) and to spend according to it, not your bank balance! Bank balances can be misleading — they can feel huge and comfy right after customer payments come in, and uncomfortably low after your big first-of-the-month expenses hit. These financial swings can cause a range of emotions (and spending).

Budgeting your cash allows you to assign a job to every dollar, which allows you to know exactly how far into the future your cash will (or will not) carry you. You'll know how long your operating costs and payroll are covered, and you'll also know how to prioritize following up on past-due invoices.

By looking at your budget instead of your bank account, you'll reach a new level of freedom. You'll find the confidence to withstand the days of low bank account balances and the fortitude to hold off on big spending when your bank account feels a bit too comfortable. Being a business owner comes with plenty of ups and downs as it is, but by ignoring your bank account and trusting your budget, you can maintain control of your cortisol levels and your cash flow.

Know Your OGSMs

OGSM stands for Objectives, Goals, Strategies and Measures. More simply put? Have a plan and stick to it. Start by identifying your business goals and objectives for the year. Then, determine the ways you'll work toward those goals. Identify what a metric of success might look like, and as you work toward these objectives, keep going back to those success metrics.

Are you on track? Are your strategies working? Do you need to adjust or optimize? Go back to your plan.

When you know what your plan is, you're far more likely to spend in a way that drives results, rather than making financial decisions that split your focus and ultimately add up to big expenses with little progress to show for them.

Always Be Bootstrapping.

Like Jack Stack, author of "The Great Game of Business", I am a believer in operating a company with a bootstrapper mentality. What does that look like? For me, it means being hopeful and excited about the future, but never taking it for granted. And not believing the myth that if you just keep working harder everything will turn out right — I did that once, and I'm here to tell you there's a better way.

"Bootstrapping" is not rooted in a scarcity mindset. It's not about nickel-and-diming your way to profitability or always doing everything yourself, never risking the expense of hiring experts. Rather, it’s about being intentional with our money and fully informed about the financial health of our business so that we can easily determine the best next steps.

Want some examples of how to maintain a bootstrapper mentality? Stay close to your key performance indicators. Perform weekly and monthly financial reviews, careful to note if your COGS are fluctuating. Be aware of when your sales or margins are dipping or if you're hitting your Accounts Receivable targets and turning sales into actual cash.

🙋‍♀️ I’m a proud bootstrapper with a profitable business, a growing team, and big dreams of helping you build a profitable business while changing our food industry!

I’m also here to support you — so join us in the Profitable Food Business Community to ask questions and get more great tools to guide you toward profitability.

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program as well as the host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

ARE YOU CONSIDERING A BIG FINANCIAL DECISION FOR YOUR FOOD BUSINESS?

WANT SOME ADVICE ON HOW TO MAKE THAT DECISION CONFIDENTLY?

I often get asked my opinion on big financial decisions that food business owners are making - "is it a good idea?" "is it a bad idea?", "what would you recommend?". My response is usually to walk them through this 3-step process.

Every business is unique, and business situations and decision is unique.

But there is a universal process that all business owners can use to help make financial decisions confidently.

If your goal is to create a sustainable business that minimizes risk and grows profitability, and you’re considering a big purchase, a long-term investment/expense, taking on debt or opening a line of credit, this checklist is designed just for you!

#1 REMEMBER YOUR BUSINESS OBJECTIVES

WHAT DID YOU SET OUT TO ACHIEVE THIS YEAR THAT WILL MOVE YOU CLOSER TO YOUR BIG BUSINESS GOALS?

Business Objectives are measurable targets that define progress toward your annual goals, and in turn move you closer to achieving your big business vision.

Creating a clear vision for your business, setting clear goals, and identifying 3 measurable objectives that will help you reach those goals is essential work for good food business owners. This work enables you to focus your attention, energy and money on the actions, activities and investments that will help you achieve your goals, and the ones that won’t.

Don't have a clear vision, goals or objectives for your business? Check out this post.

3 STEPS TO SETTING + REACHING YOUR BUSINESS OBJECTIVES

#2 DETERMINE IF THE INVESTMENT WILL MOVE YOU CLOSER TO YOUR BUSINESS OBJECTIVES

ASK YOURSELF: WILL THIS PURCHASE, INVESTMENT OR DEBT MOVE ME CLOSER TO ACHIEVING MY FOOD BUSINESS OBJECTIVES?

When answering this question it is important that you are honest with yourself, and that you do the work to identify the real problems that must be solved, rather than symptoms of problems.

Here's an example: Your business objective is to improve profitability. To do this you must get to the ROOT of why the symptom of low profitability exists in your business. Are your sales too low? Are your costs too high?

If you identify the cause to be low sales numbers, ask yourself (and your team) why. Is it Lack of repeat business? Lack of audience? Incorrect messaging?

Investing in hiring a sales person, or ramping up social media ad spend + marketing for a product with the wrong messaging or the wrong audience won’t get you the results you desire.

When you identify the real problem(s) in your business you can ensure that you are investing in real solutions.

IF you’ve determined that the investment will help to solve a true problem in your business and move you toward your business objectives, move on to the last step in the process.

#3 CONSIDER THE 2ND ORDER CONSEQUENCES OF YOUR DECISION

WE CAN CONTROL THE DECISION THAT WE MAKE, BUT WE CAN’T CONTROL THE OUTCOME.

THIS STEP IS AN INCREDIBLY IMPORTANT EXERCISE IN CONSIDERING THE POSSIBILITY OF THINGS NOT TURNING OUT EXACTLY AS YOU PLAN.

This is the part of the financial decision making process that most business owners fail to consider (including yours truly) that results in financial loss, and regret.

When you're faced with a big financial decision ask yourself the following questions:

1. What is the up side?

2. What is the downside? (What could go wrong?)

3. Can I live / can my business survive with the downside?

I recommend talking through the second question with someone else, and if that someone else is outside of your business that even better. You are seeking all the potential negative outcomes and an unbiased point of view is extremely helpful. In the process, remember to consider the monthly + long-term financial impact it could have on your business, particularly if things don’t work out as planned, as well as who and what it will affect within your business + how.

Weigh the positives and negatives, determine if you can live with (and afford) the downside, then make a decision based on the information you’ve laid out.

BIG FINANCIAL DECISIONS OFTEN FEEL LIKE THEY NEED TO BE MADE QUICKLY. 

I PROMISE YOU THAT THINKING THROUGH THIS FINANCIAL DECISION CHECKLIST AND TAKING YOUR TIME IN THE DECISION MAKING PROCESS WILL PRODUCE A BETTER LONG-TERM RESULT. 

The less your emotions and time play into your decision, the better.

Having a Profit Plan or Financial Projections is also helpful in this process and allows you to run various financial scenarios so you can actually see all the possible outcomes.

Visit our website to learn more.

AND OF COURSE, THE FREE PROFITABLE FOOD BUSINESS COMMUNITY IS ALWAYS OPEN!

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program as well as the host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

Setting up Financial Workflows and processes free up your time, improve financial reporting, and help you make more money.

As the Founder and CEO of your Good Food Business, your time is your most valuable asset. And ensuring that you are spending it on tasks that help move your business forward and make more money is extremely important. If you’re spending time making your financial workflows work that is not a valuable use of your time!

IDENTIFY YOUR ROLE IN YOUR FINANCIAL WORKFLOWS

Think about your Financial processes…

• How integral are you to making everything work right and get reported correctly to your Bookkeeper and Financial Team?

• Where in the process do you have a manual responsibility?

• Who else on your team is part of the process and what are their responsibilities? Are there better uses of their time?

• Think about the accounts or credit cards you use that your bookkeeping team can't access and require extra manual steps for you to verify and reconcile each month.

Things that feel like they only take a minute... ADD UP.

Once you’ve identified where you fit in your financial workflows talk to your team members about how you can automate or hand off anything that you are currently doing.

Don’t say, “it just takes a minute” or “It’s just quicker and easier if I do it”.
Remember that time is your most valuable asset and you need to be focusing on the things that move your good food business forward and make more money.

An Example of Financial Workflow that can and should be improved:

a Payment system that doesn't allow you to track who payments are from.

Let’s say you bill all Wholesale customers through Shopify, but they can pay through paper check or ACH that takes place outside of the Shopify system.

After payment or at the end of the month, you have to identify the payments received and link them to the right client and sales channel. As the CEO of your business this should not be part of your job, it is NOT a money making task so it also shouldn't be the responsibility of someone on your team.

Instead, create a system that do this work for you...

If you are billing your customers through Shopify, require that they pay through Shopify and have a clear set of products that only get sold to wholesale accounts so they are easy to track.

Otherwise use an alternate system like QuickBooks that offers an ACH payment option that links the invoice to the payment automatically, and if you accept paper checks create a simplified system for tracking checks received and reporting them to your Bookkeeper.

There are so many ways to streamline your Financial Workflows and get you focused on making more money!

If you want to learn more about Financial Workflows and connect with other Good Food Business owners, Join us in the Free Profitable Food Business Community!

And check out Episode 38 of The Good Food CFO Podcast.

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 8 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business Group Coaching program as well as the host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

Do you know the difference between budgeting and forecasting?

BUDGETING is assigning a purpose to the money we have right now.

budgeting answers questions like: How long can we operate on the cash we have? How far can it take us? Can we make investments?

FORECASTING is planning what we’ll do with the money we don’t have yet.

forecasting helps us see: what revenue targets we need to hit to break-even, if you need to give up one thing to afford another, how your marketing budget will affect profitability and what you expect the ROI to be.

Budgeting and Forecasting work hand and hand for your food business…

• When you create a forecast for the year, instead of filing it away, we turn it into an active budget and work with it regularly.

• If our forecast doesn’t come ‘true’ we can adjust in real-time and still hit our financial goals.

• In turn, a budget without a forecast can lead to not knowing how or where to spend your money, and for some leaves them afraid to spend the money they do have!

If you want the tools to create a budget that works for you and a forecast that supports your business needs, then start here with a Profit Assessment.

Join us in the Profitable Food Business Community where we're talking Budgeting and Cash Flow Management with other Food Business Owners just like you!

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program as well as the host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

It’s common for good food business owners to calculate their perfect product price, only to find that it’s higher than they think they can, or should, sell it for.  (So many emotions!)

Doubts often follow as to whether or not you can successfully sell your product at a premium price, or whether the right move is to lower costs so you can sell at a lower price point.  

To help coach you through this decision making process, I spoke with CPG Consultant and founder of Retail Ready, Alli Ball to discuss the steps to making this important decision, and how you CAN build a successful food business with a “high priced” product. 

You can listen to our conversation here, where Alli shares:

• Why looking to your target market is key to landing on
  the right price for your product

• 5 Key Brand Questions to gain clarity on pricing decisions 

• The freeing truth that Everyone is not your target audience

If you decide that lowering your costs is the right move for your business. 

You’ll definitely want to tune in to this video, where I share Strategies for Lowering Your Costs WITHOUT Compromising Your Standards or Quality. 

As always, I’m here to support you as you work through the math and the decision making process. 
Join other food business owners doing this work in the free community. 

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

I get excited when business owners ask “when is the right time to start paying myself?” because it means you’re actually thinking about it!

Many founders launch their food business with the expectation and belief that they will go unpaid for at least a year and that’s just the way it’s supposed to be.

Most go unpaid for much longer and have no plan in place for when, how or how much they’ll pay themselves in the future.
They simply aren’t thinking about paying themselves - even if they want to, the belief that they shouldn't or can’t, prevents them from really looking into it and taking action.

Does that sound like you? (It was 100% me, about 8 years ago)

One of my top priorities as a financial consultant is getting food biz owners paid! because you don’t truly have a financially sustainable or profitable business unless you’re paying yourself a fair wage.

There is no one-size-fits-all approach to this, but here are a few options to consider:

1. Pay yourself the same hourly rate as your employees.

   This is the approach I take in my business. It forces me to pay myself for my time each week and ensures that there is money left over in the business each month for reinvestment, growth, etc. I sweeten the deal by setting a monthly profit goal - if we achieve it I pay myself a bonus + my team gets one too!

2. SEE how paying yourself your dream salary will affect your business Financially. You may be surprised to find that you CAN afford your dream salary now!

   If you can’t afford that dream salary just yet, how many more units per month would you need to sell, or what other costs could you cut to make it a reality?
   
   If you can afford 50% or some other portion of your dream salary now start there. Then create a plan to increase sales or reduce costs, and increase your salary when you achieve certain milestones.

3. Record an In-Kind Donation to your business for your unpaid time

   If you can’t pay yourself for your time just yet, or can only pay yourself a little bit (there was a point in my food biz where I paid myself just $100/week), Financial Coach Caroline Snyder of Verdi Advising recommends tracking your unpaid time as an In-Kind donation to your business.
   
   Snyder agrees that it’s OK to not pay yourself so long as you have a plan in place for how and when you will start. And she says that tracking your time as an In-Kind donation (although it doesn’t actually affect your business financials) helps you see the value you’re giving to your business each month.

Do you have a method for paying yourself, or tracking your time that you’d like to share?

Join us in the Profitable Food Business Community and tell us all about it!

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

Do you find yourself feeling overwhelmed in your business sometimes? Pulled in many directions and unsure where to focus your attention?

If you answered yes, odds are that you’ve either lost sight of your business objectives, or you don’t have one.  

It’s possible Covid-19 played a role in this, but its also possible that you started a passion project and now that it’s off the ground you need to figure out where you want to take it and how you want it to grow. 

Knowing your business objective(s) is key to:

• Identifying the right goals for your business

• Creating a clear plan of action for yourself + your team

• Focusing your time + attention where it will have the most impact, and 

• Ensuring that you are spending your money wisely

Hello, clarity + focus! 

When we think about how clear business objectives help us spend our money wisely, the list is nearly endless.  From the tools + services you choose to invest in, to the marketing strategies you implement, if and how you grow your team, etc. 

So, what IS a business objective? 

Simply put, it’s a specific target or group of targets you want to achieve within a stated time frame.  

Some examples of business objectives include:

• Increase Wholesale Revenue by 25% this year

• Improve Overall Profitability 10% within 6 months

• Capture 5% of market share by quarter 3

• Double our return customer rate this quarter

With your objectives identified, you can get to work on identifying HOW you will go about achieving them - the strategies + tactics you will implement in your business. 

And when you stay focused on your objectives and track your progress, focusing your time and making key financial decisions becomes easier. 

Need help identifying + achieving your Business Objectives?

If you need help identifying the right business objectives to build a financially sustainable + profitable food business the “Know Your Numbers” template can help you see your business and the areas to focus on to improve financially.  

The template is available in our toolkit, workshop + online program. Click here to find out which resource is right for you!

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

Are you considering taking on debt in your food business?

want some advice on whether taking on debt is a good idea?

I often get asked if taking on debt is bad for food businesses, and like so many things in business… IT DEPENDS. 

Every business is unique, and business situations are unique. 

But there is a universal checklist that all business owners can use to help you make the right decision.

If your goal is to create a sustainable business that minimizes risk and grows profitability, and you’re considering taking on debt to make a purchase, or opening a line of credit, this checklist is designed just for you!

#1 Determine if the debt you’ll be taking on is considered to be “Good Debt” or “Bad Debt”

Good Debt is considered to be an investment in your business future, and typically is an investment that will retain or increase in value over time. 

Bad Debt is investing in something you don't NEED, doesn't help you build your business, and loses value over time. 

For some decisions the answer will be cut + dry.
Others (like purchasing a vehicle) are more nuanced. 

To dive a bit deeper into Good Debt vs. Bad Debt, check out this blog post from CPA Melissa Houston. 

If your reason for taking on debt falls into the Good Debt category, by definition move on to #2

#2 Remember Your Business Objectives

Is your food business objective to Increase Sustainability or Profitability? Increase Efficiency? Grow Sales in a Particular Business Line?  

Getting clear on what you want or need to achieve in your business to be successful allows you to identify the right goals to focus your attention on, as well as the actions, activities and efforts that will help you achieve your objectives, and the ones won’t.  

Remembering your business objectives and top 3 goals often makes decisions that seem “big” or difficult quite easy to make. 

#3 Determine if the Debt will move you closer to your business objectives

ASk yourself: WILL this purchase, or will access to this line of credit be used to purchase, things that will move me closer to achieving my food business objectives?

When answering this question it is important that you are honest with yourself and that you do the work to identify real problems that must be solved, rather than symptoms of problems. 

For example, If your business objective is to improve profitability, you must get to the ROOT of why the symptom of low profitability is showing up in your business.  Are your sales too low? Are your costs too high? If the true cause is low sales numbers, why are sales low? Is it Lack of repeat business? Lack of audience? Incorrect message? 

Investing in hiring a sales person or team, or ramping up social media + marketing for a product with the wrong message won’t get you the results you desire. 

When you identify the real problems in your business you can ensure that you are investing in real solutions. 

IF you’ve determined that the purchase or line of credit will solve a true problem in your business and move you toward your business objectives, move on to the last step.

#4 Consider the 2nd order consequences of your decision, financially and otherwise for the business 

We can control the decision that we make, but we can’t control what happens after our decision is made.

This step is an incredibly important exercise in considering the possibility of things not turning out exactly as you plan.

It is the step that most business owners fail to consider (including yours truly) that results in financial loss.  

Ask yourself the following questions…

1. What is the up side? 

2. What is the downside? (What could go wrong?)  

3. Can I live with the downside? 

I recommend talking through #2 with someone else, and remind you to consider the monthly + long-term financial impact it will have on your business, particularly if things don’t work out as planned, as well as who and what it will affect within your business + how.  

Weigh the positives and negatives and make a decision based on the information you’ve laid out.  Determine if you can live with (and afford) the downside. 

Decisions like this often feel like they need to be made quickly. 

But I promise you that thinking through this debt decision checklist and taking your time in the decision making process will produce a better long-term result. 

The less emotion and time play into your decision, the better. 

Having a Profit Plan is also helpful in this process and allows you to run various financial scenarios related to your decision.

Visit our website to learn more. 

AND OF COURSE, THE PROFITABLE FOOD BUSINESS COMMUNITY IS ALWAYS OPEN! 

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About the Author: Sarah Delevan is a Food Business Financial Coach and Consultant with over 7 years of working in the food industry. She received her MBA from Rollins College and In 2017 she founded Sarah Delevan Consulting based in Los Angeles, CA and serving clients across the United States. She is the creator of the Financial Success Formula and the founder of the Profitable Food Business program. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.