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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 your prices to achieve product profitability does not guarantee that you'll achieve business profitability."

I was recently invited to host a webinar to discuss how to price products for profitability on WeStock™

If you haven't heard of WeStock™ now is the time to check them out, but not before you know how to price your product for profitability!

“WeStock™ helps your brand grab the attention of buyers, increase sales for underperforming stores, and ensure that you own the customer journey for your brand in retail. WeStock converts customers that love your product into authentic and actionable data that helps your brand get on shelf and stay there.”

Attend the pre-recorded webinar and learn how to price your products for business profitability!

In the webinar We cover:

• The "Accounting"

• Common Misguided Approaches to pricing

• Potential problems and outcomes of using incorrect pricing methods

• MY 3 Rules for Pricing

• Steps you can take to ensure that you've got your products priced for Business profitability

Click here to watch now!

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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.

Our personal money mindset and financial beliefs find their way into our businesses and can affect how we deal with our finances…

from pricing, to how much we pay ourselves, to how much we pay others,
and so much more.

If you find yourself…

• Resisting raising your prices, even though you KNOW you should be charging more 

• Paying yourself at an hourly rate that’s less than what you pay your team
  (or not paying yourself at all)

• Cutting yourself a check each month but NEVER cashing it

KNOW THIS: You are not alone. 

And there are steps you can take to recognize and overcome your limiting money beliefs that are creating barriers to your financial success.

Financial Coach and Founder of Verdi Advising, Caroline Snyder joined me on The Good Food CFO podcast to discuss these and other ways that our money mindset, financial stories and emotions can play a role in our financial decision making.

But that’s not all - She also shared how we can recognize our emotions and overcome the barriers they create. 

If you’re a food business owner that: 

• Feels anxiety, hesitation or fear around the money matters of your food business

• Struggles to raise prices even though you know you need to

• Hasn’t paid yourself, or are paying yourself a meager wage for all the hard work you do 

You’ll find a ton of value and actionable steps to help you understand your money mindset, recognize your fear and emotions, and move forward successfully.

Listen to the full episode here. 

Then join us in the Profitable Food Business Community to share one of your takeaways.

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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.

reaching your financial goals means getting clear on your business objectives.

Here are 3 Steps for Setting + Reaching Your Business Objectives,
no matter where you are in the life of your business:

• Set the “right” Business Objectives

  If you’re concerned about setting the right objectives for your business, think back to when you launched.
  
  What did you set out to create?
  What did you dream your business would become?
  
  If that’s still a viable goal for your business or your brand, keep at it and set the business objectives that will support your progress in reaching those goals!
  
  If you weren’t really sure what you set out to create with your business, or what you wanted to achieve, spend some time to create a vision for your business that excites you.
  
  Looking at your financials can be helpful in determining the most viable options for your business and can help shape your goals and objectives.
  

• Get detailed about the strategies and tactics you’ll implement to reach your objectives.

  Once you’ve got your objectives, get detailed in breaking down how you are going to reach them. 
  
  Businesses that don’t get this detailed and don’t track their progress over time are more likely to lose focus, and hop around from tactic to tactic, chasing short-term wins rather than a clear path to long-term business success. 

Following the chart above, take these steps… 

1. State your business goal  

2. Set 1-3 measurable Business Objectives that will help you reach your goal. 

3. Drill down from your objectives to identify 1-3 strategies for reaching each of your objectives

4. Then determine the actions you + your team will take and/or the tools you’ll implement to successfully execute those strategies. 

•  Track Your Progress to Ensure Your Success

Once you’ve got your objectives, strategies and tactics identified, it’s important to track your progress.  

You can do this within your Profit Plan or create a KPI dashboard (aka spreadsheet). 

Be sure to document where your business is now, as well as your target. 

Determine how often you’ll track outcomes - daily, weekly or monthly - this will vary among tactics and strategies. 

And then stay consistent. 

If you’d like support in this process, or in achieving your objectives I invite you to visit our website to view the multiple levels of services we provide to assist you in setting + Achieving your business objectives.

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. She is also 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 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.

You likely don't need me to tell you that the more cash you've got in your business…

...the healthier it is
...the more likely it is to survive seasonal sales dips, unexpected events, etc.
...the greater ability you have to invest in its growth.

If the events of this year have you struggling to maintain steady cash flow in your business, I've got some info that may be helpful.

Here are My 4 Tips for Improving Your Cash Flow:

1. Make Sure Your Products are Profitable

This may seem like a no-brainer, but many businesses are selling products that have little to no profitability and it’s causing the overall business profitability to suffer. With limited or no business profitability there is no cash to flow in your business!

2. Speed up the rate at which your revenue turns into cash (Accounts Receivable)

Direct to Consumer (DTC) brands have a quick sales -> cash rate. Customers are either handing over cash at the time of purchase, or a 3rd party payment processor is depositing it in your account in just a few days.

Wholesalers and Manufacturers don’t have it so easy, and can have terms as long as net-60!

Exploring options for paid-in-full discounts or 50/50 payment discounts may help you turn your sales into cash more quickly. Just be sure you know how the discount incentive will affect your overall profitability.

3. Slow down the rate at which cash leaves your business (Accounts Payable)

When was the last time you requested a change to your payment terms?

Many new and small businesses are required to pay COD, or are given short net-10 or net-15 terms when they’re just getting started, but after consistent on-time payments you are eligible to request them.

If you’re working with a new vendor make sure you are clear on your starting terms and when you can request an extension of terms - then make those on-time payments, set that calendar reminder, and follow up for longer terms!

4. Look Ahead with Financial Projections

Financial Forecasting is beneficial for LOTS of reasons. One of them is seeing and understanding how your cash flow will change over the next 6-12 months based on seasonal sales trends. From there you can make cash spending vs. cash saving decisions today that will prevent you from being cash-strapped when sales slow down.

Having a long-term cash flow projection is also helpful when unforeseen events happen in your business, or on the planet, as they did this year. In just a few clicks you can see exactly how long your cash will last, how much you will need to rely on credit, or how much your small biz loan request should be for.

Wishing you all the positive cash flow!

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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.