Posts tagged Profitable food business
Budgeting vs Forecasting
 
 
 

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!

 

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.

4 Steps to Implement Profit First in Your Food Business
 

Profit First is a Cash flow Management System that supports prioritizing Financial Sustainability and getting business owners paid.

 
 
100 dollar bills and coins on table with candle and plant
 
 

It’s a tool for helping you to implement a financial strategy that will lead to financial sustainability and profitability. And I am a proponent of the strategy because it has proven to be a valuable extension to the work that I do with my clients and program members. 

BUT Profit First will NOT make you financially sustainable and operating as a cash-based business overnight.

There are 4 Steps to Implementing Profit First in Your Food Business:

  1. Understand where your business is financially right now

  2. Identify WHERE you want to be, and by when (your financial goals)

  3. Create a Plan for achieving those goals

  4. Then, begin implementing Profit First cash flow strategies to assist in becoming financially sustainable, profitable, and eventually Cash-based.

Let's dig into each.

STEP 1 - Understand where your business is financially right now. We do this through a Profit Assessment

Profit First offers a Profit Assessment structure, but for Food Businesses it will look a bit different.

They refer to a category called Materials & Subs -- stands for Materials and Sub--contractors, and the items that are included in Materials must equate to 25% or more of real revenue.

For Food Businesses we eliminate “Materials & Subs” and utilize COGS - Specifically your Ingredients & Packings, Labor or Co-packing Costs AND all other COGS -- we want to see every penny that you are spending to produce and deliver your product / service to your customer. And that includes Merchant Fees, Sellers Fees, Market Fees, Shipping Costs, etc.

These costs are variable and affected by how much product you produce and sell, so we want to get VERY clear on what they are.

We also look at your Operating Expenses, current Owner’s Pay, Business Tax Savings and Profit to get a clear picture of you Business Profitability, not just your operational profitability.

The Assessment helps you to see your business finances in a whole new way, and identify what’s working, what’s not, and exactly where to focus your attention to improve your financial outcomes.

STEP 2 - Get Clear on Your Financial Goals, or what we call Your Financial Success Formula

What COGS% is going to help you maximize your Gross Profits, or as they call it in the Book your “Real Revenue”

And what % of your real revenue do you want to be able to set aside as Profit?

What Owners Pay % will help you reach your salary goal

What Tax Savings % will cover your quarterly or annual tax payments?

And What Operating Cost % is going to help you achieve financial sustainability?

These are your TARGETS. When you’re clear on your targets you can create a plan for getting there from where you are right now.

Step 3 - Create Your Roll-out Plan for Achieving these goals.

Financial sustainability comes by making incremental, meaningful changes to reach your targets in the time-frame that is right for you.

What is that time-frame? Is this an emergency financial situation?

Do you have some time to make these changes? Once you identify the time-frame you can see how your targets will change between now and then.

For example, if you are not currently paying yourself, your current allocation is 0% to Owners Pay - Your goal may be 40% of Real Revenue in 12 months. They might break down into 10% allocation increase each quarter from now until the end of the year to reach your goal.

So at the end of quarter one you’re allocating 10% to Owners Pay, at the end of Quarter 2 you’re allocating a total of 20% of Real Revenue to Owner’s Pay and so on…

Step 4 - Identifying the Strategies to Reach Your Goals

You want to take Implementation Step-by-Step based on where you can make the most financial impact, and remember it’s VERY RARE that the answer to your financial problems is ONLY to SELL MORE. You may need to increase sales but what can you do INSIDE your business - the things you have control over - to improve your financial situation?

Inside our Profit Assessment Online Course we’ve got a Roll-out Calculator And Strategy Finder to help you do this work.

When your Roll-out Plan is created, your key strategies are identified it’s time to Open Your Profit First Bank Accounts & Make Your Allocations

To learn more or to schedule a free 30 minute consult visit our website you an also find Sarah on Instagram: @sarah.delevan.consulting and LinkedIn

Join the FREE Profitable Food Business Group hosted on Mighty Networks

 
 

Have you subscribed and reviewed The Good Food CFO podcast yet?
This is the number one thing that you can do to support this podcast and ensure others in the food industry are finding me!

To do so, follow these easy steps:

  • Once you’re there, click “listen on Apple Podcasts,” and hit “SUBSCRIBE” under the picture of me!

  • Click “ratings & reviews” and leave me a little love!

THANK YOU for helping to support & promote The Good Food CFO! I look forward to connecting with you again soon.


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 and host of The Good Food CFO Podcast. To learn more about Sarah and opportunities to grow a more profitable food business Click Here.

My 3 Rules for Pricing
 
Jars of pickled vegetables presented on a table with a price sign
 
 

“Setting your prices to achieve Product Profitability does not guarantee that you’ll achieve Business Profitability.”

If there is one critical concept that I want every food + beverage business owner to know, understand and accept this year, it’s the one I’ve written above. 

I’ve talked about it on The Good Food CFO podcast, The Real Food Brands podcast, The Food Biz Wiz podcast and even on a few webinars like the one I did with WeStock.

We’ve been misled on how best to approach our pricing. 

I got it wrong in my food business...

And when businesses get it wrong they can hit or exceed their sales goals but struggle to achieve profitability and they aren’t sure why.  When the cause goes unresolved or the source of the problem is unidentified, losses start to mount and the result can be the closure of the business.

So how do you ensure that you’re pricing your products for BUSINESS profitability? 


Follow my 3 rules for pricing:

  1. Don’t calculate your prices using your per unit labor cost

  2. You CAN’T successfully price your products in a vacuum

  3. You CAN price your product with a simple formula, and your target ingredient cost %

Ready to learn more and get your products priced right? 


Click here to listen to The Good Food CFO podcast. 

Watch the video version of the podcast on YouTube, complete with helpful slides. 

I’m here to support you - so join us in the Profitable Food Business Community to share your questions.

 

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.

TIPS for Finding tools + apps To Improve the Profitability of Your Food Business...
 
 
 
 


I love time-saving apps and tools. 
I am in full support of efficient systems. 
But...

If what you are doing now isn’t creating a profitable outcome…
Doing it more efficiently is only going to get you the same outcome faster.

YES, Implementing tools + systems are a BIG part of how I help business owners achieve their profit goals.
But it’s the FINANCIAL STRATEGY that matters the most. 


Without a clear set of goals + a strategy for reaching them
tools can ONLY help you be more efficient, not more profitable. 

In this video I’m sharing:

  • The 2 things you MUST do before shopping for tools, apps or software

  • My ‘Before You Buy’ Checklist


If you’re thinking about making a software purchase be sure to watch. 
If you recently made a purchase and are having buyer's remorse, there is value in this information for you too! 


Looking for low-cost helpful tools to build your profitable food business?

Checkout our Financial Success Toolkit and be sure to visit the Tools + Resources page for more of our favorites!

 

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.

WeStock™ Webinar: How to Price Your Product for Profitability
 

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

 
Sarah Delevan, Food Business CFO sitting on a chair pointing and smiling
 
 
 

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

If you haven't heard of WeStocknow 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!

 

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.

Your Money Mindset Checkup
 
money_mindset_checkup.jpg
 
 

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.

 

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.

3 Steps to Setting + Reaching Your Business Objectives
 
Woman’s hand at computer with coffee up that says “do it anyway”
 
 

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. 

 
Objectives to tactics chart
 


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! 

 

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.

When Is the Right Time to Start Paying Yourself?
 
 
 

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!

 

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.

The Many Benefits of Clear Business Objectives
 
 

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!

 

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.

4 Steps to Improve Your Profitability
 
danielle-macinnes-IuLgi9PWETU-unsplash.jpg
 
 

By now you know that the first step in building your most profitable food business is getting a solid financial foundation in place.

Still Working to Build a Solid Financial Foundation?

Or maybe you’re not quite sure what building a financial foundation entails?

Click here to download the free Profitability Roadmap.
It’ll help ensure you have each important pillar in place and are ready to move on to maximizing your profitability.

Got your financial foundation in place?

Great! The next step is to carve out 1 hour per month (yep, that’s it!) to work through the 4 steps for maximizing your profitability.

4 Steps for Maximizing Your Profitability:

1. Get Timely + Accurate Monthly Financials

Your Bookkeeper should provide you with completed financial reports by the 7th of each month, for the month prior. This allows you to see how your business is performing and make timely business decisions.

If you’re doing your bookkeeping yourself, it is imperative that you hold yourself accountable to sitting down at the end of each month to input your financial data and then review your essential financial reports.


2. Create a Profit Plan

Much like a budget, a Profit Plan lays out your business financials for the next 12 months and helps you stay focused on achieving your Financial Success Formula - the revenue goals and cost targets that will help you achieve maximum profitability. You can get detailed in your plan, or just start with the 4 key food business metrics.


3. Track Your Actual Outcomes vs. Profit Plan

Each month, when your financial reports are available, update your profit plan so you can see how your actual revenue, costs and profitability compare to the goals you set.


4. Identify + Implementing Key Strategies

The information in Step 3 can offer amazing insight into how your business is performing and where to focus your attention in order to achieve your business and financial goals.

For example...

  • Are your costs on target, but sales lower than projected and affecting profit dollars? You know to focus on growing sales.

  • Hitting your sales goals, but your labor costs are too high? Focus your attention on ensuring your labor is allocated correctly and that there are no bottlenecks or backlogs in your workflows that are driving up costs.

  • Food Cost % higher than you hoped? Tracking your food costs, or implementing a budget for your purchasing team may help you reach your goals.



Remember, you don’t need to be a financial wiz to build a profitable food business. And I’m here to support you in your work!

The Financial Success Formula Program offers our custom Profit Planning template and hands-on workshops, plus daily support and monthly coaching calls to help you hone your CFO skills.

 

About the Author: Sarah Delevan is a Food Business Financial Consultant + Freelance CFO 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.

4 Tips for Improving Your Cash Flow
 
 


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!

 

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.