I recently read “The Top 10 Mistakes That Keep Women Entrepreneurs From Scaling to $1 Million” published on Women / Entrepreneur.
Not surprisingly, several of the mistakes on the list are related to money + finances and offer important takeaways for good food business owners (whether you identify as a woman or not...and regardless of your personal revenue goals).
Here are the money-related mistakes from the article, with a few of my added thoughts specifically for food business owners:
Mistake #6: Insufficient financial know-how
“We don’t need to have finance degrees or MBAs to run our businesses, but we do need to educate ourselves in order to create a cash runway, steward our money better and effectively raise capital when necessary.”
MY THOUGHTS:
You do not have to have a financial degree or an MBA to run your business, and you don’t need to shoulder all of the financial responsibilities, but you MUST educate yourself on the financial realities of your business. Some must-know info includes...
What your cash flow / cash runway looks like
How profitable your products and your business lines are, and
How the decisions you make will affect your bottom-line
Mistake #7: Not having a cash runway
...women are twice as likely as men to shut down their businesses because they run out of cash. You can better avoid this issue by working with an advisor on your cash flow projections or finding a great accountant who can walk you through your numbers. Don’t be afraid to ask for help or say you don’t understand, and be sure to look at what you owe and what is owed to you on a weekly basis so you can have a healthy cash balance.”
MY THOUGHTS:
Agreed! I’ll add that you should also be aware of your vendor terms. Many new businesses are required to pay COD, or are given short net-10 or net-15 terms when they’re 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!
Mistake #9: Improperly tracking marketing spend
...marketing is one (of the) biggest expenditures for fast-growing companies. There was a time at Little Pim where we didn’t track where our customers were coming from and didn’t know which marketing channels were performing and why. Eventually, we started keeping a closer eye on our marketing spend — that way, we were able to avoid falling into the money pit that marketing can be and begin getting excellent ROAS (Return on Ad Spend). Figuring out which marketing channels work for you and rigorously tracking your spend is a key part of scaling up.
MY THOUGHTS:
It’s no secret that marketing is an important part of growing your food business, but not having a strategy and not tracking your spend can lead to inefficient spending and take funds away from other important investments.
I had a great conversation about this very topic with Marketing Strategist, Christie Lee of Nourishing Foods Marketing, that will be airing on the Good Food CFO podcast very soon! Click here for updates on the podcast launch, and this episode.
Interested in reading more?
Find the full article on Women / Entrepreneur here.
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.