There are many hard decisions we have to make as founders. From team to marketing strategy, there’s always a tough choice to make. In this four-part series, I’ll walk you through the mistakes – and successful strategies – I made surrounding some of my toughest decisions as a founder.
I’m Jamika Martin, the founder of ROSEN Skincare and Flora Studios. I launched ROSEN in 2017 to transform the acne space for people of color. Through innovative, clean formulas, we transformed our customers’ skin and landed on the shelves of Target and Ulta Beauty. Now, I work with consumer packaged goods (CPG) brands through Flora Studios. At Flora Studios, we support personal care brands with product development and launch strategy services, as well as low minimum order quantity (MOQ), U.S.-based manufacturing.
With that in mind, this series is meant for you – the founder of an emerging brand. You know, the brand fronted by a boot-strapped founder who wears 10 hats. Should you find yourself in a more scaled and capital-rich position, this series may be a little too scrappy for you. But if you’re like me, someone who started their business out of a tiny apartment – then this is for you. Ahead in this article, we dive into operations: How to find the right partners and products for your brand while scaling for success.
Inventory vs Cash Flow
This is one of the trickiest balancing acts in CPG. Inventory and cash flow are tied at the hip, and mismanaging either can take you down.
Early on, I thought having a bunch of product on hand meant we were ready. But what it really meant was that I had all of our cash tied up in jars sitting on a shelf, hoping they’d sell fast enough to keep us going.
Over time, I learned that inventory is only helpful if it’s moving. Otherwise, it’s just frozen cash. That means forecasting matters, but so does knowing your sales cycles, launch cadence and revenue splits (direct-to-consumer vs. retail, for example). If most of your sales happen around promotions or new drops, then placing a large order in the off-season might actually hurt more than help.
So, what’s the sweet spot? You want enough inventory to support growth and capture demand, but not so much that you’re stuck with old product or hurting your liquidity. You’ll never get this exactly right, but over time I’ve learned to ask myself an all-important question: “Can I cover expenses if we don’t sell through this as fast as we thought?”
Choosing the Right Suppliers + Partners
The people you work with on the backend will shape your brand just as much as the product or content you put out. Take a moment and reflect: Do these backend partners communicate well with you? Can they scale with you? Are they fair? Are they open to re-negotiations?
Early on, I worked with partners who were fine for where we were, but as it turns out, they didn’t have the infrastructure to grow with us. I’ve also worked with suppliers who were great on pricing, but a nightmare to work with logistically. Both of those decisions cost me time, energy and money.
Now, I know to ask better questions. How do they handle delays? What’s their MOQ? How flexible are their terms? And maybe most importantly: How do they handle when things go wrong? Because things will go wrong. And if the answer is radio silence or finger-pointing, that’s not the kind of partner that will help fuel long-term success.
How Much Inventory to Sit On
There’s no magic number here, but there are some obvious signals as you think about right-sizing your inventory.
Think of it this way: If we’re constantly running out of product or always cutting off sales early, that’s a sign we’re understocked. On the flip side, if we’re discounting heavily or holding product for too long – well then, that’s usually an overstock issue.
The way we forecast is based on historical sales data layered with potential growth percentage. And while you want to be confident about future sales, trust me, you’d rather be tight on inventory and selling through, than sitting on way too much with no cash to show.
My advice? Consider your last three-six of SKU sales per channel. Do you have any upcoming promotions or major events to layer in? Launches? Use this data to build out your weekly inventory needs. Then, layer in your lead time to understand how much you need to order and when.
Early on, your best bet is to order less and move faster. It’s a headache, but smaller reorders keep you flexible and more cash on hand. That’s why I launched Flora Studios, a low MOQ manufacturer for personal care brands based in Austin, TX, which helps brands to have a stepping stone to scale while staying lean and scrappy.
When to Discontinue a Product
This one hurts. Especially when it’s a formula you love and something you know serves a customer need. But if customers aren’t buying it, or it’s become too expensive or operationally complex to maintain then it has to go.
We’ve discontinued products because we realize the margins are killing us. Or, we’ve discontinued products just because the sales aren’t there. One scrappy way to revive existing inventory is through a rebrand. Can this item be repackaged or messaged differently to bring it back to life? If not, look at the long-term costs of warehousing fees and use that to decide when to drop it.
I used to think killing a product was admitting failure. Now I know it’s just part of running a business. Not every product can – or should – last forever. If the sales aren’t there, or it’s dragging down margins or causing delays elsewhere. All of those learnings are data, and at the end of the day, we have to learn from the data – and not just our egos. And you know what? Sometimes, killing a product frees up room for one that’ll actually scale.
Deciding What to Launch Next
This is where the fun lives. But it can also be one of the most dangerous parts of ops.
Newness can bring momentum, but it can also bring complexity. When I’m thinking about launching a new product, I run through a short checklist:
- Does this make sense for our brand?
- Is it something our customers are asking for?
- Is the margin healthy?
- What’s the story we can tell at launch?
- How does it pair or compete with our existing products?
I know it’s hard to admit it, but not every amazing idea should result in a launch. Ask yourself the hard questions, including “does this fit everything you’ve already built, or is it a shot in the dark?” If the product doesn’t align with your target customer’s needs, ideal sales channels, competitors or strategies, then it’s a “no.” Remember, you need to ensure every product you develop is an extension of your brand’s mission and vision.
In sum, operations logistics isn’t the flashiest area of managing a business. But it is foundational. These aren’t always the stories people tell on podcasts or pitch decks, but they’re the decisions that quietly make or break your business. Keep things lean, validate what you can and never let your ego outtalk your cash flow.
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Post topic(s): Business advice