Make 2021 the Year You Become a B2C Business
The vast majority of CPG startups in what I call the Death Funnel (trailing annual revenues below $500,000 wholesale) operate as B2B businesses. Their founders don’t interact with their consumers face-to-face. They manage distributor orders, distributor relationships, and case numbers. They drink words from their brokers’ mouths. As long as case volumes grow, these founders are happy. As long as their wholesale price can float operations and their salary, many are content.
They rely on their sales staff to grow the business by adding accounts. For them, stable velocities that retain their shelf space are a good outcome. They only worry about velocities when they’re declining and threatening access to an account.
Just walk the Fancy Food show if you want to see what I mean.
For these B2B brands, the company’s strategy’ is a theory of retail account sequencing, one based purely on its ability to service a new account and the cost of servicing it.
I’m not saying you can’t become a $5-20M business growing this way, especially if you a very gifted sales negotiator with a good reputation in the conventional retail trade. You can. It happens regularly.
But you’re very unlikely to scale a business this way on a reasonable timeline (i.e., 7-10 years).
Why?
Well, you haven’t got a consumer-centric business strategy at all. Your strategy reduces competition to an account-level problem rather than what it really is: a battle for memorability with real people. Without a consumer-centric competitive frame, you aren’t strategically managing the business at all. A good competitive-frame forces you to decide on a market position tied to some audience, whether niche or broad. It’s the anchoring of your thinking in the end consumer that is the crucial difference.
Once every decision is made at the company because it supports a strategy to delight the ideal, predisposed consumers, you have the potential of running an exponential growth brand. Skate Ramp brands draw their exponential growth rate directly from consumer enthusiasm, not from stacking accounts one after the other. However, you have to make sure you’ve co-completed the product line with your early consumers. Something is usually off. Your sales guy can’t help you figure it out in most cases because she is NOT in touch with the end consumer.
You, the founder, and your team ALL need to focus on your end consumer, why they love your product, and make your decisions to find more of those people and keep them happy and coming back, even if it’s only twice a year.
Hey, I’ll be taking my first 2021 cohort of founders through this material on February 5. Only 18 spots left. You’re welcome to reserve your spot now!