Key Components of a CPG Strategic Plan
You may have heard the phrase “strategic plan” before. I talk about it a lot. Because it’s the front half of any good business plan, but it is the most poorly thought-out part of most business plans among CPG startups.
The ones I’ve looked at seem to be copied from an investor pitch deck, a document about the world you want to see sprinkled with tidbits of reality. Not good. But very common.
So, I want to share your strategic plan’s components, including the elements I discussed in my book.
- The strategy: a competitive theory of capturing $ from other categories with a specific consumer audience. In my book, Ramping Your Brand – I boil this down to using initial sales and research to isolate your high-value outcomes and the attribute-outcome signal tied to heavy usage among your fans. This becomes the behavioral basis of your business growth, anchored primarily in product and packaging design.
- Top-line revenue goals (should be realistic based on category case studies, broker data, and your degree of competitive advantage)
- 4P Playbook – How you plan to pursue the strategy:
- product line (the list of UPCs and their key competitively advantaged attributes)
- placement (i.e., sales plan by channel and relevant retail banners)
- promotion (trade and consumer promotional plan)
- pricing (pricing plan, including the role of discounting)
- Operational plan (how you plan to produce the required units)
- unit production plan to provide excess units beyond target revenue goal
- COGS and gross profit per unit (to inform your budget)
- working capital to fund operations
- Budget for all the above (relying on maximum founder labor, not outsourcing)
- Alternative methods based on likely risks to any component of your plan (varies by category and competitive positioning)
A note on budget: It’s essential to keep your budget minimal in Phases 1 and 2 so that your gross profits cover fixed operating costs (or do it as soon as possible). When you raise angel or seed money, it should NOT be used to cover operating costs (i.e., production, distribution, retail MCBs) unless you are self-manufacturing.
Running costs should primarily come out of your gross profits (i.e., have a profitable business model). Outside funds should mainly be used to finance staff that adds to your pool of labor time for scrappy consumer and trade promotion work (i.e., field sales and field marketing) and money to fund aggressive outreach through best practice tactics.
Every quarter I teach a two-hour version of this tailored to CPG brands who want to Ride the Ramp of exponential growth. You missed Q4’s cohort, but I will be doing it again in early February! Stay tuned to this blog or sign up for my VIP e-mail list here.