Skate Ramp Brands Must Lead with Strategy, Not Finance

I had a breakthrough with a client. He is a finance guy by training. He loves P&L forecasting. He has his finance team do it four times a year. 

“We can see problems 30 days in advance,” he claimed, which is true.

But here’s the problem:

Your P&L is a lagging indicator of business health if your objective is exponential growth or even mid-double-digit growth.

Your cash register/website sales are the leading indicator. If you want to grow fast, you only strategize for the leading indicator. This is about following demand, following the market, and ‘letting go’ of the need for total administrative control. 

I’m not saying you don’t take finance and financial controls seriously. I’m urging you to set the strategy and then figure out how to finance it and the playbook experiments necessary to pursue it.

Finance is a critical skill in a low-net margin industry like early-stage consumer brands, where your initial COGS are penalized by your tiny scale. 

Despite the terror of your P&L, finance must follow the strategy, not the other way around. This is why fundraising is a common tool among Skate Ramp brands whose gross (or product) margins are below 50%. 

It’s scary, but this is why you’re a challenger brand, not a market-leading incumbent. Isn’t it?