12 Tips for CPG Startups
Over the last 20 years, we’ve helped a lot of young, scrappy teams grow quickly and we’ve helped turn a number of ideas into successful CPG companies. What follows are our general suggestions for best practices as you look to launch and grow your CPG brand:
1) Start small, prototype big
We love beautiful design, but we also acknowledge that beautiful design is almost always a process of evolution. And when kicking off or growing a CPG brand, there is almost always a need to start small, to talk with customers; to start simple and grow and evolve in response to the feedback that you’ve gathered. Some call this an MVP, which can mean minimum viable product or minimum valuable product, but they're basically the same thing. When you start with an MVP, you ultimately create a product that is irresistible and build a loyal audience that will make growth possible.
2) Embrace the sad brown bag
We have a friend who calls this early process the “sad brown bag phase.” It isn’t glamorous, but if you can put your product in a sad brown bag, take it to a farmers market, and people can’t get enough of it, then you know you have something that is ready for a brand identity that is less sad. As much as we love to launch with a beautiful brown bag, there is a lot of logic in this approach. As cool as we can make something look, if customers don’t LOVE what’s inside, they won’t become loyal fans — which is essential in this CPG game.
3) Watch, listen, learn
Go hang out with people who are shopping — and not just your friends and family. Go to stores and watch all types of people shop. Watch them make decisions. Watch them grab your product, interact with it, and evaluate whether to buy it. This is invaluable. Nothing can replace direct observation during early product development and sales. Go to multiple stores and watch, learn, determine which of your assumptions are accurate and which ones might be off, and then be ready to pivot — quickly.
4) Pivot quickly and often
As entrepreneurs, many of us like to believe that we know everything about our businesses or industries, but the fact is that we often don’t. And if we continue to push on without putting in the time and effort to think critically and learn — about our own products and the market — we will be sorely disappointed and maybe even lose a lot of money in the process. Deep down, you may already know that something needs to give. The quicker you can let go of those ideas that don’t have a chance of panning out and pivot, the more successful you will become.
5) Perfect a production plan
Making stuff is complicated and sometimes, you need help. Do your best to figure this out early. If you need help, you also need to find the right kind of help — help that can give you solid advice and won’t leave you high and dry. If you are doing this on your own to start, make sure that you can scale / evolve / adapt / grow as needed. It is a harsh game, this production space‚ and you need to be ready for challenges to arise.
6) Get cozy with distributors
While we think that brand is suuuuuper important, and the quality of the product is right up there with the brand, the reality is that this whole space is a big distribution game. If no one will carry your product from you to your buyer, you’ll struggle. So, figure out your distribution plan early. Figure it out in the short term, and less-short term, and medium-short term, and dreams of more-than-short term — it’s crucial to a successful launch.
7) Be solid on sales
And likewise, as much as it may seem that a strong brand, promising product, and good distribution are all you need, you also need a super solid sales strategy. Do yourself a favor and figure this out early. Sales is a huge part of what will make your business successful, so you need to have the right people in the right positions, with the right resources at their fingertips, or your brand will never take off.
8) Build strong & strategic partnerships
It is a huge business world out there and you’ll need help winning. So, build strong partnerships and take care of the people that take care of you. Find a mentor and listen to his or her advice. Find a distributor and let them help you learn the business. Find co-packers that have your best interest at heart. Build bridges with fans and feed their energy. Partnerships in the usual and unusual places will help you to navigate these early, choppy waters.
9) Wait for traditional advertising
If you are going to allow room to prototype, test, observe, and evolve, you should focus your resources on making an irresistible product — and getting it on shelves — before you move into thoughts of active advertising. As you do begin to advertise, make sure that you are available in abundance on the shelves at the locations where you are investing in advertising.
10) Always remember, your greatest source of advertising is word of mouth
Your fans are more valuable than gold. If you have a product that people love and a brand that people love, they will tell others, and that is not only the cheapest advertising you'll ever receive, it is also the most impactful to your growth. Building loyalty takes hard work and perseverance, but when you have loyal fans, you’ll begin to gain efficiencies, and efficiencies lead to profitability. Build a community of loyal fans and you’ll begin to hit the velocity you need to get over the startup status.
11) Be ready to pay for things you think shouldn’t cost you
It may feel like robbery, but in some cases, you may even need to pay for shelf placement. Everyone wants a piece of your business’s success and there won’t be as much left over for you as you’d like. Be smart about the process, but know that it is common to pay-to-play and build that into your pricing.
12) Build an aligned brand to which fans are drawn
As you craft your brand identity and begin to establish your brand's personality, remember that alignment leads to trust. When everything you do is communicating the same values — from the quality of the product, to the source of the ingredients, to the name you choose, the packaging you put on shelves, the partnerships you build, the way you represent yourself online, the way you respond to crisis, the way you treat people — when all of this is communicating a singular and aligned message, fans will feel that they can trust you. They will know what to expect from you. And when you build an aligned brand that people can trust, you will have fans drawn into those experiences who will then tell their friends. Distributors and stores will be drawn to those experiences, too, and your brand will grow organically. And you will have built something no competitor can achieve (or threaten) quickly or simply.