You can’t help but notice that every company under the sun is touting its sustainability practices. And why wouldn’t they? Facts are emerging that sustainable companies fiscally outperform those without sustainability practices. In the true spirit of shared responsibility for our planet and healthy living, we have to applaud those companies (at least those that are making genuine efforts and actually implementing the sustainable practices they purport.) At the same time we have to cheer them on to do more. In the meantime, there are a multitude of innovative small companies that are building socially and environmentally friendly products from the ground up.
While the mainstream players struggle to innovate (whether under a sustainability banner or not), these little engines that could are chugging up the mountain to mainstream distribution and profitability. That uphill climb can be exciting, rewarding and challenging – these companies truly believe the core values they were founded upon and gain great satisfaction from serving the greater good with great products. However, when these smaller companies approach a tipping point from “mom & pop”/ boutique brands into mainstream distribution, they face unique challenges.
Seemingly overnight, these companies burst onto the scene when they gain shelf space and achieve national distribution at the likes of Whole Foods, Trader Joe’s, and Target. Besides the obvious financial, operational, and supply chain challenges of building and shipping enough inventory at a reasonable cost while preserving sustainable supply chain practices and product integrity, these firms endure significant cultural changes among their employees and their base of loyal consumers. And for more established companies with high growth trajectories, these tipping points keep coming one after another. New distribution, product innovation, heightened consumer awareness – any of these can create overnight sensations that can spawn sensational headaches! So if you are one of these companies, are you ready? Here are some questions to consider:
- Is your product formula and packaging scalable to handle significant bumps in volume?
- Do you or your sales force have experience working with national brokers and retailers?
- How do you gather and manage demand information and forecasts? Does your demand team work closely with your supply team?
- What product innovations can you offer retailers to differentiate your brand from the many competitors (natural or not) in your category?
- Have you undertaken capital planning to understand your capital requirements to scale operations and inventory?
- What promotion strategies and ideas can you offer retailers, and have you planned for trade expenses (merchandising, promotions, advertising, slotting, etc.)?
Depending on where you are in your growth and distribution, some of these questions may be more relevant than others. And there are a hundred more to ask. The key is to recognize that you are not the first company to face these challenges. Many industry best practices are well formed and in use by small and large companies alike. If you are asking yourself these questions, let me know. We are working with several companies working to rapidly expand in the “socio-enviro” sector, and we can share best practices we have learned working with many mainstream companies.