“What If” Scenarios That Can Unlock Profitability
Sponsored content from Startup CPG partner Drivepoint
If we get Kroger, how much year-end cash will we have? Should we buy packaging with lower minimums but higher per-unit cost? What’s the margin if we go with the cheaper co-man that’s further away? How much can we afford to spend on trade and still break even?
As you scale, you’ll constantly ask these types of questions (especially right after a bad board meeting! Or when you are doing budgets, aka right now) And understanding the dollar value of each could actually hold the key to your profitability…or show you what is a waste of time and resources. Either way, you need a savvy Finance person or analyst to run the numbers and decide what to prioritize. Unfortunately, the typical approach is pretty low-tech and labor intensive – 1) Copy-and-paste your financial model 2) Plug away for a few days jerry-rigging new assumptions, 3) Try to compare the models, usually giving an answer that is hard to dig through.
What if your team could spend all that time making strategic decisions, instead of wasting 80% of their time running the numbers? Enter Drivepoint – their financial modeling lets you snap through these types of analyses with ease. Top-performing CPG brands using Drivepoint include Graza, Dose, Mosh, Beyond Better Foods, Nguyen Coffee, Seeq and more. And it’s simple enough to use that it could save you from having a full-time or fractional CFO – many of the primary users are brand founders, COOs, or analysts.
Drivepoint picks up where accounting leaves off (you do need to start with reliable book entries, but they can recommend a partner). Their platform ingests your accounting entries, forecasts, sales data, and spits out clean financial statements (P&L, Balance Sheet, Cash Flow Statement) with slick dashboard views, real-time budget vs. actuals, rolling forecasts, and ready to model out your “What If” questions.
Their CPG sales forecast model is impressive – it’s easy to navigate, but also thorough, helping you apply assumptions like velocity, retailer door count, and SKU weighting – and creates a real-time financial and production forecast. And with their custom Add-In for Excel they can pull your actual sales data directly from the major distributors, retailers, as well as e-commerce channels (even boasting powerful Amazon and DTC cohort analyses).
So who is using this type of software to add substantial dollars to the bottom line? Oats Overnight used Drivepoint to decide whether to invest in a new production facility. The model gave them a different answer then they were expecting – because it picked up surging Q4 volumes, indicating they needed to invest right away. They ended up saving $4M in EBITDA as a result.
“50-60% of a finance person’s job is moving data from one place to another”
We also heard from Ramen-made-healthy pioneers at Immi that they’ve used Drivepoint to in-source their strategic financial decision-making. Co-founder Kevin Chanthasiriphan ditched their costly outsourced CFO model in favor of Drivepoint to get better forecasting, quicker reporting, and to take advantage of cohort-level eCommerce forecasting. At each monthly close, they use Drivepoint to model out numerous scenarios that could impact their profitability and cash. According to Kevin, “now, when month close happens, I’m not exhausted from accounting work. I’m ready to rock and roll and focus on making strategic decisions.”
In terms of when you might need a powerful platform like this, Drivepoint CEO Austin Gardner-Smith says that customers typically onboard with Drivepoint somewhere between 2 and 25M in topline revenue. For retail-first brands, he estimates this means scaling beyond 500 retail doors, or for those with sustained online orders, about 2 years of selling history. But just any brand that is poised to grow quickly, where strategic decisions will have critical, lasting outcomes for your business, could make good use of the platform. And he also recommends giving them a quick look before signing an outsourced CFO contract or posting that finance job, especially because Drivepoint offers analyst services to help you get the most from the platform even if you don’t have a finance team in-house.
For anyone interested to learn more, you can sign up here for a demo.
About Drivepoint
Drivepoint is a Strategic Finance platform for consumer brands. Customers like Oats Overnight, Immi, Graza and Simple Modern use Drivepoint as their financial modeling, foreasting, and reporting system of record. Being able to build and compare quick and accurate scenarios leads to better decision making and better financial outcomes. On average, our customers achieve contribution margin gains of 3-5% in the first year. Check out our case studies for more color on how we can help.
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