🚨 Get better working capital for your brand w/ Deep Ocean, SVB and Clearco
Register Today
The Tenzo Playbook: 5 Tips to Build your Brand’s Financials from Scratch
October 16, 2023
October 9, 2023
min read

The Tenzo Playbook: 5 Tips to Build your Brand’s Financials from Scratch

Steve O'Dell, Co-Founder & CEO of Tenzo, launched his organic, ceremonial-grade matcha brand with (in his words) "zero financial know-how."

He was a self-proclaimed college dropout who’d never studied business or finance. “For a year, we had no clue what we were doing,” he admits. He and his founding team knew only the basic terminology around P&Ls, balance sheets, and financial modeling.

Fast forward almost a decade:

  • Tenzo now has a high-accuracy, real-time financial model that updates daily with every new bank and credit transaction—something that is exceptionally rare for a CPG brand.
  • Steve’s team can predict monthly order placements within a single-digit percent and strategize accordingly. (Again, exceptionally rare for eCommerce brands.)
  • The brand has grown into an omnichannel powerhouse: available DTC, found in thousands of stores and selling to cafés across the U.S.

How’d they do it?

Below, Steve shares the 5 tips he used to turn a barebones finance function into a souped-up financial engine.

Let’s dive in.

Tip #1: Start by understanding the largest line items on your P&L

If you’re starting from zero with your brand’s financials, Steve stresses focusing on the basics. Start by managing your fundamental building blocks: the largest line items on your profit and loss (P&L) statement.

For most brands, these will be net revenue, cost of goods sold, and marketing spend:

  • Net revenue (also known as net sales) is the sum of all transactions minus any returns and discounts. In other words, this is your total top-line revenue before you factor in operational expenses.
  • Cost of goods sold is the sum of all expenses directly related to making a product, including raw material costs, freight in, and labor. COGS does not include, however, indirect costs like marketing or distribution expenses.
  • At a minimum, marketing spend should reflect your average cost per acquisition (CPA). However, ideally this would be a gross blended figure. In other words, how much do you spend per month across the entire company to secure a new customer?

If your brand has the cash available, Steve highly recommends bringing on a bookkeeper to handle monthly reconciliations. That way, you can run analyses and layer in a variance model. This granularity helps you understand the difference between your projections vs. your actuals so you can strategically adjust your strategy moving forward.

Tip #2: As a founder, get involved in your brand’s financials

Not every founder or CEO has to be a finance expert. But if you want to truly understand your brand's performance and unlock long-term growth, you need to get your hands dirty and take ownership of your brand's financials (as opposed to passing the responsibility to a firm or CFO and wiping your hands clean of it).

In Steve's experience, far too many founders and CEOs lean into their wheelhouse (like marketing, sales, or product) and minimize their involvement in the business' financials. However, this is often a costly mistake. "There's often a lack of ownership among companies that fail," Steve observes.

"The CEO's biggest responsibility is to ensure the company has money," which starts with clearly understanding what's happening across your business.

When Steve decided to take ownership of Tenzo's financials, he knew there'd be a massive learning curve. So, he proactively:

  • Printed two years of Tenzo's bank and credit card statements
  • Purchased a blank notebook to chart all the company's accounts
  • Wrote down every single incoming sale and outgoing expense

These practices keep him up-to-date with where the budget is spent and how much revenue those decisions generate. As a result, he can confidently advocate for his company's financial decisions.

"At the end of the month, you can bet your bottom dollar that I'm in QuickBooks, seriously evaluating every single thing that's happening, running a ton of reports, and ensuring everything is being managed correctly."

Tip #3: Great cash cycle management relies on daily, incremental changes

When discussing cash cycle management, most business leaders default to overarching periods (i.e., 30, 60, or 90 days). However, this mindset is often counterproductive to the brand's cash flow. That's because every day adds incremental value to a business.

Steve attributes this game-changing advice to Paul DeJoe, Founder of MUD\WTR: By unlocking small wins daily, those wins add up to significant change over time.

If you apply this perspective to every aspect of your business, "all those small things really add up," Steve explains. And this longer-term outlook is often the difference between a sinking ship and keeping your business afloat.

Let's look at an example:

  • You switch from credit card payments to monthly invoicing for Meta ads. This gives you 10 extra days before the cash flows from your business. In the meantime, you're still earning money, making paying the invoice easier.
  • At the same time, you negotiate two more days to pay your freight forwarder. That's another two extra days of cash flow, making paying both invoices (Meta ads and this one) even easier.

"Every incremental dollar is ultimately so valuable. The founders I speak to who run large, profitable companies never overspend and are extremely dialed in on what they're paying for and why."

Tip #4: Not every brand needs to raise capital

With a proven track record as an entrepreneur in the food and beverage space, Steve is adamant: Most eCommerce brands don't need to raise capital.

"Founders—especially in food and beverage—can get absolutely wrecked by investors and institutional money," he explains.

In the short term, investment capital accelerates sales. But, in the long term, that capital does not necessarily accelerate the brand. Instead, this money often encourages brands to operate without profitability in sight and makes the short-term growth spurt unsustainable.

There are, of course, outliers to this rule (Liquid Death and OLIPOP come to mind). However, there's a reason taking venture capital is a relatively new practice for F&B brands. Consumer eating habits often take decades to change. So, slow and steady bootstrapped growth is often more sustainable.

That said, if your brand plans to raise capital, Steve recommends knowing precisely how that fundraising will be used and will impact your financials. These answers will act as your guiding light, preventing lapses in judgment that could hurt the brand financially.

Tip #5: Want to take control of your brand’s finances? Use Drivepoint

As your brand gains traction and finds real product-market fit, Steve emphasizes the importance of an offensive approach to your company's financials. In other words, chart clear, data-informed strategies toward profitability—rather than second-guessing your financial trajectory or reacting when things go wrong.

But for many brands at this early stage, it doesn't make sense to hire a fractional CFO or in-house financial team, which can be costly. Instead, Steve recommends partnering with Drivepoint.

Drivepoint is the strategic finance platform trusted by scaling consumer brands (including Oats Overnight, Geologie, Earth Breeze, and more). With it, you can:

  • Centralize and distill all your financial and operational data
  • Accurately forecast your brand's long-term financials
  • Identify hidden growth opportunities

Like a CFO, Drivepoint gets to know the granularities of your brand's financial health. However, the strategic finance platform then layers on unbiased insights at a macro level faster—something a CFO can't do. "This informational leverage is a huge advantage of working with Drivepoint," Steve explains.

Brands can layer those industry-wide insights into Drivepoint's advanced scenario modeling and forecasting, unlocking sustainable long-term growth.

“For Tenzo—or any brand, really—improving your financials is a constant, never-ending game. If you want to take that next step on the financial side, which every founder should, Drivepoint will empower you to make strong decisions for your business.”

Want to try Drivepoint for yourself? Book a free demo today to learn more.

Previous post
Next post

Subscribe to our newsletter

Ready to see what you can do with Drivepoint?

Sync your data in 5 minutes and be up and running with a full strategic finance solution in no time.