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A Path to Profitability for Direct To Consumer Brands

Are you a D2C brand suddenly struggling with rising digital advertising costs? Let Stage 1 Help you Build a Path to Profitability

What is Happening with Direct-to-Consumer Brands?

Many direct to consumer (D2C) brands have been struggling for the last 18 months as marketing channels have become less effective and costs have increased. Our studies show that it takes more than double the advertising spend to get the same results as this time last year.


Immediate actions

These are the immediate changes you can make to address and mitigate these challenges:

  • Rethink your marketing strategy:
    • Drastically pull back on digital advertising which includes tactics like paid social, paid search, and banner ads
    • Shift those dollars to building your online community and increasing brand awareness
      • The time is now to move away from paid social and paid search and look to build a holistic approach to building awareness and driving traffic
    • Build an omni-channel strategy by shifting online ad dollars to in-store selling and marketing initiatives (education, sampling) to drive customer trials of your product
    • Focus on creating repeat customers (retention marketing) vs getting new customers because it can cost up to five times more to get the new customer (Subscriptions, loyalty programs and memberships are good customer retention strategies, when done correctly)
  • Reforecast your business for the changing market conditions to see the impact to cash and your P&L (you may become more profitable)
  • Outsource tasks that can be done more efficiently by an agency and save you recourses
  • Closely track marketing spend and make strategic decisions based on maximizing ROI
  • Amazon may be a good online vehicle; just be aware of the costs that go into the Amazon channel before committing to that strategy (agencies can be very helpful in setting up a thriving and profitable Amazon business)


How Stage 1 can help

We’re assisting D2C companies with tools such as:

  • Unit economics analysis of your SKUs and consumer trends – This can help to understand what SKU’s may need to be discontinued
  • P&Ls by channel
  • Detailed weekly cash forecasting
  • 2023 Budget refreshes to represent the current market dynamics
  • Support with financing options (Line of Credit)
  • CFO insights into comparable company metrics


If you would like to learn more, our CEO, Katy Triefenbach, would be more than happy to connect with you. Feel free to book a time using this link: Book your introduction meeting


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Stage 1 Financials Guide to Income Taxes by Cecilia Webb

What to look for in hiring a tax professional

It is best to find tax experts who are licensed professionals that have years of experience and expertise in your specific industry. You want a professional who is attentive to your needs and questions. At Stage 1 our team of licensed professionals take pride in providing hands-on tax advice and enjoys building lasting relationships with our clients.

How to prepare and what the filing team will need from you?

Depending on how your organization is structured, the information that our filing team will need to prepare your Federal and State returns can vary greatly. However, the five (5) items below are the most common and are a good place to start:

  • Completed year-end books or year-end financial statements
  • Copies of prior year returns, if applicable
  • A capitalization table as of year-end or a list of owners and percentage owned
  • A list of states you are currently registered in
  • A revenue-by-state report and a payroll-by-state report

Schedule an appointment with our experienced team today to get a more comprehensive list of the needed documents and information.

Timing: to delay filing or get an early jump on it

Keeping track of all the State and Federal filing deadlines is a huge task and missing a deadline could be a costly lesson for your organization. The fines associated with filing late will depend on your company’s profitability and circumstances. What you shouldn’t delay is reaching out and scheduling a call with one of our tax experts to discuss the best timing for you and your company. Let our experts help you keep track of all your filing deadlines.

Things you might not know but probably should

As your business grows, you will need to make sure that you are filing in any new States that you are doing business in or have hired new staff. Determining State nexus can be complicated since each State has its own unique rules and thresholds. Let our team of experts help you navigate this ever-changing landscape.

The faster we get your info, the faster we can get started.  Missing information to complete your return can significantly impact your organization’s tax liabilities. A single document can change you from owing thousands to owing nothing. The sooner we complete your return the sooner you know where you stand. We also offer a priority service if you need your return completed in hurry. Ask our team if you are interested in this service.




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What’s Happened to DTC?

The last two years have seen some radical changes to the way people live and shop and that has meant new challenges and opportunities for young growing companies like the clients of Stage 1 Financial. For many of these high-growth companies, it can be challenging to know when to get the assistance of a CFO. We won’t go too in-depth on the subject of how and when to get a CFO but this set of data does tell a very compelling story of why you should get CFO assistance.

For this Data Insights Article we have analyzed a grouping of our clients that sell in the following three ways; Direct to Consumer, Wholesale, and through Amazon. The intention is to compare how each sales channel has performed and what the implications have on these businesses. The following are the key findings:

  • Since the beginning of 2021, Wholesale & Amazon Revenue Growth has significantly outpaced Direct to Consumer (DTC) Revenue Growth
    • In both Food/Beverage & Beauty, the average growth for Wholesale and Amazon has been 345% and 169% respectively
    • For the same customer segments, DTC average growth has lagged at 19.8% from January 2021 thru July 2022
  • The same trend has continued into 2022: Wholesale (+139%) & Amazon (+175%) Revenue Growth has outpaced DTC Revenue Growth (Flat)
  • Outside of Q1 of 2021, there has been a high correlation between Quarter over Quarter growth for both WS & Amazon
  • For DTC to support the small growth in revenue since Jan 2021, marketing spend has increased +137% and has increased 20% to keep revenue flat YTD

As we internalize these findings and circle back to why a young, fast, growing business should get CFO services there is a clear takeaway, they will help your business adjust and take advantage of situations like this to keep growing and not keep investing in a failing strategy. From a Stage 1 CFO perspective, it’s important to review profitability by channel and continue to invest in Wholesale & Amazon. As for DTC, its important to keep a close eye on the unit economics so as to not get into a negative position or increase your current cash burn.


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How our Reporting Solutions Work

The data and information your business has access to can feel overwhelming. We know the feeling. It can also feel like a huge task just gathering all of that data into usable reports, and then you are stuck with the task of analyzing, understanding and implementing that information. It’s no wonder some business owners cringe a little or roll their eyes when you bring up reporting. The good news is it doesn’t have to be that way.

Stage 1 utilizes best-in-class technologies and 10 years of industry experience to deliver the ideal reporting solution for consumer-based companies.

You can have all of your reports in one location and have them created automatically without gathering them manually. You can have polished reports created at the click of a button and ready to share with investors. You can even see valuable information on a much faster cadence than just monthly.

Our most popular service, customized financial packages, offers detailed views of P&Ls by classes, cash flow tracking, and working capital trackers; all with detailed drill-downs and stylized to your brand and ready for investor board decks.

Just look at how our reporting solution can take all of those different data sources into a Tableau dashboard. Then, out comes refined, convenient reports, premade for all the important purposes you have for them. It’s time to work smarter, not harder when it comes to your reporting solutions.

Stage 1 utilizes best-in-class data integration tools to provide live eCommerce reports to track customer acquisition costs, customer cohort behavior, and customer retention.

It’s more than just saving you time and improving your data organization. We also play a pivotal role in analyzing that data to derive actionable takeaways. It’s why we are experts in the CPG reporting space. Years of experience with hundreds of brands have given us the ability to help direct your planning. It’s why we are both a software and a service solution.

If you want to learn more about our Business Intelligence: Reporting Solutions, please give us a call and see what you’ve been missing. It could easily be the difference between securing that next round of funding versus having to continue bootstrapping your business.

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Weathering the coming economic storm

Tough economic times ahead? 3 steps to prepare

With concerns escalating around a possible recession coming, our team at Stage 1 Financial wants to address the potential impact on your companies, vendors, and customers. Our team of experts has identified 3 critical steps to help your company thrive in this potentially difficult business climate.

To develop a more in-depth understanding of the impact this might have on your company, please reach out to schedule a meeting with one of our CFOs to talk about this topic in more detail. We’re here to support you!

Step 1: Cash is King! Start Conserving Cash

It’s critical to review expenses to ensure your operations are optimized and non-essential spending is minimized to preserve liquidity. Take a fresh look at your operations including:

    • Right size expenses – Forgo expensive in-house hires when you can outsource expertise at a fraction of the cost.
    • Lower Fixed Expenses – Categorize expenses by fixed (e.g. rent) and variable (e.g. raw materials) and understand which fixed costs may need to be reduced in the event of a decrease in consumer demand. Keep in mind that paying for fixed costs requires a minimum amount of monthly sales and that any decrease here reduces that pressure while increasing cash flow.
    • Ensure Marketing Cost Generates Cash – Confirm your understanding of the Return on Investment (ROI) of marketing spending and align spending levels with forecasted changes in revenue.
    • Optimize Cost of Goods Sold (COGS) – Reviewing and benchmarking the pricing of input items (e.g. raw materials), labor, overhead, 3rd party manufacturing, and supplier pricing (e.g. payment terms and tier pricing).
    • Leverage Working Capital – Collect A/R faster!  Reduce inventory by running more frequently (even at higher costs) and work with vendors to the right size terms.

Our CFOs and Finance team can help you in analyzing your cost base to determine opportunities for improvement and support you in the process of renegotiating contracts with key vendors and suppliers.

Step 2: Adjust Expectations for Raising Capital and Start the Process Early!

Companies may struggle to find financial support as interest rates continue to rise and total capital being invested shrinks. For those companies considering fundraising, there are a few key tips:

  • You might only have 1 chance, don’t miss your shot – When pitching, bring your A-game. If you can’t confidently say “This is the best pitch deck we can produce,” or if your financial model does not answer all the questions investors and lenders are asking, it’s a good time to talk to our transaction services team. Their expert advice can be the difference between being properly capitalized or not during this turbulent period of the business cycle.
  • Start raising before you need it – Give yourself more time to raise capital. If you’re thinking about raising capital in the next 6 to 18 months, we recommend starting the process NOW! A typical process takes 6 months, plan for 9 – 12 months in this environment.
  • Back up planning – Have as many levers to pull as possible, agree on a plan with existing investors and leverage the debt options. Also, try to figure out a scenario to get to cash flow break-even (or close to it).  Raising will take time, give yourself as many options as possible.

Step 3: Continually Re-Forecast

Your place in this shifting economic world can change quickly. With the possibility of a recession on our hands, companies need to continually review their financials and respond accordingly. While we entrepreneurs love to plan for the long-term, right now, we need to focus on the months just ahead and be ready to respond quickly. To ensure you are prepared, we recommend the following planning tools and processes are in place and operating effectively:

    • Great Sales Forecasting is Everything – Track sell-through, as changes in consumer behavior can be identified earlier by watching weekly and monthly buying behaviors
    • Update frequently – Update revenue forecasts with any changes in sell-through patterns, helping understand where sales are trending
    • Run Scenarios – Running a wide range of scenarios allows you to prepare for the worst and execute for the best.  Understand how to work towards cash flow break-even, what levers you have to reduce burn short and long term, and what KPIs you need to be at to look attractive for raising capital

Our seasoned group of CFOs and Finance team can help you through these trying types, unfortunately, this is not our first rodeo in terms of managing downturns!  Fortunately, we’re here to help you navigate these challenges.

Stage 1 Financial will continue to provide more information as it becomes available, please share any information and we’ll be sure to disseminate it. 

In the meantime – reach out with any questions or concerns.

We’re here to support you!

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A Quick Q&A about ERP Systems

Empower your decision making with more knowledge of ERP systems

If you are looking at adding an ERP system or are unsure if it’s the right thing for your business right now then this is the resource for you. One of our brilliant team members graciously agreed to share some of her expertise about ERP systems. Here’s an in-depth Q&A with our Head of Accounting, Larissa Cangialosi.

Q: What is an ERP system?
A: ERP (Enterprise Resource Planning) is a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, and supply chain operations.
Examples: Netsuite, SAP, QuickBooks Desktop (lower tier), Microsoft Dynamics

Q: What is an Inventory management system?
A: A system used to track your goods throughout your entire supply chain, from purchasing to production to end sales.
Examples: DEAR, SOS, QuickBooks Commerce

Q: What are the differences between the two systems?
A: There are four main differences. Inventory management is a plug-in that needs to be synced to accounting software. ERP has accounting, operations, and other departments on the same software, centrally. An ERP is pricier and more complex. And finally, setup time is much longer for an ERP than an inventory management system.

Q: Are there any similarities between the two systems?
A: There are a few similarities as well. Both can plug into other technologies (e.g. Shopify, SPS Commerce, Amazon). They both require ongoing maintenance and utilization of the technology to arrive at good and useable data. For setup, both generally require consultants to 3rd parties to help implement the system.

Q: How should a company prepare to implement either of these options?
A: Be sure your master data is correct and comprehensive. Know your bill of materials for each of your SKUs. You want to have good starting balances of inventory. Get your operational workflow identified and adjusted to the system. Obtain physical counts to ensure starting balances.
If you’d like to learn more about ERP systems and need assistance setting it up, reach out to our account managers to get started!

For more information watch our Coffee Break video on this subject or if you need help please reach out to us at:

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Being Prepared for an ERP Implementation

As your business grows it becomes increasingly more complex to manage successfully. In evaluating technology options to support your business processes, Enterprise Resource Planning (ERP) solutions provide comprehensive tools that integrate the work of your Sales, Operations, Accounting, HR, and other functions around a common set of master data and user profiles.

When choosing an ERP, consider what is fit-for-purpose for your business in terms of functionality and cost, and ideally select a solution that can expand and grow with you.

Tier Tier 4 ERP Tier 3 ERP Tier 2 ERP Tier 1 ERP
Who? Small businesses Medium-sized businesses Lower-middle market companies Large & complex enterprises
Revenue Pre-revenue to $5M $5M – $40M $40M+ $250M+
Implementation cost $1 – $500 $500 – $10,000 $50 – $100k $200k+
Annual cost < $1,000 $1,000 – $5,000 $5k – $25k $85k+
ERP examples – Quickbooks Online

– Freshbooks

– Quickbooks Enterprise

– NetSuite SuiteSuccess Starter Edition


– Netsuite

– SAP Business ByDesign


Integrates well with – Operational plug-ins such as DEAR & SOS

– Shopify, Amazon


– EDI solutions

– Advanced reporting plug-ins

– Process automation

– Business Intelligence

– Advanced operational systems


Once you have completed software selection and are ready to embark on your ERP journey, there are some key items to consider:

  • Selecting a technology partner to assess your organization and build an implementation roadmap
  • Understanding how many resources and how much focus the implementation will require from your organization. Making sure that once allocated, that it does not get disrupted.
  • Ensuring that ‘business as usual’ does not suffer because of the ERP implementation

It also becomes increasingly important to keep a close eye on your inventory and cost of goods.

You know how much it should cost to make the product.  However, ingredient prices might vary depending on seasonality and availability; shipping costs can go up, the waste factor may change from one production run to another.  Regardless of how Excel savvy you are, at some point, it becomes increasingly difficult to keep track of all variables and changes. That might be the time to think about implementing an ERP.

Things to know about ERPs/Inventory Management Systems:

  • There are many business/Inventory management solutions available on the market.  They can roughly be divided into two groups:
    • Accounting Software (ex. QBO, Xero) + Inventory/Sales management Software (ex. Dear, SOS) This solution allows for full integration between systems and creates a “mini ERP”
      • PROs: low cost, monthly subscription, relatively simple to learn, quick implementation
      • CONS: not full ERP, not much customization, some limitation on integrations with retailers’ portals; no robust demand/production planning capabilities
      • Best suited for companies with $500K-$30M in sales; small accounting and ops team
    • Full ERP (ex. NetSuite, Golden Finch) Accounting/Finance + Operations + Sales/Marketing + HR +etc => all under one roof
      • PROs: highly customizable to fit the needs of the business, superior reporting/dashboard/analytics, demand/production planning capabilities
      • CONs: higher cost, requires full professional implementations, requires extensive user training
      • Best suited for companies with over $10-15MM in revenue and growing, medium to large internal sales and operations team, dedicated daily accounting internal/external resource.

While choosing a solution for the business, it is important to consider all aspects, including integrations with systems that are already in place, implementation complexity, costs and length; immediate and future benefits, availability of internal/external resources for implementation and use of the system.

In my experience, for implementation to be successful and for the system to be a “help” and not a “burden” on the business and the team, it is very important:

  • To involve all stakeholders / potential users of the system from day one
  • To have a clear road map, including phases, milestones, and deliverables
  • Have a good understanding and plan on how to handle each area of the business during the transition period
  • Be open to engaging an outside professional consultant from the start.  It is much harder to “fix” things in ERP than to do them “right” from the beginning

If you are thinking about upgrading or implementing an inventory management system or ERP, consider reaching out to your CFO / Controller.

We work with a variety of systems and will be able to guide you through this process.

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6 Benefits of Outsourcing Accounting

Why outsource? Why now?

Cost-cutting through outscoring can save A LOT of money.

Plus, you get seasoned experts with years of industry experience without having to sort through not-so-great applications.

With a possible recession on the horizon, now more than ever, you need to save cash while still working with the best.

What services should you outsource?

As Forbes discussed in a recent article, there are several ways to discern if outsourcing will be beneficial for your company. Two of the biggest reasons to outsource include Specialized Tasks and to save on cost. Accounting and Financial Planning & Analysis tick both those boxes.

Ready to start saving?

If you’ve looked at the numerous advantages of outsourcing and realized it’s a good option for your business, now’s the time to make an action plan! Email us at to start.


Stay tuned to our Webinars News Page for the latest updates!
We’re here to support you!
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