Mistake #7: Not Knowing Your Numbers

When you’re building a brand, it’s easy to get caught up in the creative side — packaging, formulas, marketing, design. But one of the most damaging mistakes founders make is not truly understanding their numbers.

It’s not glamorous work. It’s spreadsheets, invoices, and freight quotes. But if you don’t know exactly how much things cost — from raw materials to fulfillment — you’re flying blind. And when you don’t know your numbers, you can be selling a lot while still losing money.

The Hidden Danger

Early in my career, I looked mostly at sales, not margins. If the top line was growing, I felt confident. But I didn’t realize that every small cost — freight surcharges, storage fees, overfill waste, packaging upgrades — was quietly eroding profits.

I once had a product that looked like a huge success on paper. It was moving fast, retailers were reordering, and revenue looked strong. But when I finally broke it down by the unit — including labor, packaging, and fulfillment — I realized we were making less than 10 cents per item. And when one ingredient cost went up, that 10 cents disappeared.

That’s when I learned: revenue means nothing without margin.

The Numbers That Matter

1. True Cost Per Unit — Include everything: raw materials, labor, packaging, labels, inserts, freight-in, freight-out, storage, and shrink.

2. Gross Margin — Know what’s left after cost of goods. Aim high enough to cover marketing, overhead, and growth.

3. Fulfillment and Shipping Costs — Don’t underestimate the expense of getting your product to the customer or retailer.

4. Storage and Aging Inventory — Unsold stock costs you money every month. Plan for it.

5. Marketing CAC (Customer Acquisition Cost) — If you spend $15 to acquire a $12 sale,

   you’re not scaling — you’re leaking.

   

When you understand these numbers, you stop guessing. You start making decisions with clarity — like whether to invest in a promo, renegotiate packaging, or adjust your price point.

How to Fix It

1. Build a Simple Costing Sheet — One tab per SKU. Keep it updated every time something changes — ingredient prices, freight, labels, etc.

2. Recalculate Regularly — Costs shift all the time. Review quarterly so you stay ahead of surprises.

3. Understand Cash Flow — Profitable on paper doesn’t mean cash in hand. Know when money actually moves.

4. Plan for Scaling Costs — Growth brings new expenses — storage, staff, systems. Build them into forecasts.

5. Know Your Break-Even Point — Understand exactly how many units you need to sell to cover your fixed and variable costs.

The Takeaway

You can’t manage what you don’t measure. Numbers aren’t just accounting details — they’re your steering wheel. Without them, it’s easy to drift off course, even when you’re working hard.

In business, creativity builds momentum — but discipline protects it. Knowing your numbers keeps you in control, lets you grow intentionally, and turns chaos into strategy.

💡 Founder’s Reflection (Mayer):I’ve had products that looked great on Instagram but terrible in Excel. It wasn’t until I built a real costing system that I realized where money was leaking. Today, before I greenlight any SKU, I know my exact margin — down to the penny. Numbers aren’t exciting, but they’re what keep your dream alive.