The cash flow crisis

Look, I'm very passionate about this concept.

Most creators are cooked.

Not because they don't have audience.

Not because they can't make good content.

They're cooked because they fundamentally misunderstand what it takes to run a physical product business.

The biggest challenge with any product specifically that's physical? Cash.

Surprise.

You look at something like Feastables - Mr. Beast's chocolate brand.

250 million in retail sales.

Sounds incredible, right?

But that gross profit is only 25 million.

Pre all their staff costs, marketing activity, and everything else, maybe you net five or six mil.

The sheer effort, the scale of audience, everything that went into getting that 250 million in sales - and that's your ultimate net.

The amount of funding you need just to stay alive is staggering.

With creator brands like our alcohol brand XX Vodka or Best Cereal - you launch with huge demand.

Expectations go through the roof.

2 things happen that kill you:

First, the expectation of how much retailers will buy goes to an unhealthy level.

They're not from this world, so they don't understand the reality: yes, sales spike initially, but they will come back down.

You have to manage that without overbuying and getting stuck with massive inventory.

Second, to satisfy that initial demand, the costs are insane.

You're supporting retail media, sponsorships, everything needed to keep retailers happy who bought massive amounts of stock expecting sales to sustain forever.

The reality?

It goes up, then it goes down.

That's the cycle.

Cash is the absolute fundamental lifeblood of retail businesses that have tiny margins and huge costs attached.

You have to support them long-term, not just through the initial hype.

Want to know how brutal it gets?

We're paying £8 a bottle just to get our vodka out of a bonded warehouse.

That's before it even reaches a customer.

For every big order, you're paying hundreds of thousands - sometimes millions - just to get product out of the warehouse overnight.

This is why when you go to a major CPG company, they're spending 15 million standard as a budget just to test a new brand.

Now you see why.

Take something like cereal - those two-pound boxes on the shelf?

The margins are so low you're never going to make enough to satisfy growth expectations from the product alone.

So who's going to pay the bill for everything else?

That's the question most creators never ask before they launch.

The bottom line is…

Most creators think audience size equals business success.

But cash flow kills more creator brands than lack of followers ever will.

Before you launch that physical product, ask yourself:

Do I have the funding to support not just the first viral moment, but the sustained infrastructure this business actually requires?

Because if you don't, you're setting yourself up to get squeezed until there's nothing left.

Want to hear the full conversation about why most creators fail at business and what separates the winners from everyone else?

Click here to watch me chat about it with Rory Sutherland and Elfried Samba on the The Bottleneck Podcast!

Remember, the creator mindset is all you need to grow 🌱

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