This article originally appeared on CEOatLarge.com here on September 15, 2021

There is so much information coming out about inflation and labor shortages. Most founders I know do not have supply agreements in place for their ingredients.

Even if you have a contract in place, will your co-packer be able to honor it in the face of significant cost increases?

Hear me out: consider taking a cost increase, even if you think your brand is okay.

Really.

Most emerging brands are already undercapitalized. If your brand takes a hit with the cost of jars, mylar, cardboard, sugar (or nearly every ingredient and input) and the distributor says NO! they expected 30 days’ notice – how will this impact your bottom line? Will you make payroll? 

I’m throwing this at you now because it’s very likely to be thrown at you in real life again and again (if it hasn’t already). The cost increases have already happened, and they aren’t going to stop for a while.  Be ready to change ingredients, too: can you change almonds to pecans if you have to? You might be ready to say “Of course not!” but what if you do have to?

Anticipate more of them and protect your business. Have the reserves now so that when you’re hit by another increase in expenses, you can purchase what you need to stay solvent, be strategic, and most importantly: continue to ship product.

With grocers being hit by many increases, now is your chance. See what the rest of the channel is doing and make your move intentionally and proactively to preserve and protect your business.

Here is a WaPo article about the grocery channel’s inflation.

Here is an investor talking supply chain and food on his YouTube Channel.