I Was a Buyer for Target and Watched Many Brands Go Bankrupt. Here's the Dark Side of Landing on 10,000 Shelves. Founders often think about retail benchmarks all wrong. Once they realize their mistake, it's too late.

I feel bad saying this, but I have accidentally bankrupted many companies.

I didn't mean to! I was a senior buyer at Target, which meant that I was one of the people responsible for identifying new brands, getting them onto shelves, and (hopefully) setting them up for success. I tried only working with brands that were truly ready for retail, but sometimes I got it wrong. Founders might have said they were ready and showed me evidence that they were ready, but they were not actually ready. I'd put them on Target's shelves, and the impact would destroy them.

This is the stuff that founders never see. It's what I want you to know before you make the same mistake.

I've spent decades working in retail, and I see the same problem repeatedly: Many founders think about retail all wrong. They view making it into a big store as an accomplishment — as if getting onto 100 or 10,000 shelves means victory. But it does not. Getting onto shelves is the easy part. The hard part is everything that comes next.

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I'm not at Target anymore. These days, I get to see retail from two perspectives: I'm the vice president of food and beverage at The Genesis Company, where we help brands navigate the digital and retail landscape. I'm also the cofounder of a green smoothie mix brand called Switchback Foods, which aspires to be on retail shelves nationwide — but only when we're ready.

As a founder, I approach retail very, very carefully. You should too. Here are the three biggest problems to look out for.

Problem #1: Cash flow realities

Retail costs money. A lot of money. Like, truly, much more money than you think.

Here's a cautionary tale to explain it: When I was at Target, I looked at a ready-made meal brand. They seemed great for our shelves, and they insisted that they were prepared for retail. They handled their own manufacturing, and I went down to visit. Things looked good.

We gave them a test, putting them in 30 stores. They were excited. We sent them the purchase order (PO). They delivered the product. And two months later, they went bankrupt.

So what happened? Simple: They didn't have the cash.

When a retailer sends you a PO, you need to produce and deliver a lot of product — probably more product than you've ever delivered before. That's expensive, and it happens on your dime. Many companies stretch themselves thin or take out a loan, thinking that they only need to cover the PO. But that's not true. Once the product is delivered, a brand needs to slam the gas on marketing (which is also expensive!) to make sure the product actually sells. A retailer will not do this work for you.

This is how brands end up in death spirals. A retail order stretches them thin. Then they don't have the money to drive purchases. Then the retailer is disappointed and reduces the amount on the next PO. Now the company has its cash all tied up in inventory it can't sell. And then it collapses.

Do not fall victim to this. Manage your cash wisely, and make sure you have enough to cover all the expenses of retail — which are a lot more than you think.

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Problem #2: More and more stores!

Retail can feel intoxicating. If you get into 100 stores, you immediately want to get into 100 more. But I urge you: Resist that feeling!

We talk about this a lot at Switchback, my smoothie mix brand. We recently landed in 400 Sprouts stores, and my cofounder — who doesn't have retail experience — excitedly asked me, "How do we get the next 400?!" I told him to slow down, because right now, we shouldn't want another 400.

Instead of increasing our store count, we need to increase our store velocity. That means focusing on the stores we have, increasing our marketing and activations in those markets, and driving sales, sales, sales. That's what will make Sprouts happy, and that's what will enable us to expand without falling into a cash death spiral.

Here's a related mistake: Founders often start by pitching Target. They want to swing big and go national immediately. Please don't do that! You're probably not ready — and if you blow it with a retailer like Target early, you may never get a second chance.

Instead, start in your own backyard. Approach local retailers. Succeed there, then go regional. Build up experience and evidence. Develop the infrastructure you need. You should do this for five or 10 years before attempting to go national.

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Problem #3: Pitching the wrong way

Most founders don't know how to pitch retail buyers. So here's what to know: Buyers don't care about your product or story. They want numbers.

I saw this problem all the time at Target. Founders would tell me how delicious or ingenious their product is, and they'd rely heavily upon their brand story. I get it — that's what you tell consumers! But it can't be what you tell buyers, because buyers measure success differently.

As a buyer, I want one thing: I want product that sells. That means I care what customers think, and I want to see evidence of it — like data about where your brand sells, and what demographic it reaches. I want to know that your customer is also my store's customer.

Here's an example: The typical Target shopper is a middle-income family. Sometimes, a founder would approach me and say something like: "Our brand is primarily consumed by families that have a household income of $70,000, and we're selling especially well in the Sun Belt, and here's my consumer research and e-commerce sales data to back that up." Then they'd show me their consumer surveys, and Shopify or Amazon data with geographic trends. That stuff is very convincing.

When you make the buyer's job easy, you're way more likely to get in. Simple as that.

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Here's the bottom line: For all its complexities, retail is really about simplicity. You need to know what you're selling, who you're selling it to, and how you'll get it to perform. You will be constantly tempted to go bigger, and that's when you'll fail.

This even applies to the SKUs: When I was at Target, founders would pitch me 20 different SKUs at once — or they'd get on shelves, and then furiously pump out new varieties. Don't do that! Stay focused. Every time you expand something, you introduce operational inefficiencies and distract from building a strong brand presence with a core product lineup.

I'm living this advice every day. In theory, my brand Switchback has a tremendous advantage — because I know retail buyers everywhere! I could easily get us a meeting at places like Whole Foods, Costco, Kroger, and Publix. But I won't call these people. I won't ask for meetings. I don't want to be on their shelves…yet.

Instead, I'm running a playbook that works: My cofounder and I are building our brand steadily, focusing on a few hero SKUs. We've invested in e-commerce, where we've refined our marketing and positioning, and we've identified the markets our products perform in the best. We pitched one major retailer (Sprouts), landed those 400 stores, and will now focus on making those a success — driving more sales there until Sprouts is excited to give us more, and we know that we can handle it. Then, perhaps years later, I'll make the call to those other retailers I know.

This kind of patience isn't easy. But I know what the end result is, because I've seen it for thousands of brands: When you play things right, you'll fly off the shelves.

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