Rebuilding FP&A to Restore Margins in a High-Growth D2C Brand

Strong revenue and rising burn aren’t opposites—they’re symptoms of the same thing: a financial system that isn’t built for decision-making.

The Context

A Series B D2C brand had recently raised $18 million from a mix of regional VCs and consumer-focused growth funds. With 40,000+ active customers and solid repeat purchase behavior, the brand was known for premium clean beauty products and had strong multi-channel traction via Shopify, Shopee, and TikTok Shop.

But under the surface, the financial foundation was unstable. Forecasting was done in spreadsheets. COGS actuals lagged weeks behind. CACs were softening, and headcount was climbing. Finance was a reporting function—not a strategic one.

The Problem

What made this urgent wasn’t the revenue line—it was the compression in margins:

• Gross margin fell from 68% to 56% in two quarters

• CAC increased by 38% YoY

• Overhead crept up with new headcount and external agencies

The team believed they were overspending on discounts. The board suspected overhiring. But the real issue was more fundamental: the company lacked a financial operating model that could explain, predict, or adjust for any of it.

Key breakdowns:

Area	Symptom	Root Cause
Gross Margin	Dropping without visibility	No SKU-level or channel-level COGS tracking
Forecasting	Inaccurate cash runway	Forecasts based on static assumptions, not live inputs
Reporting	Investor updates felt disconnected from ops	Metrics framed for vanity, not decision-making

What Solved It

Three structural changes repositioned FP&A from a reactive report to a strategic operating system.

1. Reconstructing the Cost Model

The business needed a new ground truth:

• COGS were broken down by SKU, channel, and fulfillment type (local courier, cross-border, retail pickup)

• A hidden packaging change was discovered that added $1.80/unit—never previously attributed to declining margins

• Discounts were mapped by channel and campaign, exposing oversized impact from bundling promos on D2C

A zero-based budgeting (ZBB) approach was applied to opex to ensure every line item was tied to an operating driver or output.

2. Building Rolling Forecasting Infrastructure

Instead of a monthly forecast updated post-close, a 13-week rolling forecast was implemented. It was:

• Linked to real-time inputs across sales, CAC, churn, and inventory

• Updated weekly via marketing, ops, and warehouse syncs

• Built to simulate "what if" scenarios across ad spend, SKU pricing, and inventory velocity

Weekly inputs fed into a dashboard mapping the full chain: customer acquisition → margin conversion → cash runway.

Key KPI Alignment Table:

Metric	Driver	Frequency	Source
CAC (channel)	Paid media performance	Weekly	Meta, Google, TikTok Ads
Contribution Margin	COGS + fulfillment + discounting	Monthly	Shopify + ERP
Cash Runway	Burn rate + forecast	Weekly	Model dashboard

3. Translating Financials into Decisions

With clean inputs and forecasting logic in place, scenario planning became credible:

• Three strategic plans were modeled: Base, Push, and Pullback

• Each forecast included expected runway, margin profile, and growth rate

• Teams were equipped to shift from fixed annual budgets to rolling trade-off decisions

Investor reporting was overhauled to show contribution margin and capital efficiency by initiative—not vanity metrics.

The Outcome

Within 6 weeks:

• Gross margin stabilized as the packaging cost issue was corrected

• The company opted for the Pullback scenario, cutting burn and extending runway by 9 months

• FP&A cadence shifted from month-end close to weekly cross-functional decision-making

Finance regained its role as the planning brain of the company.

Why It Matters

In high-growth consumer brands, financial planning often lags behind operational complexity. What starts as a spreadsheet eventually becomes a constraint on decision-making.

Great FP&A isn’t just about accuracy. It’s about visibility, responsiveness, and clarity around trade-offs. The right structure makes runway visible, margin recoverable, and scale manageable.

When margin starts slipping and growth becomes expensive, the fix isn’t a new hire or a new model. It’s rebuilding finance to operate at the speed of the business.