In 2012, two Minnesota hockey dads found themselves unsatisfied with the sugary energy drinks that their children were consuming for sports. From their concern, they designed an idea for a healthier, more natural substitute to sports drinks and named their creation Aspire. Aspire worked alongside Flavorman to develop a formula and brand that would not only appeal and attract consumers but would be a healthy alternative to well-known sports beverages.
Unfortunately, the success of Aspire did not last long; the company went out of business in 2017. Even though you can no longer find Aspire on the shelf in your grocery store, there can be a lot of positive lessons to learn from the success and failure of this company. In the words of Flavorman owner and CEO David Dafoe, Aspire can teach us how to better manage and understand the cash flow within a company to uphold a product’s success.
Why did Aspire Beverage Co. come to Flavorman?
“When Aspire first came to us, they were very particular about a natural product; they wanted to compete in that marketplace. When you have a beverage category that is dominated by so many big players, there are always distributors who are looking for new products to dispense because big companies use their own distributors. They believed their idea was an opportunity in two ways: they could supply smaller distributors or distributors who didn’t have a sports drink, and they could make their product natural. We put the product together, focusing on the technical side of the business. We spent time looking for ingredients that would be typical for a sports beverage, plus a little bit more.”
“Aspire unfortunately may not have paid attention to their cash flow well enough. The business grew so rapidly that they quickly ran out of cash. They manufactured their sports drinks to supply distributors but were not paid quickly enough to satisfy cash flow management. Eventually, this caused the company to run out money and eventually need to shut down production completely. Moreover, energy drinks are different from other spirited beverages because they require a lot more input costs than just distributors. Costs included packaging, bottling, ingredients, shipping, salaries, and other miscellaneous expenses. It is important to keep these costs in mind when you are selling a product so rapidly.”
What is your advice for managing cash flow?
“It’s critical to pay attention to accounts receivable. Within the energy drink market, there is more competition and working parts that need to be managed in order to sell a product and maintain the flow of money. Often times, start-ups get to a point where they either borrow money from banks or find investors. It is important to get to know investors ahead of time so that they get know the business and their product vision. Start-ups find that they have one particular thing in common with investors, and that is money. As it turns out, brand owners don’t know exactly what investors want out of the relationship. Investor relationship can be tricky, but it is important to establish what both parties want. If not handled properly and communication is not effective, these relationships can quickly become toxic.”
What was Flavorman’s favorite part about working with Aspire?
“Aspire was open to looking at new ideas and new ingredient concepts. They didn’t approach Flavorman with strict guidelines and product demands. They told us their idea and their mission and asked for advice about how to make their product better with creative flavors. They came in with a concept and were willing to listen so that an end product would be the best it could be. Not all clients are like this; working with many different types of companies Flavorman can better learn how to manage relationships and give clients what they want.”