The Real Costs of Retail Expansion: Fresh Salsa in 200 Stores | Michael Salman | Cali FoodStar, Inc. | Profits on Purpose

Episode Description

Michael Salman went from managing tours for Usher and LL Cool J to the cannabis industry, and now he's disrupting the fresh salsa category in major retailers. As Co-Founder and COO of Cali FoodStar, Inc., Michael has landed his fresh salsa brand in over 200 doors in just six months, with major chains on the horizon.

In this episode, Michael pulls back the curtain on the real economics of retail expansion. He shares how produce prices can triple overnight (peeled garlic went from $42 to $120 per case in six weeks), why slotting fees can cost $40,000 before selling a single unit, and how buyer relationships can take 4-6 months to mature—or require waiting another year for the next category review.

But beyond the challenges, Michael reveals the strategic thinking that's driving his rapid growth: starting with a geographic nucleus instead of going nationwide, using sales data to dial in margins before scaling, and leveraging relationships built across music, cannabis, and CPG to open doors others can't access. Whether you're launching a CPG brand or scaling an existing one, Michael's boots-on-the-ground insights into commodity pricing volatility, production planning with perishables, and creative financing strategies will give you a realistic roadmap for retail success.

Key Topics:

• Transferable skills across unregulated (cannabis) vs regulated (CPG) markets
• Managing commodity pricing volatility in fresh food production
• The true costs of retail: slotting fees, trade spend, and marketing dollars
• Strategic geographic expansion: nucleus approach vs shotgun strategy
• Building buyer relationships without being pushy
• Financing options: PO financing vs invoice factoring
• Production planning and demand forecasting with limited shelf life
• Bootstrapping to 200 stores in 6 months

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Listen to the full episode to discover how Michael's experiences can inspire and guide you on your entrepreneurial journey. Don't forget to subscribe for more insightful conversations!

I hope you enjoy this episode!

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– Nate and the Profits on Purpose podcast team

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Transcript

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00:00 Introduction to Michael Salmon's Journey
02:12 Navigating Industry Transitions
05:24 Challenges in Rapid Growth
11:31 Financial Hurdles in CPG
15:14 Strategic Go-to-Market Approach
19:36 Regulated vs. Unregulated Markets
24:24 Sustaining Growth Through Experience
25:11 Managing Financial Operations Effectively
27:29 Forecasting and Production Planning
31:30 Strategic Goals for 2026
33:36 Financing Strategies and Considerations
35:03 Knowing When to Raise Capital
42:08 Advice for Future Entrepreneurs

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Nate Littlewood (00:05)
Welcome back to Profits on Purpose, the podcast for e-Comm and CPG founders who are looking to scale their businesses, both profitably and purposefully. I'm your host, Nate Littlewood, from Future Ready CFO, where I help seven figure Ecom and CPG founders make confident, data-packed decisions that drive profitable growth, all while helping them sleep better at night. Anyway, today's guest on the show is Michael Salmon.

who's the founder of Cali Foodstar and the Dliciosa Salsa brand. What I find really, really interesting about Michael and his story is I guess the path that he took to get where he is today. So Michael started out in the music industry, managing tours for bands like Usher, Intink and LL Cool J. After that, he went on to spend some time in the cannabis industry.

And nowadays he's disrupting the fresh salsa category in major food retailers. In just six months since launching, he's managed to get in over 200 doors with two major retailer chains pending on the horizon. So Michael's Journey is really a masterclass in pattern recognition across industries, building businesses in unregulated markets and leveraging relationships to accelerate

growth in the hyper competitive CPG space. Michael, welcome to the show. It's so great to have you here.

Michael Salman (01:35)
Thank you so much. It's nice to be here too. I appreciate this.

Nate Littlewood (01:39)
Of course, of course.

Michael Salman (01:41)
pretty grandiose introduction of me. Thank you.

Nate Littlewood (01:44)
Well, you're a pretty grandiose man. I wanted to do you justice. Why don't we get started with the background story? Because I got to say, I don't come across many people who've had quite the journey you have to getting here. Going from the music industry to working in the cannabis space for a period to now working in the CPG space, what's the common thread that kind of ties all that together?

Michael Salman (02:12)
Yeah, you know, it's interesting. I never really thought about one specific item that kind of led me to transition through everything. think initially when I was going through all these different industries, I was kind of chasing what's next. What's the biggest thing? What has potential and longevity and massive growth?

but people start to like you, they start trusting you. And then, you know, when you speak with a little bit of knowledge and you're there and you're consistent. If you execute under pressure, that, that you get more opportunities, you know, the growth, the growth comes from there. People want to keep you on their team. They want to keep you by your side. They kind of want to.

you know, work with you and give you an opportunity to see where your mindset is and how this can grow. And I think that's what kind of allowed me to pivot into these different industries. I'm just big on relationships and, you know, building friendships with people. And I'm a very, I put out what I like to get in. So I'm very like trustworthy. I'm very loyal.

I'm always easygoing, always try to be positive and happy. And I think it's really important to bring that to your workforce, no matter what you're doing. And, you know, with that, I think the biggest thing for me is, is really also having the discipline, the consistency. And when you surround yourself by these individuals that are kind of well seasoned within that workspace, you kind of learn.

of their operation skills and build on that. So I was able to kind of merge all of that and grab on to all these little important aspects there and kind of make it my own and be able to take that with me everywhere I transitioned to.

Nate Littlewood (04:15)
Interesting. It sounds like basically what you've become very good at is just being a really nice guy and being able to show people that you can deliver under pressure. Is that kind of at the core of it?

Michael Salman (04:30)
100%. I know this might sound a little crazy, but I thrive in chaos.

Nate Littlewood (04:37)
The CPG space is perfect for you then.

Michael Salman (04:40)
Yeah, it is. It's rewarding, but it's draining at the same time. There's so much going on and it forces your brain to really just be creative and keep moving forward and just build, you know.

Nate Littlewood (04:55)
We first chatted, I don't know, maybe two or three months ago about doing this podcast. And at the time you told me that you'd just gotten into 30 stores. you just told me off air a moment ago that you're now at 200. it sounds like you are moving along at a pretty incredible clip here. often in the CPG space, when things are moving that quickly, there's, you know, unexpected problems and challenges that pop up.

What are some of the biggest surprises that you've uncovered so far about moving so quickly in the CPG world?

Michael Salman (05:31)
Yeah, you know, for me, when you're in the thick of it and you're in the trenches, so to say, and you're bootstrapping everything on a day to day basis, feels aside from from the stress and the chaos and all that stuff, it just it feels slow from the from inside because everything I noticed that everything just lags. Whether you're forcing for your packaging.

You know, they initially tell you, okay, we're about, you know, you need to plan for two to three weeks out to get your stuff. Okay. So you put all those plans together and then you come back a week or two later, you're ready to order. And then something happens and they say, okay, we're six weeks out now. One of our machines went down and all that. So that gets extremely challenging. I didn't expect that to be the case.

with almost everything like moving forward. That's, know, having to navigate around that, have to like overcompensate for time now just in case, just to be on the safe side. So I order everything early on and all that. And I think the other part to this is the building relationship aspect with the retailers, the buyers, the buyers are the decision makers.

It doesn't matter if you tell me, man, I know the owner of this one retail, I'll get you directly to speak to him. Sure, that might move the wheel a little bit. It might get you through the right channels to have these conversations, but ultimately it's up to the buyer. And I think building relationships with these buyers is just taking a little bit more time than I thought, than I expected. Yeah, I mean, I'll you an example. I have one retailer,

I won't say who, but large footprint there, about 225 locations here in Southern California. And it's a nice retailer. initially when I went in there to present, first of all, it took me like two months to get a meeting and got the meeting presented. And then you have to wait for all these approvals. By the time you get a potential yes,

It can go four five, maybe even six months. Yeah, it's a long time. Yeah, it drags out. They do these category reviews. if you're on that list to go through that category review, good. And if you're not, you got to wait for the next category review, which might take another year. Right. And that's been a challenge of building relationships with these buyers.

and also not pestering them and getting to the point where you're too needy, too pushy, and then turning off and say, okay, this guy's too much. Put him on the back burner. That's easy to happen. So I'm learning a lot of that. I didn't think that challenge would be the way it is, but how I've been able to luckily break through is I have a head of business development who's been in the industry for

Nate Littlewood (08:33)
Yeah.

Michael Salman (08:56)
35, 36 years. This guy knows everyone. He's got a great reputation, great relationship. That's been helpful to me to open up these doors and to really get in to actually just be seen and to have a take this meeting and go there. then that's been work in progress. It's been moving. It's great. But one big surprise.

Nate Littlewood (09:22)
Yep.

Michael Salman (09:25)
is the spend on, on, yeah. Once you get into the, the retailer. So the marketing dollars are, you know, demo ads were, whether it be online or through paper print for however the retailer does it and in store demos for sampling. everything is so cash intensive. yeah.

Nate Littlewood (09:30)
traits meant.

Michael Salman (09:54)
And that comes fast, even if they tell you, okay, you're ready to go. When the moment you get the green light, you're ready to go. I've noticed that you better have product, you better be ready, and you better deliver on time because that part comes fast. The onboarding is slow with getting your insurance policy, you know, fixed to their requirements and...

filling out all the additional paperwork, working out your deal points of your retailer margin and what they need, your distributor margin and all that. That stuff takes time, but then once they green light you, the spend comes heavy.

Nate Littlewood (10:40)
Interesting. there's a lot of things that are kind of working against you there. So you just mentioned these relationships and starting off the sales and getting into the stores is a slower process than what you had expected. You mentioned that there's a significant amount of sales spend.

Michael Salman (10:42)
Wait.

Nate Littlewood (11:03)
I, you know, the costs of being on these shelves is maybe a bit higher than what you thought. And there's an expectation that when they do say yes, you're going to be ready and able to jump and move very, quickly. In other words, you kind of need to have your ducks in a row with respect to the inventory and having the product ready to ship. Tell me about some of the cashflow and profitability challenges that that has presented for you.

Michael Salman (11:31)
Yeah, so I'm constantly dialing in my numbers for packaging, let's say, and supplies. So we're a fresh salsa company. So everything we use is fresh produce. don't have anything that's canned or frozen. Everything is fresh. a couple of the financial challenges there is that

The produce division is kind of like commodities. They change pricing every week, sometimes daily, depending on the product. So sometimes there's a spike. I'll give you an example. Peeled garlic. I didn't account for this, but at the time I was getting a case of 30 pound case for peeled garlic. cost me about $38 a case. Sorry, $42 a case.

Well something happened with garlic. I don't know what the price went from $42 to $67 in a matter of a week two weeks later it went to $87 And then about a month later after that month and a half later I went to $120 a case for a 30 pound pack

Nate Littlewood (12:48)
Holy smokes.

Michael Salman (12:50)
And I have a

lot of garlic. yeah, now your pricing is kind of flipped. It's upside down. Now you're trying to save money on other angles to try to make up for that. And then, you know, on top of that, the marketing expenses are slotting fees.

Nate Littlewood (12:54)
And we are Salsa Company.

Michael Salman (13:16)
Always trying to negotiate slotting fees. In some cases, I didn't think they would be so high. Some retailers are... The larger retailers will charge you per SKU. For example, I'm talking to right now told me that it's going to be a minimum of 10,000 per SKU. I have four SKUs. That's $40,000 off the top.

Nate Littlewood (13:34)
Yeah, before you sell a single product, I guess.

Michael Salman (13:36)
Yeah, before you even get in there. know, and, these are the things I didn't account for. So I'm having to adjust constantly to see where I can say it, because ultimately I'm in the penny business. You're, working off of small little nimble margins here and there, you know, and there's no really written way to hedge ahead of this and get this thing dialed in exactly.

The only thing I'm trying to dial into the point is my production, my cadence production timing so that I don't lose product. don't overproduce. I don't over purchase and lose money there. Those are the important factors that I'm working on so that I can end up stomach the marketing spend that's coming with this.

It's there. It's a standard. There's nothing you can do around it. You can negotiate here, there, and save some money with them, because they're understanding. But ultimately, some margins are going to move with them.

Nate Littlewood (14:43)
Okay. Okay. So you were already in 200 doors. There's been some big surprises on costs and timeline associated with all this. It sounds like you've got a whole world of challenges with respect to raw materials costs. I'm curious how you're thinking about the go-to-market strategy here. What are you thinking about in terms of, you know, the hierarchy or order in which you're, you know, approaching these different parts of the retail industry?

Michael Salman (15:14)
Yeah.

I think when I talk to my partner and my advisors about this, initially, you know, we've had some really good resources and contacts that were early on that were open to saying, hey, send us some samples and come in here. Great. However, those retailers are already nationwide retailers, probably 500 plus doors, thousand doors, whether like Albertsons or Sprouts.

And when you get those opportunities and the buyer is interested to talk to you, you kind of want to take that meeting as quickly as you can.

Nate Littlewood (15:56)
You don't want to say no to him I guess.

Michael Salman (15:58)
Yeah.

But the thing is, think instead of us doing the shotgun strategy of like, we want to talk to everyone and let's just go to everyone. I think we kind of wanted to start our nucleus kind of like small and our nucleus would be like, we're located in Southern California, Los Angeles. And so we said, let's start in Los Angeles. Let's get these, let's get a distributor to get us in a bunch of independent retailers. Let's also get.

Nate Littlewood (16:16)
Yep.

Michael Salman (16:28)
these kind of mom and pop owned supermarkets that are chains of like eight locations 13 locations at a time so it's like let's start with those let's get our footprint there let's get some sales turning let's check the sales data on how fast that's moving how much of it is moving and get a better stronghold on what the margins are going to look like

what they require. Cause at that point, once you do, you can kind of use it as like a blanket, price point to move forward that every retailer is essentially going to be around that price point. So you need to fix your margins to be at that price point. So we started doing that and we're able to do in-store demos, which are moving the sales and bringing notice to, this brand.

And after that's been gaining some success for us here, we started slowly going out to the larger retailers, but again, they're in Southern California. so, you know, we're not shotgunning to larger nationwide. We want to go to nationwide, but I think if we focus on this first and build here and kind of say, okay, we got a pretty good flow going in Southern California.

Now we could start expanding in other territories. I think that's going to be more feasible, a little bit more to digest a little bit better. So that's kind of where we are at right now. That's our approach is just to take it step by step because one factor we really need to pay close attention to on this is production capacity and capabilities and timing of the production.

Yeah. Cause you can get one retailer quick and all of a sudden you can be at a full truckload of production that you need to build on. Can we do it? Do I have the resources? Absolutely. But now I've scheduled that timing on production, ordering materials and everything else. We don't want to just go there too fast. So we're trying to just kind of take these ladder steps to go up there versus like, I want to jump to the top.

Nate Littlewood (18:50)
Yeah, pretty smart.

Michael Salman (18:52)
Yeah,

like it's just bootstrapping it through very, very organic approach to this, you know, get excited, you know, you get excited and, you.

Nate Littlewood (19:02)
They're

fun problems to solve. There's no doubt about that.

Michael Salman (19:05)
Yeah.

Nate Littlewood (19:07)
Speaking of problems, I'm going to change direction a little bit here. You've come into this space from the cannabis industry previously. And for those who don't know, like cannabis is, you know, a fairly unregulated market and you're now operating in the CPG space, which is highly regulated. Can you talk about what the implications of that are?

for someone running a business like yours.

Michael Salman (19:41)
As far as the regulation aspect of it or how the transition kind of happened from the cannabis to the CPG.

Nate Littlewood (19:50)
I guess I'm more interested in a comparison and contrast of what it's like to operate in regulated versus unregulated markets.

Michael Salman (20:00)
Yeah, you know, it's a good question because that also tied into helping me build on skill sets that I didn't know I have. with that, so with cannabis, when we first got in there, I first got in there, I think in California, it was in 2016. 2016, they started announcing these small licenses for

retail manufacturing distribution in cultivation and that was very new. Infancy stages, nobody knew what they were doing and people still yet act like they knew what they were doing but it was there was nothing there so I think for that a challenge was navigating through legal. Making sure that you don't do anything outside of the norm to.

get yourself in trouble, get your business shut down. It's just so many, making sure your taxes are paid properly through the right channels. If not, when at the end of the year it comes, you're going to be slapped with so many fines. There was just so many learning curves to this. Alcohol or even the food space and already kind of had those aspects to really know how to navigate.

like say operations or finance or whatever, or distribution within those already well-vented sectors, they came in here and for some reason, a lot of people I saw did not understand how to work this product. So I was sourcing products, whether it be like a vape pen or the packaging, I sourcing everything from China. So I was getting pricing dialed in.

I was working with designers, getting all the timing aligned for all this stuff. And that was chaos. It was just a mess. And once you got to hold on these things, you write down your processes and you know who your vendors are and you just kind of keep going back into those vendors and you work with them and you dial in little by little. Well, I took all of that, not knowing I built

a pretty solid skillset through there of operations, you know, building under something that's so unregulated. And when I came to the CPG space for food, I this industry has already been around for forever. And, know, it's very regulated. Like you said, I took all those skillsets and applied it here. I think everything for me came natural. The only difference is, that now I just have a different product. That's just the way I'm at it.

Same exact execution skills, a different product. But what I'm happy to learn here in this space than I did previously in cannabis is that how to navigate through the industry without upsetting anybody while building relationships, it's a tight knit industry. It's a tight circle. Reputation is everything. You can get blocked out in a given

moment for doing something stupid. you know, but everything else is building under the same fundamentals. think industry changes, but fundamentals don't change in my opinion. You keep the same fundamentals, you can continue to build on those fundamentals within any division. You know, one thing I'm learning here is

It's a big learning curve for me is understanding how the retailer likes the timing on things, how you have to set things up for delivery. All the lingo, the terminologies for different requirements that they have. That's been more so the learning aspect for me here. So it all translates through and it's been working out pretty well, I think.

Nate Littlewood (24:16)
Yeah.

Michael Salman (24:24)
I think that's why I've also been able to kind of sustain growth a little bit quickly is because thank God I've had previous experiences that have, that can take me here to say, I don't need anybody to hold my hand. Just open the door for me and go in and do it.

Nate Littlewood (24:41)
That makes a lot of sense. makes a lot of sense. So I'm curious for a guy with that sort of background. mean, it sounds like you're very comfortable with SOPs and developing systems processes and so forth. Going back to our earlier topic around all of the challenges around, you know, margins, profitability costs, inventory, you know, managing cash flow and so forth. How are you managing to keep that side of things afloat and working?

Talk to me a little bit about some of the tools and the systems that you have in place for managing purchase orders, cash flow, demand planning and so forth.

Michael Salman (25:21)
So that's a little bit of a growing pain. And what I'm doing right now, for example, just because we're still in the early stages, mean, our revenues, I'm not, you know, 25, 30 million in revenue just yet or anything like that. So I'm using simple things like QuickBooks. I all my accounting in QuickBooks. I check everything on a weekly basis. I check my...

My purchase orders are coming in. I track for timing. I check my inventory on a weekly basis. And what I did was basically I created a separate spreadsheet for inventory management. And that's accounted kind of in real time on a weekly basis and sometimes every other day basis, depending on how many cases go out, whether it be for samples or full order.

I translate that back into QuickBooks at the end of the week. And then I have a different spreadsheet with my business development head. And what we do is we store account for that retailer we're talking to. I have the contact visual, and then we put our notes at the end of it to say, we spoke to this person at this time. They want us to deliver samples on this day. We need to follow up with X, Y, and Z.

We track that weekly. then we continue to just kind of hone in on that stuff. then for me, as far as the daily tasks and the reminders, I use things like Todoist and I link that with my calendar. So I put everything on calendar, follow through there. And I have so many systems, but they all kind of intertwine.

Nate Littlewood (27:19)
It sounds like it, yeah.

Michael Salman (27:21)
Yeah, it helps keep me on track of things so that I don't slip through. I keep things on Apple Notes to go.

Nate Littlewood (27:29)
So I the old school methods. hear you on that one. we're putting all of these different inputs together, right? Like you've got these complicated sales relationships to manage. You've got uncertain costs. You've got all of this production that you need to plan for and get organized. Is there like cashflow forecasting going on or profitability margin forecasting that you're using to make sure that you're making the

right decisions as you navigate through this.

Michael Salman (28:02)
Yeah, you know, we so I talked to almost on a daily basis, a few people. So my partner, we we just talk about strategy kind of updates and what's going on. And then I talked to my business development and then I talked to my what would I label him as my my food scientist, my head of like

Production food production. So what I do is we kind of forecast and I just actually did it earlier this week What we we forecast for? How many retail locations are we currently in and I go back to the retailers every month and I ask give me the sales data for the month and I compile all because they will share the sales data with you. They want to show you what moving

And so I take that and I say, okay, you know, out of all these guys in total, we have a movement of say, I don't know, 35 cases of each flavor for the month. just say. So what we do is for my next production run, I go back to my warehouse. take a look at my inventory currently with the date codes and to see how far the date code is out. And then what I do is I plan for.

the next production based on the cadence that was already given to me from the movement from the retailer. So I can say, okay, let me see, we sold X amount, I'm gonna be producing in two weeks. So I think they're gonna be running short two weeks after. So what I'm gonna do is I'll do things like, okay, I think we should make 150 cases of each flavor.

That way I have some inventory and when the orders come, it's not a problem. I can move through it. So we're forecasting that way on the on the orders. We're not we're not forecasting essentially how much money we're going to make because those numbers are already there already there. You have your your cost and what they're paying you and you know your cost as I mentioned earlier fluctuates little by little. So your numbers.

your percentages are going to move around a spike of 5 % or so. It's not detrimental to your margin. The main thing here for me is really just dialing in on the production output and the timing. That's kind of how we've been approaching it. And so far, it's been good. And in some cases, we'll get a spike.

Super Bowl is coming around. I know I'm probably going to have a spike there because I'm putting out discounts, incentives to do that. So what I'll do is I'll probably overstock a little bit. Small things like that. That's mainly where we're at now. mean, once we grow later, I'm pretty sure that system is going to have to change and really be a

or efficient. But so far, that's working.

Nate Littlewood (31:30)
Okay. Good. Good. I'm glad to hear it. Glad to hear it. So looking ahead into 2026, what are some of the things that you're trying to achieve this year?

Michael Salman (31:45)
Definitely get into more retailers. That's not going to stop. I think I'm really trying to, a few things, I'm trying to dial in with some additional production facilities because I do a co-packing method. I don't own my production facility. So I'm trying to have a secondary backup for a larger output.

Nate Littlewood (32:13)
Okay.

Michael Salman (32:16)
I think the main thing it's important for me to try to focus on and really do this well is production timing, the output, and how do we move through velocity without potentially overspending on marketing. Because you can easily go...

go ahead and say, yeah, I'm going to move the volume and I'm going to go do more in-store demos and more of all these things. But now the spend, it doesn't make sense for how much money I'm spending there and what the return is going to be. So we're trying to figure out how can we do that organically? think the most important thing is for me to just track timing on the cadence of production and the output. That's been a real challenge for me.

Cause at a smaller scale, it's almost impossible to really land and nail exactly what to produce so that you don't have waste and things are not going be out of date. That's something I'm learning as we're going along and I'm working on. Yeah. Now I hear you. Interesting.

Nate Littlewood (33:36)
So how have you financed

Michael Salman (33:40)
or

self-funded and bootstrapped and my partner and I, you know, he's been a blessing. So he's been able to, he's in the industry as well. So he's been able to really help out with this. And we also have access to PO financing, know, purchase order financing if we need it. Reverbal terms, good friends.

So I don't really, sorry, I don't really have to jump through too many hoops to get things done. If I get a larger PO, that's fine. And throughout all of it, I've just been able to save a ton of money from previous experiences on sourcing. And in some cases you get like 30 day terms. So it's pretty good to net 30 is helpful. Cause when I've got a little bit of

finances coming in from the POs, then they can replenish and do it that way. Yeah, no outside money, no money raised just yet. Eventually, I think we might go down that road eventually, but we're trying to keep everything close to the chest for the most part.

Nate Littlewood (34:55)
sense, makes sense. How do you think you'll know when it's the right time to raise money and bring in an investor?

Michael Salman (35:03)
I think from my point of view, I'm looking at it as if, let's just say I land a larger retailer of, you know, I'm a real big fan of like Whole Foods. I'm a big fan of Sprouts and Albertsons. And I think they have some really good programs to help move this category, the salsa category. I think once we get into those plays there,

In order for us not to strap ourselves too tight I think I'm gonna start exploring at that point and those might be specifically like PO financing versus bringing on a partner because PO financing is just a net 30 and I would say I'll cushion it to say net 45 and What I'll do is say, okay. I just got a half a million dollar order for example

Let me get that in and we'll give you X amount of percentage on the money and you'll get your money back in 45 days And if that works well, we can go ahead and keep kind of rolling that in that's that's the whole light And I've got I've got a bit Committed already that people are like you just tell me when and you come by and pick up the check. So it's it's to get

Nate Littlewood (36:20)
Doing PO financing through friends and family?

Michael Salman (36:24)
Yeah, through friends that are in the industry that really understand how the industry works. Because it's a little bit more challenging to get, in my opinion, get PO financing from somebody that's not in the industry. So for example, I hang around with a lot of friends that are in private equity, investment banking, and hedge fund management. They're willing to do it, but they really would just want to get in and dissect way too much.

of the business and understand more and numbers and I'm like, all right guys, it's pretty simple in some sense, it's pretty straightforward, but if I need those guys, I have those guys as well.

Nate Littlewood (37:05)
Okay, that's a nice nice to have that in your back pocket. Yeah. Are you also doing invoice factoring on the other end to bring forward the cash receipt when you actually ship the stuff?

Michael Salman (37:19)
Yeah, I I'm definitely waiting for the PO. Waiting for that when the order comes in and then I'm showing the investors, know, when that time comes that, hey, this is the invoice, this is a cost, everything's transparent. You know, I'll keep it in a book and show this is what it is and this is what your percentage return is going to be there. So, you know, I can kind of hedge

Ahead of time on what's potentially going to be like if I land if I land a really large retailer what my forecasting is going to be is it'll say like Just for round figures call it $30 a case of salsa case of 12. It's So I'm projecting the initial rollout might be two cases per store Well, if this retail has 400 stores

Multiply two cases per store. That's 800 now multiply that by four skews So that's you know, I'm gonna need that many cases and it's gonna cost me X amount because I kind of will have Yeah thing already dialed in from my suppliers So I'll just put those numbers together real quick and hedge ahead of time to say this is what I'm gonna need 30 days from now

Nate Littlewood (38:40)
Yep. Sounds like, sounds like a good system. I don't know if you've looked at it, but something I've helped one of my retainer clients with recently is, a couple of different invoice factoring, facilities. So when it comes to financing and you know, people lending money, usually the cost of that money is correlated to the risk, right? The more risk, the higher the interest rates going to be.

When you look at purchase order financing, you're obviously a competent operator and it seemed like a very noble guy, but when you're dealing with a startup business, there is obviously risk around them actually being able to produce the product. you could finance a purchase order, but maybe there's some disruption or a coat packer goes down or you don't have enough jars or God knows what. There is a certain amount.

of execution risk to that product actually becoming available for sale. And that could cause an issue with, you know, the repayment on the other side of that. Like the next step in the process is once the product has actually been shipped to the customer, right? So the product is made, we've gotten rid of all of that manufacturing risk. It's now out the door and the product at that point is in the hands of the customer, you know, Albertan or Sprouts or whatever. Now,

Albertsons and Sprouts are much bigger, more established and arguably lower risk financially than the average startup. So what you can do is actually finance the receipt of their payment. So you might say, Hey, know, Sprouts is going to pay us in 60 days, but we want that money. Now you can find invoice factoring companies who might give you like 80, 85 % of that invoice, like upfront. and then they'll take a cut.

once the actual final payment gets received.

Michael Salman (40:36)
That's usually more expensive to your, is it to your knowledge?

Nate Littlewood (40:39)
I think

it'd be cheaper. I would expect it to be cheaper than purchase order financing because the counter. Yeah, well, the counterparty and the risk associated with the counterparty is much lower. know, Sprouts or Albertson paying a supplier for inventory is much lower risk than a startup, you know, successfully executing on their purchase order. Like a lot more can go wrong with manufacturing at a startup.

Yeah, might be something worth checking out.

Michael Salman (41:10)
Yeah, yeah, definitely interested in that.

Nate Littlewood (41:13)
Cool. Well, Michael, we've covered a lot of ground today and I have really, really appreciated your thoughtful and very thorough approach to so many aspects of this business and getting the company off the ground. And you seem to have got a lot of stuff figured out. mean, like I said before, last time we spoke, you were in 30 doors, it's now 200 and...

reading between the lines, you've got some, some pretty big accounts and opportunities on the horizon here. So some exciting things happening. I'm curious, if we could turn back, turn back the clock here to just before you got started in the salsa business and building, you know, dealer CEO sale. what is the advice you'd give yourself if you could sit down and say, Hey, young man, listen up. I've got some words of wisdom.

I need you to hear what would you say to yourself?

Michael Salman (42:12)
you know, that's, that's a hard one because there's just so many, there are so many dynamics to this and, everything can consistently changes. You're constantly putting out fires. You're constantly fixing problems. I, I, I joke around and tell my friends when some people kind of ask me, what do you do? And I say, I'm a firefighter.

Cause I just put out fires and problems all day long. think the thing is it's like, initially the excitement builds fast. For me, it's very exciting and rewarding building something from absolutely zero and then seeing it on the shelf and seeing customers, you know, really.

taste your product and really say, my God, this is so good. Like I love this. It's amazing. All that it, it, it fuels me, right. It gets me excited. So I think initially what I would go back to tell myself, or to even tell anyone is like, don't confuse your traction and growth with stability. because the traction and growth can come fairly fast.

But you're not going to be stable if you don't have your systems in place properly. That might be like your operating systems. You know, I luckily tried to catch on to that quickly early on. In some cases, when I wasn't able to catch it, just momentum hits fast. You're not going to be able to catch up in time. And sometimes you find yourself scrambling. And I think for me,

There's oftentimes I'm working on this all the time. And I find myself like, oh, this weekend, I'm going to take a break and do something, go play some golf or have a nice dinner or something. And I'm not able to because I didn't have a certain system in place. And now I'm paranoid. And now I need to get that done in to not fall behind. I think.

What I would do is kind of go back, not to be too OCD on these things, but to go back and really start dialing in these things little by little so that I don't fall behind. And really, one thing I was able to do, thankfully, is to have always projected like 20 % overspend on what you're expecting to spend on marketing and all that stuff.

I think that's important. Had I not done that before from previous experiences, I think it would have just been like, gosh, I didn't think this was going to cost this much and that one hurt.

Nate Littlewood (45:14)
So you're building some contingency into the budget is what I'm hearing.

Michael Salman (45:19)
Yeah, contingencies are important and just systems, systems matter. Systems matter a little bit more than speed in my opinion. But not to lose the speed because sometimes it's good to not overthink it and just get out on the market and figure out the problems as they come. That's, we did a balance of both. know, and that's, that's, that's what I would do. And one thing I'm thankful

I told myself early on I caught this, is we rebranded early.

Nate Littlewood (45:55)
really? Okay.

Michael Salman (45:57)
Yeah, so we started this in January 2025. you recall, that's when the fires started in California. And that set us back for about three months to get into our first retailer, because one of their stores was in the fire zone. So they kind of like all hands on deck and stopped that. And I had a brand. I thought it was great. We thought it was great.

And then I went to, I got into some stores, sales started moving because everyone loved the flavor. I was never really set on the branding. So what I did was, I went to this expo in Texas and I showed the label to a few people. And the first person said, it used to be called a salsa California. And it was just a pop label, no sides. And they looked at it they said, it's cute.

And I said, that wasn't the response I wanted. They said, are you only wanting to stay in California? And I said, no. And they said, well, I'll give you an example. If you bring salsa California to Texas, we're not going to like it here. I said, okay, fair enough. Thankfully I wasn't stubborn and.

I called my partner right after that conversation. said, I'm coming back home and we are rebranding immediately. Yeah. And we finished, we fixed that. thankfully I caught that early on before the growth really happened. would have been such a costly situation for us. And I think, you know, the biggest thing is like to tell anybody is fix the mistakes early on. Thankfully we.

Right. Fix the mistakes early on. Don't confuse your traction growth with like, I'm good. I'm stable. Things can, things are always going to just go up and down. all over the place, but just, you know, really be thick skinned enough to have, be able to really go through these things, fix these issues and push through.

Nate Littlewood (48:14)
For sure. For sure. Yeah. Well, had, had an interesting, definition of intelligence recently. this was when we was talking about an intelligent person is someone who is able to recognize and admit when they're wrong and change their course of action as a result of that. you know, kudos to you for picking up on that early and, and, fixing it before it became a much bigger problem and a more expensive problem.

had you waited. So well done. Well, Michael, this has been a fascinating conversation. If I can be honest, it wasn't quite the conversation I was expecting, but it's, it's gone into some interesting places and you have a really, you have a really interesting approach to building this business. And I do hope the listeners will, you know, pick up a few things from having heard you talk about it all. So thank you so much for coming on the podcast before I let you go.

However, where should people go if they would like to learn more about you and what you're up to?

Michael Salman (49:20)
Yeah, so I will start soon enough posting on LinkedIn and it's at the Michael Salmon. And then we have our TikTok and Instagram feed that it's still being worked on. So we're going to start posting here soon enough. And that is a deliciosa.brands for Instagram and TikTok. And then we are working on our website as well.

and that would be dillyclosad.com. And that will just basically showcase our products and then we'll also give a list as to which retailers we're in and where you can go and find us and give us a taste.

Nate Littlewood (50:03)
Perfect, sounds good. Well, I'll include all those links in the show notes for anyone who wants to check them out. But Michael, thank you again. Been a pleasure and best of luck for 2026 and the years ahead.

Michael Salman (50:14)
Thank you. appreciate your time and appreciate you having me on the show. then hopefully, let's say a year or two from now, we might get back online and say, Nate, I'm in 3000 retailers now or however.

Nate Littlewood (50:28)
I don't doubt it, at the rate you're going. Okay, thanks Michael. Take care.

Michael Salman (50:33)
Thank you so much, you too.