In the past couple of weeks, several food SMEs decided its just not worth it in terms of effort or cannot move forward without significant investment.
Did they not work hard enough?
Did they have a bad product?
Did they have poor brand design
Absolutely not!!! But what they all have in common is they started their business with love and enthusiasm but ran out of energy, money or both.
When I begin working with the client, the first thing we think about is what is the end goal — what do you want to achieve from this business? A legacy for your children, a decent level of income or creating brand equity that will be sufficient for a buyout in 5–10 years’ time
Once you have that clarity, you can begin to design the business that has success through it like Brighton rock!! So what are the top 5 things, we focus on?
- Who is your customer?
Many start-ups make the mistake that their product is for everyone — it may well be but even Coca cola which is a mass brand has a number of target markets that they subsegment through products and marketing — Diet coke man anyone?!!
It is much cheaper to find a narrow customer niche and target them than try and market to everyone.
Create your customer avatar and stick to it!!
- What are your product, company and brand values?
The one thing we know about entrepreneurs is that they have great ideas — lots and lots of them!! We all do! The skill is honing down into one product range (park the others, you can launch them in phase 2 or 3!!) and focusing on that — focus works!!
I have a very simple but effective model that takes each of the three elements and picks 4 values — that’s it — your brand in 12 words — simple!!. These then underpin product design, marketing, social media targeting and distribution strategy
- What’s at the core?
How do you sum up your brand in two or three words — I am a massive fan of Marmite as a brand, a marketing powerhouse and I do LOVE it! And their core proposition is “Love it or hate it”. This underpins everything they do from social media to TV ads etc
It is important to have that clarity so again you can focus on what is important.
- Make a PROFIT!
If you don’t design your business to make money from day 1, then it won’t on day 365. I have had several clients who have said — I will put the prices up once I am established — no, you won’t actually. As your business grows from kitchen table to small unit to factory, your customer base will change and they will want more margin — so you will make less money per unit. So, start as you mean to go on — making money!! So keep your fancy ingredients, bespoke packaging and complex product recipes to a minimum!
- Who’s gonna pay?
The costs of setting up a business are considerable. Especially if you are looking to create that £5m brand. Scaling up can put massive pressures on cash flow — eg you want a £1m turnover sales business. With 30 days settlement terms from main retailers, you need at least two months cashflow — so £167k before you even think about investing in CAPEX, forward buying to ensure best prices etc etc. There are very few contracts in the food industry with food retailers so you will have difficulty convincing a bank to lend!
So where the money will come from? Crowd funding, accelerators or angel investors are all great options but you need have the first four firmly in place before considering reaching out for money.