Focus And Discipline Are Key To Food Business Success
Focus is hard to come by nowadays. The Internet age of video ads, click bait and email inboxes that never seems to be manageable offers an endless stream of distractions. Even in physical grocery stores, food consumers have so many choices in nearly every category, and now they have options about what foods they want to order online and delivered vs. picked up at the store vs. have someone enter their house to place the groceries in their fridge.
Food and beverage entrepreneurs trying to reach consumers have to consider that the general food consumer is overwhelmed by their choices and ultimately has very little time to interact with unfamiliar food and beverage brands. And, what is more, not every consumer is the food business’ target consumer, so the pool of potential customers for up and coming brands is usually quite a small subset of the larger population.
The tagline from the famous business book Discipline of Market Leaders is “Narrow Your Focus, Choose Your Customers, Dominate Your Market.” Focus is what gives food business owners clarity about their strategy and about the tactics needed to carry it out. When we work with food and beverage clients, we use tools like the business model canvas to provide focus and clarity to their business model and the strategic implications of choosing a particular business model path or going after a particular target customer.
If the strategy is to dominate a niche nationally (like our featured podcast interviewees from Quince and Apple), it doesn’t make sense to chase every single opportunity for sales, even if the promise of immediate cash flow seems tempting. Saying no to “shiny objects” is easier if you know what you are saying yes to. Quince and Apple said no to discount retailers because they knew that they should not compete on price or volume but rather on the quality of their premium offering to a premium-focused food consumer.
It takes discipline to get simple, concise and clear about the business model path for a food business. Like any discipline, work must be put in on a regular basis to stay focused and on track. Only then can food businesses dominate their market and reach their target customer.
And now, our roundup of the best food and beverage finance news, events and resources from around the web…
Business Model Insights
- What Makes an Ongoing Business Forecast Realistic? (SBA Blog) – “Start with the obvious: coordinate your forecast with your past results. Make sure that the types, categories, and items you put into your forecast match the types, categories and items you get reports on from your bookkeeping. Specifically, if you think of a forecast in a spreadsheet view with labels in the leftmost column and months across the top in the top row. Way too often people set up forecasts using different categories than what they get in accounting reports. Keep past and future aligned.”
- Getting on—and off—shelves in today’s market (New Hope Media, featuring Tera Johnson)
- 5 Lessons Learned: Legal Contracts That Every Food Business Needs (PilotWorks)
- What’s My Valuation? Pt. 1 – Evaluating Valuation (Project Nosh) “Why are so many founders/executives/owners of growing businesses deeply concerned—or even obsessed—over valuation? I don’t know, but it really can be counter-productive. If most startups that fail do so because they run out of cash, maybe you should focus on understanding and securing the financing you need. When seeking financing, you are soliciting investors who may ‘pull the trigger’ on around one percent of the opportunities they see. Don’t let getting stuck on an above-market valuation be the reason you miss out on getting the cash you will certainly need to grow a capital-intensive CPG business, or lose a chance to connect with some folks who might have been excellent value-added partners.”
- 3 questions investors consider when evaluating companies (New Hope Media)
- Financing Your Expanding Business with the SBA (SBA Blog)
- Why Category Management Needs More Critical Thinkers (CMKG) – “Why did they or didn’t they buy? Why is shopper satisfaction growing or declining? Why are business results trending up or down? As the shopper path to purchase becomes more complex and non-linear, so does the analytic pathway that we need to follow to understand the shopper. Linear thinking that has driven category reviews, assortment and planograms won’t help us as we move through massive amounts of more granular data, shopper insights and new data sources in this quest for shopper satisfaction. Step-by-step thinking creates a barrier to more strategic decision making because the path to analytics isn’t a straight line, but one that zigs and zags based on what the data says.”
- What’s With All These Similar Distribution Measures? (CPG Data Tip Sheet)
- Telling your story—and how it can help your brand (New Hope Media)
- Extremely slow CPG growth plagues 2017 — and is likely to continue (FoodDive) – “Consumer satisfaction with many CPG companies is on the decline. The waning satisfaction is the result of a growing demand for higher-quality, fresh, natural and organic products. Center store sales have stagnated as shopper demand for fresh foods and better-for-you groceries has grown, spurring supermarkets to develop best-in-class perimeter departments. Shoppers are shifting their food dollars away from grocery to spend more money on eating out too. Foodservice share of spending now represents more than half of all U.S. food sales, and grocery stores increasingly are highlighting margin-enhancing value-added products — like prepared foods, meal kits and foodservice departments — to help boost their sales and profit performance too.”
- 10 food trends to watch in 2018 (New Hope Media)
- Transparency is key to a successful sustainability strategy (Food Business News)
Farming and AgTech
- Brands are key to regenerative agriculture (New Hope Media) – “The top solutions farmers need to see in the market to consider making a shift to regenerative agriculture include: demonstrated profitability, yields, reduced costs, demonstrated market demand and multiyear contracts to support their transition. We can motivate farmers to engage, but natural products brands are going to need to lead if we are going to do this at scale. Consumers are motivated and are ready to support responsible business practices. Already they are beginning to demand transparent and responsible business practices. For food manufacturers, there is an opportunity to rebuild consumer trust, and strengthen and differentiate their brands while working to reverse climate change. Growing regenerative agriculture practices means increasing demand, which makes natural products brands central to the effort.”
- Tales of a Failed Agtech Startup: “Everyone thinks they’re an early adopter; few actually are” (AgFunder News)
- Study: 28% of U.S. jobs are linked to food and agriculture (FoodDive)
- CB Insights Webinar Highlights Influential Food & Bev Startups (Project Nosh) – “While it may seem like large CPG corporations are at odds with young upstart brands in the quest for shelf space, in truth, rather than developing separately, the two groups are increasingly linked through investment, acquisition and brand incubation. These relationships are especially key in major companies help to bring healthy, better-for-you concepts and products from these startups to a wider audience. Large food companies face a variety of challenges in the current retail landscape. In particular, customers are visiting grocery stores less frequently than in the past; in the last twelve months, 23 percent of Americans did some grocery shopping online.”
- Ag Biotech Market Map: 245 Startups Using Biology & Chemistry to Revolutionize Agriculture (AgFunder News)
- Is the Grocery Delivery Bubble About to Burst? (The Food Institute)
- Nosh Live (Project Nosh) – $, 11/30 in Santa Monica, CA
- Local Foods Marketplace (Feast) – $, 12/1 in Rochester, MN. Tera Johnson presenting
- Online Grocery Order Received: Now What? (The Food Institute) – Free, 12/5 online
- What Are the Requirements? Understanding the Canadian Market (Food Export Association) – $, 12/6 in Minneapolis, MN
- Urban Farming is A Business (Midwest Urban Farming Institute) – $, 12/7 – 12/8 in Chicago, IL. Tera Johnson presenting
- Fearless Farm Finances Workshop (MOSES) – $, 12/8 in Streater, IL