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Insights Newsletter

Shared Financial Management Builds Alignment For Food Businesses

Shared Financial Management Builds Alignment For Food Businesses

Entrepreneurship is a really difficult enterprise. There are a lot of things for one person to learn how to do well. Imagine if you as an entrepreneur tried to help everyone understand what needed to be done to make the business succeed. How do you even go about having that conversation and leading that charge? One strategy that some food entrepreneurs employ is open-book management. Open book management is essentially sharing the company’s finances and key financial drivers openly with managers to increase their buy-in and understanding of the company’s performance. By sharing company finances and expecting financial literacy of managers, open-book management allows multiple leaders to use the same language and work towards the same goal.

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Focused Prioritization Helps Good Food And Farm Businesses Reach Break-Even

Focused Prioritization Helps Good Food And Farm Businesses Reach Break-Even

Food entrepreneurs will always have lots of goals competing for their attention. Given that food entrepreneurs have many “big, hairy, audacious goals,” it is worth noting that certain goals should have more priority over others, depending on the stage of the entrepreneur. For example, many food entrepreneurs want their business to reflect their social impact goals. But they shouldn’t do this to the exclusion of the brand building necessary to tell that impact story (and capitalize on it with a premium price) or the long-term financial viability of their business. The good entrepreneurs know how to prioritize goals and optimize their efforts for the goals they are pursuing as priorities. This allows them to build financially successful companies and, over time, pursue many more “big, hairy, audacious goals” than they would have otherwise.

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Why Private Label Might Be A Great Business Decision

Why Private Label Might Be A Great Business Decision

The average full grocery store has nearly 40,000 SKUs i.e. products that it offers to consumers. Consumers have more choices than ever about what food they buy and where they buy it. But, it is becoming more difficult and expensive for new food brands to build meaningful relationships with them as the marketplace becomes more saturated. To capture more customer value, grocery stores have introduced their own branded products alongside others that they bring in on their shelves, often referred to as “private label” products. While private label products’ market share has held steady at about 18% in recent years, private label brands are now growing faster than traditional manufactured food brands. If food companies have manufacturing capabilities, making private label products can be a valuable part of their business model as they build their customer relationships, maximize production efficiency and diversify revenue streams.

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Should I Manufacture Food In-House Or Use A Co-Packer?

Should I Manufacture Food In-House Or Use A Co-Packer?

It can be a big leap to think about producing larger quantities of food when entrepreneurs are used to home production or commercial kitchens, where the batch size and financial outlay are relatively small, and operational processes are simple. However, if food businesses are considering going into wide-scale distribution in grocery stores and they want to be profitable (hopefully, they do!), they will need the capacity to produce their food at scale. The inevitable question these entrepreneurs face then is “should I manufacture food in-house or use a co-packer?” This question can be difficult to navigate for new food producers, especially because there is not a hard and fast answer. The food entrepreneur’s business model, stage of business, financing capacity (i.e. how well they can raise money) and the availability of co-packing capacity for their specific needs all make a difference in deciding how to answer that question.

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Build The Brand, Build The Food Business Ecosystem

Build The Brand, Build The Food Business Ecosystem

Good brand building is built on an understanding of your target customer and what problems you are solving for them. While it is not the only thing that is needed to build a successful business, those consumer relationships are the lifeblood of all food businesses. Brand building takes hard work. However, once that work is done, food businesses often find that the other actors in the ecosystem want to build better business relationships with them because they built those key relationships with customers to sustain their business.

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Grants, Loans, Investments…Welcome To The Food Funding Ecosystem!

Grants, Loans, Investments…Welcome To The Food Funding Ecosystem!

While food businesses are developing their big, brilliant idea (and hopefully executing on it), it can be easy to forget that they are one actor in a larger entrepreneurial ecosystem. This ecosystem includes other entrepreneurs, suppliers, farmers, co-packers, funders, accelerators, incubators, consultants, retailers and consumers. To come up with a realistic strategy for action and growth, food entrepreneurs should make efforts to understand this entrepreneurial ecosystem and whether grants, loans, investments or a combination of capital sources makes sense to fund their growth. Only then can food entrepreneurs plant the seeds for a profitable and sustainable food business.

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Reality Keeps Your Food Business Grounded

Reality Keeps Your Food Business Grounded

Being a food entrepreneur is in some ways about balancing empirical reality and a belief in something you cannot see clearly, like where your business will be in 3-5 years. You need to believe, and yet you need to be able to empirically and defensibly say that you have a clear path forward to justify that belief. That’s where clearly stating your assumptions come in. It can be hard to know what is realistic and what isn’t without mentorship and help. We encourage all food entrepreneurs to clearly state their assumptions about the future and test their assumptions constantly, asking the advice of people who they can trust to ground-truth their ideas and actions. Only then can their business be grounded in reality so they can be free to dream big.

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When Your Food Business Should Go Online

When Your Food Business Should Go Online

Technological disruption is present in all industries, and the food industry is no exception. The amount of consumers purchasing food online is increasing, with some predicting that 70% of all consumers will purchase at least some of their food online by 2024. Food businesses should know the role that online sales will play in their revenue stream and in their business model. Consumers are starting to become omnichannel in their food shopping expectations, and many food businesses will need to follow suit. Like most things in food entrepreneurship, it is best to let your customers lead the way, and if they expect to find you online, go online and conquer.

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Why and How To Think About Social Impact Investing In Food

Why and How To Think About Social Impact Investing In Food

From a business perspective, social impact isn’t as important as having a viable business model. Food entrepreneurs, when speaking to investors, should to clearly communicate the business model of their company, which means talking about how their business will make money and on what time horizon. This doesn’t mean that food entrepreneurs should hide their social mission or desired impact from investors or anyone else, but rather that they should contextualize their social goals as part of the larger business strategy. Because food businesses need to be financially sustainable to achieve their goals, including impact goals, understanding their business model and aligning their efforts behind the model is the best way for these businesses to achieve their impact goals. No money, no impact.

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Farmers: Let’s Build A Brand!

Farmers: Let’s Build A Brand!

Over the last five to ten years, food consumers have been seeking more “premium” experiences from the food they purchase, including better connections with their food and understanding where it comes from. One way this has manifested itself is interest in CSAs and farmers’ markets, allowing people to support local businesses and connect directly with the people growing their food. However, most consumers still get most of their food from the grocery store, and it is difficult to scale farmers’ markets and CSAs to reach as many consumers as grocery stores do. Developing brands for agricultural products can help farmers produce products that earn them a premium and are meeting a real consumer demand. We want to encourage more partnerships between farmers and brand-oriented food entrepreneurs where it makes sense so that all consumers have access to tasty, fresh food.

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