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Your Food Business’ Capital Needs Change Over Time

Your Food Business’ Capital Needs Change Over Time

The need for outside capital never goes away in food businesses – it just changes as the business changes. Getting proper financing for growing food businesses is one of the most challenging obstacles food business owners face. This is due in large part to the high bar for fundraising and financial communication when growing a food business. And, there are often many sources of capital that need to be brought together to adequately fund the growth of these food businesses. This food funding ecosystem is diverse, with many funders having differing expectations about business outcomes and the business owner’s responsibility or obligation to them as a funder. The money is there, if you show up with the right stuff and know where to look! To finance and grow profitable food businesses, entrepreneurs need to be able to navigate the expectations of these capital sources and understand at what stage they could be most useful.

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Joel Solomon On How Food Businesses Can Be Part Of The Clean Money Revolution

Joel Solomon On How Food Businesses Can Be Part Of The Clean Money Revolution

There is a disconnect between early stage entrepreneurs’ perceptions of available money for their venture and the sheer volume of individuals and funds looking to invest in the space at various stages, if you know where to look. Most entrepreneurs start out with “friends and family” funding (essentially people they know who will take a risk with them), later moving on to “angel” funding, usually by people who have run successful food businesses themselves and understand the space in that specific way. After entrepreneurs have grown their business with that type of funding, typically to at least $1 million in sales, they have then demonstrated enough traction to appeal to venture capital firms. However, natural food investors are starting to look at even earlier stage companies now that there is so much competition at the product, retail and investment levels of the food business ecosystem.

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Your Food Business Has A Life Of Its Own

Your Food Business Has A Life Of Its Own

While businesses go through “growth spurts”, the life of a business that is built to last is a marathon, not a sprint. Business owners that slowly build capacity and continuously respond to the needs of their core consumers can grow sustainably and thrive even over long periods of time and in today’s competitive marketplace. Being aware of those growth and life cycles can help entrepreneurs put their current activities in a context that helps them make decisions that meet both their personal and business goals.

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Peter Robertson of RP’s Pasta On Managing Growth And Changing With The Consumer

Peter Robertson of RP’s Pasta On Managing Growth And Changing With The Consumer

RP’s Pasta is now part of the portfolio of brands of Tribe 9 Foods. One of founder Peter Robertson’s first challenges was category placement as a fresh, refrigerated pasta. RP’s started moving with the consumer to come up with flavors that were non-traditional in Northern Italy, including unique flavors and ingredients. A trip to Expo West in 2010 validated the demand and uniqueness of their gluten-free SKUs, generating demand that spawned rapid growth of RP’s on a more national level. Managing growth and matching it with the right equipment setup/space has also proven a challenge. Peter had mostly funded RP’s with free cash flow and bank financing until accepting the help of an outside investor during their rapid growth phase. In 2017, RP’s merged with Yumbutter and Ona Treats to form Tribe 9 foods, forming a portfolio of brands with a co-packing line of business in a new facility big enough to house the in-house manufacturing for all three companies. Peter expects Tribe 9 to experience tremendous growth over next 5 years, especially in the growth of their private label and contract manufacturing lines of business.

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Your Relationships With Your Customers Are Your Food Business’ Biggest Asset

Your Relationships With Your Customers Are Your Food Business’ Biggest Asset

In a marketplace with rapidly changing food preferences, restrictions, diets and ethical concerns around food production, one of your biggest challenges is figuring out how to deliver a product that solves enough problems for the right customers while building a strong relationship with them. Food entrepreneurship is a stressful endeavor, full of obstacles and roadblocks. No entrepreneur does it alone, and in addition to having a great team at the governance and management levels, the best food entrepreneurs develop deep enough relationships with their customers so that their customers become deeply invested in the company’s success.

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Ownership Differentiates Willy Street Co-op In A Changing Grocery Market

Ownership Differentiates Willy Street Co-op In A Changing Grocery Market

Willy Street Co-op is a set of cooperatively owned retail grocery stores in Madison, WI. Founded in 1974, they now have 35,000 member-owners and about 400 employees across three stores. This last fiscal year, the co-op generated about $52 million in sales, making them one of the largest grocery co-ops in the country. The grocery market has changed with changing consumer tastes and habits over the past several years, with everything from store size to product mix needing to adapt. Retail grocery co-ops have struggled at times to find their niche in a marketplace where local and organic/natural products are more widely available at traditional grocery stores and online. They have found that operating transparently and openly, emphasizing cooperative ownership and owner literacy, has provided a point of differentiation for Willy Street Co-op in the current marketplace.

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2018 Year In Review

2018 Year In Review

Our mission at the Food Finance Institute is to make sophisticated financial technical assistance available to every growing food, beverage and value-added agriculture enterprise. Like 2017, 2018 was a busy year in achieving that mission, and here is what we are proud to have accomplished this year: Our Network Of Trained Consultants Keeps Getting Bigger [...] Continue Reading
Great Food Entrepreneurs Are Always Learning

Great Food Entrepreneurs Are Always Learning

We have found that the best entrepreneurs are constantly seeking new learning experiences. This includes getting constant feedback from their customers, to reaching out to potential mentors for advice, to attending industry events and tradeshows to network with and learn from their peers and industry veterans. Sometimes, learning means “un-learning” something these entrepreneurs thought was essential to their business when they launched, whether their packaging or messaging or even their original business model. In short, good food entrepreneurs learn to adapt and know that some of their original assumptions will be proven wrong as they validate their products in the market.

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This Food Hub Leverages A Diverse Food Shed For A Resilient Future

This Food Hub Leverages A Diverse Food Shed For A Resilient Future

Dorchester’s Farm Food Hub, a for-profit cooperative located in Prince County, Maryland serving the Chesapeake Bay food shed. The Hub aggregates and tries to ensure consistent supply of seafood and farm products (fruit, produce, livestock) and then redistributes to areas that are historically under-served via direct delivery of fresh and healthy food options. The Hub gives its customers lots of choice and flexibility, allowing people to chose what they purchase based on availability and their preferences. They started with 20 members in 2014 and are now up to nearly 500 consistent members in 2018. The average order size for their products is about $57 and 2 products. The Hub keeps consistent data on their customers’ preferences and has developed new products, like chicken plates and coleslaw, to both eliminate unnecessary waste in their operations and improve their bottom line through producing of value-added products and adding customers to existing delivery routes. The Hub has sought to further leverage their strategic advantages of seafood and aggregation services as their biggest points of differentiation in the marketplace.

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Where Does My Food Brand Need To “Be”?

Where Does My Food Brand Need To “Be”?

There are wide variety of tools and marketplaces to reach customers for today’s food brands. And, sometimes the ideal distribution path looks different than the entrepreneur intended when they started the business. The brands that survive today’s marketplace will be making decisions about distribution and channels of delivery with their customers’ expectations and preferences center stage.

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