You Like to Eat but Is this Business Right for You?
Deciding whether or not the food business is the right business for you is critical to your success once you do get into it. A lot of time and likely considerable expense goes into creating a thriving food business. There may be a little bit of luck too, but if anyone tells you a lot of it is luck, don’t listen. A lot of the success in specialty foods is from excellent, detailed planning and good old-fashioned hard work to make your plan a reality.
fun fact
Pop-up stores (retail shops that open in an empty space just for a season) are said to be perfect for millennials who “value new experiences over ownership or possession of products,” says Werner van Huffelen, owner of The Design Strategist in the Netherlands (“The Power of the Pop-up Business” by Alexandra Gibbs, www.cnbc.com, 8/21/15).
One of the best ways to find out if a business fits your personality and lifestyle is to work in it for a while before plunging in and setting up your own shop. If you are in a full-time job, there are many possibilities for part-time work in the specialty food business. It can be educational just to take a part-time temporary position in a chocolate shop during the busy holidays or pull an evening shift two or three nights per week at a production facility. Maybe you are looking at craft beer, or cider, or wine as a potential business; even a couple of shifts a week as a bartender at a small brewery can get you in the atmosphere of the small brew business to get a sense of what to expect. Plus you can earn a little extra cash while you are at it to add to the business startup piggy bank!
When you work in a similar job or as you get started in planning your business, think about the following:
Do the typical hours mesh with your preferred lifestyle? If you are interested in opening a craft beer brewery, do you need to be up late at night when being a night owl isn’t your usual style? Bakeries tend to get started early in the morning; is the phrase “early riser” one that has never been part of your vocabulary?
If you have always been accustomed to taking off on a trip whenever the spirit moves you, opening a retail shop is probably not a good match for you. Perhaps a production setup in a category that has a couple of extremely busy seasons and then slower periods where you could shut down for a week at a time would work better for you.
Someone with a gregarious personality might not want to open a one-person production business where you are by yourself all the time. And someone who is not fond of spontaneous interactions with strangers is not a good candidate to open and run a retail storefront.
This is not to suggest that every possible aspect of a food business can be self-selected around your personal idiosyncrasies. But don’t set yourself up to get into a business type that is just going to make you regret your decision, dread going to work, or not feel like putting a 110 percent effort into your new business. That is a recipe for failure before you even begin.
Of course, all of this is moot if you have a business that can afford to hire employees to do everything you don’t particularly enjoy doing. But that is atypical of a startup business of any kind, and certainly of one in the specialty food industry.
warning
Don’t get a job to test the waters within the same market you plan to set up in. Drive at least a couple towns away—you don’t want your potential competitors to think you were spying on them. Getting the inside story about a competitor is not your intention; your intention is to get the inside experience.
Small-Business Personality Traits
There are six traits that are conducive to small-business success according to an article by Ben Popper in Business Insider called “Six Personality Traits Every Small-Business Owner Should Have” (January 13, 2011). The article disseminates the results of a study by the Guardian Life Small Business Research Institute which found “that there were certain traits that stood out among the most successful ventures.” These six traits are:
1. Being collaborative. Know when and how to delegate and motivate others on staff.
2. Curiosity. Have an interest in scouring the world for ways to improve your business.
3. Focusing on the future. Business owners that plan cash flow and succession planning do better.
4. Self-fulfilled. Those who would rather be in control of their own destiny than feel secure in a corporate environment are more successful.
5. Tech-savvy. It’s here, it’s the world, use it to your advantage and make your business more efficient.
6. Action-oriented. Adversity actually makes strong business leaders work harder and motivates them.
tip
If your small business will have employees, now’s the time to start learning about leadership. “A good leader allows both employee responsibility and creativity to encourage growth and new ideas.” (“5 Leadership Lessons from Successful Small-Business Owners” by Royale Scuderi, Open Forum, www.americanexpress.com)
One group (RingCentral) reporting on this study in a blog post actually pulled “desire to delegate” from the “being collaborative” trait and thought it was important enough to be a trait of its own. It is probably unlikely that any one person is strong in all these traits. But think them through and think about your own approach to any one of them. Then figure out how you might strengthen the ones you are weaker in, even if the solution is something like delegating to someone else to be tech-savvy!
Using Trends to Your Advantage
Some basic trends mentioned in the article “Finding the Right Small Business for You” from www.bizfilings.com that are worth keeping in mind as you make decisions about your business are:
1. Both husbands and wives are wage earners in today’s market. This means that tasks that were once commonly performed by a stay-at-home wife/mom (like meal preparation) are often now delegated. Is this a service you can provide?
2. Outsourcing is popular in today’s businesses. Employees have been laid off and outsourced replacements brought in. Is there something in this trend that you can capitalize on? Maybe not in the specialty food business, but being creative is the name of the game.
3. Is there a technological approach that you could make a business from? What if you spent an hour on your computer in the early evening and offered 10 people to email you what they have in their fridge and you suggest a meal to them? Even technology is creative!
Be sure to spend time interacting with the community. Join in on sidewalk sales and demo days. Attend chamber of commerce events and offer to bring samples of your product. Join the local Rotary Club and interact with business leaders who can bring business your way. These are some ways you can expand a retail operation into much more than the four walls of your shop.
stat fact
According to the Census Bureau, women own 36 percent of all U.S. businesses, and of those, 89 percent have no employees.
The food business is a category like no other. While a specialty food business does not have the pressures of the restaurant industry, there are similar things to consider.
Dealing with food often means dealing with perishable products—whether it is the product you make or the ingredients you need to make the product. Keeping track of your inventory and your product is a key chore for the food business owner. You need to be meticulous in your records and with your ordering process. It is somewhat simpler today to do “just in time” ordering, but that has to be balanced with making sure you have what you need to take on that sudden huge order that could give your business the best week ever—if only you had 200 pounds of flour on hand.
You can fill in with purchasing at one of the big box stores, but you may find it means less profit on your big order, and sometimes it might mean compromising the quality of your ingredients, which is probably not worth it. It helps to find a couple of foodie business friends and set up a network where you can help each other out in these kinds of circumstances.
The other aspect of perishables is that what you don’t sell in your retail store becomes day-old after a day. For some items the shelf life is a bit longer than a day. This is an issue for baked goods. Some of it you can deal with by packaging for longer life. Bakeries and other best-when-fresh food purveyors can set up with a nonprofit soup kitchen to deliver any unused food at the end of the day; the food is still good, it just might not present well for customers to purchase. There might be other nonprofits who might be able to use that day’s unsold goods at an evening meeting or event. And you might even be able to write off those donations.
fun fact
The five best states for women-owned businesses, according to Thumbtack, are:
1. New Hampshire
2. Texas
3. Kansas
4. Oklahoma
5. Colorado
Whatever you do, you need to figure out if you can handle the pressure that comes with perishables and if you have the organizational and planning to skills to order as closely as possible so that you can sell most of what you make.
The specialty food business you have in mind may be a chocolate shop—a small storefront with a production area in back. You get up in the morning and make whatever confection you fancy making that day. Your customers love coming in to see what you’ve come up with to join the solid-selling standbys. But if you also make your business work by taking orders for special occasions, be prepared to work under deadline pressures.
Choose the Right Business for You
In the online article “Finding the Right Small Business for You,” Bizfilings’ Business Owner’s Toolkit (www.bizfilings.com) offers the following three common mistakes that people make in choosing a business (and reasons that often result in business failure):
1. Not doing the right amount of market research on demand for a product or service that is currently your hobby that you “think would make a good business”
2. Not planning enough
3. Not asking for help
Don’t succumb to these pitfalls. There is plenty of information out there on small-business startups in general, on specific types of businesses, and certainly on the specialty food industry. Read everything you can get your hands on, call people, network and actually contact the people that come as a result of your networking, and ask for help from those who have been there and from the professionals who are in the business of helping small businesses.
You are the owner and you can decide how you want to work—set up your business in a way that doesn’t make it unpleasant to go to work each day! This may mean doing something a little different from what you originally had in mind. With a small business, this is not just a job, it’s your life!
Retail is retail no matter what you are selling. Retail means having a shop in which you sit waiting for customers to come in and buy your stuff. You can always hire someone to staff your retail store, but that just means that you are paying someone else to sit in a shop and wait for customers to come in and buy your stuff. This is why several of the mentors interviewed for this book were not at all interested in opening a retail outlet for their product—Yummy Yammy owner Lisa Johnson did not even consider opening a retail store for her sweet potato salsa; Seattle toffee maker Susan Burns lets other retailers carry her product and the extent of her retail interaction is to do several demos in those stores; Winnipesaukee Chocolates owners Jonathan Walpole and his wife Sally opened a retail shop a few years into their chocolate-making business only to decide a few years into it that they no longer wanted to be tied down to the store and they didn’t want the expense of hiring someone to staff it for them.
The Factory Model versus the Fruit Stand Model
George Horrigan, business planner and founder of Foundationhead Consulting Group and author of business books including Creating a Thriving Business (Morgan James, 2013), talks about the “factory model versus the fruit stand model” of growing a business. Almost all businesses start out in the “fruit stand model,” where the owner is highly involved and opens the doors in the morning, and if the owner is not there the business does not make money. And some businesses are naturally in the fruit stand mode longer than others. But for those business owners with the goal of expanding or eventually having their business work for them, Horrigan encourages establishing their businesses with the intention of quickly moving to the “factory model” where the owner is dealing with the bigger picture issues that lead to a thriving business and sets up processes where day-to-day business can be delegated to others. This is what Horrigan feels leads to a thriving business that is set up to grow from the beginning.
But for many people, retail is their dream. All this is fine if retail is what you want for your business—although it is probably rare for small retailers to get wealthy, many retail business owners make a sufficient living and love the retail shop atmosphere and interacting with customers.
Also, retail can (and probably should) be much more than sitting waiting for customers. You will want to use your retail shop as a home base for your business and spend time soliciting large-order customers. You can try out new packaging and new products on basically an impromptu focus group of the people who happen to wander in the door that week.
aha!
Each year, Thumbtack (an online service matchmaker) rates U.S. cities for their small-business friendliness. The five worst for 2015 were:
1. Hartford, CT
2. Albuquerque, NM
3. Buffalo, NY
4. New Haven, CT
5. Winston-Salem, NC