January 12, 2010

5 mistakes to avoid in growing your Food Enterprise!

Many food companies and especially one's just starting out can avoid these frequent missteps and consider methods to avert the problems.

When you take action and try new things for your business growth and market activity - you will and your team will make 'mistakes'. If you are just launching a food product these mistakes can mean disaster for your products success and even company.

Mistake 1: Sailing your boat without a destination. You hear "let us sail away into the sunset" with no destination in mind. That works in the movies but to stay alive you need more than a romantic sunset or an adventurous voyage. You need a plan.
Take the time to thoroughly investigate your market and target customers, the competition and other basics, with a sound business model. Focus on answering one deceptively simple question: How will you make money?

Mistake 2: Selling way too cheap. Ask a child to choose between a hand full of change totaling .90 cents and a Susan B Anthony Dollar - they will choose the change everytime because like all of the jingle and the different coins. Many food company owners are like that. They think lower prices will catapult sales into the stratosphere and they will become owners of an item with increasing market share, new retail authorizations, and many more pennies. But it does not work that way! You must develop your ideal food products Unique Selling Proposition and position. Before pricing your product, do the math and calculate fixed and variable costs. Research the market and competitive price points. Buy your competitors products and study them. Read the labels and use them noting differences and similarities. Figure the dollars you need to walk away from every transaction, not just someday when the orders are rolling in and your plant is operating at full efficiency. Lesson: Don't trade penny's for dollars.

Mistake 3: Starting a Food Company based soley on a great family recipe. Just like the mousetrap, the world will not beat a path to your door to try Grandma's Jelly. You have to get it approved, build it, package it, get the word out, deliver it, bill it, and collect for it. Food Companies are a business and can be very big businesses. Don't expect your recipe to carry the day by neglecting the other important business processes.

Mistake 4: Clueless about marketing. Startups rarely plan or budget for marketing because new owners think marketing is an unnecessary expense. Or, compounding the error, they confuse marketing with sales.
"Marketing worries about tomorrow's sales and Salespeople close sales today," explains Rob, who runs a marketing communications company in San Jose, Calif. "You cannot go from product development to sales and skip the marketing step." Your retailers and distributors will need consumers to take your product off the shelf and away from the distributors warehouse.
Underlying this mistake is a lack of experience about the drawn-out process of a typical food sales cycle and retail resets. Entrepreneurs usually hire salespeople first. But the initial hire, whether contracted, broker, or project help, should be a marketing expert to get out the word and assist with your market planning. Then it's time to send out the sales force.
Lesson: Don't try to close deals before getting your message to potential consumers.

Mistake 5: Blowing through your capital. "New business owners grossly underestimate their financial needs," says Isidore Kharasch, president of Hospitality Works, a food-service consulting firm based in Deerfield, Ill. Typically, inexperienced owners overspend at the outset, buying more furniture, technology and office supplies or hiring way too many executives or experts than they really need to get up and going. New owners also don't realize that few customers pay promptly. So even when sales are immediate, cash is often tight.

You will make mistakes but your action and planning can limit your exposure to the most common and sometimes simple mistakes that hurt food companies. Planning provides enlightened and creative intelligence to your food products growth. Without planning, in the middle of a crisis your cognitive powers are not as bold. Also, it is far easier to seek impactful, experienced, and knowlegeable assistance with a written plan. Your planning makes it easier to navigate around the storms and that puts more money in your pocket in a shorter period of time.

What actions are you taking to grow your business? Send a note or comments to Tim also, follow him on Twitter  I want to hear about your success!

© Tim Forrest 2010. All rights reserved
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