There is no shortage of options for possible consulting help for emerging food and farm entrepreneurs. There are free options, like SCORE and the Small Business Development Centers, and there are paid options for a comprehensive set of services to consultants who specialize just in things as specific as what is required to be on your product’s nutrition labels.
Taking on a consultant comes with no shortage of risks, management requirements on your part and personal vulnerability, since the consultant really has to understand you and your business intimately in order to be successful in helping you. There are lots of things to consider when evaluating a potential consultant, but we encourage food entrepreneurs to keep the following things top of mind:
Everything happens in the context of your business model
In your food business, as with any business, everything is related and part of the whole. You can bring on consultants to focus on discreet portions of your work (say, helping you develop your brand and brand strategy), but if that work is not couched in in the context of your business model and your model’s financial requirements, ultimately your business won’t be successful. So, while it is great to find specialists to solve discreet problems, if you are finding you are having trouble reaching profitability and raising money, you also need a consultant that can help you with more strategic level issues embedded in your business model.
Questions that a consultant who can help you with your business model would help you answer:
- How big do I need to be (in terms of sales, staff, etc.) to breakeven?
- What are the key factors in building a solid team to support my business?
- Should I manufacture in-house or get a co-packer?
- Do I understand who my target customer is?
- Do I understand my competition and how I am defensibly unique in my category and the marketplace at large?
You need to understand your finances and fundraising needs
Strong financial management and financial planning are both key to operating your business and raising money you need to grow. And, your financial plan is related to your business model path. Choosing to focus on building a wholesale brand of products necessitates a certain level of scale and spending that requires external financing from multiple sources of capital. If you aren’t prepared for this or don’t know where your business model is headed financially, you could run out of cash, cutting off the lifeblood of your business!
Questions that a consultant who can help you with your financial plan would help you answer:
- What are the key things I should look for when reviewing my financial statements?
- How do I raise money, and from whom and at what time, for my food business?
- How to I pitch my business to lenders and investors?
- What needs to be a part of my financial plan?
- How do I make realistic and easily understandable sales and other financial projections?
Good consultants don’t just give you “recommendations”
On our podcast this week, we interviewed Ted LeBow and Jennifer Brodsky, co-founders and principals of Kitchen Table Consultants, a consulting firm that helps passionate farmers and food artisans build lasting, profitable, locally-focused businesses. The heart of their work is one-on-one coaching with food and farm clients. Rather than just make plans or recommendations for clients, they “roll up their sleeves” alongside the clients to help them implement their recommendations.
For example, one of Ted’s earliest clients was The Family Cow, a 6th generation farm that needed to better understand why they were loosing money so they could improve their business. With Ted and KTC’s help as a coach as well as in implementing a new financial system, they were able to get profitable and understand the financial drivers of their business.
Since then, they have even taken ownership stakes in the some of the businesses that they work with, showing that they are invested in the long-term success of the business past even what could be scoped for the initial consulting engagement. This more hands-on and invested approach of KTC is something that shows commitment to shared success with their clients. And, because food business problems are complex and difficult to solve, having a partner that helps you implement solutions to the problems you have identified is key.
Good consultants tell you things that you don’t want to hear
While all good consultants play a role in keeping entrepreneurs inspired, focused and happy, the best consultants also detail things in their client’s businesses that aren’t working and can tell their clients “that isn’t going to work and here’s why.” Ted and Jen with Kitchen Table work with some nonprofits that have started food businesses as part of their operations to fulfill their missions; however, both Ted and Jen have had difficult conversations with some of those nonprofit leaders about imagining multiple paths that might achieve their mission rather than being focused on building food and farm businesses themselves, due to the difficulty of layering nonprofit missions on top of businesses, among other things.
If you have a problem with your business model or your accounting, that will prevent you from successfully raising money, and it serves no one’s goals to avoid dealing with those issues, even if dealing with it seems akin to a root canal. Good consultants will – gracefully, tactfully – tell you when something isn’t going to work. This shows that they are invested in your business’ success.
Where should you go to look for food business consulting?
- Our trained consultants – We provide training for consultants in business model optimization and financial packaging so they can help accelerate the profitability, sales and capital infusion of their clients. Use the search function on our directory page to find a particular person or firm, or a consultant near you.
- Edible-Alpha – Did you know that we do consulting? We are very selective about the clients we take on and often have them take one of our courses (like our upcoming online Raising Equity Course in October) or work with us in conjunction with our trained consultants to help accelerate their business’ development. Contact us with details of what you need.
- Your board members, mentors and advisors – Your network is often a great source of information about who would be the best fit to work with your team. And, the people who are already deeply invested in your company are in the best position to know who can fill smaller, strategic gaps in the context of your business model and financial strategy.
It can feel daunting to know where to look for the right help to grow your food business. But if you can determine that the consultants you are looking at can ask the right questions and challenge you, including about your business model and financial plan, you can form a meaningful partnership with that consultant.
And now, our roundup of the best food and beverage finance news, events and resources from around the web…
Business Model Insights
- Do I Apply to That Accelerator? (The Intertwine Group) – “Validation occurs when you apply to an accelerator program and find yourself invited to be a part of a cohort. But affirmation alone won’t grow your brand. When you join, you are giving up time, maybe some equity and both are precious. Just make sure that doing so gets you further down the path of improving your growth hypothesis, speeding your growth hack experiments, and ensuring that the optimal team surrounds you.”
- Insider Tips for Working With Co-Packers From Sandro Gerbini (Real Food Brands Podcast)
- Why you should seek out a business mentor, as told by a successful co-founder (New Hope Network)
- 5 obvious pitch misses this judge sees (New Hope Network) – “First and foremost, investors invest in people, not companies, and they tend to gravitate towards people who are genuine, authentic, have grit, are confident but not arrogant, are collaborative, can be coached, and have a likable personality. The best pitches clearly and succinctly articulate the need in the market for the product and the product/market fit. With any product, investors want to know that a big market either currently exists or will exist in the future. Pitch judges and investors also want to see that the business is viable financially over the long run. That generally means an adequate gross margin or a clear path to an adequate margin as well as believable revenue projections. In addition, showing that customers clearly want a product will dramatically help that company be successful in a pitch competition.”
- The Basics of a Business Line of Credit (Investors Community Bank)
- Why your brand should consider getting a line of credit (New Hope Network)
- How to differentiate your brand through a customer-centric approach (New Hope Network) – “The single biggest marketing challenge today may well be brand differentiation. Now more than ever it can be difficult to differentiate your products from your competitors’ products in the eyes of the consumer. And can you blame them? One look at any major retailer’s shelves or a quick search on Amazon and you will see a virtual sea of products that all seem to have similar attributes, features and benefits. How does a brand separate itself and develop true brand recognition and loyalty when there are so many products that apparently offer the same thing?”
- National Wholesale Brands Business Model Optimization Report (Edible-Alpha®)
- Albertsons partners with CPG brands to drive online sales of groceries through 4-prong approach (Food Navigator)
- Plant-based food market value hits $4.5B, with sales growing 11% in the past year (FoodDive) – Plant-based options expanded across product categories, growing much faster than conventional items. Sales of plant-based ice cream and frozen novelty items were up more than a quarter. Plant-based cheese sales increased by almost a fifth, while the dairy-based variety remained flat. Sales of all plant-based meat — refrigerated and frozen — were up 10% last year, bringing the category’s worth to more than $800 million and now comprising 2% of all retail packaged meat sales. Similarly, sales of plant-based milk products expanded 6% in the past year, while sales of cow’s milk dropped 3%. The plant-based segment now makes up 13% of the entire milk category.”
- The F Word: Flexitarian is Not a Curse to the Meat Industry (Neilsen)
- Vegan vs. Plant-Based Diets: How Are the Consumers Different? (Food Industry Executive)
Farming and AgTech
- The Seasons of Farm Financial Management (Compeer Financial) – “Like so many other things on a farm, financial management is seasonal. January and February are the height of the harvest season for farm finances. It’s the time to total all of the income and expenses from the previous year and get them ready to haul to the tax preparer. It’s also the time to take inventory of stored crops and feed, prepaid expenses, livestock, machinery and equipment, other assets, and update the farm’s balance sheet. The balance sheet can be completed after all of the end-of-the-year bank and investment statements have been received. March is the time for profitability analysis and is also the season to measure and sift last year’s cash flow. After March, the rest of the year just requires some monthly maintenance, monitoring cash flow.”
- Trucking Along: Where Rural Roads Are and Where They Are Going (Farm Bureau)
- Big Food turning to regenerative agriculture to meet sustainability goals (FoodDive)
- Nutrition Capital Network Deal Download: July 2019 (New Hope Network) – U.S. shoppers are making more room in their baskets for plant-based foods, according to new SPINS retail data released by the Plant Based Foods Association and The Good Food Institute. Sales of plant-based foods that directly replace animal products grew 11% to $4.5 billion in natural and conventional grocery channels in the year to April 21, 2019; since April 2017, sales have increased 31%.”
- Food industry M&A deals dropped by 11% last year, study find (FoodDive)
- KKR to acquire Campbell Soup’s international operations in $2.2 billion deal (Food Business News)
- Small Grains Conference 2019 (Practical Farmers of Iowa) – $ for non-members, 8/16 – 8/17 in Wisconsin Dells, WI
- Western Foodservice and Hospitality Expo (California Restaurant Association) – $, 8/25 – 8/27 in Los Angeles, CA
- Expo East 2019 (New Hope Network) – $, 9/11 – 9/14 in Baltimore, MD
- Guiding Wisconsin Farmers to Legal Resilience (Farm Commons) – Free, 9/13 in Madison, WI
- Food Culture Forecast (Hartman Group) – $, 9/29 in Chicago, IL
- 2020 Farm Bureau Ag Innovation Challenge (Farm Bureau) – Free to apply, 9/30 Online
- Food and Ag Ideas Week (Grow North MN) – $, 10/10 – 10/15 in Minneapolis, MN
- National Farm Viability Conference 2019 (Multiple Hosts) – $, 10/22 – 10/24 in Redwing, MN
- Regenerative Earth Summit (At The Epicenter) – $, 10/29 – 10/30 in Boulder, CO
- Annual Farmer Cooperatives Conference (University of Wisconsin Center For Cooperatives) – $, 11/6 – 11/8 in Minneapolis, MN
- Good Food Financing and Innovation Conference (FamilyFarmed) – $, 11/3 in Chicago, IL
- Business Tax Basics (UW-Madison SBDC) – $, 11/19 in Madison, WI
- National Good Food Network Conference (2020) (Wallace Center) – $, 3/10 – 3/13 in New Orleans, LA