Last week’s Food + Enterprise Summit in New York was a chance for the small business community to meet experienced investors and strategists to talk about food business growth.
Here are their 3 main takeaways for scaling your food business in a sustainable way.
#1: Sometimes You Have to Pay to Play
While Whole Foods may sound like the mecca for your company's natural food product, be sure to factor in slotting fees. It’s very common for large supermarket chains and retailers to charge small companies high fees in order to carry their product. While controversial, this practice is one of the harsh realities of growing brand awareness - despite the fact that it's by no means a guarantee.
Try to keep in mind that the retailer is providing your business with the chance to sell. Whatever you decide, this consideration needs to be included in your business plan. Slotting fees can add up to hundreds of thousands of dollars - and with absolutely no guarantee of sale! Nevertheless, premium product placement can help drive business. It’s useful to remember that the retailer is merely providing the stage but ultimately, your product has to perform.
It's also beneficial to consider how other factors, such as marketing or cost of supplies, can help determine when it’s strategically advantageous to push for that spot on the big store shelf.
Kinnek Tip: Slotting fees are not set in stone, so often times, it pays to play it small. In certain situations, if your business is small and decides to capitalize on a hot new trend, it may provide more flexibility on the retailer-side.
#2: Don’t Forget to Measure Your Marketing Impact!
While slotting fees and other promotional strategies can help increase sales volume, don’t just throw all of that money into an empty void. Measure your growth promotion strategy, and keep this in mind: experts tend to agree it’s best not to measure during the time of promotion, but immediately after.
Make the calculation for your baseline prior to the promotion, then measure the overall increase in sales following the marketing push. That data will ultimately support a cost-benefit analysis to determine what works best for both your product and your business!
*Kinnek Pro Tip: If you’re paying a service provider to run a promotion on your company's behalf, don’t forget to also get the data on your customers and performance from that provider, as well.
#3: Business Growth is Tied to Customer Acquisition Costs
Surprisingly, not a lot of business plans take their customer acquisition costs into account. It’s a good idea to identify which metrics you'll need to track in order to figure that out. For example: X amount of capital gets you Y amount of customers.
By measuring the performance of your growth efforts, you should be able to determine how much it costs to acquire customers and ultimately, incorporate those costs into your growth strategy.Kinnek Tip: Once you've figured out your customer acquisition cost, continue to verify and re-adjust that figure as your business grows. What’s suitable for an early-stage small company will greatly differ from what's right for a more mature one.
Not sure what's right for your business? Kinnek can help with that! Find all your supply and equipment needs in one place - no matter what your business size!
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