Hey folks, our friends over at Harlem Food Local did a great job with a writeup on our inaugural event, Launching a Food Business on Lean Budget back on February 27th. In it, the highlight 15 of their takeaways from the panelists, so if you didn’t get a chance to go, here are their crib notes 🙂 We encourage you to sign up for The Lean Food Startup NYC MeetUp Group and come to the next meeting scheduled for March 26th.
Interested in starting a food business? Here are the top 15 take-away tips from the panel that will help you navigate this insane startup business.
- Delusion is a Necessity. You must have uncompromising and unwavering belief in your product, your idea, and your mission. But, this delusion must be anchored by the slightest bit of reality, where you also have to realize that you are not going to have any idea what you are doing for most of the time.
- You must be intensely and extremely stubborn (coupled with the aforementioned ‘delusion’, they work very well together). Every time someone tells you’re wrong, tells you that your product stupid or that your packaging is ugly, and that you’re never going to succeed, you have to dig your heals in even more and stay committed.
- However much money you have for StartUp and Operating costs, chop that amount in half and use it as your actual budget. Don’t worry, the reserved half will get used too (on costs you never anticipated) but you’ll be under much less financial stress if you budget conservatively.
- Have a very honest conversation with yourself about how much money you have, what your costs will be, and when you need to start being profitable. Remove all of the delusion from this step. Really figure out if, with the tools and capital you have, your plan will turn into a winning equation. If you aren’t absolutely certain, take inventory of where you feel you could improve, and do that before you sink a ton of cash into discovering your hunch about it not working out was right.
- Plan for a ton of costs that you never anticipated because they are ‘unknown unknowns’ and they will materialize when you least expect them.
- Question and Negotiate EVERY expense. Go through each and every line item on your debit sheet and if you don’t know why you are spending that amount on a particular item, try to get it for cheaper. The worst that can happen is that you’ll be paying exactly what you are right now.
- Everyone is NOT your Target Market. Know who your market is and get to know them on a personal level. Stop pretending that your product is so amazing that every consumer in the world will want it, because they won’t.
- When designing your business model, keep scalability, agility, and adaptability in mind.
- If you are selling a packaged food item (specifically to a grocery chain, or a gourmet specialty store), make sure any and all of your potential clients taste your product in front of you. If you leave it up to them to taste it, they never will, and you won’t get a new customer.
- Creating different product lines, with different costs, and different margins is one of the best way to ensure profitability. BUT, don’t expect to launch multiple products simultaneously.
- Plan for profit margins of no less than 50% because it is very likely that margin will shrink.
- The best way to learn about the industry is to get yourself a mentor. Seek out a successful business that is like yours (but does not directly compete with you) and make friends with them.
- Don’t think that Kickstarter (or similar types of crowd fundraisers) will get you all of the cash you need. You will need alternate funding sources. Successful crowd fundraisers require an extremely developed and vast social networks with high visibility. If you don’t have a social network like that, don’t expect for Kickstarter to be the answer to your prayers.
- You will need an internet presence, but chances are, you aren’t a food industry professional that is also an expert web developer. Whether you decide on a site that will be dynamic or static, outsource what you can of it. You don’t need to learn how to be a web developer while building your business. It’ll save you a lot of time, effort, and frustration if you outsource the project to someone who can do it painlessly.
- By throwing your hat in the ‘entrepreneur’ ring, you are signing up to have an adventure. Bound to encounter a few of your lowest lows and your highest highs, remember to have fun the whole time, because it’s an adventure of your own creation.