Scaling An Early Stage Food Business

So, you have built your new food or beverage company from a start-up to over $1,000,000 in annual sales, with good margins and strong same-store sales.  You have investors looking to finance your growth to the next level.  You feel you are over the hump and on your way to long-term success.

However, you have just entered the most complicated stage of building a food company.  That is scaling from the start-up phase to a fully staffed and well organized small business.  This phase in the build out of your organization has led to the stagnation or death of many companies.  The following are the most critical areas of concern as you build a food company from very small to mid-size and a few of the major tasks in each area:

ORGANIZATION:  You are now hiring full-time people and beginning to build out your organization.  How do you hire and what attributes are you looking for?  What company culture are you trying to establish?  Do you need C-level people or great executors?  These and many other questions need to be addressed at this stage.

SUPPLY CHAIN: Can your current production scale rapidly?  Do you have the right certifications to sell to the large accounts necessary to hit your growth targets?  Should you use a co-packer or manufacture in-house? Are your vendors qualified properly and capable of handling your projected growth?  What will your supply chain look like at $25,000,000 in sales and who do you need to manage it?

SALES STRATEGY: To hit your growth targets you will need to sell to larger accounts in multiple distribution channels.  Do you know what expertise you will need to make these decisions correctly?  Accurate sales projections become critical to effectively manage your supply chain and cash flow.  How do you select brokers, distributors, and marketing support?

FINANCIAL: Cash is king at this stage.  Do you have an adequate method of forecasting cash flow?  Do you know what all your costs and margins are, and can you track the effectiveness of your promotional costs? With your first set of outside investors coming in do you have the financial reporting in the form that they require?

Up until now you have been proving out the marketability of your product, now you must expand on that knowledge while simultaneously building the business structure from scratch.  This requires a founder to delegate in many areas while maintaining control over the general direction of the company.

In my next series of posts, I will go into each of the four areas described above in greater detail.  The result will be a high-level blueprint for how to scale a company from a very early stage company to a sustainable high growth small business with the ability to fully execute against its market opportunity.

Stay Tuned………

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