Apologies for this delayed post. The final bits of 2015 have been a bit of a mad rush. I suppose that’s holiday time for you!
Back to business — the workshop “How to start a food business” was not so helpful for me. It focused on mass-produced food products. I did take a few notes that could be useful. Here are a couple:
• You need to be outgoing
• the most successful people share their ideas
Our group was pretty quiet. I was the only one who happily shared their idea. And then the speaker asked me if I was rich…and said having money was key.
They did talk about the USP (unique selling point) and i’ll admit I wasn’t sure what exactly qualified as a USP. The example they used was a vegan pasta sauce. Even though most pasta sauces are vegan, they put their USP to use by explicitly labelling it “vegan.” Another example they used was packaging – if it fit nicely into a small space since the majority of Torontonians live in such small condos.
They also gave us a price structure which was helpful.
As a product developer, they suggested your profit margin should be 50%, so I guess as a baker, if my muffin costs .50c to make, then I need to sell it to retailers for $1.
Then the retailer would sell it for 35% more. So if I paid $5 for a card to sell in a gift shop, I would sell it for $6.75. And I would sell that muffin if I were both the producer and the retailer at 85% of it’s cost.
Another interesting tidbit we learned is that if inflation makes your supplies cost go up, instead of changing the price of your products (muffins, coffee, whatever) change the packaging, size or weight.
I went to see an accountant after the workshop. It was a bit discouraging. He told me if I were his kid, he would be worried about what kind of debt I could get myself into at this age. He said businesses have a 90% rate of failure. He did offer some helpful suggestions in finishing my business plan. Since my concept doesn’t fit nicely into one category, I’ve been having trouble figuring out how to do my sales estimates for the cash flow sheet.
He said to figure out my area, or if I have a couple in mind, go to both and just count foot traffic for potential customers during peak hours. Then go to a couple of similar-ish places and lurk there during busy times and count traffic there as well.
Another thing he mentioned that isn’t working in my favour is that banks want collateral when offering loans to businesses. I don’t own anything, no car or condo, so I have nothing they can take from me if the business goes sour. My only hope is financing through BDC — or winning the lottery.