Stay Lean

Stay Lean

By Wiss (509 words)
Posted in Food & Beverage on February 25, 2015

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How food and beverage entrepreneurs can ramp up production without going broke in the process

By Jim Duffy 

You’ve just sold your leading food or beverage product to a major supermarket chain and it wants to conduct a test run in 50 stores.

Your hard work is finally paying off. Your company just got bigger in terms of sales and opportunity, and now you need the workforce to match. Right?

Not so fast. 

The power of outsourcing

The true cost of an employee is much greater than a salary, and many entrepreneurs underestimate the costs, including payroll taxes, health insurance, software licenses and training, etc. We often see projections that consider payroll as a true variable expense directly linked to projected sales volumes. But for early stage companies, payroll tends to be more of a fixed cost than a variable one.  

There will, you hope, come a time when you need the dependability and stability of a full-time workforce, but it’s not when you’re scaling up and every dollar counts. During that time, you have other options. 

Many necessary services are only a phone call away. You can contract with top talent in manufacturing, accounting, sales and marketing, human resources and food industry expertise, turning the spigot on and off in response to sales, customer demand, cash flow and other factors. Here are some areas of concern and the help available as needed. 

  • Manufacturing. Contract packers, or co-packers, are food-processing facilities that manufacture and package your recipe on a contractual basis, saving you costs associated with leasing production space, buying equipment and hiring workers. Furthermore, a professional co-packing operation knows how to get and stay compliant with the FDA, OSHA and other food industry and manufacturing regulatory bodies. 
  • Food or beverage marketing. You got your product on the shelves; the next challenge is keeping it there. Food or beverage sampling means hiring people as your in-store brand ambassadors to present your product to shoppers, get them to taste it and answer questions. It’s labor intensive, and requires frequent hiring — unless you contract with a company like Relish Food Project that acts as an extension of your sales and marketing team. 
  • Sales and advertising. You’re determined to hire a sales team and creative types to write, design and produce marketing literature. But that’s what independent sales brokers, ad agencies and public relations firms are for. Hire the services you need and can afford without adding overhead. 
  • Accounting and financial services. With your major sale, your finances just got complicated. Sales and revenue went up, but margins probably went down. A CPA familiar with the food industry might seem costly, but the inability to answer basic accounting questions from customers and potential investors costs much more. 

Congratulations again on your big sale and may it lead to long-term success. But in the meantime, welcome your talented team of outsourced experts.  

Jim Duffy is the partner-in-charge of the commercial practice at Wiss. Reach him at jduffy@wiss.com.

Want to find out more? Read the full article here.

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