In December I attended a seminar on how to become a more effective sales manager in the natural and specialty channel. One of our friends in the food industry told us this was an absolute must, and he was 100% right.
Coulter was supposed to come with me, but he was really sick, and unable to sit through a long day of presentations. I have to admit, I was extremely nervous attending this by myself, but it worked out in the end. I was able to speak to a couple of brokers, and the information shared throughout the day has already proven to be invaluable.
I not only took about 20 pages of notes, but was also able to take home a CD of all the presentation material. I also have a new understanding of what a sales manager does. Because at the end of the day, no matter how good your product is, you have to be able to sell it. I need to become an effect sales manager on top of creating this food start up. I knew that, but now I am able to do this, or at least have information on how to do this.
The founder of Q Tonic, the new manager of Lesser Evil Snack Foods, and the co-founders of Chozen, an all natural ice cream company based in Brooklyn, were all there. The best part, I felt like I wasn’st alone in this crazy food industry. I actually have ‘sœfriends’s who are doing the same thing that we are doing; trying to make an existing product, better, and trying to sell it. It was very comforting.
Some key things I learned/ terms that I want to share: I will be writing posts on these items individually, but for now- some things for you to digest.
Margin: Be scared of this: I am.
We need to be at 40% margin. Not less. If we aim for a lesser margin, and never get there, we are doomed.
To determine our margin we add everything up- whatever it costs us to get our product to our distribution house. (We are actually not using a distributor, not at first anyway. Since we are starting small, we need to figure out what it costs to get the product in our car, van, truck, bike etc.) For example: We need to calculate the cost of each gram of our ingredient, each pouch, each bag, each box, the kernels, the oil, the cost of shipping that is tacked onto this. If we are having a fulfillment house helping us, we factor this in. We want to make sure we have a good grasp on how much it is going to cost us to make our product. This is the first thing we should have figured out. I say should have, because we have not fully done this yet. If you are reading this and thinking of starting a food company, please do this first.
This is the equation. Sale price-cost price /sale price.
Brokers: They have a ton of experience in the food industry. They know the key players/buyers. We need to make sure our broker fits with what we are doing. For example: IF we were launching a frozen food product, we would need to make sure our broker understands the world of frozen foods. We also need to make sure that our broker is in the loop, hands on etc. We need to make sure we like our broker and most importantly, they need to like us and our product as they are selling/pushing our product into the stores. (Again, since we are starting small, we don’st necessarily need a broker. My first thought: Do brokers do pro bono? JK’s¦ kind of)
Distributors: We don’st necessary need one at first, but If we want to get into the major chains, we are going to need one. The most important thing I was told at the seminar: Never sign a New Vendor Contract Form by yourself. Always have a broker look this over. We will never understand the fine print, and they are out to make more than a buck. Depending on the store we want to get into, depends on the distributor we will use. The good thing-not all distributors take a huge percentage.
Whole Foods: We don’st necessarily need to be intimidated- we CAN get on the shelves without a distributor or broker. We just have to contact the local buyer in our area and make an appointment to speak to them and show them our product. Our first goal is to get on the shelves of our local stores. We move up from there. We are not going to aim to get our product into nationwide stores first-apparently it’ss a death trap. So we need to remember; local, regional, national.
This is just a quick summary of what I heard. More to come when we experience all of this first hand.