Are you thinking about scaling up your food business with a major retailer? Whether you’re expanding your product line or increasing production, there are key elements you’ll need to have in place before contacting a major retailer.
I have seen many excited food entrepreneurs get into major retail stores only to have their products removed within a year with several thousand and sometimes millions of dollars of unsold inventories.
Here are seven elements to have in place before contacting a big-name retailer.
1. Get the right team and the right software
When building your team, make sure:
- You hire people who enjoy learning and are great team players. Your team needs to keep up with all applicable regulations and should have ongoing training opportunities. All departments need to be able to work together to maintain an efficient product delivery process.
- You reach out to your network of food consultants and services. As your business grows, you will inevitably have more on your plate than you can handle yourself. A very knowledgeable consultant can help you navigate some key transition periods without having to commit to them long-term. RangeMe offers a network of service providers that can support many aspects of your business until you are ready to hire someone full-time.
- You are up to date with the software and digital tools available to simplify your business. In the beginning, you may find yourself using notepads, spreadsheets, or word processors to get the job done. The food industry has welcomed many digital tools that can make your process efficient and reduce labor costs and human errors.
2. Understand FDA and USDA regulations
FDA and USDA are the two major government agencies regulating food in the U.S. In general, the FDA oversees non-meat products while the USDA handles meat products. There are many exceptions. Therefore, if you are unsure where your product falls, consult their websites.
The Federal Food, Drug, and Cosmetic Act (FD&C Act) gives the FDA authority to inspect food facilities, require recall of unsafe foods, set standards for food safety, and more.
Compliance with these regulations will help ensure that your products are safe and fit for human or animal consumption, which will protect both your customers and your reputation.
3. Keep an eye on quality and food safety
An inadequate quality and food safety program can shut down your business. Take the time to review news about recalls and even subscribe to the FDA recall alert mailing list. It is important to know what the major sources of recalls are and how to prevent them from impacting your business. Undeclared allergens have been the leading cause of food recalls in the U.S. for many years.
Many retailers ask for 3rd party GFSI audits such as BRC, SQF, and FSC2000. These audits rely on a rigorous food safety and quality program that will minimize adverse events.
In addition to protecting your potential customers, a great food safety and quality program sends a strong message about your brand, your business, and your potential to make more sales.
4. Ensure your supply chain and processes can be scaled up
Your suppliers need to have the capacity to increase production to meet your needs within a reasonable amount of time.
A good rule of thumb is to have three qualified suppliers on your approved supplier list. If your product includes a hard-to-find ingredient, work on some alternatives including creating a substitute recipe without that ingredient.
Keep an eye on costs as you scale up production.
5. Develop the right product for your retailer
You may have enjoyed some successes with your product and determined that it was time to talk to additional retailers. Avoid the one size fits all approach. Research price points, packaging sizes, and even marketing messages to ensure that you will be a good fit for your targeted retailer.
This will help you build a strong foundation for growth and ensure that your marketing efforts are paying off. It may take some trial and error to find the right mix of channels and product, but once you find what works, stick with it and keep scaling up!
6. Ensure you have access to the funds necessary to scale up
It is never too early to figure out where you can turn to bring in additional funds to a growing business. Create a business plan with detailed financial projections and be ready to share it with potential investors, grant providers, and loan officers to get more capital. The Small Business Administration (SBA) can provide a lot of resources on government grants programs and other types of funding.
Ultimately, having access to the right level of funding is essential for any business looking to scale up. By planning and identifying potential funding sources, you’ll be in a much better position to fill large orders.
7. Build your audience
There is so much work involved in launching a food product that entrepreneurs often forget to build their own audience. If for any reason your product is discontinued, you will no longer have access to your retailer’s customers.
On the other hand, when you build your audience, you can successfully send some of your fans to purchase your products.
There are several ways to build and maintain an audience via social media, email marketing, and various marketing programs.
Production is not the end of the business cycle. As a manufacturer, you need to try to support your product all the way through the sales cycle.
Are you a supplier on RangeMe? Find LaSource Food Industry Consulting, LLC on RangeMe services here.