Emerging specialty food businesses can find it difficult to optimize operations and make the best use of funding opportunities.
SFA will host Scale Up Saturday, the day before this year’s Winter Fancy Food Show kicks off in Las Vegas. The all-day event, taking place on January 20, is designed for makers to learn about growth strategies and financing options. Package prices range from $99 - $149 for members and $199 - $299 for non-members. More information can be found here.
During a Scale Up Saturday session titled Fund Your Future, Jack Acree, EVP of Saffron Road Foods, will speak about the basics of financing a business with Hallie Bonnar, co-founder of investment fund New Fare Partners, Brandon Ng, VP of investment firm Houlihan Lokey, and Adam Spriggs, founding member of The Angel Group.
Panelists will address the difficult economic climate and strategize appropriate funding options at each business stage while diving into actionable objectives and timelines.
Acree spoke with SFA News Daily about the topic.
What are some common mistakes that specialty food businesses make when financial planning?
Number one would be failing to set realistic goals. To be an entrepreneur, one must be naturally optimistic. This optimism must be tempered with reality though, as setting unachievable goals can have a cascading effect of damaging profitability and credibility. Tying those goals to a clear roadmap is helpful from both a planning and hindsight standpoint as one can look back and see where key goals might have been missed.
Entrepreneurs need to understand what it costs to make and sell their products, and then what the key levers are to drive costs out of that process.
How do you know how much money is enough when bringing a business to market?
This is all about research and education. Most new specialty food companies are started by people who don't have direct retail food experience. Even if one has foodservice experience, packaged food is a completely different business. There are many “hidden” costs between making a product and keeping it on store shelves. Once someone understands all of those pieces, they will have a much better understanding of what is possible from a sales standpoint and how much that will cost.
There is so much information at the SFA and through other sources to help new companies looking to succeed.
What are some data points that a specialty food business should include in a pitch meeting with potential investors?
Once your product is selling there are two key market metrics, distribution and velocity. Distribution shows that you can get your product on store shelves and velocity shows that you can also move your product off store shelves. It's a bit tricky sometimes as velocity can be negatively affected by a lot of new distribution, but the overall trend lines are usually apparent.
On the company side, showing positive trends in lower costs and raising profitability are key.
Are there any challenges that you foresee in 2024 that businesses need to consider when seeking funding opportunities?
The current market is quite challenging. This will be a good bit of what we will discuss at the session. Volume is down across many food categories. Some companies that have been relying on additional funding are finding it tough to raise more.
Over my 34 years in the specialty food business, I have seen at least four outright recessions; one thing consistent across all of them is that many great brands were born out of those tough times. It's a natural process of the business cycle. The right person or group is always there to fund a great idea with an even better plan to back it up.
What topic are you most excited to cover during the session?
I look forward to giving great information to help businesses get started and maybe even introduce them to a future financial partner. It would be easy to say the exit part when companies are sold [is the most rewarding], but the most exciting part [to me] is at the beginning.
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