The Food + Enterprise Summit in New York was a chance for the small business community to meet experienced investors and strategists to talk about food business growth. Here are their 3 main takeaways for scaling your business in a sustainable way.
Whole Foods may sound like the mecca for your natural food product, but be sure to factor in slotting fees. It’s very common for large chains and retailers to charge small companies high fees in order to carry their product. While controversial, the practice is one of the realities of growing brand awareness. However, it is by no means a guarantee. Remember that the retailer is providing your business with the chance to sell.
Whatever you decide, this consideration needs to be included in a business plan. Slotting fees can add up to hundreds of thousands of dollars and with no guarantee of sale! However, premium product placement can help drive business. It’s useful to remember the retailer is providing a stage, but your product has to perform. It’s good to think about how other factors such as marketing or cost of supplies when determining when it’s strategically right to push for the big store shelf.
*Kinnek Pro Tip: Slotting fees are not set in stone. Sometimes it pays to play small. In some situations, if your business is small and capitalizes on a hot new trend, it may provide flexibility on the retailer-side.
While slotting fees and other promotional strategies can increase sales volume, don’t just throw that money into an empty void. Measure your growth promotion strategy. Experts tend to agree, it’s best not to measure during the time of promotion, but immediately after.
Make the calculation for your baseline prior to the promotion then measure the overall increase in sales following the marketing push. That information will support a cost-benefit analysis to determine what works best for your product and business!
*Kinnek Pro Tip: If you’re paying a service to run a promotion, don’t forget to also get the data on your customers and performance from the service provider.
Surprisingly, not a lot of business plans take their customer acquisition cost - or the amount spent to acquire a customer into account. It’s a good idea to identify what metrics you’ll need to track to get there, for example: X amount of capital gets you Y customers. By measuring the performance of your growth efforts, you should be able to determine how much it costs to get customers and incorporate it into your growth strategy.
*Kinnek Pro Tip: Once you figure out your customer acquisition cost, keep checking and adjusting it as your company grows. What’s right for an early stage small business will differ for a more mature one.
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