7 Things I Wish I Knew Before Starting a Food Company

Part of The Barnraiser ‘Future of Food’ Series

7 Things I Wish I Knew Before Starting a Food Company

The future of food will not be determined by the mammoth food monopolies. The true innovation will come from people like you and I, sitting in our kitchens, dreaming about how we can provide healthy and sustainable food to everyone on this planet. Sometimes, those dreams will become so all-consuming that we’ll drop everything else to turn them into reality. A year ago I did just that and started my mission-driven food company, Kuli Kuli which sells moringa food products. Here’s are the things I wish I would have known before making that leap:

We’ve rounded up the most successful food projects. Learn how to do it on Barnraiser!

1. It’s going to take a long time.

Read TechCrunch too much you’ll believe that your company will take less than a year to build and will sell for billions of dollars shortly after that. There’s a reason that every food crowdfunding campaign I’ve funded delivers the product to customers months after the promised date. Taking your company from idea-stage to shiny store-ready package stage takes a long time. It’s also very difficult to get funding at that stage. Expect to eat ramen (or your own product) for at least the first year.

2. Iterate as much as you can while you’re small.

We started out in farmer’s markets, iterating on our bar recipe at each market and conducting consumer testing. Now that we’re in over 200 stores across the West Coast it’s become harder for us to iterate as easily. Make sure to take advantage of those early days by testing out your recipe on every person you can get ahold of.

3. Build in big margins.

First take the cost of making the product (known as COGS) and add 40%. That’s the minimum margin you’ll need to sustain your business. Then add 25%, that’s the margin that your distributor will likely take. Add another 40-50% for the retailer if you’re in the CPG space and an extra 5% for the broker you’ll eventually need. As you’ll quickly realize, the price that your product will be sold on shelf is 100% + more than what it actually costs you to make it.

4. Don’t print until it’s approved.

I can’t tell you the number of horror stories I’ve heard of people who have invested thousands of dollars into their packaging only to realize that Whole Foods, or another big store, doesn’t approve of some wording on the packaging and won’t let them sell in their store. Make sure all of your packaging is FDA compliant and make sure to get it checked by someone (we use Everclear) before you print.

Join our free webinar to learn the 5 keys to success with crowdfunding.

5. Find co-founders who you love.

They say that you should take finding a business partner more seriously than you take finding a life partner. Chances are that you’ll probably spend more time with the former than the latter. I feel blessed to have co-founders who are not only better, smarter and more talented than me at so many things, they’re also just awesome people to be around. Some people believe in “marrying up”, I believe in “co-founding up.”

6. Do demos like it’s your job (because it is).

On any given Saturday, you’re most likely to find my co-founders and I in a grocery store passing out samples. Doing demos (in-store sampling) is the single best way to get new customers interested in your product. Particularly when you’re just starting out and don’t have much brand awareness, doing demos is key to keeping your product moving off the shelf. As Whole Foods likes to say “the hardest part isn’t getting your product in the store, it’s getting your product out of the store” (and into people’s shopping carts).

7. Believe in your idea more than you believe in gravity.

Here’s the funny thing about food: different people have very different and equally strong opinions about it. Particularly if you’re trying to do something different and totally new, there are going to be people who hate your product. There will be people who try it and spit it out, just as there will be people who will love it and buy entire cases after just one sample. On a similar note, there will be potential investors and advisors who believe that your business has no chance of succeeding. The trick is to find the customers, investors, advisors and most importantly, team members, who believe in your idea almost as much as you do.

This article was posted on Barnraiser May 2015