Scale your start-up: the need to knows
“Every year, 16,000 food and drink products emerge into the UK market and yet, 90% of them don’t make it past their first year of trading.” How can you avoid being a statistic and become a success?
Entrepreneurs starting up organic food and drink brands have a distinct commercial advantage, given increasing concern over traceability and sustainability.
2020 saw the UK organic market reach its biggest year-on-year increase in 15 years with 12.6% growth and the UK market now reaching £2.79B*. £50m per week was spent on organic during 2020.
To help organic food and drink entrepreneurs set up to succeed, we launched an exclusive Business Start-Up Support Package last year with leading UK start-up organisations, Bread & Jam and Young Foodies. We asked our package partners, and some of the fast-growing organic brands we work with, The Hemp Pantry and Cocofina, to share some of the key challenges start-ups face in the early years and how to overcome them.
Managing product quality and suppliers
Matthew Atkins, Founder of The Hemp Pantry
“Always make sure to check your supplier out first and always request certification before purchasing. When I started my business from my sister’s flat, I was producing small volumes of product, and only needed small quantities of ingredients. I started purchasing from a couple of online stores, and after the first few orders came in, non-organic produce started being delivered. I changed suppliers and then found the next supplier had out-of-date certificates, and some smaller companies couldn’t provide any organic certification at all. After a stressful start, I did finally find a fantastic supplier that’s Soil Association Certification certified, and I‘ve continued to work with them for over two years now.”
Jacob Thundil (MBE), Founder of Cocofina
“If you purchase raw materials, it’s important to set up specifications and a procurement process early on. This is especially important when it’s a product you’ll keep buying, and any fluctuation from your specification would affect taste or food safety. Working to Soil Association’s organic standards, we were made aware of the impact of seemingly minor things like PVC linings in caps and solvents in ingredients. Adhering to organic certification is reassuring when you're starting up, as you may not otherwise consider some of these important points.”
Finding the right manufacturer
Jason Gibb, Co-Founder, Bread & Jam
“Most manufacturers just want to turn on their machine at the beginning of the day, turn it off at the end, and use ingredients, processes and packaging that they’re well versed in. Innovative brands, on the other hand, want to use exciting new ingredients and processes, and put their product in the latest, cutting-edge eco-packaging – and of course, in small quantities at first, please. So, it’s about finding a manufacturer who you can sell the dream to, and that’s willing to take a punt on you. The ideal is finding a manufacturer that’s expanding, or has excess capacity, and then they’re hungry.”
Winning over buyers
Jason Gibb, Co-Founder, Bread & Jam
“If you’re a food and drink entrepreneur planning on selling through retail, a huge challenge is accessing retail buyers; these are essentially the gatekeeper to the deli, store and supermarket shelves. For a buyer, talking to potential new suppliers is a tiny part of the job, whereas for a producer, speaking to the buyer and winning them over is a huge part of the job. Therein lies the friction. I always tell start-ups that they’ve got to get inside the head of the buyer, understand their needs and pressures, and make everything as easy as possible for the buyer to list their brand.”
Jacob Thundil MBE, Founder of Cocofina
“You don’t have to do every deal on the table. We quickly realised there was a pattern for our successful distributors. Now, we have a set criterion to help us select distributors.”
Nailing the label
Matthew Atkins, Founder of The Hemp Pantry
“The labelling of organic food products can be quite daunting to begin with, as there’s a lot of information that must be included, from the name of the product, organic logos, ingredients, to nutritional information. The main challenges I found were describing the product correctly and working out the percentages of descriptive ingredients in the ingredients list. I’ve found it good practice to firstly get my labels checked by a third-party service and then double-checked by my local council service. As I’m certified organic, Soil Association Certification signs off every label before going to print.”
Scaling up before you’re ready
Jason Gibb, Co-Founder, Bread & Jam
“Every business needs some sort of money to get it growing. It’s entirely possible to start slowly, hustle up some branding, a website and some packaging, and then use sales income to organically grow. However, pretty much every business needs a cash injection at some point, if it wants to scale. The challenge is firstly finding family, friends, customers, angels or institutions who believe in you and the project, and who have cash to invest, then working out the right time to take the money so you aren’t giving away too much too soon.”
Krystal Ng, Senior Commercial Manager, Young Foodies
“If you’re looking to raise capital, consider overdrafts, loans, invoice financing, equity finance, competitions, accelerators or crowdfunding. Remember that the fundraising process is time-consuming, so leave enough time and capital to tide you over, and try to plan ahead, so you’re not raising while you need.”
Jacob Thundil MBE, Founder of Cocofina
“In the early days at Cocofina, a few supermarkets reached out to us. We were flattered, but it was evident that without the brand awareness, and targeting the right customers, it would've been hard to drive sales from the shelf. It's important to focus on where and how you'll sell your products, and to whom, by completing a cluster analysis to target who your target customers are. This is an even more important aspect for a food business, as products have shelf life and minimum batch sizes, where you want to sell out quickly and keep producing fresh batches.”
Our Organic Start-Up Business Support package is here to help
As the UK’s leading organic certification body, certifying over 70% of all organic food and drink businesses in the UK, we know a thing or two about running an organic business. However, we want to support new food and drink businesses even more in the difficult early years of growing their business, which is why we set up the Organic Food & Drink Start-up Business Support Package in collaboration with Bread & Jam and Young Foodies.
Participants in the scheme will have access to ‘Meet the Buyer’ events, bespoke business support and marketing webinars; eligibility to enter the Best of Organic Market (BOOM) awards in the ‘Best of Organic Food & Drink Start-Ups’ category sponsored by Ocado, with this round’s entries open until 1st March 2021; and exclusive discounts on memberships, events and training through Bread & Jam and Young Foodies.
Bread & Jam run workshops and bootcamps on anything from finding and working with manufacturers, how to sell into retailers, and landing investment, as well as their annual foodie festival Bread & Jam Fest. Young Foodies also offer a breadth of events, guidance and services, spanning recruitment, supply chain and logistics; to product, and technical and business services; to investment, and sales and commercial.