Launching a food and drink brand? How much does it really cost?
80% of new food and drinks brands don’t make it past the first 12 months. In our Business Innovation Masterclass, Eddie Stableford, Food Brand Expert and founder of Brand Clock, explained the importance of planning, development and accurate costing for a business to not only survive, but also thrive! Here are some of the lessons we learned in our session.
Even outside the realm of food and drinks, everyone has a different idea about what success means. Eddie’s advice is to first figure out what success means to you, then walk backwards through the stages to formulate what you need to do to make that a reality.
Investing in the process
Launching your product should be the last part in your brand building process. Businesses can fail because they do not invest enough time and money into initial research and development, so make sure you ask these important questions early on:
- Is there actually a gap in the market?
- What are my competitors doing?
- Will the business plan and financials work?
A useful method you might want to try is Cooper’s Stage Gate methodology, with five stages from discovery, through to launch and implementation. According to this model, you must complete the current stage before moving on, this ensures you don’t skip any important steps. And at each stage, you decide whether to go ahead, kill, or rework your project.
Investing in the right people
If you’re a business owner, no doubt you have worn the necessary hats: the visionary, the salesperson extraordinaire, the accountant and more! But you can’t wear them all forever, so get your core team set up as soon as possible:
- The founder, the visionary, the magician, the maverick
- Purchasing, production and logistics control
- Sales
- Finance
Not all the roles have to be full-time at the beginning, but they are all vital to the success of your brand. Based on your particular business, there may also be other integral roles such as a chef or subject expert, but these are the starting four. A fine balance must be struck between logistics control and sales because a business can suffer both from having no sales, or not being able to keep up with demand.
Investing the capital
And finally, the million-dollar question, how much will it cost to build your food and drinks brand? The truth is this will depend on what you are trying to achieve – there can be many costs involved such as material costs, staff salaries, product R&D through to manufacturing, packaging and logistics.
To get an accurate picture of whether your business will be financially viable, you need to do the calculations. Begin by calculating the ideal drawings for the first, third and fifth year of your business. From there, you can work backwards to see how much your gross sales will need to be and therefore how much you’ll have for overheads each month. Does that work out based on what your overheads will actually come out to each month?
In addition to these key takeaways, we also learned about:
- the benefits of launching into retail;
- the important distinction between mark-up and margin;
- detailed estimates of how much various stages in the process could cost, including product photography, certification and packaging.
With thanks to Eddie Stableford, founder of Brand Clock, for hosting the masterclass.
Don’t miss out on future tips for growing a successful horticultural or food and drink business. Become a Growing Kent & Medway member and sign-up to our upcoming Business Innovation Masterclasses.