Separating the Con Man From the Co Man by William Madden

Author:William Madden
Language: eng
Format: epub
Tags: food science, farmers market, entrepreneurial venture, manufacturing business, manufacturing methods, co manufacturing, comanufacturer, comanufacturing, commercial kitchen, contract packer
Publisher: Caroline Madden

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Chapter 10: You Don’t Have a Business Plan or Proof You Are Ready to Scale

Remember that lemonade stand you ran outside your house as a kid?

You used your parents’ lemonade mix, and your indulgent neighbors paid you 50 cents a cup for your watered-down lemonade. They patted you on the head and commented on what a promising entrepreneur you were. You made a whole $8, which you promptly spent on junk from the dollar store or somebody’s garage sale. Nobody even remembers what they bought with their “profits.”

As an adult, you now see what was going on.

Mom and Dad paid for your supplies.

Your neighbors bought your product to be nice to you. Your “sales” were in actuality acts of charity.

Believe it or not, you’ve probably been experiencing an adult-version of the lemonade stand with your product.

The Adult Version of the Lemonade Stand

If you’ve just been making your product at home and selling it at farmers markets or online to friends and family, you probably:

• Have no idea how much this is really costing you.

• Have not had to deal with large-scale packaging, storing, transportation, sales brokering or recall costs.

• Have gotten a lot of pity sales from friends and family, who will always tell you that your product is awesome (even if it’s not).

You’ve also not had to deal with all the basic running-a-business expenses. You know, things like:

• The time spent on accounting, record keeping, paperwork, tracking your product and sales, finding places to sell your product, researching compliance issues, making sure you have crossed all your t’s and dotted all your i’s, etc.

• The actual costs of buying raw materials and paying for production, packaging, transportation, getting shelf space in a store, etc.

• How to market your product to people who don’t know you and who have no reason to consider your product.

Because you haven’t had to deal with the impersonal, cutthroat market, you probably are not prepared for what this monster is going to really cost you. It’s likely that you are not prepared (financially or emotionally) for the amount of time and investment it takes to successfully launch a business.

This is especially true if the only materials you’ve read so far are hyped up get-rich-quick business books and online materials. You know, the type of programs that promise to teach you how to launch a successful business for $99.99.

What You Need: A Well Thought Out Business Plan

You need a professional business plan, complete with numbers from your past efforts, predictions that have been verified by experts, and records of your experiences in the commercial kitchen. Add to this proof of funding, a financial plan (projecting out a minimum of one year), and a marketing plan.

You need to figure out things like what are your profit margins and how much you will need to use to reinvest in the business.

This is a point you need to really think about. Do you realize how much of your profits will need to go back into promoting your business? Rule

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