A variety of food spread out on a table

Build a stronger food and beverage business by building stronger business skills

June 13, 2022

Build a stronger food and beverage business by building stronger business skills

Synopsis
2 Minute Read

In an industry known for passion and purpose, knowing your numbers can be your biggest differentiator. Here’s how the right advisor can help.

Partner, BC Leader, Food & Beverage Processing

There has never been a more exciting nor a more daunting time to be a food and beverage entrepreneur. The growth in grocery e-commerce through waves of lockdowns has allowed many small producers to capitalize on the direct-to-consumer boom. Start-ups across Canada have also benefited from increased demand for health-conscious products as well as a shift toward supporting more local and sustainable producers.

Finally, it seems breaking into the brick-and-mortar establishment is no longer necessary for large-scale distribution. Yet, despite great products, attractive packaging, and a rapidly growing fanbase, many upstarts are struggling to translate their initial surge in popularity to sustainable growth and profitability.

For a growing number of emerging brands, especially those who got their start in selling online or at small local markets, issues emerge slowly and hardly register until they become an existential concern: A founder might find profits are growing more slowly than anticipated… they’re needing to pay themselves less despite a steady increase in sales... or they may find it difficult to source key ingredients to meet the rising demand.

These struggles no doubt owe much to the ongoing supply chain problems, inflation, and labour shortages impacting every business in every corner of the sector. They’re also easier to shrug off with fewer small businesses committing to big-box retailers and the contractual commitments that go in hand.

With more plausible explanations and less urgency to investigate, many entrepreneurs don’t look for the root of the issue until those issues become an overwhelming problem.

Building a recipe for success

It’s no secret the food and beverage sector is particularly mission-driven. Producers go into business to share a family recipe, help people live a healthier lifestyle, or fill a void in the marketplace. Getting product into customers’ hands is the priority. Managing spreadsheets and negotiating co-packing relationships is merely the process that helps them to do that at scale.

That deep-seated sense of purpose is essential; it’s what consumers are buying, after all. But a clear vision is only one ingredient for an exceptional brand. Sustainable success is impossible without a strong business plan, clear strategy, and solid understanding of key performance drivers.

Few entrepreneurs understand everything there is to know when they launch their first business. That’s understandable. An enterprising brewer should know a lot about making a great beer, but it takes time and experience to build skills related to management, finance, and distribution.

On-the-job learning is simply part of the gig — which is why mentorship is such a common fixture in start-up circles: A trusted advisor can help work through challenges, validate decisions, and point out blind spots.

Unfortunately, not every founder knows someone with those kinds of skillsets. Many food and beverage entrepreneurs have pivoted from a completely different career. And the industry isn’t exactly known for the kinds of incubator networks common to the technology sector. However, that doesn’t mean owners have to go it alone.

An entrepreneur’s secret ingredient

There’s a common misconception that professional service providers cater primarily to large businesses. In fact, it’s often small and medium-sized businesses that don’t have the benefit of large finance, risk, and operations teams who can often benefit most from working with a business advisor.

This individual or team is committed to the entrepreneur’s success and helping them develop the financial mindset and skillsets to match their branding and product expertise. A business advisor’s skills are particularly beneficial in the early stages when an entrepreneur may be living hand to mouth and not yet have a clear plan for growth and profitability.

Like a mentor, they’re there to help workshop issues, navigate growth milestones, and pinpoint areas for improvement. Unlike a mentor, though, a business advisor takes a far more invested role, embedding themselves in the business, getting their hands dirty, and helping owners grow and do the right things well. They also bring extensive knowledge of the challenges in the industry — and in-depth expertise on practices, strategies, and techniques similar businesses have adopted to optimize their performance.

The goal of every worthwhile advisor should not only be to help businesses evolve through the start-up to more established phases, but also to ensure entrepreneurs become more confident in their ability to lead and create sustainable value. The relationship will continue to deliver value as new challenges and opportunities arise, but the conversations will become focused less on doing the right things, and more on how to do the right things even better.

In an industry known for passion and enthusiasm, the right mix of conviction and business acumen can make an enterprise virtually unstoppable.

Contact us

To learn more about how MNP can help your organization, contact Eva Tone, CPA, CA, Partner, BC Leader, Food & Beverage Processing.

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