I debated writing this as in many ways I wanted to leave 2019 behind. We made our way through the year with a few big issues. At times the bad news seemed to pile on, tainting my ever present optimism.
But you can’t only share good news. You read this for an honest account of a small business trying to succeed in the natural food space. So here it is.
I don’t want to sound too negative here. There were also a few positives too!
What went well
We launched Certified Organic bone broth!
No easy feat! This took a lot of time and energy. But organic was my main goal since starting this brand in 2016.
Organic is not perfect, but it is the best 3rd party system for assessing animal welfare, sustainability and integrity of food makers and suppliers.
We’re now one of two Organic bone broths sold Canada wide! For more on why organic is important, read my primer.
We continue to grow year over year. This is a huge positive. It may not be as much as I’d planned, but celebrate the victories!
It’s difficult to not compare yourself to other companies who are larger and grow much faster in the food space.
I need to remind myself that we are different. You’ll never win if you constantly compare yourself to your peers. They will always be larger, unless you’re Amazon.
We are doing something different and incredibly challenging. Bringing Organic bone broth to a massive country. If it was all about growth, I’d have a different strategy and different products to sell.
Closer to profitability
Here’s the big secret with small food companies. When you’re really small, you can be profitable.
By really small I mean making your product in your kitchen or in a commissary kitchen and selling at local stores and farmers markets. You make a few bucks and enjoy the chaos.
But ego gets in the way. You feel the excitement and urge to grow. You dream of possibilities. Once you get a bit bigger, the adult pants come on your business.
Adult pants mean that you transition to copackers, distributors, brokers and larger retailers -- all with their hand in the proverbial cookie jar. Any of your profits dwindle to zero in the first couple of years.
If you're a hyper growth company, you may take on additional financing to ease this burden. In our case, the growth is deliberate and slow because we do not have outside funding.
The margins are incredibly thin. The hope is that you get enough volume to make the business viable. This turns you into a sales driven company above all else.
I paint this picture because this is where many food startups fail. They don’t know their margins when they go through this transition faze, only to find out that the numbers don’t work as they grow. It’s really devastating.
What we need is a bit more volume / sales to earn a true profit. By profit I mean paying myself a competitive wage, which I certainly have never done in the business.
We maintained important retail accounts
I almost pulled the plug on one retail chain because it was proving to be too expensive for the sales it was driving. But having a few tough conversations allowed us to tweak a few things. We are en route to figuring it out.
We also continued to grow in some of our top selling existing grocery chains. This is a positive as there is more competition for bone broth on the shelves every day.
What did not go so well
Out of stock problems
Supply chain continues to be the bane of my existence. It’s an awful feeling knowing that you’ll be sold out for a month at a time -- with nothing you can do about it.
This is one thing that kills small businesses. If you can’t fill the shelf, the store will find someone who can. I lose a lot of sleep over this.
In 2019 we had more issues getting enough organic bones to sustain our growth. This caused shortages to our main retailers and financial hardships for us at times.
We are working through it. However, it remains difficult to maintain a supply of quality organic bones from farms that meet my ethical and sustainability standards.
This year I’ll be investing in more long-term solutions.
We lost one key retail chain
I need to take more responsibility for this one. We earned placement on the shelf during our slow summer season.
Grocery stores usually give you one year to see how it sells before making a decision whether they will keep your product or discontinue you.
I waited until the busier winter months before planning some sales and marketing support to this retail chain. But once I had these wheels in motion, it was too late. We got discontinued six months after getting on the shelf.
I was shocked and incredibly sad. Lesson learned. I need to be more proactive from day one in new accounts. We also shouldn't be getting new listings at the beginning of our slow season. It doesn’t set us up for success.
As I mentioned above, we’re growing, but not at the rate I’d hoped. Our sales support staff is pitching stores and working to bring in new opportunities, but we still have not landed a larger chain.
It still remains to be seen if our organic bone broth is viable on a mass market grocery store shelf.
I need to do a better job leading the sales process and communicating with our team about goals and expectations.
Superfood Mushroom broth
Our new Superfood Mushroom broth did not sell as well as I planned. It’s a shame because those who try it much prefer the taste to our chicken or beef bone broth. It really is a delicious and great product.
But if you can’t drive trial through demos and mass marketing, it doesn’t matter how great your product is.
Mushroom broth is a complex value proposition. Do our customers place the same value the medicinal mushrooms in the broth as I do? The market would say no.
Or do consumers see it as a competitor to the $1.99 mushroom broth at the store. Probably more realistic.
It’s a lot to ask our customers to pay $13.99 to try a mushroom broth. I may have to change the ingredients to make it more cost effective for everyone to try.
Lesson learned for me: these ‘edgy’ products are not always ready for prime time. Maybe they work on the west coast, but you need them to sell everywhere.
What’s happening in 2020?
Enough of the reflection, let’s look forward to 2020 as there are big things happening!
We’ve spent the last half of 2019 completely overhauling the look and feel of our packaging. Keep an eye out in February on our website or in store as it looks much different. Also be sure to subscribe to our email list for special deals!
Focusing on online sales
I’m making big investments in growing our online sales. In 2019, we got back to experimenting with the viability of online bone broth sales.
I’m happy to report that it works well with our new temperature controlled insulated liners.
We’re experimenting with different pricing models to see what works best. Currently we’re offering 2 day shipping with UPS for only 4.99 for six and 9.99 for 12.
My goal is to grow our online sales to 15% of our total sales. Let’s see if I can do it!
We have a new product in the hopper. The plan is to have it ready during the summer season. If you’d like to be involved in testing this product, please email me. I’d love your feedback: firstname.lastname@example.org.
Awesome to hear Richard. All the best and let me know how it goes with your bone broth.
Making my first batch of homemade broth. Wish me luck.
Love the honesty here man. Great post. I’m rooting for you!
Thanks Shorty. Means a lot coming from you!
Thanks so much for all your support and love DaveO!
Will do Marita. Thanks for reading! Unfortunately the closest place to you is Stong’s in Dunbar. We don’t have any stores in Kerrisdale at this point but I’m working on it.
Sounds good I’ll send you a note Robyn! No mushrooms in this new one.
Thanks big sis!
A good read for any entrepreneur. I can associate with much of what you have written Connor thanks for sharing your experiences.
gosh buddy, your honesty and integrity are your hallmarks and there is no greater attribute to build upon. know i am always i your corner / respect from a cottage in Japan
Bravo Connor!You seem to be doing just fine in your business .
Would you send me a picture of your new logo please?. In what markets around Kerrisdale are you selling them now?
Wishing you lots of bones and all the best.
Love your products though I cannot do mushrooms. happy to help test if no mushrooms involved!
Thanks for providing this annual recap. Definitely insightful to see what goes into running a small business – particular one with a national market reach. Looking forward to see what you do in 2020!