Thursday, December 17, 2015

So you want to start a food business....

Aw--just kidding.
Every episode of SHARK TANK, it seems, has at least one food hopeful. Cupcakes, barbecue, health drinks, you name it. The Sharks always remark that this is a very hard business segment to crack--so much competition.

But, these days, according to Julian Mellentin,, millennials are food explorers--fusions, new tastes. Snacks based on seaweed alone are already a $250 million market.

Some pluses:

If the volumes of potential customers are low, you can come in under the radar and not run into the big boys coming to eat your lunch. Peter Drucker, business guru from Harvard, lauds the small market.

The new wrinkles are low volume--but can command high prices. Twenty to 30% of people will bite on health and wellness--and they pay.

New brands, at least at first, can use alternative distribution channels such as gyms, health food stores, and gas stations/convenience stores.

Small brands can go directly to the consumer--sell online. The Hint no-sugar drink gets a quarter of its sales online.

With a small brand, you can take your time. The bigger brands kill off ideas if they don't make money immediately.

Some challenges:

You must keep a close eye on consumer behavior with small brands. People may get bored with baked chips (had some the other day--yuck).

If you have no recognition, you need to go the PR route and give out samples.

Cash flow from sales is not enough--sooner than you think, you will need an investor or many of them. A hundred grand is mimimum for marketing and fulfillment of orders.

But this does not mean it can't be done. Even a company that sends out whole cakes made it big on SHARK TANK.

Cake is something you can get anyplace--but it worked as an online business.

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