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Consultant Birgit Blain offers advice on when to close a food business


Packaged foods consultant Birgit Blaine notes that “Food is a tough business. And it takes big bucks to build a sustainable brand. We only hear the jaw-dropping stories about food start-ups getting seven-figure offers. But don’t be mislead. We seldom hear about businesses declaring bankruptcy or shutting down due to mounting debt. Others have been scooped up for a pittance by opportunists, never recouping the money spent trying to grow the business.”

This article is about two business owners who tried valiantly and eventually came to the realization that success can be illusive.

What they tried
Launching more products is a common strategy when sales don’t meet expectations. However, new products increase expenses, disrupt production, and can lead to inefficiencies and loss of focus. Research and planning is needed to avoid pitfalls. And new products must generate additional profit to cover development costs.

Rebranding and packaging redesign, if done right, can breath new life into a brand. But it’s expensive and does not guarantee a sales lift. In fact, it can erode sales if loyal customers no longer recognize the brand.

Giving product away or selling it below cost is never a good idea without a concrete ROI. Sampling programs to raise awareness and drive trial should pay for themselves.

Three things they needed more of
#1. Money. You can never have enough to build a brand. Sad but true.

#2. A team to manage production and distribution, thereby enabling them to focus on marketing and sales.

#3. Business experience, especially in the grocery trade, marketing and sales.

What they learned
-It’s a numbers game. Only profitable businesses survive.
-Well-meaning people doling out advice to “never quit” won’t pay the bills.
-Cash goes out faster than it comes in, with no guarantee of sales growth and profitability.
-Timing is key; maybe it was the right product at the wrong time.
-Building a thriving business in the highly competitive food space can be daunting.

Red flags – The situation is dire when: 

  • growth stagnates and it’s a constant struggle to get new listings and retain existing ones.
  • strong, well-funded competitors eat your market share. With the competitive landscape changing daily, resting on your laurels leads to business failure.
  • credit card debt mounts and desperate measures are taken to procure cash: multiple lines of credit, high interest loans, cashing in retirement savings, remortgaging property.
  • family or friends who have generously provided financial support can’t be reimbursed.
  • stress levels are intolerable. It’s not healthy. And it affects personal and business relationships.
  • sleepless nights are a frequent occurrence. With sleep deprivation comes impaired decision-making, causing further damage to the business.

Wisdom of hindsight
In the words of a former brand owner, “Saying farewell to my business was comparable to ending a long term relationship which no longer served me. Despite the heartache and disappointment of the losses, it’s critical to have a plan in place should the risks become more than you can afford to lose.”

Planning the exit
It may seem counterintuitive but the ideal time to exit a business is when things are going well. To attract buyers, a business must be in growth mode.

What’s the silver lining?
All is not lost. The experience and knowledge gained are invaluable and transferrable to the next career or business.

There is no shame in exiting a struggling business. It’s good business sense. And good for your physical and mental health.

As a packaged foods consultant, Birgit Blain helps clients think strategically to build a sustainable brand. Her experience includes 17 years with Loblaw Brands and President’s Choice®. Contact her at [email protected] or learn more at www.BBandAssoc.com


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