Start-up 101

What’s the number one obstacle that food and drink producers face?
After setting up and successfully selling my own juice business, Pomegreat , I have firsthand experience of the difficulties that start-up food and drink brands face. Now, in my capacity as commercial director at Windfall, part of the role involves providing consultancy services. It’s essential to want the businesses you work with to succeed!

The most frequent issue that we encounter is food and drink brands not being able to meet working capital requirements. Fundamentally, you need a robust infrastructure and satisfy the level of resources that are required to survive in this sector. There are many ways that businesses can do this. However, some traditional financing options carry heavy penalties such as fixed fees and high interest charges. These can be avoided by finding partners that understand the sector and your needs.

The term ‘logistical nightmare’ is common parlance amongst food and drink businesses – why do you think this is so and what’s the solution?
It’s true, there are obstacles associated with logistics. There are often external factors at play that cannot be controlled, such as adverse traffic and weather conditions. The best solution is to build good connections to be able to fulfil orders and add value. Build relationships with hauliers and have a skilled team in place that can manage and cope with unforeseen situations with clarity and calm.

When supplying to multiples, you are dealing with the most exacting businesses that minimise costs at every opportunity to keep prices low and competitive. Brands absolutely must be able to meet their requirements.

It’s inevitable that producers can cause themselves an enormous headache by having too tight a demand to fulfil orders on time and in full. You risk being poorly rated and fined if your logistics performance doesn’t meet the mark.

It is also a complex process to get to grips with. Unfortunately mistakes with large volume orders can sink a small business that’s just starting out. The solution is to have a robust structure in place, this is critical to meeting a brand’s aspirations from the outset.

What do back office functions involve and how does outsourcing work?
The back office is the engine room of your business. In the very simplest terms you have to ensure the right products make it from A to B; that they’re delivered on time and that all administrative elements of that process, from stock management to invoicing, is properly managed.

An effective back office demands considerable resources. To succeed you must take the bull by the horns, in order to be resilient to the pressures that your business will come up against.

Employing talented people to manage these day to day functions is costly and full of pitfalls. Yet, there are alternatives available – such as outsourcing to a dedicated professional team. There is currently a really low percentage of business that outsource their back office functions; primarily due to lack of awareness that these services even exist. However, the benefits can be huge, particularly as it significantly reduces overheads and the pain associated with recruiting and retaining high calibre staff.

In terms of stabilising cash flow, is there anything that start-up businesses can do?
There tends to be a slight misconception by many start-up food and drink businesses. Obviously, they’re desperate for growth to get their brand of the ground. But sadly, nine times out of ten its growth that causes the biggest problems. Many businesses are not prepared to be able to scale up operations to fulfil that longed for big order – it’s a real problem. One of the ways to overcome this common obstacle is to have a reliable and cost effective financing facility in place.

Is there a heavy penalty for using this service?
Brands can be heavily penalised by their finance provider. It’s a bit of a minefield – in terms of debentures, personal guarantees and fulfilling minimum annual costs. Fortunately, there are specialist providers that know the market inside out, who do not demand these requirements. You should look for a complete, flexible solution that matches your business needs, and be able to access this facility as and when you need the service. Free set up costs, fast implementation and managed credit control removes a whole host of difficulties. At every step of the way, transparency is essential. If you know in advance how the service is structured, then you’re able to manage your bottom line. Agree fixed rates up front and avoid any hidden costs.