starter

starterWelcome to the FaBcap Program

FaBcap_starterHow to start a food or beverage business

FaBsafeHow to develop a FSMA-compliant safety plan

FaBcap_scalerHow to profitably scale your food business

FaBcap AcceleratorHow to build an investible food business

Innovation conference, 1-1 coaching, SME mentoring, 4 cohort

meetings, investor pitches & graduation ceremony

starterThanks to our FaBcap Sponsors

PRESENTING SPONSORS PROGRAM SPONSORS

starterFaBcap_starter Agenda

3:15 – 3:45 pm

Expectations of a food or beverage business

3:45 – 4:45 pm

Food and beverage business start-up planning

4:45 – 5:15 pm

Break, dinner, and networking

5:15 – 6:15 pm

Food and beverage business start-up planning, continued

6:15 – 7:00 pm

Q&A and next steps to business development and resources

starterKey Takeaways

Critical elements to be addressed when starting a food or beverage company

• Macro business expectations (time, $, key considerations)

• Process to develop a defensible & fundable business

→ Utilizing the “Lean Business Model Canvas” approach

→ Structured approach to develop the key elements and activities

to build a food & beverage business

Networking/Resources

• Peer businesses

• Professional & technical products and service providers

• Educational

• Small business development support

starterBuilding a New Business

The masterpiece is in there…all you have to do is remove the excess stone.

- Michelangelo

“

”

starterBuilding a New Business

Building a new business can just happen...

Building a new business can take on a life of its own...

Building a new business can drive you to

success or bankruptcy...

It’s really quite simple, it’s just not easy!

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TERA JOHNSONDirector, Food Finance Institute

Founder of teraswhey™

What to Expect When Starting a Food and Beverage Business

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So you want to start a food business?

starterBeginning with the End in Mind

Get clear about

your vision!

What do you want to create?

Where do you want to end up?

Get real about what kind of

food or beverage company will

get you there…

If you don’t know where you’re

going, any road will get you

there.

“

”

starterThe Bar is Getting Higher

3,100 80,000exhibitors attendees

600 $10,000first-time

attendees

minimum

booth cost─ 2017 ─

starterAre We Reaching Saturation?

starterBe Defensibly Unique or Die

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Great entrepreneurs guide their businesses through

this transition and do it as quickly as possible!

Fail Fast Forward: Systematize What Works

Startups That Make It

Fail Fast Forward

Mature Businesses That Thrive

Do Things Systematically

starterThree Business Model Paths

One of the best ways to

accelerate your success is by picking a proven business

model path for food enterprise

and work it until you succeed.

One of the best ways to burn

through a lot of cash and

never reach success is by trying several paths simultaneously.

1 Local direct to consumer

2 Regional brand

3 National brand

starterThree Examples – What it Took

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BRAD ROSTOWFSKEDirector of Industry Growth

FaB Wisconsin

What to Consider When Developing

a Financially-Viable New Business

starterFaB Business Model Canvas

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FaB Business Model Canvas

Value Proposition

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FaB Business Model Canvas

Customer/Consumer Segments

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FaB Business Model Canvas

Sales Channels

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FaB Business Model Canvas

Customer/Consumer Relationships

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FaB Business Model Canvas

Sales/Projected Revenue Streams

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FaB Business Model Canvas

Key Operations/Business Resources

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FaB Business Model Canvas

Key Partners

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FaB Business Model Canvas

Business Development Activities

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FaB Business Model Canvas

Finances/Projected Cost & Profitability

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MARY PELLETTIERICo-Owner, Top Note Tonic

FaBcap_one Participant

Value Proposition and Customer

and Consumer Validation

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FaBcap Business Model Canvas

Example: Top Note Tonic

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Exciting, Unique Beverages in All Formats• Changing the landscape of mixed drinks by providing high quality mixers in

3 key formats; handcrafted syrups, bag-in-box, and ready to drink

• Add to the consumer interest in RTD premium mixers

• Bring flavor and quality to the customer from the soda gun to added skus

in retail

Value Proposition Development

A Passion for Flavor• American craft mixers with

European heritage

• The renaissance of tonic

• #timefortonic; change the

occasion for when tonic is poured

Highest Quality• Natural ingredients, real sugars

• Respected & responsible suppliers

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Target Behaviors, Uses and Attitudes

• At-home cocktail enthusiast

• Simple hi-ball fans

(Gin and tonic, Vodka tonic, Moscow Mule)

• Simple quality drinks at home

• Adventuresome beverage choices

• Likes an upscale NA option

• Bartenders seeking quality, consistency and speed

Customers & Consumers Segments

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Research/Customer & Consumer Insights

• Farmers markets and direct to consumer markets

• Demos at early adopting retailers

• Speaking directly to bars, restaurants and end-users

• Watching how people shop while at demo

• Asking vodka and gin buyers to try a tonic syrup

• Asking how people heard of us

• Blogging and white papers – read and submit

Customers & Consumers Segments

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On-Premise

• Building brand and relationships, and occasion (including breweries, and coffee shops)

Natural/Specialty Retail

• Building customer pull and interest by demoing and

engaging customer. Using strategic partners with spirits

makers

Grocery Beverage (RTD only)

• Expanding brand into mainstream

Sales Channels: Top Note Tonic

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Beverage Distributors (liquor)

• On premise and liquor channel focus

Specialty Food Wholesalers

• Regional / national wholesalers and sales brokers

• Retail focus, execution in grocery/liquor

Grocery Beverage Distributors

• Execution in grocery with liquor end-caps

On-Premise Gas Distributors or Soft Drink Bag-in-Box Distributors

• Support accounts with service

• Support distributors/Top Note connection

Customer Relationship Management: Top Note Tonic

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SCOT TROJANOWSKIPresident

Z.T. Distribution

Sales Channels, Customer Relationships &

Sales/Projected Revenue Streams

starterSales Channels: Path to Market

Target channels and merchandising location • Traditional retail grocery, mass merchandisers/club, c-store, d-

store, limited assortment, specialty, liquor, online (Amazon,

direct), food service, business & industry and ingredients

• Produce, bakery, meat, dairy, frozen, liquor, center store, etc…

Sales Execution Requirements• Who is the consumer? Who is the customer?

• Appointments/presentations/CRM

• New item and customer set-up

Pricing• Direct to Retail

• Distributor – add 15-30+% distribution margin

starterSales Channels: Path to Market

Merchandising/Plan-o-Gram Recommendation• Who is leaving so that your product can go in?

Awareness/Trial/Repeat Promotional Programs

Management• Business goals, objectives, reporting

• Direct sales vs brokers and/or distributors

→ Direct - all or targeted accounts

→ Brokers; Commissions vs. retainers

• Distributors

• Roles & responsibilities

→ Brokers/Distributors

→ Owner

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Customer Relationships Management:

Key Customer Expectations

Product logistics

• Specifications (product, package, pallet, holding temperatures,

etc.)

• Shipping

Merchandising

Promotional Support

Customer service

• Ordering

• Shipping

• Invoicing

• Payments

• Deductions

• Complaints

• Returns

• Food Safety Requirements (SQF)

starterSales/Projected Revenue Streams

Net Payment Terms/Cashflow

• Net 30 – 45 – 60 – 90. Early Payment discounts?

• Deductions

• Returns

• Other market entry expenses: slotting, promotional program, third

party item hosting and promotional management

Channels

• Retail storefront

• Online direct to consumer

• Direct store distribution (DSD) to retailers

• Wholesaler/Distributor to retailers

• Direct retailer warehouse distribution

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4:45 pm to 5:15 pmBreak, Dinner, and Networking

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Key Considerations to Developing a

Financially Viable New Business

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Key Considerations to Developing a

Financially Viable New Business

OPERATIONS FOOD SAFETY MARKETING SALES

ACCOUNTING LEGAL FINANCING OTHER

Manufacturing

Supply chain

Quality

Licensing

Labeling

Tracking

Branding

Promotions

IP: branding,

trademarks

Brokers

Distributors

Customers

Processes

Documentation

Reporting

Systems

Biz formation

IP

Insurance

Friends & family

Banks

Angel

Early venture

Personnel

Advisors

Etc.

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Key Considerations to Developing a

Financially Viable New Business

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ANDY GEHLPresident

Contract Comestibles

Manufacturing and Production

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Traditional Avenues for Manufacturing

• Home

• Shared Use Kitchen

• Dedicated Manufacturing

• Co-Packing (Dedicated Manufacturers)

Manufacturing and Production

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Key Manufacturing/Production Activities

• Storage (incoming and outgoing)

• Labor

• Equipment/Building

• Quality and Consistency

• Compliance

• Growth

Manufacturing and Production

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Manufacturing Setup: Why People Manufacture Themselves

• Manufacturing is extremely specialized

→ Product Type (Butcher, Baker, Dairy)

→ Sub Type

→ Volume (100 lbs., 100 million lbs.)

→ Package Design (Glass, Plastic, Pouch, Tub)

→ Production Technique (Hot Fill, Retort, Aseptic)

→ Label Claim (Organic, Gluten Free, Peanut Free)

• Often, there is only one

Manufacturing and Production

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Compliance: Why People Use Co-Packers

• FDA vs. USDA

• GMPs

• HACCP

• FSMA

• GFSI (SQF or BRC)

• Audits and Auditors

Manufacturing and Production

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PAT WERNERDirector of Food Safety

FaB Wisconsin

Regulatory and Food Safety

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Regulatory and Food Safety

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Licensing

• Product Based

• US, State, Local Requirements

Labeling Ingredients, Finished Products

• FDA, USDA Regulations

• Claims

Product Specifications

• Ingredient Breakdown, Label

• Quality and Food Safety Specifications

• Regulatory Compliance

Regulatory and Food Safety:

Compliance

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Food Safety Plan

• Preventive Controls

→ Allergen, Sanitation, Environmental Controls

→ Supplier Management (FSVP)

→ GMPs

→ Employee Training

→ Recall Contingency/Mock Recall

• Documentation

→ Validation, Verification

→ Production Records

→ Corrective Actions, Trends

→ Training, PCQI

Regulatory and Food Safety: FSMA (Food Safety Modernization Act)

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Regulatory and Food Safety:

Food Safety Plan

Food

Safety

Plan

and

Team

HazardAnalysis

PreventiveControls

SupplierProgram

RecallProgram

Monitoring

Procedures

Corrective

Action

Procedures

Verification

Procedures

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JODEE GEORGEAccount Group Leader, Food & Beverage

Bader Rutter

Marketing and Branding

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Be people-focused, not product-focused.

Tell your target’s story, not yours.

Focus first on inputs, second on outputs.

Marketing and Branding

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Marketing and Branding

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Brand Look: Before

Marketing and Branding

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— Creative Alchemy

Marketing and Branding

We never seem to have enough time

to do it right, but we always seem to

find enough time to do it over.

“

”

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Marketing and Branding

Brand Look: After

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Marketing and Branding:

Understand Your Target

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Marketing and Branding:

Target Persona Template

DEMOGRAPHICS

Age:

Gender:

Marital

Status:

Tenure:

Other:

Activities:

Description of mindset in the target’s voice…

I Need: I Want:

I Listen To: This Gets My Attention:

Example Target Photo

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Understand Your

Target’s Desired Journey

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What resources are available?

Take the time to listen to your target. It’s not about playing back what they said, it’s about bringing to life what they meant.

Fill in the category gaps with…Trade Publications, Investor/Analyst Communication

Marketing and Branding

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SCOT TROJANOWSKIPresident

Z.T. Distribution

Sales and Distribution

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Sales/Brokers Team Development & Management

• Pick the right broker. Relationships in your channel/category

• Determine optimal path to market (distributor, direct, or both)

• Meet to discuss launch plan (customer specific)

→ Pricing

→ Promotional Calendar (6 to 12 months)

→ Introductory offer (discounts, slotting, demos)

• 30/60/90 plan following initial purchase

→ Retailer review cycle

→ Shelf resets (timing and resources)

Sales and Distribution

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Distributors/Warehouses Development & Management

• Pick distribution resources that your customers recommend

and trust

• Distributors margin requirement

• Types of services offered by distributor

• Find out about the cost of retailer promotions

→ Ask your broker about prior experience with costs

Sales and Distribution

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Customer Relationship Management (CRM)

Development & Management

• Rely on the relationships of your brokers and distributors for customer

insights

• Accompany brokers and or distributors on appointments with

customers

→ No one will display more passion about your product than you will

• Keep the team aligned and goal oriented

→ Even if a buyer loves your product, the answer will always be “no” if

there is no confidence in your distribution model

• Your team needs to make working with your brand “easy”

Sales and Distribution

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MARK ALBRECHTPartner

Chortek LLP

Accounting

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Accounting Recommendations:

Why Does Accounting Matter?

• You need to keep score, or you don’t know

whether you are winning or losing.

• You need to keep track, so you can comply with

laws, rules and regulations.

Accounting

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Recording Business Transactions

You need simple, reliable methods of recording:

• Checks written

• Deposits made

• Sales

• Purchases

• Payroll

Accounting

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Organizing Business Transactions

You need a system that organizes the transactions

recorded to:

• Manage the business

• Meet your compliance requirements

• Meet requirements on time

• Meet requirements accurately

Accounting

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Software Programs

• Excel: Great starting point but limiting

• Account software programs at a reasonable cost

→ Quickbooks or Sage 50: Reasonable cost, moderately

user friendly

→ Benefits:

Accounting

• Greater accuracy

• Less time-intensive

• Easier to share

information

• Scales with business

growth

• Integrates with other

business software such

as Quigistic’s Inventory

Management & FSMA

Tracking

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Accounting – The Key

Seek help to start the right way, saving

time and money in the future:• Setup Chart of Accounts

• Setup Reports needed for management

• Setup Reports needed for compliance

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ROBERT HEINRICHBusiness Lawyer; Chair of Food &

Beverage Practice Group

Reinhart Boerner Van Deuren

Legal and Risk Management

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Types of Organizations

• Sole Proprietorship

• Partnership

• Limited Liability Company

→ Limited liability to members

→ Income and loss is reported by members

• Corporations

Legal and Risk Management

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C-Corporation

• Subject to "double tax"

S-Corporation

• Avoids the "double tax"

• Restrictions on capital structure, including:

→ No more than 100 stockholders

→ With certain exceptions, stockholders must be

individuals or certain trusts/estates

Legal and Risk Management

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Organizational Considerations

• Do investors care what entity form?

• Do banks care what entity form?

• Simple Agreement for Future Equity ("SAFE")

• Online forms / self-help providers

• Sign contracts on behalf of the company, NOT as an individual

• What type of insurance do I need?

Legal and Risk Management

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Intellectual Property

• Review all IP to ensure validity of status

→ Federal vs state trademarks

• Knockout searches

• Recipes = trade secrets

→ Confidentiality agreements

• Work-for-hire agreements: Ensure that IP developed by an employee belongs to the company (not the employee/creator)

Legal and Risk Management

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Regulatory

• Food can kill people

• Making food can kill people

• Not labeling food correctly can kill people

• Label approval is not the same as trademark approval

→ Some labels have special meanings (e.g., “Organic”)

→ Key product or health claims typically need FDA approval (Ex. -“Will help you lose weight”)

• DATCP representatives are (usually) pretty friendly

• You need to have a relatively detailed recall plan

→ This requires having and keeping good business records to trace your suppliers for each batch you produce

Legal and Risk Management

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TERA JOHNSONDirector, Food Finance Institute

Founder of teraswhey™

Finances, Cost Structure & Profitability

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Direct Sales Local Brand

• High percentage of direct to consumer sales

• Shared use facility

• Often little or no other labor cost

• High cost of goods sold

• Inventory high % of sales

• AR low (direct model)

• F & F, Kickstarter, Microloans

Finances, Cost Structure & Profitability

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Regional Brand

• Scale up by targeting most promising markets

• Co-packer with full labor allocation

• Distributor sales drives margins down & volume up

• High promotional plans needed in new markets

• High AR in new distributors

• COGS improve with volume

• Kickstarter and Microloans not large enough

• SBA 7a, F & F Investors, Other Investors may be needed

Finances, Cost Structure & Profitability

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National Brand• Investor grade fast growth to exit

business model

• $10M target sales level at exit

• Steadily improving COGS

• High sales & marketing expenses

• Other expense growth slowing as a

% of sales

• Inventory, AR decline relative to

sales as volume increases

• Accredited investor equity offering

and conventional lender required

Finances, Cost Structure & Profitability

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Key Business Development

Activities Schedule

starterQ&A

What questions do you have?

starterThanks to our FaBcap Sponsors

PRESENTING SPONSORS PROGRAM SPONSORS