Posted: Tue 21st Apr 2020
Food and drink businesses face a unique moment of threat and opportunity. They need to adapt to the short-term impact of coronavirus and plan for the future.
In this Lunch and Learn, food expert and investor John Stapleton answers questions from Enterprise Nation's community.
John's grown a number of successful consumer-led businesses, including The New Covent Garden Soup Co and Little Dish. Here's what he had to say.
How should I be thinking about my cash flow?
Food and drink businesses have seen sales grind to a halt in certain channels, such as restaurants and pubs, and impact elsewhere. That means many are looking to preserve cash.
"Don't just decide not to pay anyone. Figure out the businesses that are big enough to negotiate with. Categorise your creditors and think about what you can delay. Figure out your debtor books too."
He recommended revising your cash-flow forecast and thinking about what trade will look like after the crisis.
"We're all second guessing when we're going to come out of this lockdown, but it's likely to happen in a staggered pattern. Look at where your risks and opportunities are - entrepreneurs are all about seeking opportunities in adversity."
Is this an opportunity for artisan producers?
John notes that there's been a huge amount of support for local produce over the last few years.
"That's even more so the case now. People are going to the major retailers but they're also supporting the local guy; community is very strong right now. The issue is if we come back to a new normal how you extend that emotion and support."
Your brand needs to have one or a combination of the key aspects of quality, convenience or health, John adds.
How does The Good Food Fund work?
The Good Food Fund is investing £1.8 million in businesses committed to bringing healthier children's food to market. The accelerator is run by Mission Ventures, which John is a director of, and the fund by Ascension Ventures.
John, who's invested in several food businesses already, said they've been working on the initiative for at least 18 months, but the crisis has made it more important than ever.
"The Good Food Fund is focusing on the factors that cause childhood obesity and what we can address in a commercial context.
"Basically, we can get funding for start-ups in the healthy children's food and snack category. We provide the accelerator support and we help people spend that money wisely."
You can find out more by visiting Mission Ventures' website.
How should I price an online cooking product?
One audience member planned to take her business online by offering cooking demonstrations. Asked how much she should charge, John joked that his culinary skills stop at the microwave, but he did have some sage advice around testing pricing:
"Try it and see what happens. If you have more than 10 people take part you're probably not charging enough."
Should I start a chilled food business right now?
The market won't always be as constrained as it is now; you need to think about the long term, John says.
"Have courage in your convictions. It's so easy to say that and so hard to deliver. As an entrepreneur you're constantly putting yourself in the face of adversity. But you have to figure out if you're on to something good and you really understand your market.
"You're going to get so many no's. There's only one way to prove yourself right in the entrepreneurial world and that's by doing it."
Retailers have to justify taking something off the shelf to list your product. John suggests new food and drinks businesses should think about building momentum through independents and direct sales.
Finally, think about how big the market need is and what it's like. You might be starting a business because you saw a gap in the market for something you want, but the customer base might end up being quite different to your needs.
"The size of the prize is important. How many people's lives are you going to change? If only a little bit?"
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