scaler - cdn.ymaws.com · scaler Welcome to the FaBcap Program FaBcap_scaler How to profitably scale/grow your food or beverage business-or-FaBcap Accelerator in 4 hours FaBcap Accelerator

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Thanks to our FaBcap Sponsors

Presenting Sponsors Program Sponsors

https://wmep.org/

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Welcome to the FaBcap Program

FaBcap_scalerHow to profitably scale/grow your food or beverage business

-or-

FaBcap Accelerator in 4 hours

FaBcap AcceleratorHow to build an investible food business

Innovation conference, 1-1 coaching, SME mentoring, 6 cohort meetings,

investor pitches & graduation ceremony and $10,000 award

scalerFaBcap_scaler Agenda

1:30 – 2:00 pm – Food & Beverage Business Profitable Growth DriversMaximizing Business Potential

Business Growth Considerations & Benchmarks

2:00 – 3:30 pm – Food & Beverage Business Profitable Growth Best PracticesMarketing Maximizing Brand, Product Lines and Net Margin

SalesMaximizing Customer Profitability and Relationships

Operations Deliver Best Quality, Lowest Cost within Food Safety Requirements

3:30 – 3:45 pm – Break and Networking

3:45 – 4:45 pm – Food & Beverage Business Profitable Growth Best PracticesAccounting/Financing Developing Reliable Accounting Procedures & Financial Tracking

Legal Make Sure Your Legal House is in Order

Organizational Management & Systems Developing a High-Performance Organization

Executive Management Building a Credible Leadership Team & Advisory/BOD

4:45 – 5:00 pm – Wrap-up, Q&A and FaBcap 3 Program & Schedule Reveiw

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Key Takeaways

Critical elements to profitably scale & grow a food or beverage company

– Macro business perspectives and scalable business models

– Key drivers to maximize your profitability and grow your business

Marketing

Sales

Operations

Organizational Structure & Leadership

Networking/Resources

– Peer businesses

– Professional & technical products and service providers

– Educational resources and programs

– Small business development support organizations

Accounting/Finance

Legal

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Introductions

10 second introduction and

very brief infomercial

– Name

– Company

– Products and/or Services

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Profitably Scaling/Growing

a Food or Beverage Business

Brad RostowfskeDirector of Industry Growth

[email protected]

http://www.fabwisconsin.com/

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Profitably Scaling/Growing a Food or Beverage Business

Maximizing Your Business Potential

• Mutually aligned,

balanced Marketing, Sales

& Operations

Plans

• Deliver a

comprehensive

business plan that

is worthy of investment and

execution

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Scalable Food Business Models

Tera JohnsonDirector, Food Finance Institute

Founder of teraswhey™

(608) 890-0780 | [email protected]

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It’s a business model, not a product, that determines whether a company makes

money. Having adequate capital

determines whether your business model can reach critical mass.


Fundable Business Models are Scalable

• A defensibly unique value

proposition

• Sufficient market and business scale

to generate adequate cash flow

• The right brand, packaging, pricing,

sales and distribution channels, and

promotional programs

• The right staff, production facilities,

& QA

• Enough appropriate capital to fund

growth

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Viable Local Food Business Models

That Achieve Scale and Cash Flow

Go Where the Market is

Diversify Income

Horizontally Integrated Businesses

Vertical Integrated Processors

Stay Small

Each of these growth paths have different financial benchmarks, capital requirements,

and optimal sources of capital over time. It is therefore important to pick your path as

soon as possible and optimize for it.


Business Models That Are Working Financially

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Direct Sales Local Brand

• High percentage of direct to

consumer sales

– Farmers Markets

– Retail front

• 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

MES = Manufacturing Execution System

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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 requirements in

new markets• High AR in new distributors• COGS improving with volume• Kickstarter and Microloans not large

enough• SBA 7a, F & F Investors, other

investors may be needed

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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 and 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

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Local Vertical

• Local brand or on-farm processor adds retail location to gain scale and generate cash

• Production facility for wholesale is retail kitchen

• Capitalization more like a restaurant• Metrics like restaurant• Can be a successful model in small

communities• Potential for sustainable slow growth

model• Micro lender, F & F, Kickstarter

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Horizontal

• Financed and managed as

a series of smaller businesses

• MES for each are aided by

synergies across entities

• Often capitalized

individually

http://www.undergroundfoodcollective.org/

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Thinking BIGGER….

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Tera JohnsonDirector, Food Finance Institute

Founder of teraswhey™


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Marketing Maximizing Brand, Product Line & Net Margin

Lora SteinmetzSenior Account Executive


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Marketing

How Great Brands Are Built

• Understanding the customers

• Clarity of message

• Consistency in coverage

• A positive customer experience

• Products that always deliver on the brand promise

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Fundamentals of Marketing & Brand Building:

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Marketing

Take a Step Back

1. Be people-focused, not product-focused

2. Tell your target’s story, not yours

3. Focus first on inputs, second on outputs

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- Creative Alchemy

“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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WHAT IS ONE OF AN ORGANIZATION’S MOST IMPORTANT

ASSETS?

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Marketing

A Strong Brand Delivers …

• Increased revenue and market share

• Increased customer loyalty

• Increased profitability

• Decreased price sensitivity

• Increased clarity of vision

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• Increased ability to mobilize an organization’s people and focus its activities

• Increased ability to expand into new product and service categories

• Increased ability to attract and retain high-quality employees

Marketing

A Strong Brand Delivers …

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KNOW THE CUSTOMERS NEEDS AND MOTIVATIONS:CUSTOMER ACQUISITION THROUGH UNDERSTANDING

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Marketing

Your Ideal Consumer

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Audience Centric

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Marketing

Understand Your Target

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Marketing

Customer Persona

PHOTO

Background: Job? Career path? Family?

Goals: How do they define happiness or satisfaction? (Primary and secondary)

What can we (company) do?

Name: Motivators: What are my buying/recommending behaviors in this product category?

What can we (company) do?

Gender:

Age: Influences: Whom do I look to for advice, recommendations or as resources when

making a purchase decision in this category?

Role:

Geography:Common Objections: Why wouldn’t they buy your product or service?

Other:

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Marketing

Understand Their Desired Journey

7

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Marketing

Take the Time to Listen

• It’s not about playing back what they said, it’s about

bringing to life what they meant

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Marketing

Dig to Find Out More

• Surveys

• Trade Publications

• Investor/Analyst Communication

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ULTIMATELY, A BRAND IS A

PROMISE.

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A PROMISE YOUR COMPANY

CAN KEEP.

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Marketing Maximizing Brand, Product Line & Net Margin

Lora SteinmetzSenior Account Executive


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Sales Maximize Customer Profitability & Relationship

Scot TrojanowskiPresident

[email protected]

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Sales

Key Partners for Your Sales Team

Manufacturer

– Operations, production, sales, marketing, customer service, logistics

Broker

– Sales, analytics, customer service, forecasts, merchandising, auditing,

promotion implementation and verification, deduction management,

general sounding board

Distributor / Wholesaler

– Sales, analytics, customer service, merchandising, promotion

implementation, product consolidation

Retail Outlet

– Marketing, analytics, avenue to the consumer

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Sales

Developing Sales Capacity & Capability

Be prepared when meeting with each of your new team members

Broker Requirements• Complete Price List

― All customers should work off of one price list (example of a good

price list)

• Sell Sheet

― Product Family Sell Sheet

― Individual Product Sell Sheet

• Promotional Calendar• Samples

• General Professionalism

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Sales



Distributor/Wholesaler Requirements• Standard Price List

• Sell Sheets/Sales Deck

• Promotional Calendar• Samples

• Required Allowances

• Slotting dollars/free product

• Supporting Analytics

• Who of their customers are you targeting? How do you assure the

distributor or wholesaler they will be successful?

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Sales



Distributor/Wholesaler Requirements• Retail Outlet Requirements

• Standard Price List (from distributor or wholesaler)

• Sell Sheets/Sales Deck

• Promotional Calendar

• Samples

• Slotting dollars / free product

• Supporting Analytics

• Required Allowances

• Shipper/Display Vehicles

• Customer Service / Professionalism

• Why do they need your product in their stores / markets? What will you bring

to the category? How will you help them succeed with their consumer?

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Sales

Go to Market Strategy / Execution

Notice a Trend? BE PREPAREDYour brokers, distributors and retail execution will only be as good as you are.

All aspects of your go to market strategy needs to be carefully evaluated,

developed and executed

– Target Consumer

– Brand / Product Role in Market

– Target Markets & Channels

– Retailer Requirements and Expectations for Success

– Pricing and Merchandising

– Promotional Programs to Generate Awareness, Trial and Repeat Purchases

– Metrics, Audits and Follow-up – Follow-up – Follow-up

• It should go without saying but YOU NEED TO WIN AT SHELF

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Sales Maximize Customer Profitability & Relationship

Scot TrojanowskiPresident

[email protected]

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Operations Deliver Best Food Quality & Safety at Lowest Cost

Peg DornManufacturing Specialist


Adam HaenSmall Business Consultant

(608) 770-6971 [email protected]

https://wmep.org/

http://www.madllamallc.com/

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WMEPWisconsin Manufacturing Extension Partnership

48

Operational ExcellenceServices that result in reductions to lead - time, increased sales per employee, improved

quality and on-time-delivery.

GrowthGrowing revenues by reaching new customers and markets, new product development,

exporting, adding capabilities through strategic hires, and improved employee productivity.

Human Capital Developing an environment and processes that attract and retain talent, grow employees’

capabilities, and create an empowered workforce.

Certification & CompliancePursuing certifications that set a company apart as well as certifications needed to fulfill

local, state, national and international qualifications and to achieve awards and grants.

TechnologyHelping companies analyze new and existing technology to grow their business and protect

their enterprise.

We help you build a foundation for success by showing you how to improve your business in key areas.

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Operations

Operational Excellence

Value Added

–Any activity that

increases the market

form or function of the

product or service.

These are things the

customer is willing to

pay for.

Non-Value Added

–Any activity that does

not add market form or

function or is not

necessary. These

activities should be

eliminated, simplified,

reduced or integrated.


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Operations

Production Process Optimization

Lean = Eliminating Waste• DEFECTS – any aspect of the service/part that does not conform to

customer needs• OVERPRODUCTION – making more, earlier or faster than required by the

next process• WAITING – idle time waiting for such things as people, materials, machinery,

measurement or information• NON-VALUE ADDED PROCESSING – extra effort that adds no value to the

product (or service) from the customer’s point of view• TRANSPORTATION – movement of materials, products or information• INVENTORY – any supply in excess of a one-piece flow through the process,

whether it is raw materials, work in process or finished goods• MOTION – any movement of people, tooling and equipment that does not

add value to the product or service• EMPLOYEES NOT ENGAGED – not fully utilizing people’s mental and

creative skills and experience


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Operations

Supply Chain Optimization

• Get to know your vendors

– Identify which vendors present the most risk

–Qualify them as an approved supplier

• Do they have a quality system – ISO, GFSI, FSMA

– Track their performance

• Cost

• On-time delivery

• Quality

–Communicate with them – Build a relationship


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Operations

PRA™-Profit Risk Assessment ™

• Profit Risk Assessment benefits include:

– Focuses attention on the factors that drive profitability

and value in your organization

–Reaching consensus within your leadership team on

areas of greatest opportunity and risk

– Identification of specific actions you can take to

improve your organizations profitability and overall value

– Low cost, high value evaluation

–Quick and easy to complete


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• Generic examples include:– Financial

– Strategic

–Compliance / Effectiveness

–Operational / Planning (physical & environmental)

–Human Factors

– Legal / Political (import/export controls)

– Environmental Health & Safety

–Counterfeit Products

–Cyber Attacks

– Ethical / Image

Operations

Business Risk Categories


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Operations

Goals of Strategic Workforce Planning

1. Reduce labor costs rapidly without negatively impacting

productivity

2. Identify and prepare leaders and managers for future openings

3. Fill “sudden vacancies” in key roles immediately with capable

talent

4. Maintain a flexible contingent workforce

5. Proactively move talent internally to maximize the return on

talent

6. Target retention activities on key talent

7. Identify mechanisms to rapidly hire needed talent

8. Increase the overall productivity of the workforce

54

Source: Dr. John Sullivan


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Operations

Cost of Quality

• Sum of costs incurred in maintaining acceptable quality levels

plus the cost of failure to maintain that level (i.e. cost of poor quality)

– Quality planning - creation of plans for quality, reliability, operations, production,

and inspection

– Quality assurance - creation and maintenance of the quality system

– Verification - checking of incoming material, process setup, and products against

agreed specifications

– Quality audits - confirmation that the quality system is functioning correctly

– Supplier rating - and approval of suppliers of products and services

– Waste - performance of unnecessary work or holding of stock as a result of errors,

poor organization, or communication

– Scrap - defective product or material that cannot be repaired, used, or sold

– Rework or rectification - correction of defective material or errors

– Lost sales / customers / brand equity - due to poor quality

http://www.businessdictionary.com/definition/costs.html

http://www.businessdictionary.com/definition/incurred.html

http://www.businessdictionary.com/definition/plus.html

http://www.businessdictionary.com/definition/cost.html

http://www.businessdictionary.com/definition/failure.html

http://www.businessdictionary.com/definition/maintain.html

http://asq.org/learn-about-quality/quality-plans/index.html

http://asq.org/learn-about-quality/quality-assurance-quality-control/overview/overview.html

http://asq.org/learn-about-quality/quality-assurance-quality-control/overview/overview.html


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Operations

Quality Management & FSMA Traceability

• Food Safety Modernization Act (FSMA) Not Voluntary

– Recall Procedure – Test it

– Risk assessment (HACCP) – process controls

– Allergen Program

– Sanitation Procedures

– Vendor Control – They must make a safe product, you must make

sure they do

• Global Food Safety Initiative – (GFSI) Voluntary

– HACCP + Pre-requisite Programs + Management Systems

– Annual recertification audit

– Safe Quality Foods (SQF), British Retail Consortium (BRC), Food

Safety System Certification (FSSC 22000)


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Products in Support of Client Business Objectives

WMEPWisconsin Manufacturing Extension Partnership


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Operations Deliver Best Food Quality & Safety at Lowest Cost

Peg DornManufacturing Specialist


Adam HaenSmall Business Consultant

(608) 770-6971 [email protected]

https://wmep.org/


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3:30 pm to 3:45 pmBreak & Networking

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Legal & Risk ManagementMake Sure Your Legal House is in Order

Eric NeumanAssurance Manager


Jason PovlichTax Manager

[email protected]

http://www.chortek.com/


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Accounting & Finance

Accounting: Why is it so Important?

• Provide Information to Banks, Lenders or Investors

• Measure Performance

– Budget vs Actual

– Financial Forecasting

• Make Informed Business Decisions


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Accounting Process: At a High Level

• Recording

• Classifying

• Summarizing

• Reporting

–P&L, Balance Sheet, Cash Flow

–Management Reports and Key Performance Indicators

• Analyzing

• Interpreting


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Optimized Processes: Systems in Place

• Built on policies that are followed without exception

• Defined Roles and Responsibilities

• Standard processes-simplified whenever possible,

automate whenever possible

• Timeliness (On time, every time)

• Goal = Information that is reliable and timely


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Accounting Processes That Work

Are integrated with your operating systems

and are used to make management decisions

–Not something separate that happens weeks later


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Accounting Processes That Work

For example, accounting information that is

integrated with your operations makes it possible

for you to manage your working capital:

–Cash

–Accounts Receivable

–Inventory

–Accounts Payable

Always important, but critical as your business grows!


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Accounting Best Practices

• Make it a Priority from the Start

• Choose accounting method

• Spend your time wisely

• Invest in the Right Software

• Consider a Payroll Service Provider

• Automate Certain Functions

• Chart of Accounts w/ Account Numbers

• Determine appropriate costing / segment reporting


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Taxes

General Tax Considerations

- Entity Structure & Administrative Burdens

- Research & Development Credit

- Excise Taxes


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Taxes

Tax Law Changes – Business

- Qualified Business Income Deduction

- C-Corporation Tax Rates – 21%

- Meals & Entertainment

- South Dakota v. Wayfair


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Taxes

Tax Law Changes – Individual

- Condensed & Lower Brackets

- Increase to Standard Deductions

- Cap on State & Local Tax Deduction

- Modification of Child Tax Credit


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Eric NeumanAssurance Manager


Jason PovlichTax Manager

[email protected]



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Robert HeinrichBusiness Lawyer; Chair of Food & Beverage Practice Group


Kathryn WestfallBusiness Lawyer




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• Inventions and Assignment Agreements

•Confidentiality Agreements

• Employment Agreements– Severance

– Termination for "Cause"

–Restrictive Covenants

©2018 All Rights Reserved

Reinhart Boerner Van Deuren s.c.

Legal & Risk Management

Key Employees and Advisors


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Intellectual Property

•Current IP - validity of status:

Federal vs state trademarks

•Any additional IP to be registered?

• License Agreements

•Work-for-hire agreements©2018 All Rights Reserved



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•Vesting:– Time Vesting

–Performance Vesting

•Repurchase Rights:–Voluntary termination

– Termination for Cause

• Tax Implications©2018 All Rights Reserved



Offering Equity to Key People


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• Think Exit Strategy

• Financial Statements/Business Plan

•Valuation of your Company

• Investment Documents




Raising Capital


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Alternative Financing Options

• Small Business Administration loans

•Crowdfunding

•Kiva Zip, WWBIC, etc.

• Focus on Energy programs: Cash-back

incentives and technical expertise




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Governance Issues

•Re-assess Entity Form

•Governance Documents:

Transferability

Board size

Waterfall

Withdrawal of a Member




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Robert HeinrichBusiness Lawyer; Chair of Food & Beverage Practice Group


Kathryn WestfallBusiness Lawyer




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Matt WesselCo-Owner, COO | 2017-18 FaBcap Participant


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Operational Management & Executive Leadership

A (very) brief timeline …

• 2012 = Year in Germany

• 2013 = Company begins

• 2014 = Move to Kasana

• 2015 = Move to Riverwest

• 2016 = OOM Distribution

• 2017 = SQF Level 2 / Bucks

• 2018 = Expansion

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In the beginning …

It’s just you.

And maybe your spouse.

Or a friend.

Or a cousin.

But the point remains:

YOU ARE THE TEAM

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But if your crazy idea works …

You will need help!

1) Production

2) Logistics

3) Sales

4) Administrative

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Look for leadership early on …

Things to look for:

– Self motivated

– Responsible

– Great attendance

– Passionate about your product / brand

– Leads without being asked to

– Respectful and kind

– Takes criticism

– Looking for a career

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Look for leadership early on …

Things to be wary of:

– Low energy

– Unreliable

– Poor attendance

– Indifferent about the product / brand

– Identifies problems, not solutions

– Disrespectful and/or mean

– Defensive when corrected

– Job hoppers

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Then, make them leaders …

And give them:

– Job description

– An appropriate title

– More pay

– Benefits (formal or informal)

– Bonuses (when deserved)

– More work

– More responsibility

– More expectations

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Basically …

CONVINCE THEM OF

AND EXCITE THEM FOR

THE OPPORTUNITY!

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Oh, and …

LET.

THEM.

LEAD.

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KATIE WESSELChief Executive Officer

MATT WESSELChief Operating Officer

ERIC KITZKE

Production Mgr

SHARON GREASBYBakery Mgr

CARI DECLUE

Production Mgr

CODY GLORIOSO

Food Safety Mgr

PRODUCTION ASSISTANTS

ANGELO BONCIMINO

VP, Sales


Our team …

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As you grow, you’ll want advice …

• Board of Directors

• Board of Advisors

• Executive Leadership Groups

• Roundtables

BUT FIRST – Just talk to people in town who

do what you do.

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Matt WesselCo-Owner, COO | 2017-18 FaBcap Participant


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It’s really quite simple,

just not easy!

So, what questions

do you have?

scaler2018/2019 FaBcap Accelerator Program

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LOOK FOR OUR FaB ANNOUNCEMENTS

September 20th from 8:30 am to 2:00 pm at Marquette

2018-2019 ACCELERATORGROWING & CAPITALIZING YOUR BUSINESSApplication period open 8:00 am Jul. 16th until 12:00 pm Aug. 17th

Program runs from Sept. 2018 to Jun. 2019

KICK-OFF & CAFÉ MAKING FOOD OUR FUTURE

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Thanks to our FaBcap Sponsors

Presenting Sponsors Program Sponsors

https://wmep.org/