In the last few months I’ve come across at least 5 start-up food businesses that have stopped trading. I hadn’t noticed until I was asked to give a talk on longevity at a food start-up conference. Initially it seemed a bit ridiculous coming from Rude Health a business that’s only been in business 11 years. But then I realised that all five businesses went out of business after about 2 years. Why, and more importantly, what does it take to get past that point?
The first couple of years are fun. They are about bringing a dream to life, about making an idea real. It’s not easy but it’s exciting and every step makes a difference. Each new listing in a single shop is a breakthrough. The money doesn’t matter, – much – at the beginning.
Then there’s a shift. It’s impossible to maintain the frantic pace indefinitely. After the initial delight at growing there’s the realisation that adding one stockist at a time isn’t fast enough to create a viable business. Which in turn means that scaling up production becomes a necessity, and paying yourself becomes a priority.
The 2 most obvious hurdles are scaling production and building a team. Sometimes the reason that nobody is filling the space you were hoping to fill is that nobody can make your food or drink, and building your own factory may not be an option. We spent 2 years finding someone to make our granola who could meet our demand for using unrefined sugars. As for building a team, our leap was to take on a qualified Accountant, which meant acknowledging what the business needed that we couldn’t do, and then paying that person more than we paid ourselves. It paid off, he’s still here 9 years later, and one of our Directors.
Then there’s support and advice. Our 2 year crunch came in 2008, so we combined our own scaling up and management challenges with coping with a recession. Nick had the unshakeable belief needed to hold on to the vision when it seemed more like an unrealistic dream, and we had friends who had the business and life experience to offer wise advice and support. In particular one friend, who offered to buy the business for a knock-down price. This meant our home was secure, so we didn’t waste energy worrying, but it was a dismally low value, which was the best possible incentive for Nick to pull out all the stops and make it worth more. It was more than a generous offer, it was a brilliant bit of psychology.
Camilla Barnard, co-Founder and Marketing Director of Rude Health. #rudehealth