Weekly Update January 31st

I spent over $15,000 on failed manufacturing

Happy Monday! I always enjoy connecting with you at the beginning of the week, to share the latest resources, opportunities, and partners to help you be successful. 

As we start off this week, I want to share my experiences self-manufacturing and working with co-manufacturers to share some key learnings from my journey. Let's dive in.

PS. If you were forwarded this newsletter, please 

I spent over $15,000 on failed manufacturing tests as we scaled.

When we started TeaSquares, we self-manufactured out of our own facility with all of the work by hand. As we started growing, we tested with a contract manufacturer, spending $5,000 and our process broke on their manufacturing line because our formulation wouldn't run on their equipment. After figuring out a complicated workaround, they dropped us to take on larger clients.

We then went back to producing in-house, before testing with a second, multi-million dollar manufacturer. They promised they could make it work, but guess what? After spending over $10,000 and 8 hours on a test, the product failed to run.

After that we had to bring our production back in-house again, this time adding some automated equipment.

I learned from this experience that you need to start with the end in mind, and understand how manufacturing works at various scales so your product has a clear path the growth.

To 👨‍🍳 Self-Manufacture or 🏭 Co-Manufacture?

At some point on your journey you have to decide between manufacturing products yourself or outsourcing to a contract manufacturer (co-manufacturer).

As a food entrepreneur, I’ve experienced both production methods myself and have heard countless stories from other founders about their successes and failures with each. First let’s talk about the pros and cons of self-manufacturing.

THE GOOD of Self-Manufacturing

📦 I could produce inventory on demand so I didn’t have to have a bunch of product sitting around for weeks or months.

💳 I could use credit cards + vendor payment terms to finance most of our ingredient purchases.

🌟 For artisan goods, product quality was at its all time high.

THE BAD

of Self-Manufacturing

🚨 When Costco called, I had to turn down the opportunity. I would have to increase our production capacity (people and equipment) 10 times, and there was no guarantee they would order a second time.

👨‍🍳 Labor shortages are a huge disruption and costs are sky high.

🏭 Our production line was inefficient as better equipment was outside our budget.

Next let's lay out the pros and cons of co-manufacturing.

Working with a co-manufacturer can relieve a lot of headaches and time by making large volumes of your product so you can focus on growing the business. They are a great option for many companies and most large companies that you’re familiar with use them. I just recommend going in with realistic expectations so you don’t get blindsided:

THE GOOD of Co-Manufacturing

🏭 Quickly produce large volumes of product without large upfront equipment, facility, and employee costs.

🤝 Outsourcing your manufacturing allows you to focus on sales and marketing to grow your business.

🧪 Meet professional food safety standards often required by larger retailers.

THE BAD of Co-Manufacturing

📦 May require high minimum order volumes resulting in higher than expected costs and extra inventory.

😩 Small brands often find it tough to work with co-manufacturers as their business models don’t align. (High volume of simple products vs. low volume of unique products)

🍪 Product quality won’t be as good as small batch for artisan products.

What have been your experiences? Join the conversation in the Foodbevy Slack (e-mail me for an invite).

Jordan Buckner

Foodbevy

EQUITY CROWDFUNDING

As you traverse and explore the various fundraising stages, options, expectations, vehicles and overall process, crowdfunding is one of the options. If you're thinking about this approach, take a read through our latest guest post by Brandjectory.

45-60 DAY CREDIT CARD WITH PARKER

If you're looking for a new business credit card, definitely check out

. It's a credit card built for e-commerce businesses with 45-60 day payment terms based on spend date (compared to the normal 30 based on billing cycle). You can unlock 100% of monthly e-commerce sales as your credit limit too.

AMAZON CONSULTING

Amazon is one of the most important channels for brands, but it also requires a ton of work to make it successful. If you're looking for someone to guide you along the way, reach out to our friend, David at Amplify Goods. He specializes in taking brands who are doing ok, to great.

LOWER CUSTOMER ACQUISITION COSTS

Our friend Dallas Crum at Inspiir Media created a resource to help you lower your Customer Acquisition Costs…he's spoken with over 30 CPG founders in the last 60 days and one big theme that keeps coming up when talking is high Customer Acquisition Cost (thanks a lot iOS14). Here are the 3 biggest things to decrease CAC dramatically (post iOS14).

  1. Theme - This is our internal nomenclature for “angle” or “big idea”. Once you nail the Theme that resonates with an audience, the algorithm can really go to work and find more people looking for what you’re offering. Ex. “Breakfast Replacement” was a theme we came across after a brainstorming session. Now this isn’t the entire purpose of the product but it is a definite value prop. We wrote headlines like “Your New Favorite Breakfast” and we watched CTR% and ultimately ROAS sky rocket.

  2. Offer - How can we package or bundle something incredible to get someone in the door. This doesn’t have to be a discount. It actually shouldn’t be if possible. Maybe a special bundle, or a gift with purchase. Ex. from the same brand above. “Trial Pack” this new offer lowered the barrier to purchase and mitigated the consumers risk. This new offer alone cut down CAC by over 40%. It was crazy.

  3. Creative - This is not as simple but basically creative is more important than ever before. UGC (user generated content) has absolutely been at the top of our list. When we analyze creative we have some quantitative metrics that we use but we also look at ads qualitatively and ask simple questions. Is it communicating the problem we are solving and how it make the consumers life better? Do we need to provide and anchor point so the prospect know’s how to compare our product to the market? Do I have enough social proof? Authority? A strong/clear offer/next step?

Dallas distilled the top performing ad creative to templates - 9 of them.There is 1 clear winner that continues to beat out all of the others, especially Top-of-Funnel. He calls it the “Storyline” template. Request an introduction to Dallas to get the template.

DISCOUNTS

- Mindful Goods 

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- Amazon Brand Success Academy 

is your go-to source for succeeding on Amazon. Learn everything you need to adapt in the changing environment.

- Maverick Lab 

allows you to create individually personalized videos (with a customer's name) welcoming them to your community. Foodbevy members save 40%. Reply to this e-mail for an introduction

- Chop 

is a

that allows you to drive in-store trial, collect customer shopping data, and build customer profiles to further drive your business. Foodbevy members save 20% off. E-mail me for the discount.

- Stripe 

is now providing $20,000 in fee-free processing for new and EXISTING customers.

The Accountrepreneur 

is your go-to outsourced CPA and CFO firm for the food and beverage industry. Receive

- Airtable

 can store information in a spreadsheet that's visually appealing and easy-to-use, but it's also powerful enough to act as a database that businesses can use for customer-relationship management (CRM), task management, project planning, and tracking inventory. 

With your help we're building an amazing community of Food and Bev entrepreneurs helping each other!

Jordan

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