artwork Been there? Done that? Or one day I dream of starting my own fiery foods business?

Husker21

Husker21

I know there are lots of threads that focus on various aspects of the business.  Many thanks go out to Lucky Dog Hot Sauce and Salsa Lady.  I have been reading your content likes its gospel.
 
But I am really curious... How many of us have the dream to start a fiery foods business?  How many people have tried it and couldn't get past some early hurdles?  How many people tried and failed?  How many people have a small business plus a day job?  How many people are living the dream and do this full time?  What are your experiences and lessons learned if you care to share?
 
I am in a weird place right now.  lol  I have a friend who owns a restaurant.  I gave him some of my sauces and jams during the holidays and now he wants to put them on his menu starting around Super Bowl time.  I know I can use his kitchen to produce what he wants....  But I immediately started thinking past this one "order."  
 
What has me hung up is taking the leap.  I have 1 sauce that I think is ready to go to market.  I have two more that need a little fine tuning.  I also have a bbq rub and seasoning salt that I think are ready for market. If I make a business out of this my friend has offered to let me use his kitchen for FREE  I know securing a commercial kitchen can be daunting, but literally had one fall in my lap.  I have a good break down of all of the fees, licenses, regulations, and start ups costs.  I have identified a couple of farmer's markets I could sell at, a couple of vendors that would be willing to sell my products, and 2 restaurants that would be willing to place my sauces on the table of their establishment.  Financing is a big one.  I have a potential financial backer that will be sitting down with me this weekend to go over my business plan.  But as much as I am excited about this, I know there is a good chance at failure.  Right now I can make my hobby sauces and hand them out to friends  The kudos I get are awesome... But I fall into the go big or go home category.  If I am going to do this I need to be all in.
 
I am looking for any feedback or personal experiences that might sway me.
 
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Affiliate marketing is almost never the answer, except when it is ...
 
If I was trying to sell volume, I think I'd spend my time teaching people how to make (themselves and myself) money selling my product ...
 
It's a great way to generate inbound links, and Google likes inbound linking A LOT ...
 
Your website should have new content, preferably more frequently than bi-monthly ...
 
It's helpful if you have a 'keyword' in your domain ...
 
Most recently, though, site performance is weighted HEAVILY (I think the recent edition of Google's algo is called Panda) ...
 
You should make sure your site is loading quickly, and if a lot of people back right out, Google lowers your ranking harshly and quickly ...
 
There's a ton of voodoo to SEO, but it's getting better ...
 
Adding a Google Analytics <script> tag is an easy addition, and can tell you a lot of useful information ... where your visitors are coming from, who's linking to you (so you can go to them and try to work in symbiosis) ...
 
That's my .02 if I was trying to work in a larger quantity ...
 
Also, reading Tim Ferris's 4 hr work week can be enlightening ... even though I'm a complete failure at doing it myself.
 
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I opened my own co packing plant 7 years ago. We run my line of dressings, marinades, dry mixes, and sauces. We also have an egg ling because of a family farm.
 
Right now we have...
Bulk line that bottle into 1 gallon jugs.
3 glass bottle lines.
4 plastic bottle lines.
1 woozy bottle line.
1 glass jar line.
1 dry seasoning line.
Custom egg inspection / packing line (duck eggs).
 
I have 55 items we make year round and 9 that are seasonal.
 
We run 24 hours a day 6 days a week with 76 full time employees and 8 temps.
 
Because of ware housing we have out grown our 30,000 sq' building and our 20,000 sq' addition is about ready to expand into.
 
We have 6 items on QVC, 22 that are in 30 Asian food stores, 2 regional Kroger warehouses carry my dressing line (19 flavors), Fresh Market carry 18 products in all there stores and 32 products in some of there stores. Currently talking to Whole Foods and if it works out they will stock 40 products in all there stores, but part of it will be dropping Fresh Market. Once we get our new warehouse set up were putting in a pick by light system and will lunch our web site.
 
 
 
Looking back on how everything works I would suggest getting with a co packer to make smaller run.
 
Smaller special stores and farmers markets are great places to start selling.
Try contacting a mom and pop restaurant that dose daily specials or seasonal menus; there is a chance that they will use your sauces and sell it for you from there location (doing this might cut some profits, but looks great).
QVC is great if you have a couple of sauces that you can get them to show at one time. You have to pay for trucking of the product and they do not pay for the product till they sell it. With having to pay for shipping it might be better to get them to take larger orders.
Internet sales could be great (I don't do it yet), but unless you know website promotion can be costly.
 
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Husker21 said:
 
Lessons learned (in no particular order):
 
- I need to be selling cases not bottles.  Farmer's markets and festivals are great.  Lots of exposure and schmoozing.  But I need to be selling cases cases cases.
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Agree but also disagree - Building a customer base will drive sales in brick & mortar locations. You are correct - you want to be selling cases. But wholesale & retail are different animals. You need to sell 3-4 cases wholesale to equal 1 retail case. And selling cases cases cases doesn't mean shit if the consumers have no idea who you are - you'll watch your sauce sit on a grocery shelf next to Tapatio (at 1/4 the cost or less) and collect dust.

Selling any qty directly to the public is 1 sale. Selling 1 case to the grocery store requires multiple sales.

My philosophy is that you need to walk before you can run. Early on I had a 3 case order from a store and thought "man, that's the way!"

Except even with tabling it took months for those 36 bottles to sell, since no one had ever heard of my brand. And in an hour at my biggest market I'll sell that qty and I won't lose the ridiculous margins in the store.


 
- While farm markets and festivals will keep you selling and get you that immediate satisfaction of making a sale... It will take a lot of time and effort to get you to making it a full time business.  But it WILL also expose you to other people in the industry.  While vending I have met 3 distributors so far.  Two of them will be hoking my product for me in the new year.
 
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And you'll lose 15% on top of the 35% the store will take. And somewhere between the cost of goods sold and that 50% remaining will be your meager profits. You'll likely make $0.50/btl or less - since the grocery business is all about leverage and you have none - they may even beat you up for an in-store incentive that comes out of your pocket. They'll likely ask for (demand) "free fill" too. And some distributors will sign agreements for buy-backs if product doesn't se in X # of days. And you pay that, not the distributor.

Suggestion: Don't be in such a hurry to become the next Tabasco. You said it yourself: it will take a lot of time. And IMO that's a very, very good thing. I have repeat customers at every market I do. And now the product moves off of the shelves in the grocery stores I'm in. And that's taken almost 3 years. For me it has nothing to do with the satisfaction of making a sale - that excitement wore off by the 2nd week. It has far more to do with wanting to build a stable customer base of loyal supporters who will show up rain or shine to purchase my products. And quite honestly it's what puts food on my table.

Build your business 1 tasting at a time, one customer at a time. There is no shortcut to success. Some people get lucky - overnight sensations are few and far between.

And hypothetically let's say you do make it into a big chain & can therefore move the kind of qtys to make wholesale a winning proposition (likely at least ~300 stores each selling ~1.5 cases/month) - now your advertising budget better be significant because there's no way you'll have time to table at each of those stores - only so many hours in the day. If you table 3 hours a day at 2 stores a day, 7 days a week, you're still only hitting 1/6 of the stores each month (and that's unrealistic anyway).

I think you make some good observations. No offense intended but I'd humbly suggest that you're being a bit shortsighted. The connection you're not making between wholesale and retail is that tabling at farmers markets *is* marketing. You are building brand awareness. You're increasing your customer base. You're sampling your product much more effectively to a multitude of consumers more qualified & greater in number than if you stood in 1 store all day. And provided your product is good, you're making some $ whole you're doing it.

My $.02
 
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Lucky Dog Hot Sauce said:
Agree but also disagree - Building a customer base will drive sales in brick & mortar locations. You are correct - you want to be selling cases. But wholesale & retail are different animals. You need to sell 3-4 cases wholesale to equal 1 retail case. And selling cases cases cases doesn't mean shit if the consumers have no idea who you are - you'll watch your sauce sit on a grocery shelf next to Tapatio (at 1/4 the cost or less) and collect dust.

Selling any qty directly to the public is 1 sale. Selling 1 case to the grocery store requires multiple sales.

My philosophy is that you need to walk before you can run. Early on I had a 3 case order from a store and thought "man, that's the way!"

Except even with tabling it took months for those 36 bottles to sell, since no one had ever heard of my brand. And in an hour at my biggest market I'll sell that qty and I won't lose the ridiculous margins in the store.



And you'll lose 15% on top of the 35% the store will take. And somewhere between the cost of goods sold and that 50% remaining will be your meager profits. You'll likely make $0.50/btl or less - since the grocery business is all about leverage and you have none - they may even beat you up for an in-store incentive that comes out of your pocket. They'll likely ask for (demand) "free fill" too. And some distributors will sign agreements for buy-backs if product doesn't se in X # of days. And you pay that, not the distributor.

Suggestion: Don't be in such a hurry to become the next Tabasco. You said it yourself: it will take a lot of time. And IMO that's a very, very good thing. I have repeat customers at every market I do. And now the product moves off of the shelves in the grocery stores I'm in. And that's taken almost 3 years. For me it has nothing to do with the satisfaction of making a sale - that excitement wore off by the 2nd week. It has far more to do with wanting to build a stable customer base of loyal supporters who will show up rain or shine to purchase my products. And quite honestly it's what puts food on my table.

Build your business 1 tasting at a time, one customer at a time. There is no shortcut to success. Some people get lucky - overnight sensations are few and far between.

And hypothetically let's say you do make it into a big chain & can therefore move the kind of qtys to make wholesale a winning proposition (likely at least ~300 stores each selling ~1.5 cases/month) - now your advertising budget better be significant because there's no way you'll have time to table at each of those stores - only so many hours in the day. If you table 3 hours a day at 2 stores a day, 7 days a week, you're still only hitting 1/6 of the stores each month (and that's unrealistic anyway).

I think you make some good observations. No offense intended but I'd humbly suggest that you're being a bit shortsighted. The connection you're not making between wholesale and retail is that tabling at farmers markets *is* marketing. You are building brand awareness. You're increasing your customer base. You're sampling your product much more effectively to a multitude of consumers more qualified & greater in number than if you stood in 1 store all day. And provided your product is good, you're making some $ whole you're doing it.

My $.02
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No offense taken.  I started this thread for feedback like that.  :)  I am def guilty of getting way ahead of myself.      
 
Thanks for the feedback grant and ugly.  
 
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I have not read every post in this thread, but if no one brought up the cost of distribution witch leads to warehousing I think it's about time.
 
The city I'm in is a great location for shipping. We have a UPS sorting air hub for when I start my online store. There are 30+ trucking companies that I'm able to cross dock within 10 miles, this is a huge cost savings if you know how to use it.
 
We have our own box van so if it's just a couple of pallets we drop off or pick up at a local cross dock. I do my best to set up accounts where the volume will let us ship door to door and use 28' or 48' trailers letting them warehouse my products.
 
My bottle suppler used to send us 5 48' semis a week that were mixed loads that was coming from 6 of there manufactures. We switched over to 4 loads coming direct from there manufactures and one mixed load from bottle suppliers warehouse we save over $100,000 a year. The only 3 differences are my bottle suppler no longer cross docks, warehouses those loads, and there is a different name on the side of the trucks.
 
 
At one point I would get a ton of request to co pack for someone. 95% of them just thought I had every thing on hand that was needed and that after we made a 100 gallon batch they could just stop once a week and pick up a couple of cases. I remember one time we did a 5 100 gallon batches for this guy and there was 14 days to pick everything up. The guy flipped out when he found out what the rent was per a day for each of his 48” x 40” pallets on day 17; he did not read his contract very well.
 
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Thanks for sharing, uglyduck. Good information for all of us in the industry.
 
 
 
Re: farmers markets-  When I revived the fresh salsa after moving to the other side of the state, first stop was the local farmers market.  First season at the market, the salsa took off and I was selling out pretty much each week during the 3 hour Saturday market.  At the end of the season, I got into the local store and continued to sell wholesale through the winter. 
 
The next summer at the FM, I was still selling OK at the market, but not selling out like the first year.  And to each customer I made a point to say "you can buy the salsa at Hank's, it's there year round."  HHHHmmmmmmm~~~~
 
3rd Summer-   Customers come by the table, digging into the samples...."This is the Best Salsa EVER!  I just bought some at Hank's!"  aaaannnnd off they go~~~
 
4th summer- the 'Kid was selling Lavender Lemonade or Li-monade....and there were several days that the 'Kid made more money than I did.  That does a number on the self image! :lol:
 
 
 
But I figured it out and gave up selling salsa at the FM, just went with wholesale salsa to 4 local stores and took the 'Kid to market for his lemonade business.  Sheesh!  That 'Kid made Bank! 
 
 
Oh yeah and then there was the Lemonade Tidalwave--- I'd just got a (new to me) Honda Odyssey.  We had everything for selling lemonade at the market stacked in the back with the rear bench seat down including the 5 gallon Igloo thermos.  Around the corner, down to the stop sign.  Braking hard as we're running late.  And the lemonade sloshes forward in the Igloo cooler, tipping it forward, the lid comes off, I look back to see a tidal wave of lemonade washing from the back to the front of my new car.   :banghead:  :banghead:  :banghead: :banghead:  
 
 
Well,doodoo occurs, but we still had to do the market, so back to the house, mix up another batch, Firmly Secure The Cooler!...and off to market we go~~~
 
 
When we got home, I parked the van on a bit of a slope and literally took the garden hose to it.  Rinsed it out as best I could but I still had to take it to our local cleaning service.  It was a good thing I did, cuz they pulled up the carpet flap and removed the spare tire that's in the middle of the floor and cleaned out all the lemonade that went into the spare tire well.  Imagine if that had not been found!  :eek: 
 
 
OK~  sorry for the side track, back to sales and market.  :)
 
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I hear that SL - but dare I say I'm in a slightly different market. I get 10K people a day at my Sunday market and another 5-6 at my Saturday for example. More if it's a particularly nice day. So my markets have the draw of some small festivals. 
 
The SF Bay Area is a huge place - east bay, north bay, peninsula, south bay. I get a dozen new customers every week at every market & I've been doing it for 2.5 years. 
 
Which all illustrates the point that there's no one magic formula for whether or not to do FM's vs straight wholesale.  I think it's probably safe to assume that you did better at the stores because of your early marketing efforts at the FM's, right? And as compared to traditional marketing vehicles it was likely pretty affordable as a mechanism as well. 
 
But yeah - you've got to know when to shift your business plan as demand changes or as your business model evolves - the best plans are the nimble ones. 
:cheers: 

uglyduck said:
I have not read every post in this thread, but if no one brought up the cost of distribution witch leads to warehousing I think it's about time.
 
The city I'm in is a great location for shipping. We have a UPS sorting air hub for when I start my online store. There are 30+ trucking companies that I'm able to cross dock within 10 miles, this is a huge cost savings if you know how to use it.
 
We have our own box van so if it's just a couple of pallets we drop off or pick up at a local cross dock. I do my best to set up accounts where the volume will let us ship door to door and use 28' or 48' trailers letting them warehouse my products.
 
My bottle suppler used to send us 5 48' semis a week that were mixed loads that was coming from 6 of there manufactures. We switched over to 4 loads coming direct from there manufactures and one mixed load from bottle suppliers warehouse we save over $100,000 a year. The only 3 differences are my bottle suppler no longer cross docks, warehouses those loads, and there is a different name on the side of the trucks.
 
 
At one point I would get a ton of request to co pack for someone. 95% of them just thought I had every thing on hand that was needed and that after we made a 100 gallon batch they could just stop once a week and pick up a couple of cases. I remember one time we did a 5 100 gallon batches for this guy and there was 14 days to pick everything up. The guy flipped out when he found out what the rent was per a day for each of his 48” x 40” pallets on day 17; he did not read his contract very well.
Click to expand...
 
Supply chain & logistics should be a consideration of every business plan, regardless of whether you're selling hot sauce or sneakers. You have to have pallet storage, transportation for your product from mfgr to warehouse, etc. 
 
That tends to be my first question when someone tells me they make sauce & they want to be in the sauce business. I ask, "how much are you going to make and where do you intend on storing it?" - sometimes explaining that 3 pallets (assuming 3 flavors) takes up a lot of space and costs you money for every month it sits in someone's warehouse gives them an appropriate pause & reconsideration of the idea. 
 
All relevant for sure.  I think the reason 95% of the people don't understand those things is because 95% of them see it as "starting a sauce business" - not "starting a business".  They're both true - the latter is far more relevant. 
 
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LDHS, you are in a totally different market!  The Seattle markets seem to be more along the lines of your SF markets.  For our little po-dunk town, 3,000 on Labor Day weekend is slammin'.  I should of made it more clear the size/scope of our little market.  Not sure of the size of the markets being previously discussed. 
 
We even considered traveling to Seattle (5 hours one way) for the opportunity to participate in one of the largest in the region.  Decided it just was not the direction we wanted to go. 
 
Store sales definitely benefited from FM sales.  I haven't done a salsa tasting in-store or at the FM for 6-7 years, so all my current sales are repeat customers. 
 
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Yeah - size/scale is key to whatever business model - and I think you were smart - 10 hours of driving is a brutal market day. Maybe if you had a place to stay in Seattle cheap you could make a weekend of if & do a Saturday/Sunday, but that's be like me doing a Los Angeles market Sat/Sun (6 hours each way)
 
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Really great info flying back and forth in this thread!  I'm much obliged :)  
 
uglyduck:  Your info on the scale/quantities/intricacies of shipping were a nice addition - always good to focus on logistics of that sort.  Can you tell us some more about how long it took you to get from making the batches of sauce by hand in the kitchen to shipping 48' trailers full?    
 
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I started out my sauces in the restaurant I owned. I spent 4 years with a clientele of captive hostages to fine tune about 20 sauces. I had gotten to the point I no longer liked dealing with the hostages I was serving and when my daughter finished collage she kicked me out to run the place. We remodeled the second floor of the building and installed 2 100 gallon kettles and a small bottling line.
 
We started selling in the restaurant, 3 stores at different farmers markets, and my other kids would sell my stuff at there collages. With in the first 2 months I had out grown my equipment and was renting warehouse space across town because we were out of room to store anything.
 
At about 4 months we found a space that did not need any renovations and built it out with 2 bottling lines. I know the first time I looked at the place we would not be there more than 1 year, but at the time it was the fastest thing we could get into. We had the first line moved and had it reworked into a line that could run oil based dressings.
 
At month 7 we bought land for a new build out and started moving in by month 15. I never thought we would run out of room with 30,000 sq'. At that time we were doing a lot of co packing and going after people that were doing QVC to help us get in there door. Think my first 48' semi load went out at around 25 months to QVC and it had a bunch of different peoples product on the load that we manufactured.
 
Right now we have 4 weekly 48' semis a week we ship out. 2 of them are going to Kroger warehouses and 2 are going to Fresh Market, but one is half a load of duck eggs. 2 or 3 times a week we are shipping a 28' trailer.
 
 
I was thinking back to some of the sales plans when I was smaller.
 
Go expos as a vender and setting up there with your tasting table. There are tons of people walking around for single bottle sales and should be able to turn these people into mail order customers. Depending on the expo and the product your selling you might be able to work some deals for gallon jug orders.
 
Partner up with a fire department or what ever organizations yearly chicken BBQ. Get set up as the sponsor of the event. You donate a couple gallons of product for the BBQ and make sure your name gets plastered on everything at the event. Set up tasting table to generate sales on there way out. They might want $.25 for every bottle you sell and a case or 2 for there fire house kitchen.
We have been doing this yearly with 7 firehouses and with our foot in the door, they also call us when they have there pancake breakfasts and there chilly dinners because they know we will sell and they will get a good donation. Just make sure you know how many dinners they sell and half of them will be pick up orders (hard to convert to sales).
 
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I truly do not want to come out and say the name of my co packing company or the names that I pack my sauces under at this time.
 
A couple years ago I picked up a lover that spams all my post about how I stole a bunch of her recipes and ripped her off. She dose not use a lawyer, but she sends me a couple cease and desist and other love notes every month. She also says she has patented recipes and that I’m using them, but a recipe is a calculation and a formulation can not be patented. We have sent her 100's of letters asking her to give the needed information to see if she has anything valid, but she can not or will not provide the right information.
 
She cost me a couple $,$$$ a month as it is and do not want to open up the doors for her to cost me more.
 
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To all in thread: 
 
After the R&D, after the recipes are finalized,  after the logo and artwork is done and you've located suppliers for all ingredients you'll need and you're ready to go marching on with the big parade - what was it that sparked you?  Why drop the restaurant (or the day job) to pursue this new business?  What was the catalyst that finally put the get up in your go?
 
Were you fed up with corporate life?  Tired of rolling tamales/driving a truck/selling trucks/etc?  Seems we're bootstrappers all, so I wanna know what was the proverbial 'last straw' when/where you decided that you were actually gonna do this.  What did you tell yourself?  Did you have enough money coming in via the sauces/powders to replace the other income?  Did you hate what you were doing so much you didn't care?  Was family understanding of your vision/affliction along the way?  Looking back on it now are you more or less happy?  Are you really doing something you love, because paraphrasing a lot of people (most recently Sam Adams founder) "If you do what you love you'll never work a day"?  
 
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1. That expression is horseshit - I work every day. And it still feels a lot like work. Especially the longer days.

2. The catalyst for me: after I launched, I was working 10+ hour days in project management and 1 day a week at a local farmers market.

I was on vacation in Hawaii staying with friends on the big island. I went for a hike at a beautiful area called Pololu - and while sitting on a cliff overlooking the ocean I had some clarity. I'd saved enough nest egg to get by for a little while, and I realized very clearly that I would never take hot sauce where I wanted if I was working my day job all the time, and I wouldn't be able to fully focus on my day job if I was distracted by hot sauce.

But the decisive moment was when I asked myself "what's the worst that can happen?"

The answer was "I fail, I'm broke and I go get another job in my former field".

I suggest that having that "what's the worst that can happen" conversation with yourself may be key. If the answer terrifies you, don't take the plunge. If the answer isn't all that bad, go for it. But be honest with yourself.
 
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