Category Archives: Food

Where there’s magic there’s margin

At the Food For Thought workshop in February one of the high points was the presentation by Charles Baughan, MD of Westaway Sausages. He gave an energising and inspirational talk which left everyone in the room wanting to hear more.

He began by sharing some of his own survival tips for small business:

As Westaway’s has grown the customer base has become more diverse; now they sell to retail, wholesale, and food service customers both in the UK and abroad. Charles talked us through a comparison of the different channels and markets and discussed the reasons for pursuing this strategy.

It was evident from this that the broad range of customers offered a chance to spread risk and also smooth any short term fluctuations in sales volumes.

However the advice was quite clear: “Sometimes it is better to spend time and effort choosing your customers instead of reacting to every opportunity”, something that supported the business planning discussion from earlier in the day.

Questions that would help work out whether an opportunity was the right one for your business included:

Can they pay their bills?
Do you like them?
Are they high maintenance?
Is their business strategically right for you? (Not just about profit!)
Is the market expanding?
Why are you the best choice for them? Are you cheaper? Better? Faster?

From my point of view this final question is fundamental; success is not just about why “they” are the right customer for you but also why you’re the right supplier for them. That’s where the magic comes in – if you can supply something that fits the customers needs better than the competitors you can make the margin.

The message to take away was clear: make a plan, aspire to great things and then get out there and succeed.

You can find more details of what was discussed at the workshop here

Food For Thought: A Workshop for Food and Drink Businesses

Plans for the Food For Thought workshop are coming together now, and its looking exciting.

I’ve lined up great speakers to join me, and together we will address:
* pinpointing what your customers value,
* which products or customers are worth most to you
* getting noticed by the right customers

All building towards making sure sales growth in 2018 brings profit growth at the same time.

The idea behind the workshop was the number of businesses whom I have met with in the last 5 years who have got themselves into trouble because they put all their effort into getting more sales when what they really wanted was more profit.

If you sell more than one product, to more than one customer I would be prepared to bet that some of the sales are super profitable, but some only just cover their costs.

That’s usually unavoidable, but the key thing is to make sure YOU have made a decision to make the not so profitable sale instead of just being led by what the customer wants.

Selling what the customer wants is not guaranteed to make profit for your business. However, direct profit isn’t the only factor to consider; there’s also issues like keeping customers happy, spreading delivery costs, and establishing a reputation to allow you to develop other products. The challenge was illustrated quite nicely by a business that I met with last month:

The have two product lines which sell well, in large quantities, and are profitable. They have another product (product C) which sells in smaller volumes, is not profitable and causes lots of problems for their factory because they need different processes and different ingredients.

From a finance perspective product C is a disaster and should be discontinued as soon as possible and the factory manager would agree wholeheartedly with this.

However there are other things to consider; the customers who do buy the product love it and the retailers who stock it can’t get enough. Also, competitors who make either one or both of the profitable lines don’t make product C so retailers will not move away from this business while they offer something that no-one else does.

So, from the sales and marketing team’s perspective the business should sell more of this product, even though it is not profitable!

The solution here is to have enough information to know that some sales of product C is good, but more isn’t necessarily better. And a balance between the perspectives of sales, marketing, operations and finance is essential to success.

On the day I will be joined by:

The workshop is at The Cedars Inn in Barnstaple on 27th February from 9.30am to 1.30pm.
Tickets are £30 (inc VAT) until the end of January and can be booked here