Running a food company? – taste your product!

Over the Thanksgiving Holiday, food was a much more popular topic than politics. As you can imagine those discussions were also a lot more pleasant. We are a food family that also happens to have been involved in both cooking food and manufacturing food. Many of our conversations start with: “This tastes like…” and end with suggestions on what beverage would pair well with the dish.

Beer or Wine with that? Duck raw TG 2018

That choice will depend on how you are genetically wired – how your taste buds interact with your brain.

At its most basic, the 5 tastes (sweet, sour, bitter, salty and umami) signal our bodies what to get ready for.

But it’s far more complicated than that!

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For many years science used a simple map of our tongue to show the areas specializing in specific tastes. We are now realizing that it involves not just the taste buds in our mouth but in the throat and down to the stomach. In addition taste involves smell, texture and nerve endings. For example, research has also shown how certain foods can send signals to our brains that distort normal data. For example, capsaicin directly activates our tongue’s touch rather than taste-bud receptors. For more detail you can read Tip of the Tongue: Humans May Taste at Least 6 Flavors .

How does that tie into running a food manufacturing company?

When I first got involved in manufacturing foods, the Chairman of our parent company had an example he liked to use whenever he visited one of the plants and requested a tasting of the products that were being made.

His opening line was: “If the dog does not eat the food…”. It was the story of a European dog food manufacturing start-up that made the best dog food in the world. Unfortunately, they went out of business in 3 months. They forgot to test if dogs would eat it!

I took that story very much to heart and to this day when I am involved with a product that I can eat, wear or otherwise use personally, I insist on doing so. I should add that it may not make the product better, but it does insure that it works as intended.

Finally, a shout -out to Donald McKenzie whose blog “Dining with Donald always includes a book review or two. He is the one who recommended the book “Tasty” by John McQuaid . It was thought provoking.

 

 

Dealing with a Nuisance!

Both in your business and in your non-business life you have to deal with nuisances, some serious some not. How much time and energy you spend on them depends totally on you.

In business, nuisances have a tendency to never go away. Instead they simmer and only come to a boil when we neglect to manage them. They can range from a key employee’s bad attitude to a vendor’s misbehavior and anything in between. Because there are so many varieties of a nuisance I will use a parable from the non-business world to illustrate some of the ways I have learned to reduce their impact.

Z Niche Blog Nuisance squirrel 102919I live in the South and we are entering our six good weather months. As temperatures drop, the oak trees are full of luscious acorns. Unfortunately these nuts become a major culinary attraction luring squirrels to think they own not only our yard but also the interior of our attic. For further digestion, they will also chew on exposed cables of any kind and in our neighborhood, the cable guy has become more regular than the mail-woman.

In order to defend our castle, I had to spend time,energy and money, in ever increasing amounts to reduce the rodent nuisance, and yet I knew that total victory was not in the stars. Just like the gopher in the movie “Caddyshack” the squirrels were determined to outlast me.

Keep in mind, that in business, your nuisance owner does not want to leave you or loose your business – they just want to train you to accept things their way.

Phase 1

When the squirrel nuisance started a year ago, my animal loving wife insisted that we use a catch-and-release trap. SZ Niche Blog Nuisance squirrel trap 102919he volunteered to drive the captives to an uninhabited oak tree wooded area about 8 miles away and release them . We purchased a $59 trap and set it up. We averaged one captured squirrel per day for about 3 days. Then the rodents caught on and I never trapped another one. They also must have passed on their knowledge to their off-spring ( just like employees can copy bad behavior). Even with different bait set in different locations, I never caught another squirrel. Sort of like the practice of transferring a problem employee- they become a nuisance from afar.

Phase 2

Still being in a non-lethal mindset, after the failure of the trap, we tried using bio based repellents. These were totally ineffective – the squirrels partied on the treated surfaces and just multiplied in the yard.  In correlation to HR terms – verbal counseling. The next step was an escalation into high-tech. We invested in a sonic noise generator, Z Niche Blog Nuisance squirrel sound repellent 102919but low and behold, one of our neighbors started complaining that his pets were acting weird. The squirrels on the other hand acted as if the $90 gizmo was part of their home entertainment system. Zero effectiveness.

Phase 3

When non-lethal methods failed it was time to go on the offensive. We purchased the old-style, large rat-traps from Walmart and baited them with bacon or peanut butter. Success was mine for about one week.  The squirrel population shrank and I was celebrating.Z Niche Blog Nuisance squirrel rat trap 102919

 

Then from one day to the next, even though the traps had been set off, the rodent and bait were gone! I reset it, and in a few minutes I watched a squirrel trigger the trap by pushing it. Once the trap had sprung, the squirrel proceeded to eat the bait, all the time looking at me. The entire squirrel family adapted their behavior and the nuisance was back worse than ever.

Phase 4

I realized that I would have to be more personally involved. That meant that I had to figure out how to get to them from a distance with something that would make an impact. Being surrounded by neighbor’s homes, firearms were not a possibility and neither was Elon Musk’s flamethrower. IZ Niche Blog Nuisance squirrel flamethrower 102919 settled for a BB gun and immediately realized that actually hitting a squirrel in motion was a bit out of my area of competence; but at least I was getting close enough for them to sense actual danger. Over the span of a few weeks the squirrels learned to associate my presence combined with the sound of an air-gun being charged as “immediate danger” and they ran for the neighbor’s yards. Even better, their ability to learn danger signs resulted in our yard becoming almost squirrel free. Now, when I see the occasional nuisance showing up, all I have to do is load the air-gun and shake the pellet box and they are gone.

Z Niche Blog Nuisance squirrel pellets 102919
The Winner

What have I learned from my battle with nuisance squirrels? When you are dealing with a nuisance, it does not pay to be laissez-faire. Escalate the battle from Phase 1 to Phase 4 immediately. In HR terms – give a nuisance employee only one warning, if the behavior repeats, terminate them. It will save you time and energy and it will help morale. The same holds for a nuisance supplier – one warning and the next time you will lose my business. That is one of the reasons why you should try to never be dependent on a single vendor, or for that matter, a key employee.

Moore’s Law meets Murphy’s Law

Fifty years after it was coined, Moore’s law (the number of transistors in a dense integrated circuit doubles approximately every two years, or why the cloud works) continues to amaze. Murphy’s law on the other hand has been around forever.

Unfortunately as we are approaching singularity, Murphy’s law is in full action below the surface. While reading Future Crimes by Marc Goodman, I was struck by how much our society has closed it’s eyes when it comes to: “What could possibly go wrong?”.

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Just think for a moment about your own business and how much you take it for granted that things will not go wrong – we all expect and accept glitches and soldier on. But what happens if you find your files locked by ransomware? Or you are one of the 143 Million identities released by the Equifax hack? Murphy’s law bites when you least expect it.

If you are older than 18, then I strongly suggest you make the effort to read this book. It is not an easy read, but it will make the hair on your neck stand-up when you see the implications outlined in gory detail by the author.

You will never look at a DNA test the same way again.

So you want to do an App?

Frequently we are approached by potential clients who want to build a business arround an App. While many of them know how to code, a significant number only have a concept that they want to convert to the next mega app – and cash out.

Unfortunately not many realize that most of the current market for Apps are at the long-end of the tail and very industry/user specific. Their business models are often predicated on unrealistic user acquisition  rates, and they are disappointed if not angry when we explain that their model in its current state is not functional.

The book “Machine Platform Crowd”, written by Andrew McAfee and Erik Brynjolfsson is a must read if you are considering building an App.

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Lifetime Guarantee – Yes or No?

If you are a maker of products, then this is a question that you need to answer. You will also have to be prepared to live with your answer, especially if you say: Yes!

Full disclosure: I have always insisted that the products made by my companies be “unconditionally guaranteed.”  I never regretted that philosophy and in 25 years+, the cost was less than 0.01% of our sales.

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Last month, I had the opportunity to test another company’s lifetime guarantee. Zippo ®, was made famous by soldiers during WW2, and most recently was a key accessory for the men in the Mad Men TV series.

I inherited a Zippo® lighter made in the early 1950’s and the lighting mechanism finally stopped working. I mailed it to the American repair center and 4 weeks later my lighter was returned in perfect working order. Zippo ® confirmed receipt and sent me the return shipping information – a professional and flawless transaction.

The recent uproar over L.L. Bean’s® decision to change their guarantee policy because of “claimed” abuse, prompted me to look a little deeper. To my amazement, while a large number of companies offer a “lifetime” guarantee, the fine print says otherwise. A Google search showed that there are only 20 -50 brands currently with a genuine “lifetime” guarantee: in other words, companies with a no-hassle process to exchange your product or to get it repaired for free. Country Living has a photo gallery of 25 products/companies that practice what they preach.

My recommendation to a Start-Up or an SME that manufacturers or distributes physical products is: Guarantee your product unconditionally. Yes, you will be tested on your resolve, but the resulting customer goodwill and word of mouth will be worth every penny you spend on fulfilling your promise.  Do not get into fine print with qualifiers. Just spell out clearly what constitutes a failure of the product and what the procedures are to get it replaced or repaired. Yes, it is OK to charge for shipping – just do not make that an unrealistic amount. You will be doing the right thing.

Update on November 18, 2018 –  NYT She collected 1500 companies that stand behind their products.

Location, Location and Location!

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As an entrepreneur, you will have to make an early decision on where you should physically locate your company. While micro businesses or single employee companies have the most flexibility and the least need for a fixed location, businesses that produce or handle physical products do not have that luxury.

Because many of our clients fall into the latter category, we frequently face this geography question and while each situation is unique, there are some common denominators. I will address some of them, so that you can evaluate your situation before committing to a location that could be more expensive than necessary.

Restaurants

In the restaurant business, your physical location is more important than your social media prowess. Rent and build-out costs will be your most significant fixed expense and consequently choosing the right location (i.e., a neighborhood where your target customer wants to go) is mission critical. An established location will be more expensive than a location beginning to trend. How do you choose?

  1. Do a thorough demographic analysis – framed by your ideal customer persona.
  2. Establish a relationship with a real estate broker active in your target area and who is specialized in restaurants.
  3. Do a personal review of Social Media covering the area (Yelp, Google, Facebook community page, etc.)
  4. Walk the neighborhood during the day and at night.
  5. Get comfortable with using data from the applicable municipality – zoning regulations, noise restrictions, building permits, crime reports, etc.
  6. Join a neighborhood organization and make friends.

Manufacturing or Assembly Companies

Here the main criterion is not foot traffic. Instead it is infrastructure and transport accessibility. How your employees get to work, how safely and at what cost has a long-term impact on your profitability. So does the infrastructure condition for electricity, water supply and whether or not you are located in a flood zone or possibly a volcano eruption. How do you pick what is right for you (assuming you have already settled on a city or town)?

  1. Create an optimal floor plan for your operation and determine the amount of square feet you will need, both minimum and allowing for growth.
  2. Create a relationship with a commercial real estate broker who specializes in light industrial buildings and provide a detailed list of your requirements. In addition to square feet, you need to specify your electric and water requirements, determine whether or not you need to be dock high, how many restrooms, parking area, ceiling height etc.
  3. Visit every location under consideration at least twice and at different times of the day.
  4. Meet with local politicians to see what incentives are available for you to locate in their district. For example: Targeted Economic Zones will allow an investor to invest only $ 500,000 instead of $ 1 Million to qualify for an EB-5 Visa. There also may be development credits, tax breaks and other incentives available.

E-commerce Companies

If you are involved only in e-commerce and are doing your own fulfillment then you have the greatest amount of leverage over your future landlord, because you can use just about any light industrial space to house your operations. Location, signage, foot traffic or demographics are of little interest to you. What you require is the lowest cost per square foot in a reliable building. You want to have easy truck access but you do not need to be dock-high since a forklift will be adequate for loading and unloading. What you do want is a relatively safe neighborhood and a secure building.

  1. Determine your square-foot requirements.
  2. Contact several commercial brokers to provide a list of locations.
  3. Visit only the places whose pictures indicate they may work for you.
  4. Check with FedEx® or your preferred trucking company on a location’s accessibility and service times.
  5. Check on Internet availability (i.e. fiber-optic cable vs. regular).
  6. Negotiate for the smallest deposit and shortest lease landlord is willing to give.

Most important, never forget that getting the first or a new place for your business is a significant mile-stone. Enjoy the process and celebrate your accomplishment after your lawyer has checked the lease and it is signed!