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.

 

 

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!