Braving the food market: How did they do it?

Braving the food market:
How did they do it?

It’s a hard-knock life, maybe, but these food entrepreneurs are still at it ... and they’ve learned a lot.

Editor’s note: The following interviews with six successful entrepreneurs were conducted by phone and e-mail. AURI extends a sincere thanks for their willingness to share their hard-won acumen with aspiring entrepreneurs.

From the ground up: development and financing

What are the most important ingredients in a business plan?

Samuelson: Marketing,

Jager: Always, marketing

Economy: Demonstrate a knowledge of the industry; show some product detail, a realistic budget, personnel requirements and contingency plans.

Klein: Is there a market big enough to make money? Are the margins good enough? Is the initial expense for start-up reasonable? How is this going to be sold? ... Who is going to do the selling?

Carlson: Financial backing, long-range planning and marketing knowledge.

Gullekson: Customizing your goals so you end up where you want to be.

How important is adequate financing to a startup?

Economy: Essential.

Samuelson: Very important. We are fortunate that we were an existing business. It would be difficult to go it alone.

Klein: Medium — I started with no financing.

Gullekson: You can do with what you have; you just have to adjust your plans accordingly. Starting a small food business doesn’t have to be a high-risk venture.

Carlson: It’s very important to know what financing’s available and where to get it at low interest.

What advice do you have for those capitalizing a new product venture?

Gullekson: It doesn’t make sense to go beyond what you can reasonably do with your local bank.

Carlson: Do not go into debt too heavily to start out, or you may get the product back.

Jager: If you’ve got a good business plan and can show the banker how you’re going to sell this, it’s a lot easier. Of course, some sort of track record helps.

Economy: In addition to tapping debt and equity sources, one can often find financing from suppliers, product manufacturers or co-packers. It’s something people often don’t think about.

What have been the most challenging regulatory hoops to go through?

Carlson: All of the state regulations and licenses. And then FDA, especially with labeling.

Samuelson: Information is often difficult to locate.

Klein: We haven’t had a whole lot. Initially it was understanding the parameters of labeling.

Gullekson: I guess it’s gone pretty smoothly. Getting a food manufacturing license and all that was very easy — you just have to do what they want you to do.

Jager: You talk to some people and the notion is, ‘How much can we get by with?’ … But I always got along well with the State people. Before we started, I called the ag inspector and said, ‘You tell me what to do.’ He said ‘do this, this and this,’ and we did. They’re not the police, they’re there to help — for everyone’s benefit — yours and the consumers.’

Economy: The most challenging has been relaying health benefits in a manner that’s understandable to consumers yet still conforms to FDA requirements. For example, there are many people with certain diseases who benefit from our product, but without clinical trials we’re not allowed to make claims. Also, several states have their own requirements, above FDA. That was kind of a surprise. For example, we had to be licensed in Alabama, which costs $250 a year.

What agencies or organizations have you found helpful?

Economy: For me it’s been AURI, the Minnesota Department of Agriculture (MDA), Minnesota Technology, the FDA and a variety of local organizations such as Stearns County and the City of Sauk Centre.

Jager: For nutritional labeling, we went through AURI. We changed our line a little bit and went with low sodium; Charan Wadhawan was real helpful in reformulating that.

Klein: AURI was valuable. Small Business Development people were helpful for certain things, as was the Southwest Regional Development Commission.

Samuelson: AURI and the Minnesota and North Dakota agriculture departments.

Gullekson: MDA and AURI.

Carlson: (Same) and the U of M Food Service and Extension Office.

Our interviews continue: People promos, pricing