1. Sustainability before growth, understanding
the cost base of the business
1. Authentic purpose
Every company needs to pin down "why we do what we do,” in other
words, they must establish a ‘mission.’
In order to achieve sustainable success, companies must repeatedly re-
examine their sense of purpose and make sure the organisation serves it
well. An authentic and inspiring purpose allows for:
• A constant, consistent sense of focus
• A strong emotional engagement both within the company and
with its customers
• Continuous, pragmatic innovation
Unique Selling Proposition
• Sales and marketing experts often talk about
"unique selling propositions," or "USP," which in
simple terms means ‘what sets your business
apart from the others’
• When a business has a clear vision, it's easier to
create great products.
• Ray Kroc, founder of McDonalds once said ‘we
provide food that customers love, day after day
after day. People just want more of it’.
That was the businesses’ authentic
2. A Powerful Brand
The surest road to product failure is to
try to be all things to all people.
• To create a scalable business, you
have to understand how crucial it is to
build brand equity and emotional
connections with customers. It's
those attachments that link
customers to your products and will
keep them returning to you. Building
a brand is about developing and
sustaining those relationships over
Here are some basic rules to
connect, shape, influence, and lead
with your products and brands:
1. Choose your target audience. As
aforementioned, the surest road
to product failure is to try to be
all things to all people.
2. Connect with the public. Make
your audience feel an emotional
attachment to your brand that's
grounded in confidence in your
Connecting, shaping, influencing and
3. Inspire your customers. A
simple, inspirational message is
far more influential than one that
tries to highlight too many product
4. No marketing plan can rescue a
brand identity which isn't fully
formed. But if you don’t have that
kind of budget, then create some
great interesting social media
content using a funny or heart-
warming back story to create
awareness among target
Partnership and Collaboration
• Doing everything for your self can be
tempting in the beginning when funds
are scarce and ambition is at its peak.
• Taking on more than you can handle,
especially in areas where you lack
experience, can be damaging.
• In the era of the global freelance
economy, it’s not difficult to find talented
expertise, but you have to know where
to find it.
• There are now dozens of websites and
online marketplaces which provide
resources from design, development,
sales, legal services, and banking.
• The best part is that you can try small
projects at low investments.
• The trick is knowing exactly what you want
and putting it into an understandable
format for the contractor to be able to
understand what you need from them.
• Getting new customers can cost you many
times more than retaining current ones.
• In fact, a 2% increase in returning
customers can have the same effect as
decreasing a company’s costs by 10%.
• The average business in the U.K. loses
around 50% of its customer base every five
• So you see why it’s so important to have the
combination of great food and amazing
customer service, as one without the other
is rarely sustainable.
• A business network is a collective of similar businesses and
individuals who talk to each other and pass on business
• A network can develop around a product. In the U.K., the issue of
the safety of medium or undercooked burgers came to the forefront
of the Food Standards Agency which is the National Regulator in
• Networks can also be created by your customers around the type of
product that you are producing. Such a network could exist around
such things as artisan beers, or great pizza, if this occurs it’s vital
that you become an active participant. Alternatively networks can be
created by you as the ‘expert’ in your field or product offering.
Creating a unique product and brand isn’t
• It takes repeatable sales processes to
create a scalable business.
• It’s one thing to set up a one man band
business and be making enough money to
survive, it’s another thing to design and
implement processes which can be
successfully deployed again and again on
an even greater scale.
Case study: Creating a scalable business
• Consider the Ray Kroc (McDonalds)
success story as a class exercise and
write up individual ways that they could
create a repeatable business model.
Scalable sales model
You've created a scalable sales model
• New staff can be added and quickly
trained to work at the same output rate
as the owner
• You have a sales can be consistently
• Customers get the right products in the
right price at the right time.
• You have created a repeatable model
Flexible Adaptable Leadership
• To continue growing, business
owners need to get people around
them who are experts in their field.
• For instance if you need to acquire
high street locations you need a
good property agent whom you can
trust to get you the best deal in a
location which appeals to your
• Since a company's needs change at each stage, your
team need to evolve at the same pace. That requires
introspection, self-awareness, and a keen sense of
strategy—both in the short and long term.
• The most sustainable way to create value is to continually
invest in your teams capabilities.
Challenges to growth
1. Spreading yourself too thinly:
• Most of us spend too much time multi-tasking,
working in the business but not on the business.
If you want to get big then you need to start
• You achieve success not by working more but
working less. Simply put, trying to do too much
• When you go as small as possible, you’ll be
focusing on one thing. Your ultimate dream is
possible and you must never lose sight of that -- if
you prioritise everything and put your time and
focus on the most important thing.
• Colonel Harland David Sanders[a]
(September 9, 1890 – December 16,
1980) was an American businessman,
best known for founding fast food
chicken restaurant chain Kentucky
Fried Chicken (now known as KFC)
and later acting as the company's
brand ambassador and symbol. His
name and image are still symbols of
• Many small businesses go off track because the
owner loses track of the big picture and gets
bogged down in the detail and ends up trying to
multitask their way to their goals.
• Therefore, if anything goes on that list it must be
qualified by asking the question:
“What’s the one thing I can do that will either
alleviate the most should dos or make everything
else easier or unnecessary?”
How to remain focused
You need to ask yourself a lot of questions and dig deep for the
answers to identify the one true thing.
• The key to “living by priority and for productivity” is by doing
something they call “time blocking.” For the best results, block
off your time in the morning -- for four straight hours.
• In the end, the people who go on to produce extraordinary
results, work fewer hours. Time blocking makes it possible.
• The reality is that everyone needs a ‘to do’ list but it should
only contain must dos and not should dos.
Working on the business rather than
working in it
Managing the workforce, impact on personal /
• Most small business owners and managers
spend virtually all of their time working in
• This makes sense in the beginning because
that is the essence of the business and there
are limited resources available, but the
problems arise when they want the business
to grow, or when they want to be able to take
some time off.
• As all available time is spent working in the business, they
often neglect essential activities such as strategic planning,
marketing, identifying new opportunities and dealing with
the financial aspects of the business, whereas the key is to
find the right balance.
Another reason why business owners find themselves working within
the business is that they feel they do it best! However, this problem
can be overcome in a number of ways:
1) Recruiting – You have to hire the right people for the right jobs.
You need committed people who are wage earners and not
2) Training –Spend the time and effort properly training your team
and the benefits will come back to you. That isn’t to say that you
should reveal all of your trade secrets - ‘keep something back’ from
staff, thereby minimizing the possibility of their concepts being
3) Standard Setting – Ensure that you have clear standards of quality
and service and that you communicate them to your team.
4) Rewards and recognition – If you are not rewarding your team
equitably or recognising them for a job well done, then it is
unlikely that they will be striving to give you their best possible
“But isn’t it just quicker and easier if I do it myself?” I hear you
Delegation is probably the hardest thing to learn for a business
trying to grow. The solution here is simple – you need to spend
time training your staff so that you feel confident that you can
assign tasks and responsibilities.
‘But I have to be here just incase’
This usually means “just in case I have to make a decision”.
1. The solution here is to have clear guidelines as to what
decisions you are comfortable with the team making on
your behalf and what decisions they cannot make.
2. Have guidelines agreed in writing and be consistent. If
you find that someone makes a different decision to the
one you would have made, deal with it calmly and
“Whenever I am away, there is always an
• The solution to this problem is to monitor and identify the
issues and resolve them long term rather than on a day-
to-day basis while you are working in the business.
“The staff think I’m ‘bunking off’ when I’m not
• Working on the business does
not mean that you have to work
on the premises, although in
some instances it might have to
be the case due to space or
layout. You just need to let
everyone know what you are
doing and why.
Work and life balance
• There is no right or wrong when it comes
to Work Like balance as it depends on
your particular business and the vision for
it; it’s most certainly not ‘one size fits all.’
For example, a business owner who wants
to expand so they have multiple locations.
• This type of situation can have a massive
impact on personal or family life, including
health and well-being.
What to do?
• Unfortunately there is no stock answer for this other
than common sense - there are times when a
growing business demands a lot, if not all of our time,
but that should not become the norm.
• A week or two of intense effort must be balanced off
with some ’me’ or ‘family time’ otherwise you risk
losing things that in the long run are more important
The Brand is one of an organisation’s most valuable assets. With
brands like Apple valued at $98.3 billion, Google at $93.3 billion,
and Coca Cola at $79.2 billion, it’s understandable why building
and protecting a brand is a high priority not just for the big players
but for a small business which is looking to expand.
Why is a brand so important?
• A brand is far more than its outward representation - it is a
set of recognisable factors which bring a customer back
time after time.
• A strong brand can impact your business in many ways.
• It can help you charge more than your competitors
• Attract new customers
• Protect a business during economic downturns
• They create reservoirs of goodwill that can help in times of
• Make you appear bigger than you really are
• Watch this short clip on why your brand is more important
than your product:
Who do you trust?
• Consumers tend to favour and
develop a high degree of loyalty
to brands they know and trust.
• This requires establishing and
communicating a brand promise
and building a customer
experience that upholds the
promise consistently at every
stage of the purchase cycle.
• Trust comes with confidence defined by the brand: quality,
experience, service and innovation.
• It’s not just personal experience which shapes the
consumer’s trust and expectations that a brand will
• Strong brands create evangelists who are not shy about
sharing their stories, particularly with the advent of social
media and these types of customer endorsements are
invaluable when it comes to building trust in your brand.
The importance of recognition
• As the result of social media, the
public are becoming more and
more familiar with branding to
which they’re consistently
exposed, both overtly and
subliminally. When people are
familiar with brands, they are more
inclined to favour them – provided
that they have a positive
experience or review of that brand.
• The brand colours, logo and name need to be consistent and easily recognized
in order to create a comfort and confidence in your product or service. It should
also help differentiate the brand from the increasing number of competitors in a
• Above and beyond the visual image, there’s a broader and more important
matter at stake when it comes to a brand. It involves a reputation, or
perceptions of everything the brand represents, conveying a sense of the kind
of company that stands behind it. A number of factors and activities can help
achieve this over time.
• On one hand, there are the practical actions which
a business may follow. These include internal
practices and policies, like employment and
advancement of minorities and women or cultural
nuances, like family friendly policies. They also
include how associates on the front lines deal with
customers, from their responsiveness at the
purchase point to their helpfulness resolving
complaints. Such policies should always be
consistent with the brand and the company
• It’s also important to note that customers
increasingly pay attention to a company’s altruistic
endeavours and charitable contributions; both of
which should also be aligned with the brand
• “That’s the greatest sauce I have ever eaten! You
should consider marketing it.”
• Have you ever had a friend, customer or relative
tell you that a special sauce or food that you are
selling as a caterer is so good that you should be
selling it in a supermarket?
• You may be surprised to find that making the
move from making food and selling it on market
on the day (in other words being a caterer) to
becoming a manufacturer is not as simple as it
• Like any small business, food enterprises require
careful planning, dedication, and skilled
management to be successful.
• Competition is intense in
the food business. Having
a product accepted by a
major grocery chain or
• In the initial planning stages, you should check
the planning regulations to determine if you can
• your food business in the chosen geographic
location. Local planning regulations may restrict
the kinds of businesses allowed or prohibit food
• Planning regulations should involve consulting
your local authority before making any
• Do not make any plans until you are satisfied
that your business will fall within the bounds of
the current planning class or zone.
It is unlikely at this stage that you
will be building a new facility due
to the potential costs such a
venture would incur, so the other
• Renting a suitable food
• Renting a suitable shared food
• Modifying an existing building
• After modifying or converting an
existing building you must advise your
local environmental health department
who will then schedule a physical
inspection. We strongly advise
however, that you get them involved
at the planning stage as this can save
a lot of wasted effort and cost!
• It is unlikely that enforcement
inspectors will approve home kitchens
for medium to large scale production
of food that is to be sold through
Important factors to consider
• All foods prepared at any location and offered for sale to
consumers for distribution to retailers fall under the
responsibility of the local health department (who are
responsible for regulating and enforcing food safety as it
pertains to food processing, handling, storage, and sale).
• Consider waste management when planning as this may
require the implementation of different strategies.
• Always include a labour cost, even if
you do not intend to pay yourself a
salary. This is a good business
practice that will help establish a fair
• One way to estimate labour cost is to
divide the profit by hours spent. For
example, if it takes 50 hours of labour
to produce £1000 of profit, the labour
cost is £2 per hour.
• Another way to establish labour cost is to decide what
your time is worth. You may think your time is worth £2
per hour or maybe £20.
• Labour cost is more than preparation time. A certain
amount of time will be required for developing the
business, transportation, purchasing, and record keeping.
If others will be working as well (family members for
delivery, for example), include their labour costs also. Will
they work as quickly or as efficiently as you do?
Consider the following questions:
• Will you deliver your products?
• Is a special vehicle necessary?
• Will you need equipment to keep foods at
recommended temperatures while in transit?
E.g. Some foods need to be kept cold during
delivery. Let’s use the example of ice cream. Ice
cream must be kept frozen at all times or the
quality of the product is lost. Therefore, if you plan
to sell ice cream, you must purchase, rent, or
lease a refrigerated vehicle to transport it.
• Insurance helps safeguard your business
against losses from fire, illness, and injury, it
is unlikely that a normal catering insurance
policy will apply once you branch out into
manufacturing rather than catering.
• Talk with your insurance agent about your
business needs making absolutely sure that
he understands your business, to do so it is
wise to put everything in writing, then there
can be no doubt that you gave them all the
Although not all the following expenses are
applicable to your business in the beginning, they
may become significant as the business grows:
• Overhead for kitchen, equipment, and delivery
• Utilities (fuel) used in food preparation
• Licenses required by local, or national
• Record keeping and required sales reports
• Customers who do not pay
• Accounting or legal fees
• Excess production (leftovers), pilferage, returns, and
• Advertising and promotion; postage and telephone
• Kitchen modifications
If you have major initial expenses, such as building a kitchen
or buying appliances, ask an accountant to establish a
monthly figure to include in expenses.
Setting prices for products
• The price of a product can make
the difference between success
and failure. Good prices make
customers think they are getting
their money’s worth and make
you think you are getting a fair
return on your investment of
time and money.
How much can you charge?
• Consider comparable commercial
• Prices should reflect all fixed and
variable expenses in the business
and provide what you consider a
• Prices should be competitive. If your
product offers a service or is better
quality than your competitors, don’t
be afraid to charge more.
• This method uses unit costs of
ingredients, expenses, and labour to
determine the price. Here’s an example.
• You have fixed expenses of £xxx per
month; you plan to work 5 days each
week, or 32 hours
• Your ingredient cost is £xxx per product;
and you can make xx products an hour
• How much should you charge per
• Step 1: Figure the productive working hours (total hours spent in actually making
Seven hours of the 32 are spent in bookkeeping, shopping, and delivery, so they
are not productive hours. Therefore, your total productive hours per month are 25
(32 – 7 = 25).
• Step 2: Figure expenses per hour.
Divide the monthly fixed expenses by the productive working hours in 1 month (£xxx
÷ 25 hours = £xx fixed expenses per hour).
• Step 3: Figure ingredient cost per hour.
Multiply the ingredient cost of one loaf by the, number of products you can make in
• Step 4: Set labour cost. In this example, you decide you
are willing to work for £xx per hour.
• Step 5: Add your totals:Fixed expenses +Ingredients +
Labour = Total per hour cost £
• Step 6: Divide the total per-hour cost by the number of
loaves you can make per This is the minimum price that
will cover your costs. Compare this price with that of
How to resolve problems relating to cost
• Reduce ingredient cost
• Reduce labour cost
• Increase per hour production
• Decrease expenses
• Improve work methods, which may
accomplish all four of the above
• Reconsider the business venture
Percent food cost pricing
• This quick method is used by many
restaurants. It is based on the theory that
food cost makes up about 40 percent of the
price. To set a price, multiply the food cost by
• The 40 percent figure is just a guideline; it
may not be a suitable if the cost of
ingredients is low, the product requires a
great deal of labour, or if the ingredients are
so expensive that no one would pay 21⁄2
times the cost.
• To get a price per person, divide that total by
the number of people the food will serve.
Price list and policies
Have a price sheet that is available to customers. On this sheet, list your
basic policies. Post both prices and policies in your office as well. Some
basic policies could include:
• Minimum order size
• Time needed to fill order
• Delivery schedule
• Advance payment and billing procedures
• Price changes
• Other rules you will follow
• To estimate profits, make a conservative estimate of the
number of products you expect to sell during a certain
time period (for example, 6 months.) Multiply that figure by
the selling price per product.
How does the anticipated profit figure
compare with what you could make
through other job opportunities?
• What about the money you
must invest in the business?
Could that money earn a
better rate of return
elsewhere? If the anticipated
profit figure is satisfactory to
you, proceed with your
Preparing your project
• Standardised quantity recipes are necessary to ensure
uniform product results and keep preparation costs
steady. If the original recipe serves 12 and you want to
serve 60, multiply all the ingredients by 5.
• If the food no longer tastes right, continue to experiment.
Brands of ingredients can make a difference too, so
don’t change brands without testing the result.
• Experiment with cost-cutting measures that don’t affect
the final product. For example, discover the minimum
amount of each ingredient that can be used without
affecting quality. Arrange equipment for most efficient
production, and streamline work methods as well.
The recipe should include the following:
• Appropriate descriptive title
• Size of servings in volume, weight, or size
• Yield number of servings and/or volume
• Pan size needed, especially for baked or
congealed items, or if important to the
quality of the finished product or portion
What should a recipe include?
• Number of pans needed and whether glass or metal
• Ingredients in order used and brand name
• Type or form of ingredient, such as all-purpose flour,
melted fat, finely chopped onions, etc.
• Quantity of ingredients in both weight and volume
• Clear, precise instructions for preparing and combining
ingredients; cooking method, time, temperature, size or
portion and method of service, as well as possible
Packaging and labelling
• It’s a fact that attractive products sell better.
Attractiveness refers to both the appearance of
the food and how it is packaged or displayed.
Strive for innovative food arrangements.
Prepare the product the way you want it to look,
and take colour photographs.
• Packaging also contributes to the attractiveness
of a product, so choose a packaging method
that enhances what you sell. Today’s
customers are concerned about sanitation and
safety; securely wrapped and sealed packages
are vital if food is sold through retail outlets.
Product Labelling: All food and non-food
items packaged by your business must
be properly labelled before they are sold.
This varies amongst countries within the
EU so you must check the relevant
Nutrition Labelling: This does vary from
EU countries so you must check the
Allergen Labelling: This does vary from
EU countries so you must check the
• Trademarks are distinctive names or symbols used by a company to
distinguish its products from those produced by any other company.
• The creation and use of a trademark is the first step to making it
• Registration Bodies vary from country to country
• There is a charge for the registration and it gives you the legal rights to the
trademark for 20 years.
Weights and Measures
• This too varies amongst countries within the EU so you must check the
• Obtaining written orders or contracts will make your food
business seem more professional. If possible, get written
orders or contracts from buyers, especially if you are
producing for resale through retail outlets. Written orders
help prevent errors and misunderstandings.
The order form should have:
• Space to write the price, order type, amount, time of
delivery, last date order may be changed or cancelled, and
payment schedule. If food is for resale, be sure the order
form specifies the policy on return of unsold merchandise,
especially if it is perishable.
• Records tell you where you have been, where you are, and
where you are going. Business experts say there is a close
relationship between inadequate record keeping and
Franchising and licensing your concept
• Licensing, also called a "business opportunity" and
franchising are extremely similar and could have a major
impact on your company.
• Franchising means selling the rights to use a business
model and trademark, whereas licensing lets a party use a
• Whether you should license or franchise largely depends
on how comfortable you feel running a business and if you
want to avoid legislation in various countries.
• The difference between franchising and licencing can be
simplified by watching this video:
Benefits of Licensing
• Licenses are usually much lower cost than a franchise.
• After the initial purchase of a licensing agreement, the
licensee generally has no financial obligation to the
licensing company other than purchasing products or
using the trademark in accordance with the agreement,
which may amount to annual or ongoing fees, but these
are generally less than franchise costs.
Benefits of Franchising
• Franchisers offer exclusive rights to a geographical territory to franchisees, while
licensing companies usually offer no such protection to licensees. Most
importantly, franchisers give support to their franchises, such as business
management training and help in accessing financial assistance. Licensing
companies typically offer little or no support services after the purchase of the
• Franchise costs are usually multi-faceted comprising:
• Signup fee
• Premises and branding costs
• Ongoing franchise fees
• A percentage of sale and or restrictive purchasing agreements which will include
a further profit element for the franchisor
• If you want to expand your business by letting other people copy your
business model and use your trade name, licensing carries few federal
legal restrictions. In many countries franchising your business is controlled
by legal regulation.
• In general, it is better to franchise than to license because franchises offer
more well-known brand names and support, according to San Francisco
franchise attorney Kevin B. Murphy. Also, licenses are usually just
franchises attempting to skirt government regulation. If you are trying to
expand your company, customers are usually more attracted to franchise
agreements than to licenses.