08 Aug Holiday Planning Starts Now
Ahhh August. Pools and barbecues, festivals and farmers markets AND ribbons, tissue paper, winter flavors and inventory. If you are in the business of Consumer Packaged Goods (CPG) then August also means holiday planning for Thanksgiving and Christmas and this is especially true for food businesses.
The big players in the food industry (think any major grocery retailer or food brand) have a holiday strategy that starts 10-18 months out and you need one to. No matter your size, a strategic holiday plan can mean the difference between ending in the red or the black at the end of the year. In the food industry these two holidays are your Mt Everests – the ones that have the potential to have the biggest payoff. When I worked for Whole Foods Market, Thanksgiving was the biggest holiday of the year; gravy, turkeys, and pumpkin pies had all been taste-tested and pre-ordered. Now that I work with local food businesses, Christmas is THE holiday to capitalize on with people opening their wallets not only for to treat themselves but also purchasing gifts for others.
So, how do you best take advantage of the holiday season and what should you be doing right NOW to be ready? Here are the top six things your business should be focused on for success:
1) Pre-Ordering and Cash Flow Planning
As a food business you are in the precarious predicament of having to purchase all of your ingredients and packaging up front and then make all of the product (renting kitchen time and/or paying someone else) and then hope that you sell it all the coming months. As I have said in my financial profitability presentations, a food business is not operating in a straight line but rather a stair step. Every time you scale up, you need more capital. Anticipating how much cash you need to purchase all of this holiday inventory so that you can go out and get it is work that needs to be done NOW, not in November. Hopefully, you can spread out the inventory purchasing and time in the kitchen, but getting all of this planned out is essential for your sanity and wallet. This planning, whether it is for the holidays or getting a big account, can be the difference between financial success and closing your doors. I have seen food businesses fold because they couldn’t meet demand because they didn’t plan and there is no such thing as emergency capital.
Be sure you understand your cash flow cycle too. If you got to holiday markets, then you generally realize the cash immediately. If you have wholesale accounts, this could be a 30-90 day cycle. Make sure you have financial strategies in place to wait that long to actually receive the money for your product.
So how much inventory do you need to purchase and how much will it cost you? This is where you need two things: accurate COGS (cost of goods sold) and a sales forecast tool. If you have gone through a holiday season before, that should help you with some baseline numbers that you can add a healthy growth percentage. If not, to some extent you are making a best guess based on the markets and accounts you do have. The last thing you want to be sitting on is 10 cases of perishable cinnamon, peppermint, pumpkin spice whatever with no outlet after December 25th. Cultivate uses two great tools for COGS and forecasting with our clients.
2) Holiday Gift Packs
People L-O-V-E gift packs for the holiday. They also love gifts that tell a story or are more interesting than just the product itself. Think about some of the best gifts you have given or received and try to be a part of someone else’s gift giving experience. Whether you are selling via e-commerce or at markets, put together a beautiful gift pack with a card that tells the story of the product, the company and/or the founders with ordering information. Consider making recipe cards as well. Anything that gives a customer value beyond just the utility of the product creates fans and loyalty. We love to design marketing pieces; let us know how we can help.
Find beautiful boxes that fit your product perfectly with cellophane, tissue paper and twine or ribbon. Buy a stamp with your logo that you customize all of this or have a box custom made, but remember, all of this packaging needs to go into your COGS and can get expensive. Some sites to check out ahead of time and order samples are Bags and Bows Online, Nashville Wraps or PaperMart are good places to start. Don’t forget that if you are doing e-commerce, you will also need shipping boxes that work with the new packaging.
3) Dial In Your E-Commerce
If you have any kind of e-commerce sales make sure it is ready to go. Update photos, text, pricing, shipping, the about you section, etc. All the things we do at the beginning and then set it and forget it. Try to view your site as a customer would. Is it easy to find the shop button? Do your product descriptions, packaging, etc make sense? Consider adding your products to Facebook Shop – its easy and one more outlet for customers to find you. Also tag your products on Instagram with the shop feature for easy purchasing, but don’t get too carried away with this. Only do it for the post about your new gift pack as an example.
If you are not collecting emails either in person or through your website, start doing this NOW. Mailchimp is easy to set up and fairly easy to customize. Create a template with consistent colors and fonts that are aligned with your brand. Sign up for some other brand’s email lists to see how they are packaging content and what kinds of promotions they are doing. A business who does email marketing really well is WildZora. Commit to doing one great email a month (no more than 4x a month) with good content, could be a recipe or something in the news that is related to your product, and a promotion. Just like with social media, the 80/20 rule is in effect – 80% content and 20% promotion.
Once you have an email list and a great looking email like this one we did for Blue Owl Preserves, plan ahead! There is a method to the madness of all the emails you get from companies. The initial email goes out “X” days in advance of a promotion and then there are a number of follow-up emails, but not too many so the customer doesn’t unsubscribe. Create a content calendar, either a spreadsheet or use an online tool, for your social media and emails so you know what you are sending out or posting and when.
Also, make sure you have a plan in place for shipping orders. If you can’t offer free shipping, which is very understandable, make sure to follow the best practices outlined here. Shopify has a good FAQ as well on e-commerce home shipping. Customers have little tolerance for delayed orders or broken items. Setup a space in your home or office with all the necessary shipping materials, boxes, labels, etc. to make it turnkey and build in time to your schedule for packing and shipping.
4) Find Your Markets
For many small foodpreneurs, holiday markets are a great way to bring in big cash with a medium amount of work. We have started a list here, but it is definitely not complete. We would love you comments below or your help filling in the spreadsheet – the more vendors at a market, the more customers, so it is a win-win.
Since you are selling direct to consumer, your margins are usually pretty great over wholesale. Build a spreadsheet with the market, date, hours, location, cost, other fees and any notes. If you had done the market in previous years, you can look back at your sales to determine if it was a good use of your time. Consider hiring help to work multiple markets – they need to be just as passionate about your product as you are (or close). I typically hear $10-$12/hour with a 5% or 10% commission of sales.
Once you identify your top markets you want to participate in, start building a budget that will go into your forecasting. Many markets have an upfront application fee, possibly a booth fee and then a percentage of sales fee. How much will it cost you upfront to participate in all of the markets you want to? This number may force you to scale back or to consider a line of credit or small loan.
Another option for the holidays are pop-up markets. Stop by some of your gift stores where you live and ask if they do any holiday pop-up markets. You won’t realize these sales right away, but a check in January is always nice.
5) Align Your Brand
A logo is not your brand. A website is not your brand. You are not your brand. A brand is the cohesiveness of these things and so much more. It is your business’ personality and how you interact with your customers. Is your brand homey and comforting or is it edgy and pushing the envelope? Everything you put out into the world – your logo, your website, your market booth decor, your label and packaging, your tone of voice on social media (and in real life), your photos, your blog – all need to be aligned with your brand. Consider doing a branding exercise like this one to set yourself up for success before going into a busy holiday season.
Once you are very clear on your brand – identity, tone, values and personality – take a fresh look at your branded marketing. Marketing is not your brand, it is how you sell your brand. Marketing could be promotions, store demos, recipe cards, testimonials or influencers raving about your product to their circles, Facebook ads or boosted event posts.
Having some lead time in August is a good time to rethink your market booth or store demo table. This is the first impression a potential customer has with your brand and you want it to stand out! Is it time to replace that ratty tablecloth and get one that has a logo with your colors or more in line with your brand? Maybe a vertical banner is in order since you will be inside and not in a pop-up tent? Brand identity or pricing on a scribbled chalk or a word document is definitely in need of an upgrade.
One of my big pet peeves is when the sales person, who is often the owner, is wearing someone else’s brand! I have a photo with one of my clients, who will remain nameless, at his awesome booth wearing a t-shirt with a giant Nike swoosh on it. This is your opportunity to be recognized as part of your brand. I highly recommend Pine Print Shop (Garrett is the owner is a awesome), but you need to order 10+ shirts or hats. You can also sell these shirts, hats or other swag at your booth or online. If it is “cool” enough you could see some additional revenue. If you only need a couple, Denver Custom Printing is a great option since they can literally do one shirt (it is about $25 a shirt plus shipping).
Also consider your table layout. Do people have to look down to see your product or is it at eye level. It is great to have your logo on your tablecloth, but once the market has people walking past, no one can see it. Go vertical with both signage and product. Use boxes, shelves, or other items around your house that help get the product up higher (as long as it fits with your brand). Also consider how you are sampling your product. If it is a sauce, are you putting the sauce on something that goes well with your product and people want to eat? If you only have crackers or bread this may deter your gluten-free folks. Consider buying little wooden or plastic spoons to sample the product directly. Lastly, have a trash can that looks nice and ready for people to dispose of these spoons.
Below are some notes from a farmers market recently in Denver and Eat Denver trade show:
6) Talk with your Customers
Great, now you know how to speak from your brand’s point of view. Now it is time to talk with your customers. There are a multitude of ways we interact with your potential customers and each of them has their own pitfalls to avoid. Recall a time when you had amazing customer service from a brand – maybe at the store, through chat, email or social media. You have probably become a raving fan and have maybe even told a few others about your experience. Now think of a poor interaction you had with a brand or store. You may have heard the adage that when we have a bad experience, we tell 15 people, on average, when we have a good experience we only tell about three people. Here are some more shocking numbers that may help you shape your customer interaction game. See the full infographic here from Trackur.
I started to write out some helpful hints when interacting with your customer through various mediums, but it quickly became too long, so I will turn it into another blog post…stay tuned!
In the meantime, get a jump on the first five strategies for a successful holiday season. You don’t have time to waste, so start jingling those jingle bells and ordering ribbon and boxes.
Feeling overwhelmed by any of the strategies? Cultivate offers a free 30 minute consultation to discuss your needs and find out how we can help. Just fill out the form below. Cultivate offers branding, marketing, design and financial planning services for all kinds of food business, large or small to achieve your business goals this holiday season.
If you are local to Northern Colorado, you have the option of meeting through the Larimer SBDC.