Scaling an Early Stage Food Business – Part One: Organization

As a food company begins scaling the organization required to run it changes dramatically.  The external factors driving this are many.  The most important ones are:

  • Selling to larger more complicated customers
  • Distribution going from local to regional and national
  • Greater regulatory scrutiny
  • More partners and increased financial reporting requirements
  • Multiple production locations
  • Aggressive growth projections

A founder’s first set of organizational issues comes around the $1,000,000 annual sales level.  Before then the company is usually staffed by a group of part-time employees and volunteers.  Around the $1,000,000 sales level, a company often raises its first outside capital with an investment offering that generally includes a growth plan to $25,000,000 in annual sales or greater.

How do you build your organization to scale without overspending or stifling growth by being under-resourced?  Here are some things to consider.

START WITH THE END IN MIND:

Find some support to help you to develop your organizational blueprint for your company at $5, $10, and $20 million in sales.  What will each department look like, sales/marketing, supply chain, finance/administration, etc.  What will be an estimated cost be for support staff and will your margins support it?  You are not looking for a great amount of detail at this stage.  The goal is to have a general direction where you are going before hiring full-time staff.

HIRE GREAT EXECUTORS FIRST:

Many companies after getting their initial funding want to hire C-level or large former CPG company folks to help the company grow.  That often is a mistake.  Executive level support is not needed full time at this stage and can often be found in mentors at little or no cost or, with part-time consultants or former executives.  A staff that executes well and does what they say they will do are worth more than you can imagine at this stage.

ESTABLISH YOUR COMPANY CULTURE:

There are certain attributes you need in your team to effectively manage a high growth organization.  Flexibility, the ability to operate both independently and collaboratively and a bias for action are critical.  But perhaps the most important is a personality that is challenged and energized by the rapid growth and high change business environment, not overwhelmed by it.

CELEBRATE SUCCESSES:

Often in a high growth company, the team gets so focused on the next set of opportunities and tasks that they do not take time out to celebrate various milestones along the growth path.  Working in a high growth company is hard work but it is also a lot of fun.  Be sure to maintain the proper balance between the two.

There are other things you should consider when building out your first permanent team, but the four discussed above should put you on the right path.

The next topic will be SCALING YOUR SUPPLY CHAIN.

Stay tuned……

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