Scaling an Early Stage Food Business – Part 3: Sales Strategy

Developing an effective Sales Strategy to grow your company from its early stage $1,000,000 annual sales level to $10-25,000,000 and beyond is not an easy task. As you grow you will greatly expand the number of competitors while simultaneously entering new markets and channels of distribution that often have conflicting requirements. You will also be building out a sales and marketing function within your own company as the requirements in this area quickly outgrow your ability to manage them.

Here are a few things you should keep in mind as you work through the process of creating an effective sales strategy.

Quick note: I have purposely left out much of the marketing issues here to concentrate more on the often overlooked elements of sales execution.

INTEGRATION OF THE SALES STRATEGY WITH OPERATIONS

As you grow your sales, your supply chain needs to keep up. Pipeline fills into new accounts and introductory promotions can play havoc with a supply chain. This is equally true if you make the product yourself or have it co-packed. Vendors and your manufacturing operation need at least 90 days to react to major changes in demand. Finally, product costs should drop as you scale up. Knowing the price structure at various volumes will help you develop a sales strategy targeted to larger accounts who will require more aggressive pricing.

EXPERTISE NEEDED TO SELL TO LARGER ACCOUNTS

In order to get to eight-figure annual sales levels, you will need to sell to larger accounts. It is much easier to manage $20,000,000 in annual sales from a small number of accounts than to have it spread over smaller accounts in different channels and geographies. To sell and service a large account you need to perform 3 functions well:

  1. Develop a strong Headquarter relationship
  2. Get the product to the store (physical distribution)
  3. Manage the product in the store through proper merchandising, demo management, etc.

Each of these functions can be done in-house or through third parties such as brokers, distributor, and merchandisers. Selecting the right mix of these is critical and can vary from account to account.

DIVERSIFICATION OF ACCOUNTS AND DEMOGRAPHICS

In this growth stage, you want to explore as many channels of distribution as possible. You also want to learn how broad a demographic appeal your products have. To effectively do this, it is often best to focus on a smaller regional demographic as this is much easier to manage. Regional buyers for grocery, club, and convenience stores are commonplace. A combination of a regional brick and mortar strategy coupled with a national online sales strategy is
often the best mix to demonstrate the power of your brand without overextending you.

I hope you find this helpful as you think of how to create an effective sales organization to grow your early-stage business.

Our next and final part of this series will focus on the financial issues around scaling your food company.

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