Tom Lock, founder of Awfully Posh (AP) Brands, offers advice on scaling up a business.
If you’re a small business selling bread, biscuits or other baked goods, there will come a point when you might want to scale up. However, you need to do it in a way that preserves quality and flavour, while giving you a sensible profit margin.
Start with smaller manufacturers to learn the process. Then speak to larger manufacturers to establish their volume requirements and the price difference. Larger manufacturers will often deliver the best prices but will probably need larger volumes.
To get the best pricing you need leverage. By shopping around, you’ll discover what’s available, what the points of differentiation are, and be able to plan a number of options.
Read books and trade publications to brush up on law and jargon. Using the wrong phrase could signal ignorance and lead you to be taken advantage of. It’s also essential to have a contract with detailed product specifications from the outset, otherwise the manufacturer may alter the product or modify the terms later on.
Manufacturers want to “bake it” and “ship it”, and complex demands may put them off. However, it’s essential the product stays true to your brand and product principles. Define the aspects of your product that are fundamental to your brand. With Awfully Posh, for example, our products had to be flavourful without any additives. Resist changes to the recipe. Some tweaks may be sensible and useful, but others will fundamentally change your product.
Ensure you have the option to be present at production runs, at least periodically, so that the quality and flavour matches your high standards. Manufacturers should send you several samples from every production run.
Most manufacturers understand building brands is difficult, but if you can get them to believe in your growth plan, it will be easier to convince them to start with smaller volumes, helping you grow sustainably. Have a detailed strategy and share as much as possible with potential manufacturing partners. Critically, the mission and vision need to be clear, practical
Manufacturing partners like to see a detailed forecast. Having invested in the set-up and production methods for your baked products, they want to know the order in which volumes, profits and range are likely to grow. With in-depth preparation you’ll find the right manufacturer and successfully scale up your baked goods business.