Podcast Summary
Navigating Business Challenges During a Pandemic: Entrepreneurs starting businesses during tough times must focus on increasing profitability, setting clear goals, and effectively managing time to succeed.
Starting a business from scratch during challenging times, like a pandemic, requires determination, adaptability, and effective time management. Lucy O'Rourke, the founder of Soup Stars, faced the challenges of scaling her business, setting and reviewing goals, and managing her time. Her long-term vision is to expand her business to resemble successful chains like Pret or Eat. However, she currently operates with a small revenue and no team members. It's essential for her to focus on increasing her profitability by paying herself a commercial salary and setting clear goals. Lucy spends most of her time cooking and promoting her business on social media but neglects planning and goal setting. To help entrepreneurs like Lucy, James Sinclair, the host of the Business Broadcast podcast, provides valuable insights and coaching based on his own experiences and those of successful business owners. In addition to listening to the podcast, entrepreneurs should check out the YouTube channel for more learning opportunities and consider attending the Business Masterclass.
Staying connected to the business and learning from the frontlines: Business owners should get out of their offices and onto the frontlines to identify areas for improvement. Direct-to-consumer sales can lead to valuable insights and opportunities for growth.
Being involved in the day-to-day operations of a business, even as a business owner, can lead to valuable insights and opportunities for growth. The speaker shares his experience of buying an ice cream company and the importance of having direct-to-consumer sales. He started by making sales on the first day, but the sales were not consistent. He worked long hours to get the shop open and improve it before investing a significant amount of money. During this process, he discovered opportunities to grow one of the businesses he had bought. He also emphasized the importance of business owners getting out of their offices and onto the frontlines to learn and identify areas for improvement. The speaker's hands-on approach and willingness to deliver ice cream himself led to new opportunities and increased sales. Overall, his experience highlights the importance of staying connected to the business and being open to learning from the frontlines.
Learning Business Growth Strategies and Finding Profitable Niches: Entrepreneurs should focus on consistent customer acquisition and maintaining good profit margins to ensure long-term business success. James Ingham's Entrepreneurs University offers affordable strategies, while Lucy's catering business thrives by catering to a specific niche market with high profitability.
Starting and growing a business involves finding consistent sources of customers and maintaining good profit margins. James Ingham, the coach being discussed, offers an affordable solution for entrepreneurs to learn proven strategies for business growth through his Entrepreneurs University program for just $49.99 a month. Lucy, a business owner of a home catering company, shares her experience of not struggling with customers but facing challenges in expanding and focusing her business. She emphasizes the importance of finding a niche market and maintaining good profit margins for long-term success. James recommends focusing on a specific customer base and offering products or services with decent profit margins to achieve this goal. For Lucy, her business caters to customers with specific dietary needs, providing regular income and high profitability. Overall, the key takeaway is that entrepreneurs should focus on consistent customer acquisition and maintaining good profit margins to ensure the long-term success of their business.
Calculating Net Profit for Home Businesses: To find net profit, factor in personal and business overheads, aim for 70-80% gross profit, and use calculator apps.
Making a 50% gross profit at home doesn't equate to a 50% net profit. To determine your net profit, you need to factor in your personal overhead costs, such as electricity and materials, and add a percentage for business overheads, like rent, salaries, and utilities. For instance, if you want to pay yourself £30 an hour, you would add 25% for overheads and 20% for labor to your product costings. Using an ice cream business as an example, their costings include 40% for overheads, 40% for ingredients, and 20% for packaging. Aiming for a 70-80% gross profit margin is recommended to ensure financial sustainability, especially when you're swapping your time for money. Utilize free gross profit calculator apps to help you determine your costs, margins, and potential adjustments. Eventually, you'll likely want to transition from working from your home kitchen to a dedicated business space.
Running a food business: GPs vs overheads: Scaling a food business involves balancing GPs and overheads, expanding to physical locations, selling at markets, and addressing challenges like frozen food storage and freshness.
Running a food business, whether it's a lifestyle choice or aiming for scalability, requires careful consideration of various factors. GPs (gross profits) are crucial for small-scale operations, but as the business grows, overheads increase, and GPs decrease. However, a larger turnover brings more revenue. Expanding to a physical location like a coffee shop can help increase sales and brand recognition. Selling at food markets and festivals is an effective way to reach customers directly and generate strong cash flow. However, challenges such as storing frozen food and ensuring freshness must be addressed. Ultimately, the decision between maintaining a lifestyle business or scaling up depends on the entrepreneur's goals and resources.
Focus on high-margin products and direct sales: Start with high-margin items and sell directly to consumers for strong cash flow, valuable customer interaction, and valuable feedback.
When it comes to starting a business, particularly in the food industry, it's essential to focus on high-margin products and direct-to-consumer sales through markets and food festivals. This approach allows for better interaction with customers, valuable feedback, and a strong cash flow. Additionally, being frugal on property costs is important, but it might be worth considering paying a little more for prime locations. When approaching potential landlords, emphasizing a solid business plan, strong cash flow, and a proven track record can increase the chances of being granted a lease. In the early stages, it's crucial to minimize loss leaders and focus on items with high gross profits to maximize the potential for a net profit of 10-20%.
Considering the true cost of a product: When calculating profits, factor in overhead costs like rent, utilities, and salaries, as well as research and development expenses, not just the cost of the product itself.
When calculating profits for a business, it's crucial to consider the costs beyond just the cost of the product itself. This includes overhead costs such as rent, utilities, salaries, and delivery fees, as well as research and development costs. For instance, if a meal prep meal costs £6 to produce with £3 worth of ingredients, the true cost would be much higher when factoring in overhead and R&D costs. A simple way to calculate this is by adding 25% for overhead and 10% for marketing and R&D to the cost of the product. Using the previous example, the true cost would be £1.35. This is an essential consideration for small business owners who often underestimate these costs.
Focus on higher profit margins: To succeed in business, especially in food industry, focus on higher profit margins by increasing prices or exploring other income streams. Your time and effort are valuable, so get paid fairly.
To be successful in your business, especially in the food industry, you need to focus on higher profit margins instead of just breaking even. This means you may need to increase your prices, even if it means losing some customers. However, it's important to remember that your time and effort are valuable, and you deserve to be paid fairly. Additionally, consider exploring other income streams, such as meal prep or catering, to bring in more consistent revenue. While these options may require more effort upfront, they can provide long-term financial stability. Remember, running a business is your full-time job, not just a side hustle, so make sure you're getting paid what you're worth.
Profit from catering to offices: Small food businesses can expand reach and increase sales by catering to offices with minimal overhead costs. Gain experience and training from larger companies for success.
Contract catering can be a profitable business model for small food businesses. By supplying food to offices or large corporations, a business can reach a large customer base with minimal overhead costs. These companies often subsidize the catering for their employees, providing the kitchen space for the business to use seven days a week. This is an excellent opportunity for small food businesses to expand their reach and increase sales. However, it's important to consider the size of the company and the business owner's experience and capabilities before pursuing a contract catering opportunity. Additionally, gaining experience and training from larger food businesses, such as Pret a Manger, can be beneficial in learning the ins and outs of running a successful contract catering business.
Gain practical experience in catering environments: Working in various catering settings enhances skills and knowledge, providing valuable techniques and methods not learned in formal training.
Gaining practical experience in various catering environments can significantly enhance your skills and knowledge in the industry. This can be achieved by working at prep schools, large catering companies like Pret or EAT, and even signing up with a contract catering agency. By doing so, you'll learn valuable techniques and methods that you may not discover on your own. This approach not only broadens your horizons but also allows you to work around your current commitments. Lucy, a successful business owner, emphasized the importance of this hands-on experience and encouraged those interested in catering to explore different opportunities. Overall, the combination of formal training and practical experience is a powerful tool for anyone looking to excel in the catering industry.
Support the podcast to help it grow and reach more businesses: By rating, reviewing, and subscribing, you're contributing to the podcast's success and helping it reach a wider audience, allowing it to continue providing valuable insights and strategies for businesses.
By engaging with the podcast, you're not only enhancing your own learning experience, but also contributing to the growth of the show and the success of the businesses it aims to help. By rating, reviewing, and subscribing, you're helping to spread the word and allow the podcast to reach a wider audience. In turn, the podcast can continue to provide valuable insights and strategies to help businesses thrive. So, your support is essential to the success of both the podcast and the businesses it serves. Keep listening, sharing, and engaging to make a difference.
