2 major risks and typical mistakes that food start-ups make many times (anywhere between <1 and >100 mio. € revenue)

Yes, you read it right: These mistakes with potentially devastating risks can be made anywhere in the life of a food start-up (before they want to be called differently), and also at new product launches by corporates:

📈 1) Scaling up on first-time buyers that only test a product, but where recurring sales cannot be expected yet
🪙 2) Too small retail margins getting tighter every year by additional conditions and increasing costs

Mitigating these risks is especially important, if it’s the only product (category) yet or the one that finally needs to get the food start-up on track to profitability.

When it is just one new product of a large portfolio, the risks are much lower, e.g. for corporates. It doesn’t hurt them as much to test and fail several new products and thus is not as important for them.

❓Have you seen one of these typical mistakes? What were the consequences or successful solutions?

🎁Bonus for the ones that keep on reading”:
Another huge risk-factor that becomes more relevant once product-market-fit has been achieved and when the company is scaling up to build a long-term business is…

🤝 3) Depending on single partners without a “backup plan”:

If it is just one possible supplier, only one product category, the majority of sales with only one client, only one narrow target group or only one marketing channel / approach, these important pillars can easily take down a whole business when they break. They could for example be critically delayed, get too expensive, have salmonella / ..., or completely collapse.

--> Solutions / risk mitigation strategies 🧯⚒️

• Resilience by diversification on all necessary levels (suppliers, ingredients, product category, sales, marketing) – One of the most important rules for any monetary investments.
• Knowing alternative suppliers, being in touch with them or even having a backup-plan ready with completely developed products (e.g. from the performance comparison during the initial supplier search).
• Diversify the downstream supply chain as soon as possible: Open more than one sales and marketing channel once you understand and rock the first channels.
• Know some alternatives for sales channels, marketing strategies etc. just in case, e.g. in a list of backup options where new ideas can be added at any time.
• Create backup plans for suppliers, ingredients, packaging or whatever is most critical to you.
• Create actual contingency plans in case of a large risks, meaning a large probability, large damage or both, because risk = damage x probability; both downstream and upstream.
• Work with adequate safety stocks that you can afford and sell off within the shelf-life.

❓How do you diversify along your complete supply chain from ingredient to recurring customers to make it more resilient?