Vol. 127 - NO. 39

Blog Startup CPG

SINCE 2019

How to Start a CPG Company
with No Prior CPG Experience

Breanna Atkinson is Co-founder and CEO of Kokada the original coconut spread. Kokada is a better-for-you, organic, refined sugar free coconut-based spread. Kokada is available in three flavors, Original, Brownie, and Cinnamon Toast. Follow on Instagram.

Starting a business, specifically a food business, is never simple, especially when you do not have previous CPG or start-up experience. Although that lack of experience may mean more time spent learning in the beginning, I have found that having a fresh perspective on the industry has also allowed me to be creative in execution and business model, adapt and think beyond the way things have been done before.

Starting a CPG company without previous CPG or start-up experience isn’t easy but it has its advantages too. The first hurdle is figuring out where to start. Now that our brand, Kokada, is a few years in (we launched in 2020), here are a few lessons I’ve learned along the way.

1. Study, study, study

Consume everything that you can. Listen to podcasts and TED talks, stalk your favorite CPG entrepreneurs, retailers, and products on every platform you can. Read as many books and news articles as possible. Looking back, a few key areas to read up on are operations, supply chain (food and beverage has a distinct and more complicated supply chain than most industries), food safety, margins needed for success, and marketing strategy.

You never want to cram overnight for a final exam, it is much better to study over time. Take your time learning the nitty gritty of the industry and go deep on the topics most interesting and relevant for you. If you are passionate about it, you’ll probably find that you enjoy the educational deep dives! While studying, consider applying the ideas that you come across to your own product or business idea to further develop your concept.

2. Network, network, network

Everyone says it, but I’ll add to this topic. Networking, especially in this industry, is key. There are several groups to think about, early-stage founders, later stage founders, investors, retailers. For us, connecting with those early-stage founders and retailers was the best place to start. Early-stage founders were recently in your shoes and can help you navigate your first few (probably wobbly) steps into the industry. Connecting with small retailers in your area (i.e. local co-ops, locally owned stores and gift shops) will help you get a better idea of what margins they expect and how you and your product could support them. Remember, getting on the shelf is just an entry point! Once you’re on the shelf, you then need to know how to support the store to sell!

3. Develop your product, brand, and business plan

Make sure you understand what needs your product is satisfying and for whom. The most important thing is building a brand that will resonate with your target customers. This sounds simple but can be really difficult early on. It should require significant thought and effort so don’t worry if it doesn’t come to you right away. Take your time on this one because it’s important!
Build your business plan. Where are you going to sell your product in the future? At What is your price point? Spend time understanding what your COGS are and what any additional expenses will be. Make sure you understand all the places that your margin will shrink (retailers, distributors, brokers all take margin!) and all those unexpected costs that are sure to come up. Confirm this understanding with others in the industry to make sure you are on the right path, again lean on the experience and expertise around you.

4. Dig into legal

This is a step that is often forgotten for first time founders, but it’s an expensive area to not do right. Before you go to market, you need to make sure you understand the many legal aspects of the food business. Have you formed a company (i.e. a sole proprietorship, LLC, or corporation)? Have you registered your company with your state for sales tax filing purposes? Do you have insurance? Before launching, have you trademarked or at least checked for trademark risk for your company and brand name? There are so many easily missed legal items to check off and not doing them can get you in some serious trouble or having to write some serious checks, interview lawyers and find a great team you can trust (specifically a team with great CPG experience!). Some more cost-effective ways to get this done is partnering with a local university’s law school (many have pro bono small business clinics) or local government organizations and nonprofits.

5. Lastly, JUST DO IT!

This is the scariest part, the part where many get stuck. You have studied the industry and feel confident that you know enough to get started. Your product and brand are ready for the public eye. Now, you just have to jump in.

There are many ways to do this. You can find a local farmers market or small retailer to start selling in and focus your time on figuring out who is buying, what messaging is working, what price point is right (maybe vary your price by a few dollars each week and track your sales). You could also look for local incubators or pitch competitions to join.

As first-time founders and first time CPG people, we found that farmers markets and local small retailers were what helped us the most. It’s where you will move from theoretical experience (i.e. your studies and the conversations that you’ve already had!) to practical experience. It’s also where you will gain more confidence and really test out if this is the industry for you. I can’t express enough how those face-to-face interactions with customers week after week can shape and grow your brand, it was invaluable for us.

Of course, there is a lot more that goes into starting your company, but I hope this is a good starting point and offers some inspiration for anyone feeling a bit stuck. The truth is, you could read this article and every CPG or startup book out there and there are still going to be hiccups and a lot to learn every day moving forward. Almost three years in and I am constantly being reminded of how much I still have to learn and how far we have to grow.

You’re going to make mistakes and you’re going to run into challenges beyond your control. They are inevitable. Just in the past few years, we’ve run into supply chain crises that have led to months-longstock outs, financial crunches, and late-night hours managing crises that felt impossible.

Part of the fun of this ride is learning and fighting for your business to live another day. As you get started, remember that as a CPG newcomer, you’re about to embark on one of your most challenging but also most rewarding endeavors yet. In the process, focus on incremental improvements every day and be sure to document the journey. You’ll be surprised how much you can grow in a few months!

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