#51 - Bread & Jam Festival LIVE - Where The Hell Does All The Money Go?

19:42Jacob Liddle:One way that we wasn't a good use of money was going to lunch too early. We didn't really understand our product market fit. it was a huge waste of money actually and we got off a day place at um vegan camp out which is like the largest vegan festival and i was a bit skeptical but we sold like 15 000 bars in a weekend it was absolutely nuts and every single time that we've we've done it twice and the you know people recognizing the brand and then going into holland and bar it was incredible value for money one we had some dead stock that we needed to get rid of fast um but it was interesting the next year when we had full pricing and not discounts um we actually made more money so it's i think finding those kind of even if they're quite niche festivals can be a really great way to do sampling and kind of get your brand out to more consumers but i would probably avoid the really big kind of wholesaler shows until you've got some good listings and you've got some money behind you i think to do the follow-up well yeah that's the thing like all these events the follow-up

20:46Thiviyan Umapathysarma:and obviously a big big thing like doing lunch ife and all of these events they can be very expensive and it's like how you capture the people there how you bring them to the stand how you turn up and and do all of that but as you said there's so many other opportunities that are more cost effective more niche and more bespoke to what you're doing so for craft beers obviously loads of craft beer things um for other ways of kind of being able to like your money just being spent where are the hidden fees hidden in things that you're doing is that listing fees that marketing contributions like what what fees have kind of almost caught you out oh wasn't expecting that

21:16Charlotte Miller:like start with you jacob i actually had a re-look through the first three years of what i'd spent um to sort of remind myself of where all the money had gone 80 80 90 of it just went on stock and uh yeah stock and basically 3pl uh logistics costs and then there were some bits in there which i was like oh yeah that was a bit of a but things i actually shouldn't forget about is the VAT bill, which comes every three months. And if you're not doing your cash flow effectively and you're not like, okay, better keep a little bit in the pot for that VAT man, then that can really catch you off guard and it can be pretty substantial.

21:54Charlotte Miller:And then corporation tax, the kind of like the whammy of like not paying myself for the first two and a half years was that actually the business was profitable. And I was like, yeah, I've got some money to reinvest into the business. And it was like, oh, corporation tax, great. and then software basically will will build up you know you get your website you've got zero you've got maybe a 3pl website which warehouse management system and it starts to build up over time with things which really are pretty necessary a lot of them are very necessary but that can add

22:23Jacob Liddle:up to a couple hundred quid a month quite quickly i think some of the costs that kind of catch us out or we just don't plan for is when things go wrong in manufacturing and then you need to rush you need to make sure you meet that retailer deadline and all of a sudden my um you know fees for doing our allergen testing have doubled overnight and we're like damn it gives that hits the margin for that quarter quite significantly um yeah I you know I echo what you're saying you know fees are overheads for technical things in the company are just ridiculous and it's sometimes you don't see the benefit like it's exceptionally expensive sometimes they have a mailing list and it not deliver back um we obviously need to get better with our mailing list but it can be quite expensive if you're just gathering email addresses and then you don't have

23:13Thiviyan Umapathysarma:any time to do anything with them yeah for me the one that really annoyed me was admin fees when you are running a promotion that one just really struck a chord with me like i'm trying to give you money when a promotion and then you're going to charge me an admin fee to run it

23:27Charlotte Miller:uh so that one really well and the when they charge you to run a sampling as well and it's

23:32Thiviyan Umapathysarma:like oh key you're making so much money off me already and then you're going to charge me to make even more money off me so yeah that winds me up yeah something can be very expensive have you found any good ways have you got social media doing influencer send outs have you had any good experience with that um it's obviously influencers can be incredible for brands but they can also be very expensive or not really get that return on investment do you guys have any good kind of wins or like ambassadors for the brand that you work with we've only ever gifted we've never done

24:02Jacob Liddle:any paid promotional like activity within influencers yet I think we will when we find the right fit but I think you've got to build that relationship with them I think quite often it's easy enough just to you know send something to an influencer and expect something back even if they love it you know and it's gifted but what I've come to realize you've really got to harness and build those relationships they are people they want to work with brands and also make an income so um yeah we've we've not done an awful lot of that right now how about you guys jacob have you

24:35Charlotte Miller:ever big on the influencer scene any any beer influences um a little bit yeah sent a few free gifts out to people as well noticed occasionally someone had just i saw some influence uh someone sent me a video saying hey this influencer is wearing one of your fleeces and she had like 90 000 followers so i messaged her sent her some beers and then invited her to a beer event we did and she did like a video and that actually got quite people like oh i saw your this video that so and so did on but i think we haven't like paid for anyone to do it's been more more by chance there's also a chap who runs a camping blog on youtube um and he has our beers on his camping channel but he's like got like 200 000 followers as well so yeah nothing paid there it's always

25:19Thiviyan Umapathysarma:nice when you get those little wins or you're like the free ambassadors who are just like championing your brand final few questions before we open it to the floor you mentioned obviously first few years you had that profit and then you were like oh I could have paid myself but haven't when in the business did you start taking any salary or any money and is that the case or obviously Vivian it sounds like you're still working full-time so not at that stage yet but Jacob for you like when have you actually started taking money from the business if you have?

25:44Charlotte Miller:I think as I said earlier it's about having a proof of concept and you know realistically you can only pay yourself if the money is there so you've either got to have some sort of little cushion that you've built up or you've got to raise a little bit of money um and the point i did it was as i said i basically spent two and a half years building up a little bit of a buffer and um i uh went talking about events actually i basically applied to um this uh this this beer event uh great event where they had a competition where you could win a free stand and i won a free stand there and went and did it and basically just got amazing feedback met some buyers and um and various other contacts through that and then at that point i was like wow people really actually love this bit like i've definitely got something and that kind of put the ball in motion where to quit my job about four months later i just said look i've got to i've got to go through this and it puts a lot of pressure on you but also you know when you have all of your week available to work you get a lot done so i think yeah to answer your question though basically you you have to have the money from somewhere to pay yourself but also there has to be you have to have enough belief and proof of concept in what you're doing that you can you can actually scale it and your time will pay for itself know your numbers and your margins basically as well exactly you've got to you've got to model it out if i sell x how many units do i need to sell to pay

27:09Jacob Liddle:myself basically what else can happen is that your margins get absolutely crushed because there's like a cocoa crisis. We used to have cocoa in our products. And the year that I was like, yeah, I should be getting paid, there was no margin to be paid. So like you said, you need to have that revenue coming in over to cover your overheads. And that was a bit soul crushing, to be honest, I must admit, I was getting to the point where I was like, can we keep going for much longer? Full disclosure, I have a husband who has a really well paid job, and he keeps my household alive and pays the mortgage, which means I can reinvest my, basically my salary back into the company.

27:46Jacob Liddle:And I've been doing that for a long time, but not anymore. So it's a nice thing when you finally start to get paid.

27:52Thiviyan Umapathysarma:For us, I guess it's just about reinvesting our money back into the business, because again, margins are tight, especially in the food industry. And it's all about scaling and it's about growing as quickly as you can. And for us, with the house, with a mortgage and a kid, it just makes sense to hold our kind of safe jobs but that's the big question of that time when you have five days a week for you to work purely on your business how much can you grow that business and that's the kind of trade-off you've always got a balance in your mind and as risk averse people I think we are sticking to our jobs and when you have a well-paid job as well it's a lot harder to leave so I just think it's one of those things where you got to fight we're fighting as long as we can until we need to raise and i think we're getting to that point so fingers crossed i'm here

28:37Charlotte Miller:next year without a job one thing i guess i'd add is yeah about that you know work out in three years what your margins it doesn't necessarily have to make money at the start but that's kind of proving the concept and do people like the product but where is it can you speak to manufacturers who oh i'm gonna be manufacturing with you guys in like a year even if it's gonna be like five years time that you might get to that scale what kind of cost would i get for this product and then you know where your margins are going to sit in like three four five years and at least you can work towards that and and see what it's going to take for you to go full-time on it and you can always

29:10Thiviyan Umapathysarma:taper down like do one day less a week so i'm still gonna work full-time four days but i'm gonna take that one day off a week to focus and then build that up so you're you're kind of crossing that and keeping the bills paid whilst you're still reinvesting into the business so i'd like to open up to the floor so has anyone got any burning questions for our wonderful panel please introduce yourself and where you're from as well hi everyone my name is krish and our brand name is enrich and we're looking to launch some four breakfast cereal products made with uh superfoods like such as buckwheat millets ashwagandha hibiscus and spirulina so okay so i think it was a great session so the question to all of you is what is a good margin so i think

29:48Jacob Liddle:it'd be good to understand uh we i wouldn't say this is a great margin but i'll be honest right Right now we're running at about a 25 % gross margin. Last year we had zero because the cocoa crisis went from like£6 a kilo to£28 a kilo. It literally took out our, and you know, problems with packaging, it just very quickly decimates the margin. So 25 right now I'm happy with, but we're going to be working up to 35 to 40 % because we are told that is the golden kind of ratio to be able to run the business sustainably.

30:23Thiviyan Umapathysarma:is that margin post if you're working with a wholesaler or is that so um to kind of flip your question if you want to be selling via a wholesaler you need to build in a buffer most wholesalers will want 15 to 20 to 30 depending on the size of wholesaler then they're going to want their customers to then sell it for more you have to then it's post so that's what we get left with so that's your fine yeah so within that you build in your costs and everything else you're doing but is actually going okay from the amount you probably want to try and have 60 like if you can get to 60 before working with any wholesalers retailers and all of that you know they're going to want 30 40 50 so you're going to save that extra bit but that's what i'd say i don't know beer is probably very different in terms of margins and how it works and honestly i would love it if i was at 60

31:09Charlotte Miller:i would be on an island somewhere i think it's yeah it's really difficult so many different factors also what channel you're in direct consumer obviously should be higher but then the logistics cost to get it to them is going to be higher even direct businesses independent delis higher but then logistics cost is higher if you're you know sending pallets of a single skew to somewhere you can afford to drop your margin quite considerably um but yeah i mean we need to i need to definitely increase our margin just to make sort of so you're not working so hard as he said it's sort of crushing when you spend a year working really hard okay not much left here is there um yeah you you want to i think if you can go gross margin blended across all your channels of as say sort of 30 30 percent i would say that was pretty good then that would be great but like direct consumer maybe sort of 40 50 um indies delis like 35 distributors maybe like 25 520 so then it sort of meets somewhere in the middle almost reverse back so going okay what's

32:16Thiviyan Umapathysarma:the end customer going to pay how do i get it to that price if there's people taking budget along the way what do i actually need to charge kind of the best cost exercise before doing it and be

32:24Charlotte Miller:realistic with yourself like sit down and do this on a piece of paper like if it's not going to work out in sort of three four years where you're going to end there like something something needs to change whether you know you've got to compromise on on product costs or whether you've got to increase your prices or something like in the long run it has to be sustainable for the business but

32:42Thiviyan Umapathysarma:also for yourself hi i'm fliss from wild things sweets we make organic sweeties with half the

32:47Jacob Liddle:sugar i had a question on hiring like how any tips on like hiring smart like just anything on hiring my husband's really good at picking up people in the hospital that he works in like it's really weird but every time i've needed somebody that's got some really good knowledge he seems to find them and treat them. Anyway, I managed to find our factional sales director through that contact. And her very words were, you can't afford me, but I'll have a conversation with you. But that was fine, because that's all I actually needed was to have a conversation. And sometimes it's about making sure that that fits right.

33:21Jacob Liddle:I just needed to sell the dream and be like, do you want to get paid not a lot of money to come on this journey with me, which thankfully she did. But I have hired badly as well. I hired a sales guy probably way too early on in the process because I thought, you know, we're just launched, let's get a salesperson straight away when the fit was definitely wrong. And then I did not own any big girl pants at the time to get rid of him fast enough. So that was a painful and expensive lesson to learn. Hire fast, fire quick is the phrase, right? Yeah, that's the one. Hopefully I don't have to do too much of that, that I definitely we take that forward the next time that we're hiring because it's expensive when you get it wrong well i mean like i'd have to pay my sales director 100 plus grand if she worked for us and we pay like half a day a week a day a week depends and you know there's different things you can do because we've got a kind of an equity um relationship as well so we can offer some equity you've got leverage then um and especially if you've got some traction that will attract people into your business as well because there's loads of people who are like bored that have come from taskos and stuff that have really great experience but they want to get involved in the

34:29Thiviyan Umapathysarma:nitty-gritty and like be an advisor obviously the fractional payoff versus kind of the if it's like sales high you can get fractional who might have a good black book good relationships and all of that or you get a sales exec who's going to cost you a lot less but they're learning with you and you've got to handhold them so it's the time commitment the money commitment actually if you only go can we have a day a week or a few hours a week could actually be well more beneficial so it's just if it's fractional it's like speak to other brands they work with or look at their history and all of that i mean there's amazing people out there and there is ways of finding this but ultimately your network like you'd be amazing about people who are fans of the product or what you do that go i'd love to work with you so linkedin any more questions um hi i'm hannah

35:09Jacob Liddle:from belly dance i'm not a belly dancer okay i was wondering about investment when you're doing your fundraise if you are also working full-time do you admit that to the investors we've been given kind of mixed views on whether that's an appealing thing or something that's a bit of an

35:25Charlotte Miller:off-put so asking for a friend i can't comment on that specifically that situation but i think really when you get investors you want to be often on the same page with them anyway and if like you can't admit to them that you're not working but you're like ready to take that leap then maybe it's not the right fit potentially um yeah because investors are similar to hiring like you want to get the right ones on board people who aren't going to be a pain in the long run um and this

35:52Jacob Liddle:is i think harder to get rid of as well yeah i i think it's important that you know when that leap into your company full-time is going to be so i think an investor will be very receptive if you are i mean understandably lots of people can't just give up a job to start their company it's a privilege to do that right so if you can if you know um okay we get to 200 000 pounds revenue or£100 ,000, that allows me to come in. Your investment's going to allow me to get to£100 ,000. I can be all in. I think it's about being transparent about when that time falls for you.

36:26Thiviyan Umapathysarma:Yeah, I'd also say you're able to prove what you've done whilst working full-time. So whatever you're building and business-wise is going now, actually say, look, we've been doing this while holding down full-time jobs. We want to go full-time. Just imagine what we can do with all the extra time to focus on it, as you guys have been saying. I think it's, as Jacob said, it's all about the relationship, the honesty, the trust with the people who you want to bring in because it is another relationship you're about to build into for five ten however long that's actually a really good point is that it's a spin

36:54Charlotte Miller:like realistically the fact that you've done what you've done while working full-time shows how committed you are and i put that in in the front of my investment deck just said look the first two and a half years we did this and i wasn't even working full-time um and then we've done this since then so actually again if they can't appreciate that then they're probably not the

37:12Thiviyan Umapathysarma:right investor probably one more question don't be shy is everyone ready for their drinks can i just give some advice then when you're talking about money i think one thing that founders maybe don't do is just do it themselves like we did our amazon listing ourselves and i think a lot of the time people don't take that you survived you know what i mean it took me three months don't get me wrong and we've made a lot of mistakes but a lot of people just kind of shy away from these difficult challenges like building a website on Shopify. If you can take the time and be patient and do it, you can do it yourself and save yourself almost two and a half grand these companies charge to build a website on Shopify and you can do it in a few days.

37:51Thiviyan Umapathysarma:And so if you can kind of sit down and be disciplined to make your website, do your Amazon, it might not make as many sales as these experts will do. But it's a great place to start, see what your product's doing, see if you're getting traction. And actually what you should do is kind of sign up to your competitors, check what they do on amazon check what they do on their website sign up to their emails see what they have coming through as emails and then try and copy it make it better there was a previous talk about ai use chat gpt it can save you a lot of money as well yeah i think that's it if you're trying to save money be resourceful know where you can put your time and energy and effort but also appreciate sometimes your time is super valuable so if you're only working like if you're working full time alongside and actually going i've only got a certain number of hours to put into it actually paying a little bit of money to get someone to do it could be even more beneficial.

38:38Thiviyan Umapathysarma:So it's just doing that cost calculation going, actually, I need an expert in this. They're going to do it in a day. I'm going to get decorators to pay my downstairs because they'll do it so much quicker than me, so much better. I'm not going to bother trying to do it myself, even though I could save money. Yeah.

38:49Jacob Liddle:I think one thing I really wish I would have known sooner was about cashflow management. I don't think we can stress strongly enough to founders that if you do not understand where your money's coming in, your money's coming out, And then what happens when you have a few crap months of sales held like bad or you run out of stock, for example, you might find yourself in a position where you don't have any cash. And the training I've had recently on that has been an unbelievable game changer for us because I have visibility. I know I'm going to run out of money in a few months time. That's why I'm raising money now.

39:23Jacob Liddle:And it's kind of having that kind of it gives you foresight and it actually gives you weirdly a lot of peace of mind. You know, when I didn't have that visibility on the numbers. but it's really easily overlooked when you're doing your operations you're doing your sales you're doing your marketing it's like we it's quite often people don't have the financial training to run a manufacturing and product-based business it's quite complicated so if you know nothing about cash flow I would really recommend you go and learn about that before you take on investment and you run out of money and all of those bits and as I say in final bit is like don't be afraid

39:59Thiviyan Umapathysarma:to ask friends family and other people to buy your products like that's the the best support you can have is just saying like hey guys we're available here can you go and buy it case in point jacob bought some lovely beers from the tesco express over the road so if you ever look for a jiddler's tipple only person buying the product at this point myself hey this has got

40:15Charlotte Miller:to start somewhere oh that is actually a shameless plug if you do walk by the tesco's express opposite the design center we're on the shelf and i would very much appreciate if you can help increase the rate of sale amazing so if we'd like to give everyone a big round of applause thank Thank you so much for coming. Hope you had a lovely day.