Small Business Success

Mindy and Larry Parker have a room filled with blue ribbons and trophies for the rhubarb salsa they can from the fruits of their backyard garden, and it has always sold out at the local farmers’ markets. Because of that, their friends and family had long been encouraging them to take their All-Natural ML Salsa to the next level, and offer it to the regional Clarks Grocery. To their surprise, the chain accepted the salsa …

Now what?

Although the ML Salsa story is fictitious, with a simple change of name and product, it is a true account of the start-up of many food producers. The difference, and a determination of their success, lies in what did happen next; how the new company weathered the challenges of being a small business.

SMALL BUSINESS CHALLENGES. “When you start up, you have so many challenges,” said Shawn McBride, vice president of Foah International and chair of the Specialty Food Association (SFA). “You don’t even know what you don’t know.” Nor do most know where or how to find out what you need to know that you don’t know. So you have to rely on the advice of others, venture forward by trial and error, and learn by hard knocks. But when you’re talking about food safety, trial and error can result in very hefty “hard knocks” to both you and your customers – from issues of regulatory noncompliance to those of contamination, recall, and consumer illness. This is particularly critical today with the increased requirements – and pending deadlines – of FSMA, and the intensified media scrutiny of all things food.

So how do small and very small companies, given the limited dollars and resources of most, learn what they need to know and implement it? If you’re unique, you may get a chance to be mentored and financed by a “Shark Tank” investor (like Chapul Founder Pat Crowley of QA’s Eating Insects cover profile [http://bit.ly/1nvIDY1]) or hear their ideas, then decline their offers (like Copa Di Vino Founder James Martin of Wine by the Glass [http://bit.ly/1UzQOyZ]). But such opportunities are far from the norm – and even these investors often have little knowledge about food safety.

But, despite the challenges, it is critical that all businesses – small or large – ensure they understand the basics of food safety along with regulatory and customer requirements and build the cost of these and the needed resources into the business from the start. “So many people low-ball their expected expenses,” said Renfro Foods President Doug Renfro. “And every year that passes, the expenses are greater – that’s just the way it is.”

“Money is a big issue,” agreed Avenue Gourmet Owner and President Patricia Lobel. “People think the money they have in the bank is enough, but it never is.” As a specialty foods distributor, Lobel has found that it’s usually easy for the small company to get the first pallet of product out, but it then may take three or four months to produce enough product for the next shipment – and by that time, they’ve lost their spot in the store. “It’s a commitment to produce product,” she said. “You have to be prepared. You have to be able to see beyond the first hundred cases.”

START WITH THE BASICS. Partners Crackers Vice President Cara Figgins recommends that small businesses begin by investing in HACCP training, which is relatively inexpensive, but gives businesses a basic knowledge and good starting point for food safety initiatives, with most courses now likely including FSMA information as well.

“Everyone should get HACCP training,” she said. “You’ll start looking at things through a different lens.” It causes you to look at and think about the practices you employ for which you may not have otherwise considered the food safety aspect. Additionally, Figgins said, it is helpful because “HACCP is very specific and actionable.” This is beneficial for both management initiatives as well as worker training. For example, she said, people often put on rubber gloves to protect themselves from whatever it is they are working with. But for food safety, you can explain to workers that “they are wearing gloves to protect food from them, not to protect them from the food.”

HACCP training generally requires two days away from the office or plant (with some providers also offering online training). “But if it’s important – which it is – you just do it,” Figgins said. “If you don’t have a basic understanding of HACCP, you have nowhere to go.

“I think it’s really easy to make an excuse that you’re too busy to do it, but you’re never too busy to get that organized,” she said. “Taking two days to take a HACCP course will prevent such headaches down the road.” Besides that, Figgins said, having such programs brings opportunities. “It opens doors for you. I wouldn’t be able to sell to Costco if I didn’t have a food safety program.”

© Szepy | Thinkstock.com

Figgins also recommends that companies invest in auditing, whether that be a consultant who reviews your operation to determine your readiness for an audit or you contract with an auditing agency. Partners has undergone third-party auditing every year for more than a decade, Figgins said. “It keeps everyone on task and conscious of what we’re doing and why we’re doing it.”

So where do successful small businesses turn to learn? Renfro Foods President Doug Renfro relies on peers, state extension services, suppliers, and trade associations.

• Trade Associations. As a member of the Texas Food Association, SFA, and IFT, Renfro said, “We are big believers in trade associations.” Associations often provide training for a nominal fee, sometimes even legal advice, such as that of SFA’s attorney Marsha Echols, whom members can contact for general direction at no charge. Although she cannot dispense legal advice in this way, members can get information about areas such as labeling, new regulations, supplier interaction, etc.

The Food Institute provides a very comprehensive list of food industry associations (https://www.foodinstitute.com/assn_natl), and requests that anyone knowing of other associations that should be included contact them.

• Trusted Peers. “I’m a huge fan of networking,” Renfro said, advising, “Call six other people in your same position and ask what they are doing.” Ask them for referrals as well. Renfro said he would only hire consultants he personally knew or who were recommended by someone he trusted to know, as the consultant may just be desperately trying to get a job. By asking your peers for referrals, he added, you also are more likely to be referred to a consultant you can afford.

Other places to network and connect are association groups, such as IFT’s Connect Community (http://connect.ift.org); LinkedIn groups (e.g., http://bit.ly/22rQqsl); and industry trade shows (e.g., Food Safety Summit, http://bit.ly/1fkft63, and IAFP, http://bit.ly/1LniPFl).

Suppliers/Vendors.
• Renfro also advises that companies work with their network up and down the supply chain for assistance and knowledge. “We’ve loaned our QA person to vendors and suppliers. And if I have vendors who are really on top of it, I pay them a consulting fee to advise us,” he said. This can be particularly critical if you are selling to a large supplier that has very specific corporate dictates that are more prescriptive than even the new FSMA rules. “I’m a huge believer in it never hurts to ask,” he said.
• Small Business Administration. There are inexpensive and free options for advice and consultation, one of which is the Small Business Administration (SBA). “Getting in touch with the SBA representative for your state is super important because that’s what they do,” Figgins said. “Their whole job is to help you find resources that are free, and every state has an organization.” SBA was created in 1953 as an independent agency of the federal government to aid, counsel, assist, and protect the interests of small business concerns. The agency has an extensive network of field offices and partnerships with public and private organizations along with online resources, such as webpages on Starting a Business, Managing a Business, and Local Assistance. (https://www.sba.gov)
• Government Agencies. Along with the federal agencies, each state has a department of agriculture and/or food extension service which is generally associated with a state university. Additionally, the state agriculture department often has a small business advocate, Renfro said. Links to individual state departments are available at http://1.usa.gov/1ReZuGo. Although some FSMA training is still being developed, there are resources and information available through the Food Safety Preventive Controls Alliance of the Institute for Food Safety and Health which is developing a nationwide core curriculum, training and outreach programs to assist companies in complying with FSMA’s preventive controls rule (http://www.iit.edu/ifsh/alliance/).

COMPLYING WITH FSMA. “There are often issues today with food safety because of FSMA,” Echols said. For example, a company that does not understand the regulations and steps to compliance may ask, “What should I do first, and next; and how do I make it manageable for my small company?” To start, Echols said, a small business should focus on the one step forward, one step back traceability requirements, and how they are documenting these by lot number, date, etc.

Such traceability and supply-chain management can be particularly important for small companies that work with other small companies. Even those with well-recognized names whom you may expect would have no issues can face challenges when starting as small food business. Take, for example, Bo Jackson – featured in our cover profile, Bo Knows Meat (page 8). One of the key reasons he selected Two Rivers to produce Bo Jackson’s 34 Reserve was because of its supply chain. Being a minority-owned small business, Bo often works with other small businesses. But in the past, he said, “I got burnt because a small business failed to keep up with supply and demand.”

Often a small company also will work with a small co-packer; although all packers are required to be registered with FDA, many aren’t, and don’t even know they are supposed to be, Lobel said. “There are a lot of people under the radar,” she said. “Before you do your first job with a co-packer, make sure it is in compliance with FSMA.”

Other small producers are making the food themselves in their garage or kitchen – “They are definitely not in compliance,” she said. Then they find a commercial kitchen, such as that of a restaurant who allows them to use the kitchen in their off hours. While these may be compliant with foodservice requirements, they are not necessarily aligned with food processing regulations. “I think there are a lot of items in FSMA that are going to create huge headaches for small businesses,” Lobel said. “All these new rules are going to be a nightmare because the small producers don’t get it. They often don’t even know FSMA exists.”

And those who do know of it may wear so many hats it is difficult to prioritize things that don’t seem urgent. Because the deadlines for small and very small businesses are at least a year or two away, FSMA compliance is one of those things that often falls into the non-urgent pile. “I think there is a fair amount of ostrich activity – of ‘If I ignore it, it will just go away,’” Renfro said.

Having more time too often means simply buying an extra year for procrastination, Figgins agreed. “If you give them twice as much time, they will do nothing the first half anyway, so extra time doesn’t help,” she said. “Just put your head down and get it done.”

The author is Editor of QA magazine. She can be reached at llupo@gie.net.