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Galilean reminds me of a really good point that was a bit misleading in my business plan. The SBA guy that I was working with suggested very strongly that I write the business plan to focus on one outlet, and not make it appear that I was trying to spread my sales too thin. His point was that (while I was still looking for investors/loans) that by trying too many outlets I would spread myselft too thin. That is one of the cardinal rules of startups... Owners always think they can do more than they are capable of. From that we had discussions on which would be the best outlet to focus on. I decided that selling direct to retailers (LFS) had the best upside with the smallest downside. That is what the plan is based on, and for the most part that is the position that I still hold... but I have done some research on internet/shipping sales, and large scale sales are possible if the right conditions exist. Markup has to be much more ~80% more than what I have for wholesale, and to make it worth it you have to do enough volume that you can keep a person employed with shipping and fulfillment ~ 3-400 orders a month. These numbers will basically give you a break even on the person and the bottom line is that you get the extra sales. In a startup situation this was a bit more work than it seemed to be worth.
The big issue is that it is hard to quantify what you can sell online. I trolled ebay for a while and tried to contact some of the larger online retailers to find out what they were selling and at what price. On ebay it seemed to fluctuate so much I wasn't comfortable using the date, and I got no response from most of the people I tried to contact. All told I figured it was much better to just go with what I could put a finger on and it happened to be the retail/LFS. I am not opposed to selling online and even foresee doing it at some point (with a few stipulations listed later) but that would be once I saturate the local market and only be if I were still looking to expand at that point. Even then I would probably have to put a few limits on how and who I sell to so that I can keep my LFS customers. The LFS owners I talked to did not like the idea of my selling the same things to them as I would online. The minimum set of guideline I think I could get away with are to:
1.not sell to people located in the markets that I do LFS sales in. I would probably do this by not shipping to certain zip codes
2.Make sure the LFS customers have first choice of all stock, and then sell the leftovers.
I didn't get the idea that my pricing would be an issue since I am not directly competing.
On the point Galilean was actually bringing up: I glossed over this in the busines plan and I think there is only a couple of lines about it, but your point is absolutely spot on. I will have a virtual storefront for each LFS I deal with where they can go and see the stock, as well as see what their specific pricing is. From this they can also leave information for me, and procure and schedule their deliveries as well. The last part will be implemented at the point when I start looking for other people to do the deliveries. This way I don't have to worry about the delivery person exchaning money or keeping track of ordering. I am planning on even taking it a couple of steps further. Becuase I should be able to foresee production within a pretty good margin I am planning on listing upcoming 'crops'. In this section you can see what will be on offer in the next couple of weeks. This was something that I took from the organic growers community. They have pretty much the same situation; a year round crop production but with large gaps between yeilds. What they do is list what crops will be ripe within the next couple of weeks so that stores can prepare display area for them as well a preorder.
I hadn't really considered the fact that I could use this information for adjusting operations and financials though. Not sure how I missed that but it would be a good thing to provide a concrete estimate of current procedures and use it to tweak thing to increase yeild.
Sonja,
Good to have you back with us. If you look back over this thread and the large scale prop thread you will see that I did finally get information by spending a fair amount of time in their offices. I agree with your comment about lack of procedures and quality... but I would say that those that produce quality will always have a market looking for their products. Others will come and go once people realize what they are getting.
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