Welcome back ladies and gents 🙂 Happy Hari Raya to my Muslim friends, I hope you enjoyed your holiday and visitations!
This is the second part of the 2-part series, where I help to revamp Good Food Heals in 30 days.
In the first part of the series, we were poking around and uncovering things that were not working in the business.
The purpose of this follow-up post is to do Problem Solving. As we are a week into the 30 Day Challenge to revamp Good Food Heals (its Day 7!), I’m so excited to be covering the things we have accomplished so far. Val has been incredible to work with, she is always doing her 100% to deliver the content required and signs of her efforts paying off are starting to show 🙂 Praise God!
Okay, let’s break this down into 3 main components that we’ve begun to tackle.
I know starting a post with “Accounting” as the headline isn’t all that exciting. But here’s why it might be important for you, the business owner, to bother about cash-flow. (If you really are not interested in Accounting or Zombies, skip to the header Branding and Product Launch below, I’ve numbered them for your easy reference.)
Disclaimer: I’m not a fantastic accountant, but being an Accounting student does require me to know the basics.
Accounting Part #1: Cash Flow Management
Have you heard about that wacky and depressing statistic where “90% of all businesses fail?”. I have no idea where it originated from, or whether it is accurate or not. But I guess the quote serves to remind us that starting a business is hard. Really hard. There seems to be a million and one ways that a business can fail.
However, I once read this somewhere and I agree to a large extent, that a business only truly FAILS (aka: Game-Over), when you have no more money to play with (AKA: Cash Flow Problem).
Arcades And Cash Flow
So its like playing in a casino/arcade, you want a shot at winning the jackpot of a million bucks/killing all the Zombies in “House Of The Dead”, you have to have chips or tokens. Once you run out, it is really Game Over. The business must shut-down if there is no financing options.
This is the Cash Flow Illustration:
If you’ve got more money coming into your business (from sales/capital injection) than going out from it, (from costs such as wages, rent, food costs), you are Cash Flow Positive.
Conversely, if you’ve got less money coming into your business (from sales/capital injection) than going out from it, (from costs such as wages, rent, food costs), you are Cash Flow Negative.
Keeping more cash in hand allows you to weather the business hiccups along the way and gives you more chips/tokens to play arcade games with. Cash allows you to invest in your other ideas for the business.
First thing we did for Good Food Heals, was to decide to move out of the current location. The shop is now on prime land, but was not attracting the kind of traffic that Val expected. Also, the rent was not something the business could afford at the moment.
Val made the decision to move from a brick-and-mortar shopfront, to one that is focused on online deliveries within 2 months. The overheads for rent would be greatly reduced moving from a location on prime land, to a centralized kitchen.
Second thing we did, was to apply for the ACE Start-Up Grant. The Singapore government supports first-time entrepreneurs with a unique business idea by giving up to SGD$50,000 in co-matching funds for a start-up. We went through the application process and discussed about the carving the business to meet all the criteria for grant disbursements. If successful, this would inject cash into the business.
Note to Singaporeans: There are many initiatives made by our government to support businesses, do consider spending time to learn more about these.
1) IRAS: Productivity and Innovation Credit Scheme (PIC) (Under the PIC Scheme, businesses can enjoy 400% tax deductions/allowances and/or 60% cash payout for investments made in any of the Six Qualifying Activities)
2) SPRING Singapore: Innovation And Capability Voucher (2 vouchers, up to $5,000 each, to enhance capability)
3) Great article about Cash-Flow Management
Third thing we did, was to look at food courier delivery companies and compared prices between Rocket Uncle, Gogovan, Carpal and Teddy Courier and negotiated better delivery rates with them.
Accounting Part #2: Break-Even Analysis
What is Break-Even Analysis?
First, Break-Even point is the position where you are neither making a profit or loss in the business.
Break-Even Analysis is a tool for you to calculate at which sales volume, will your costs (Variable and Fixed) be recovered. Understanding the break-even analysis allows you to see how many units of goods you have to sell in order to profit. If you do not feel confident of selling that number of goods, you can rule that business idea out, before bleeding money into a bad venture.
It is also a super useful tool to help you set prices, target optimal costs combinations and evaluate your business strategies.
The basic formula for break-even analysis is as follows:
BEQ = FC / (P-VC)
Where BEQ = Break-even quantity (number of bento boxes Val must sell to break-even)
FC = Total fixed costs
P = Average price per unit, and
VC = Variable costs per unit.
Figures are arbitrary, for illustration purposes:
- Supposing that fixed costs are $80,000.
- Price per unit of bento is $14 and variable cost per unit is $9.
- The contribution margin (how much each bento sold adds to profits) will then be $5. Fixed cost divided by $5 results in 16,000.
- Therefore this company must sell 16,000 bentos just to break even (gasp!).
- The next unit sold thereafter is the first contribution to profit.
- This company must sell 16,001 units to make a tiny profit of $5.
Doing up a calculation like this shows Val very clearly that the business cannot just be selling 1 bento after another in the long term. It will be very challenging to try to sell 16,000 bentos! Thus, we formulated a strategy to bring in more sales through higher-value products.
In the book 22 Immutable laws of marketing, Al Ries and Jack Trout’s top law was to “Be the First in the marketplace”.
It is better to be first, than it is to be better. If you are not first in the marketplace and dominate the prospect’s mind, you should attempt to carve a new niche and be the first there. (pretty suave looking gents?)
The healthy lifestyle market has been rising and is set to rise in the next few years as more people are conscious of their dietary decisions. Val’s bentos are centered around probiotic food, a concept that is never heard before in the market (Singapore).
The Old Has Gone…
When I first met Val, the words and phrases she used were “Healthy” , “let the healing begin”, “you are not what you eat, you are what you absorb”, “mind, body, spirit”, “muscle, skin”.
These are great, but not sexy, they have been overused by many health food companies that consumers tend to be a bit indifferent to them. There are even health food groups that are commenting about the lack of meaning to words like “Superfood” or “Natural”, saying that these are all marketing gimmicks. You can read the article here, pretty interesting.
…The New Has Come
In my humble opinion, one of the best things we did for Val, was to brand her as the Probiotic Girl. Kudos to Val for discovering that Probiotics can indeed heal people! What is even more amazing is that she has a fantastic story that lead her to the discovery of Probiotic foods that she wants to share with the world.
Owning A Word
To recap, the single, best thing we did for her brand was to prescribe the word “Probiotic”, and got Val to call herself the “Probiotic Girl” in Singapore. By Owning A Word like “Probiotic” in her prospect’s mind, Val got to dominate the market by being leader. From here, she can go on to brand herself as an expert in this field. She will teach people all about probiotic foods and how these foods aid in their health journeys.
Be Opposite Of The Big Brother
For effective marketing, we should always know our place on the product ladder.
In the health food community in Singapore, Good Food Heal’s is not a heavy weight at the moment (hard truths).
Majority of the attention is being drawn to famous Salad bar chains that offer fully customizable Salads and Wraps. We do not aim to copy the concept of being completely customizable and allowing customers to mix and match.
Knowing our place as number 2, our strategy should be to adopt the stance opposite of the Big Brother (famous Salad bar chains). For example, since this Salad bar chains are saying to consumers “Pick and Choose all you want!”, our message will be the direct opposite.
Instead, our message is:
“Do you really know what is the best food combination to meet your health goals? Unsure? Don’t worry, with our signature Smart-Nutri-Combi™ Principle, each of our bentos are specially optimized for your health goals. They are all decided for by nutritionists, you don’t have to fret.”
What Branding Does:
From our very rough calculations under the “Accounting” section, it is evident that Good Food Heals cannot be simply selling bentos in the long run. For it to become profitable quickly, Val has to move to closing bigger ticket sales and selling higher value items.
Effective branding allows her to
1) Command her own price, instead of being subjected to the market prices of competitors in an increasingly crowded place.
2) Branch out and do things like corporate partnerships, book writing, giving talks, meet-and-greets where she can leverage on her expertise in Probiotic nutrition, which brings in more profits for the business.
3) Generate more sales on existing bento sets. People follow a brand because of the “WHY”. Once the story becomes clear to them, they know what you are all about, your prospects will segment into 2 very clear groups. One side loves you, one side doubts you. This is the best position to be.
Take A Stand
We can never try to have effective marketing when we don’t take a stand. Yes, this requires us to alienate some segments of the market, but it also helps us to identify who our true fans are. These fans are the ones you want to engage and provide value to. Anything that provides massive value to the client, can be charged, and the sale will make both parties very happy.
Get Out There
After carving out the brand and defining it, we got Val to blog every, single, day. Each blog post is written with a pattern and ends with a cliffhanger, to leave the reader wanting more. This technique is employed many times in effective TV Dramas. Copy and paste the concept to your blog posts for maximum engagements. The posts are also scheduled deliberately, with an intentional storyline, to lead up to her product launch (Talk about this in a bit).
Okay, now’s “a bit”.
Check out this product launch that we did up for Val. Thanks to my friends Chris Moore and Josiah Tan for your help! Our launch went WAY better than we ever expected. I’ll write a detailed post about how we did it. We will cover why we did the launch, how we structured the offer, what was the psychology behind it, how we included elements to induce rapid decision-making, our video script, our Queen traffic generation method that led to these results (Hint: We didn’t pay a single cent for traffic) !
Our launch was supposed to last for 4 days, but the offer was half-gone by the time we were 1 hour in.
Within 24 hours, we were completely sold out. The total opt-ins were 117 at this time of writing.
Conversion rates was an impressive 51.54% (To be honest, I was really amazed):
PS:I’m thinking of charging for my book, “Authority”. Not decided at the moment, so before I start doing that, do lock in your offer by filling in your name and e-mail on the right side of this blog post. The book and materials will be e-mailed to you once the design is ready. Yes, for now, it is free.