Food producers are often driven by a passion for their product, and they understand that achieving the very best quality means knowing all there is to know about their ingredients, suppliers, production process and recipes.
Most producers are avid readers of books by chefs and cookery writers, constantly seeking to increase the amount of information they hold about what they are producing, and what more they could be producing with the right knowledge and ingredients.
Alongside that knowledge and information, there is an instinct for knowing what will work, what will taste good, and what will ultimately be the best product they can make.
Sadly, too often the same approach – following their instinct – is taken when it comes to the business side of the operation but when your living depends on making the right decisions, relying on instinct is just not enough.
You have to reach the same levels of hunger for information about your business as you might about the product itself. Information is what gives you the tools to drive profitability, and an understanding of what makes money in your business model. Whilst few food producers will boast a huge collection of business titles on the shelf alongside their food-related books (although we know some who do), making sure you have the right information is crucial for business success.
There are all sorts of variables which will affect the profitability of your business: the cost of production, the efficiency of your supply chain, overheads, stock turnaround, seasonality, wastage levels etc.
It never ceases to amaze me how many businesses don’t actually know their break-even point. Small changes in any of the factors listed above can have a massive effect on your business, so having the right management information to help you make the right decisions is vital.
When you are developing a new product, you will record carefully every slight variation in combination of ingredients and every miniscule variance in the process. Well, you need to be recording your business information equally diligently, so that you know which part of your business is the biggest driver of profit (or indeed loss).
It is not as interesting as concentrating on the product. Few food producers are as passionate about the business side of their operation as the product itself, but those food businesses which capture this kind of management information are invariably more successful – giving them more resources to spend on the product itself. Justin Wright
is a member of our food and drink team.