Even if you haven’t heard about Chattanooga, Tennessee, you have likely heard of some of the legacy brands that started here. McKee Foods—you know it as Little Debbie. Chattanooga Bakery—you know it as Moonpie. Lodge Cast Iron, the nation’s oldest manufacturer of cast iron cooking products, sits in our backyard in South Pittsburgh, Tennessee. And while Coca-Cola was first created and distributed as a fountain drink in Atlanta in 1886, two Chattanoogans were the first to bottle it in 1899.
Today, Chattanooga is still a thriving ecosystem for companies with consumer products to grow. But that’s not just the legacy ones—there are countless new products popping up each year in Chattanooga.
Even before I made the move here from Cleveland, Tennessee, I was inspired by Chattanooga’s maker movement—particularly at one of its most visible places, the Chattanooga Market—where every week I would meet new people who had a passion who wanted to turn it into a profit.
And that’s why—as you could imagine—I was excited to find myself at CO.LAB five years later when we decided to launch an accelerator focused on supporting food and beverage companies in their efforts to scale.
In the summers of 2018 and 2019, we hosted a total of 21 companies in this program. These products ranged from farmstead cheese to powdered kale to sparkling water to spice blends and so much more. With a team of experienced food and beverage entrepreneurs, we worked with these teams closely on finance and operations, marketing and sales, and distribution and growth. We saw dozens of industry mentors offer their support in these areas as well.
Some have raised capital, many have expanded their team and production, and a majority have seen an increase in their customer base. And we expect to see more growth down the road.
Chattanooga has an opportunity to see even more growth in this space.
With more investment into this space from our region’s investors, we can see companies grow faster and hire more employees, thus investing in our community.
Those with commercial space and kitchens who are open to leasing or even sharing a lease can give younger companies a chance at producing their products at a greater scale.
The community at-large can continue investing in these products by making purchases that may at first be more expensive than another choice, but ultimately lead to greater economic growth for our whole region.
Lastly, I want to share a few things I have learned through working with the companies in the program. Below, you can find my 3 points of advice for anyone looking to start their own company in the food and beverage industries. And by the way, if you do, please do contact me.
- Understand your costs. But, like, really.
One of the mistakes I’ve seen many companies make—ranging from those with less than $25,000 in revenue to more than $200,000—is not having a handle on the cost of producing their product(s). Without having as close to an accurate picture of the cost of goods sold, it’s impossible to make decisions for your business that will ultimately lead to success.
For instance, you want to start making and selling granola bars. You will need to understand the cost of every ingredient and labor that goes into producing one single granola bar—known as your “unit cost.” The granola itself (of course), honey, any nuts you may add, etc. A few cents here, a few cents there. And while it can be complicated, make a calculated estimate of how much of your time or your staff’s time went into making that one single bar.
With this kind of data, you can determine your margins and how to price your product appropriately, and it will also hopefully lead to seeing inefficiencies and ingredient costs that could potentially be minimized.
- Try mastering and marketing one product. Maybe two.
I completely understand how you may start your company and get excited about all the different types of products you could make—so you make them all. While having variety may seem like a good idea, it can make the cost of goods sold very expensive as you are buying so many different ingredients, likely at a non-bulk rate. You may also have some products that are going to waste. And generally, your message and conversation with customers is easier when you sell a simplified list of products.
Dollar Shave Club didn’t get started with its wide range of men’s grooming products (it was recently acquired for over $1 billion). It started with one simple message with one simple product: Our Razors Are F**king Great.
- Take advantage of opportunities for customer feedback.
The advantage of starting a consumer goods company over a tech company is that it doesn’t require an exorbitant amount of capital, technical experience, or time to just get started and test your product. You can likely create a version of your product in your house and have your friends and family taste it for feedback. Your next step may be taking advantage of low-barrier opportunities like the Chattanooga Market, where you have access to a potential customer base in the thousands and you can get feedback from them.
About the Author
Tim Moore is a Programs and Communications Manager at The Company Lab, CO.LAB, in Chattanooga, TN. An avid fan of local foods and beverages, Tim manages CO.LAB’s Consumer Goods Accelerator, connecting consumer starts-up across the region with expertise and resources.