Dave Hirschkop, founder of Dave's Gourmet, knows how to grow a specialty food brand. He did it with his own business. But after selling his company, he wondered what he could've done better. To answer this question, he met with dozens of CEOs and founders of CPG brands, from $5 million to over $100 million in revenue, to understand what essential attributes make a successful leader, and brand.
During last week's SFA webinar, “Lessons from Successful Specialty Food CEOs,” Hirschkop distilled the wisdom of his peers to identify three key ingredients for success: a solid product, finance, and people.
Hirschkop explained that there are a lot of large companies with mediocre products in the marketplace, and to compete, and succeed, it is more important that a product stands out, and has a defined space within the category.
“Product market fit is about having the right item at the right time in the marketplace positioned correctly with the right pricing, right packaging, right product characteristics, of course, the right quality,” Hirschkop explained. “And it has to be within the context of a good brand.”
To determine market fit, a product's “velocity” or the number of units being sold per point of distribution, should generally grow over time, he said. "Without velocity, your business is a time bomb," because, in order to succeed, there must be growth, he said. Consumer surveys and retailer data are good ways to measure this.
Hirschkop also advised paying attention to where products can be discontinued. He explained that you should ask crucial questions such as: How resource-intensive is the product? What resources are you not using for other projects because you are using them on this? Is it worth it?
Related to the resources that go into the product, Hirschkop spoke of CEO best practices on pricing specialty items, speaking mostly on the need to create liveable gross margins from as early on as possible. The experts he interviewed warned of the dangers of artificially low margins and the fact that most business leaders overestimate the margin increases that may come from scaling the company. Some advise pricing products higher than originally intended because it is easier to lower than raise prices once they are set, he said.
But the product can do little to succeed without people supporting the effort. Hirschkop said that while the team can uplift the company's mission, the CEO is tasked with fostering a positive culture around results and performance. The leader should strive for the characteristics that will foster success, like being tenacious, hardworking, nimble, and willing to sacrifice to creatively find a way to get things done, he said.
Hirschkop addressed many of the isolating aspects of this mission, however, that also need to be acknowledged, and said that leadership can be lonely, and mentally and physically exhausting. Because of this, a CEO needs to find an emotional support system, practice self-care, understand their own “stress mindset,” and be open and honest about their feelings. Therapy should not be overlooked, nor should the implementation of stress and time management principles, he said.
To learn more about Hirschkop's insights into Specialty Food CEOs watch the webinar on demand in SFA's Learning Center.
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