“I came up with the idea to sell BBQ sauce (seemed simple at the time). I sat down with my wife and we decided to set a budget of $5,000.”
I came across a few articles in the entrepreneurship space over the past month that I thought were informative, so I focused this episode on the articles.
New business in the mist of a pandemic
I subscribe to the weekly Hustle Trends newsletter, where they discuss trends in the economy as well as impact to entrepreneurs. On the Trends Facebook group, a young lady who worked at a restaurant was recently furloughed due to the pandemic and shared a business she started as a result of being let go.
She explained that she loved baking and would bring baked goods to parties and people loved it. Her friends would always tell her to consider selling her pastries but she never took them seriously. Since she lost her job, she finally decided to open a website called The Very Best Cookie In The Whole Wide World, where she sold freshly baked cookies.
Based in Los Angeles, she started the business three weeks ago taking orders for baked cookies online and delivering them to customers’ home. She was able to sell $2,300 worth of cookies in the first 10 days. She explained that since she worked at a restaurant she looked into other products such as tomato sauce and broth but the margins were too low.
She decided to sell cookies because cookies have a high profit margin, apparently after ingredients and packaging, her gross profit is about 76%. At this rate, she plans to sell $5,000/week by end of May. She explains that things are going pretty well, she is currently the only employee, but she is looking to hire her sister to help her since her orders continue to increase.
She uses a commercial kitchen to save on cost which makes a lot of sense. There are many commercial kitchens available for approximately $25/hr, which can help reduce your capital expenditure of building a restaurant. I believe Africans can adopt a similar model, making food, pastries or snacks in a commercial kitchen that can be sold commercially using an eCommerce platform. One popular snack I think can be replicated in the US and sold commercially is Gala sausage roll, a wheat based pastry with beef filling.
The BBQ Experience
A member of the Reddit Entrepreneurship subgroup joined a conversation to discuss his attempt to get into the BBQ business. Below is his story……..
About 8 months ago, I set a challenge for myself to start a company. Didn’t matter what it was or even if it would be successful. No more excuses or procrastination, just start. I came up with the idea to sell BBQ sauce (seemed simple at the time). I sat down with my wife and we decided to set a budget of $5,000.
Below is the list of things we purchased:
- Domain name from GoDaddy: $12 a year
- Web site host from Shopify: $31.93 a month
- Website theme from Shopify: $198.18 one time
- Logo from 99 design’s: $300 one time
- LLC setup from legal zoom: $467
- 336 Glass bottles from a local company: $103.06
- 336 lids from the same company: $40.32
- Co-packer to cook and bottle BBQ sauce: $381
- Labels for the bottles from Uprint: $141
- Produce for the BBQ sauce: $890
- Approximately total investment: $2,700
We planned to sell the BBQ sauce for $6 a bottle. If we sold all 336 bottles, we would make back $2,016 and only be negative about $700. We figured we would be net positive after about 2.5 batches of BBQ sauce.
The big issue was that shipping cost about $7 per bottle. We didn’t plan for this at all…Shipping costs basically made our BBQ sauce cost $13 for a 12oz bottle. So we didn’t sell very many at first. We decided to run a sale and offer free shipping if people purchased 2 bottles or more. Our sales took off but due to the cost of shipping we were losing money. We still have about 50 bottles left and have decided to shut down the website.
The plan we came up with is to change from trying to sell online to trying to sell in farmers markets in the spring. We believe we have a good product and most people seemed happy with the $6 price point. By selling locally we can remove the shipping costs. Our end goal would be to have a co-packer cook and bottle all our products for us then find someone to sell the BBQ sauce for us. If we could get picked up by a store or something like that, all we would have to do is manage the orders. This project didn’t end up being profitable but it was very informative. My wife and I learned a lot from the process.
This message seemed timely because similar to BBQ sauce, I believe there is an opportunity for Africans to expand the business of making jars of stew that can be sold to both American and African demographics. While running the restaurant, many Americans dining at the restaurant usually ask us where can they find the red stew, ‘ata din din’? Making this product available in stores with effective marketing would be a viable business.
Social media approach
With the availability of numerous social media platforms, how does a small business identify which platform to focus their efforts on? The chart below does a good job explaining how to segment your social media exposure; the best approach is to identify platforms that align with your objective.
– Trends, The Hustle
