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The Startup Forecast...with Bonnie & Jacqueline

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The Startup Forecast...with Bonnie & Jacqueline

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From NFCA's 2019 Northeast Startup Co-op Day: news you need! Jacqueline Hannah from Food Co-op Initiative gives a fast and informative look at 2018-2019 trends in funding, member- ownership growth, failures, and new paths to success for startups.

From NFCA's 2019 Northeast Startup Co-op Day: news you need! Jacqueline Hannah from Food Co-op Initiative gives a fast and informative look at 2018-2019 trends in funding, member- ownership growth, failures, and new paths to success for startups.

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The Startup Forecast...with Bonnie & Jacqueline

  1. 1. The 2019 Startup Weather Report and Forecast
  2. 2. 2012 - 2017
  3. 3. Why do startups fail? We’ve studied our data on the closed startups twice now, in 2012 and 2017, and the reasons were consistent: Poor location. Too small for the market. Inadequate parking. Under-capitalized. Cut corners, underestimated costs. Pushed Timeline. Moved forward too fast with too few owners. Not enough community awareness and buy in. Reliant on Owner Labor. Professional, trained staff are a must to meet customer expectations, competently run the store.
  4. 4. Recent Weather
  5. 5. What are the odds ? 2008 - 2017 76%Of startups that opened were still open. As of 2019 Of startups that opened are still open. 72%
  6. 6. It’s a little less sunny. And it’s NOT all gloom and doom, but you have to know the odds and factors. Then we’ll get to the sunshine stuff!
  7. 7. Recent Closures Startups that closed in the last two years, some key reasons why. Closed Startup #1 Biggest reasons: LOCATION Going First Closed Startup #2 Biggest reasons: LOCATION Going First Board Muscle Owner Connection Closed Startup #3 Biggest reasons: Market Study Marketing Location GM Talent New Model Closed Startup #4 Biggest reasons: LOCATION Location Location
  8. 8. Struggling Recent Opens Startups that opened in the last two years that are way under on sales, some key reasons why. Startup #1 Biggest reasons: poor store design Weak Board Very Soft Opening GM talent Startup #2 Biggest reasons: Market Study Execution Board Dysfunction Marketing Owner Connection GM Talent Location Green Top FC Biggest reasons: last minute competition Marketing Soft Opening Visibility Startup #4 Biggest reasons: Market Study Execution Weak Board GM Talent Marketing Weak Board Visibility STRONG, HEALTHY BOARD
  9. 9. New storm fronts to be aware of: Capital Market Studies No Soft Openings Marketing
  10. 10. Capital: Be weather prepared! • Expect to need to raise more from owners – Fredericksburg/$1.8 million, Prairie/$2 million • Court multiple lenders • Grants – you won’t get there without them, period. Go after them earlier, harder, get a fiscal sponsor • Cooperative lenders are lending less to startups across the country • Collateral – a bigger and bigger issue. Understand it. • Costs continue to go up – trade issues driving up prices. Don’t go low on equipment/build out costs!
  11. 11. Market Studies: Be weather prepared! • Use our Market Study Action Guide process, identify assumptions, know them, adjust if not meeting them • Interview the providers in depth, make sure they truly understand your plan/community, pick for fit • Preliminary market studies are a MUST in stage 1/early 2A, don’t wait, know what you are up against • We cannot currently recommend using any but the “big two” as others have been far more off or are unproven • There’s less room to wiggle, you must meet the assumptions laid out OR prepare for less sales • Market study providers are getting *far* more conservative, it’s going to impact your pro forma • More variability between results from trusted providers
  12. 12. NO Soft Openings: Be weather prepared! • Set the expectation – the GM needs to know coming in that a soft opening is not acceptable and plan for it; share with the the FCI memo • Budget for it – don’t cut opening staff budget, ever. Plan for the time needed to do it right. • Opening Day = Grand Opening – be ready to “kill it” the first day open to the public • We use to do a “soft opening” and the perfect/finish the store until grand opening • New trends – less chances to impress a shopper “1-2 shopping trips” • Consumer expectations are up, willingness to shop down; yes, even core cooperators
  13. 13. Brand/Marketing: Be weather prepared! • Court owners too – bring them along during construction, do targeted marketing to get them excited • Budget for it – don’t cut opening marketing budget, ever. Spend every dollar, strategically. • Retail branding – get professional help making the transition from startup branding to retail store branding, invest in branding the store exterior and interior • Marketing Plan – must have a strong one, invest in it • We used to assume owners would show up without being courted, not true anymore • Weak marketing can be corrected for, but it’s a short window and the lost sales will hurt for years • Brand recognition is WAY UP as a factor with all shoppers and you don’t have it, you need a strong brand at opening!
  14. 14. Wait, where’s the GM stormfront?
  15. 15. Trends! Rainbows! Sparkles! OR “what about delivery, food trucks, on-line ordering?”
  16. 16. The trends reality: On-line shopping Delivery Meal kits Large, urban-density, established co-ops are starting to see success. Large co-ops with commissary kitchens are working out the kinks of this idea now.
  17. 17. Focus on opening your cooperative grocery store – it will take all your resources! • If you want a successful retail grocery co-op, focus on opening in the right location, with the right product mix, with the right leadership - that’ll take all you have for at least the first two years, even if things go great. • Your startup will be small to medium volume, you will not have the volume, in the beginning, to support these trends; you could in the future • As established co-ops with resources work out the kinks in these trends you can adopt what’s working, let them do the R&D while you learn to be a solid grocery store for your community!
  18. 18. Yes, it’s getting tougher to open startup food co-ops than it once was, and not all startups will or should go forward. But many still will get open – and innovate, and lead!
  19. 19. WELCOME ACCESSIBLITY COMMUNITY INNOVATION

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