Food and beverage start-ups: How to succeed where others fail

Let’s be honest, starting a new company in any industry is not easy. In fact, it’s nerve-shreddingly difficult, and comes with a whole heap of financial and reputational risks. So why do so many start-ups fail and how do others succeed?

Why is it so difficult to create a successful start-up?​

Entrepreneurs face a whole range of challenges when founding a new company. From securing the initial business loan or investment, to securing distribution channels, it’s an uphill struggle. But ask the people on the other side of that struggle, who’ve made it from start-up to established brand, and I’m sure they’d say it's worth it.

However, there’s no denying that many companies won’t make it to that stage.

According to market trends firm, Exploding Topics, 10% of start-ups across all industries will not survive past the first year. A further 70% of start-ups will fail during the following four years. And a total of 90% of start-ups will fail overall. Yes, these are bleak numbers, but knowledge is power and understanding the risks will help to ensure that the decision to create a new business is not taken lightly and that all the necessary preparations are made. But why do so many start-ups fail?

“There are lots of reasons for start-ups to fail,” said Stephen Minall, founder of FDReviews, while speaking at IFE 2024. “Maybe it’s a husband and wife team that gets divorced or a brother and sister partnership who fall out.”

However sufficient funding is, by far, the main reason that new businesses fail.

“New businesses often run out of money,” adds Minall. “It’s very very difficult to do it on a shoestring now.”

Another major issue, faced by food and beverage start-ups in particular, is actually getting their products into shops in order to sell them.

“Most of the supermarkets are very difficult to get into,” says Minall. “A supermarkets is not a TARDIS, if your product goes on the shelf then something else has to give way.”

So what can you do to help mitigate these risks and give yourself the best chance of success?

How to help your start-up succeed​

Do your homework:​ Make sure you know as much as you possibly can about the industry, including your supply chains, your production plans and your competition.

“Do your research,” says Minall. “Go into supermarkets, look at the shelves, look at the shelf space to make sure your product actually fits the shelf height. I’ve seen hundreds of brands where the bottle’s the wrong size or the jam jar looks lovely but you can’t get the product out.”

Grow your network:​ Get to know people across your industry who can advise you on the different stages of creating, launching and growing your business.

“You may well find that there are different people who have different expertise who can help you at different parts of your journey,” says Bruce Isaacs, partner at Hospitality Management Solutions.

Set goals:​ Make a clear plan for how you want the company to develop so you know what you want to achieve and by when.

“Get some KPIs in place so you can measure your progress,” says Dan Barron, non-executive director at Just So Care Ltd.

“KPIs are crucial” agrees Isaacs.

Speak to a business consultant​: Consultants can guide you through some of the more complex business processes and advise you on fundamental decisions. But choose that consultant carefully as you’ll be financially invested in them and they’ll be having an influence over the success of your company.

“Look at their LinkedIn, get case studies from them, tie your contract to results and trust your instincts,” says Daniela Busseni, senior consultant at IGD

Find the right distribution channel for your product:​ You don’t necessarily need to sell your product through a supermarket, particularly in the beginning when your brand and your products are unknown. There are multiple alternative options, including online shops such as Amazon.

“There are Amazon experts out there that can help you if you want to go the ecommerce route,” explains Minall. “But don’t just think multiples. If you’ve got a product that can be sold in bulk than you can sell it into manufacturers, you can sell it to farm shops – there are thousands and thousands of farm shops, delis and garden centres.”

Be open to change:​ Your circumstances may change throughout your first year but if you can adapt to those changes and recognise the aspects of your business, which are not working, then you have a greater chance of success.

“The reality is, the business you end up with will not be the one you have in your business plan,” says Isaacs. “They’ll be something that will happen and opportunities will change, meaning that the business looks different.”

And perhaps most importantly, “make those changes whilst you still have the budget to make them,” says Barron.

Don’t lose hope when things don’t work:​ There will almost certainly be aspects of the business or a particular product idea which won’t succeed. But that’s okay, not everything will work out perfectly and not every product will succeed.

“Don’t take it personally, it happens to everyone,” says Tim Davies, founder of DuelFuel. “Steve Jobs failed at Apple in the first couple of years and look what happened.”

“It’s a learning journey,” agrees Busseni. “It’s not about failure.”

But more than anything else, “enjoy the process,” adds Davies.

“It’s not easy, but guess what, it’s a lovely business to be in,” concludes Minall.

Good luck!