Full Transcript

Sari
Welcome to your Food Business Success. This podcast is for early stage entrepreneurs in the packaged food industry ready to finally turn that delicious idea into reality. I'm your host Sari Kimbell. I have guided hundreds of food brand founders to success as an industry expert and business coach, and it's got to be fun. In this podcast, I share with you mindset tools to become a true entrepreneur and run your business like a boss, interviews with industry experts to help you understand the business you are actually in, and food founder journey so you can learn what worked and didn't work and not feel so alone in your own journey. Now, let's jump in! All right, welcome back to the podcast, everyone. I am excited to welcome back Danny Walsh of Peak State Coffee. Hi, Danny.

Danny
Hey, Sari.

Sari
So I was just saying that you're going to be on the podcast, semi frequently. And so if people want to get your full story we had our original podcast, it's episode number 172. But can you give us just a quick intro of who you are and what your business is?

Danny
So yeah, I'm the founder of Peak State, we introduced a line of coffees with added health benefits, easy to forget a vitamin but you never forget your morning coffee. We're direct to consumer brand. And so I've been building the last three years, focused on the direct consumer channel rather than the sort of more conventional retail.

Sari
Yeah, so you have built your business through farmers markets and online subscriptions and one time orders. And like I said, in 172, they can hear even more about that. But I am so excited to have you on today. And you're such a trooper because I was like this morning, I'm like, can we do a quick podcast? So here we are. And we are going to talk about an investment mindset as an entrepreneur. And I wanted to talk about this topic, because I just feel like, you know, I hear from so many entrepreneurs, and I know it can be scary to make investments in your business, and we worry about wasting money and failing. And you and I have had multiple conversations about this. And so I thought it would be such a great person to talk to as a brand. You know, it's not just from my mouth, from my experience, but you know, your experience building a big business over three years.

Danny
Sure, yeah. I kind of hate how cliche, the quote is, but you got to spend money to make money. Right?

Sari
Right. And there's a fine line there, right? Of like, I know, I've spent money just because it's like, oh, that's shiny object. And that's a shiny object. But I think it's important as people are early stage, that there's a little bit of a fear of like, you know, investing in the wrong things. And so I thought we could just have a conversation about what are some of the things when you were like pre launch or those very early, that first year? What are some of the things that you invested in that you feel like were the right things to do?

Danny
Yeah, totally. So I'm personally a big fan of like, the lean startup mentality. How could you take what you're building, and get contact with reality as quickly as you can, while spending the least amount of money so that you could learn because I hate to break it to you, no matter how smart I thought I was, what I thought the market needed wasn't what I ended up going to market with. And I'm grateful that I didn't spend a lot of money to learn that. And so whatever you think you're bringing to market, the customer might decide that it looks a little different, whether it's a slightly different formula, or it's a slightly different packaging, the way that it's communicating or whether it's a slightly different form factor, for example, we pivoted from ready to drink into something that is a bag of whole bean coffee. So, you know, think about how expensive that would be, if I decided I was going to make 100,000 units right out the gates of the wrong product. So that's the mindset with which I looked at early stage investing. A lot of us are, you know, potentially chefs, or we might be great marketers, even great entrepreneurs, but chances are, we're new in some capacity to whether you're new to being a business owner or you're new to being in the natural products or CPG. And so you're learning the nuances of that. And with that newness, whatever that is, whether it's the role or the industry comes great risk, right? So on the other side of all of that, so you got to also make sure you're avoiding mistakes. And I think that's a really important thing. What's the cost of a mistake?

Sari
I love that. Yeah. Because we often think about the cost of the investment, right? If I invest in this XYZ, this service or this tool, or this online program, or, you know, just the internet tools, I'm paying the subscription or whatever. And then what we forget about the other side of it, the cost of not investing.

Danny
Yeah, exactly. And so for example, let's say you didn't know that a trademark was important, and you went to market and then you get sued. That's an expensive mistake. Let's say you didn't know about regulatory claims, or how to be compliant with your packaging, and you go to market, and you get sued by a lawyer for violating FDA protocols.

Sari
Or the one I've seen is, same thing, but your label isn't compliant in the stores like no, sorry, we can't bring it on until you fix it. So you just printed 5000 labels that go in the trash.

Danny
Exactly. And then there's the foregone business that you didn't win because of that mistake. You know, so that's the two ways to think about, you know, you want to make sure you're investing in, like I said, the ability to make contact with reality, so to learn, and then you're also investing in making sure you're avoiding the pitfalls that can be very expensive. So those are the two big buckets, we can kind of dive into each one. But I think some of these common things in the beginning, you know, coffee is a great example, you can't open a coffee shop if you don't have tables and chairs, and you need inventory to sell. So you can't expect to start making money without investing money in something to get going. And of course, in the beginning, we need to be scrappy. So let's say you're a great marketer, you might need to invest in that formulation, you need to work with a food scientist, you need to formulate your idea of a better chocolate bar, whatever that is. Or let's say you're a great chef or formulator, you might need to make that initial investment in a packaging design that will succeed because you might not be experienced in that area. And so I think one way to sort of summarize that mindset is realizing you're going to have to pay for what you hate, you're going to have to pay for the part that's missing that you hate. You can't do it all, you're going to need some help there. In the beginning of Peak State, we spent very little formulating, a lot of time experimenting in kitchens. And we had to pay for the packaging design, because that was not our strength. And that was a cost I knew and investment we had to make. We knew we had to pay for some of our intellectual property. So for our trademark, we have a pending patent that we paid for. But then what we kept doing in house was some of that product development, product management. And some of them are marketing that we did feel like was within our core competency. And so for example, we realized that the more high return on investment channels to market were these direct to consumer channels for us. So we had to invest in a beautiful website design. And we had to invest in tents for our farmers markets. Because those were assets that will help generate more revenue. Those are the higher return on investments that you got to think about. And even before we bought tents for our markets, like I said, I don't want to tell anyone I'm not, you know, actually super scrappy. So what that looked like at first was we just bought a black tablecloth, and we bought a tiny two by four runner with our first logo. And we would drape that over the tablecloth because the branded tablecloths were really expensive, but the runner was like 60 bucks. And then we were able to buy more runners and still use generic tablecloths. And then once we knew we ended up changing our logo. Great. I'm glad we didn't double down on that too hard. Once we knew that our logo was good, we then got the more permanent equipment like the brand new tent, for example. So to that point, it's really important not to invest in too much inventory of something that might change. I think one of the biggest mistakes brands and founders make is buying too much inventory even if that's packaging before you validated it. Because then you're sitting on all that, and you can't get that back.

Sari
I agree a 100%. And I am in the same as you, I really tried to help brand founders run lean. And I'm really good at saying no, no, no, don't spend money over there yet. I know it sounds fun, and to have the fun branded tent and all of that, but this could change. And we, you know, let's get it up and running. And so, you know, in the farmers market jumpstart course, I have a list of resources, and table runners always what I suggest for that first time out, before you start investing in the next thing, so I'm all about like, how can we still look good, professional, right? I mean, looks do matter at markets and on your website, and things like that. But yeah, let's keep it scrappy. And you and I both know, a lot of tricks of the trade now after all these years of being in the industry and kind of like what you can get away with, and then the things that you really do need to make the investment like a trademark, you know, when is it the right time to do that?

Danny
Exactly. And if you need help with that, invest in help with deciding what the best place to spend money is, you know, I see some people go to Expo, they spend well over $100,000 for their booth. It's like, did you return that investment? Some brands might, most probably don't. Is that the right thing to be doing in the beginning of your journey in a tough macro environment?

Sari
Yeah, and you know, the people we're talking to are probably more, you know, Farmers Market stage or launching directly on the ecommerce, Amazon. But yeah, there are brands that do go and invest a lot of money right out of the gate. And it's like, I love that, and we share this as well, is that I really look at investments and say where can I either save money? We talked about this. You probably told me this more than anything, save money and how am I going to increase sales, right? Like, it's important to be mindful of our investments and say, how does that support my business in either of those ways?

Danny
Totally, I think, a great point there. You know, in the beginning, our job is to grow sales, save money, profit is sanity, revenue can be vanity. Like, we have to be smart in the beginning specially, hopefully, throughout the entire business lifecycle. But you know, for example, some agencies can be very expensive and not helpful. And so vetting your agencies, if there are opportunities to grow your sales on a more performance bases. Looking at those offers, oh, you only work on the upside you create amazing. Can you do the same thing with your sales team? Can you pay them with just commissions on the upside that they create? That's awesome. You know, I can't tell you how many times I've seen marketing agencies charge upwards of $50,000. Some of them are really great. Some of them don't end up getting results that were worth that investment. So being really careful with the service providers you work with in the beginning and finding the ones that are going to help protect your money as much as you need to in the beginning by helping you decide. Okay, this looks like a good place to spend money that's going to have a sustaining impact on the business. This might be something I need to put on hold right now until I can do further analysis or get some more proof that it's going to be a good investment from somebody else. It's really easy to spend all your money.

Sari
Yes. And I think it's important though, that people recognize like you are going into a business, there is a certain amount of investment. You're a product based business. So there's going to be that initial investment of like those startup costs to just get the product. And there's a fine line here of like, yes, I want people to be really mindful of their investments and be smart about it. But I'm curious what you think I usually recommend, like, trying to get a baseline number of like, what's my scrappy cost to get into the market to start getting my MVP out there and testing it in real life? And, you know, maybe add 10% on top of that or something and say, okay, am I willing to put this money all in? And like really go for it? Because I think sometimes people really slow themselves down because they're like nickel and diming every little thing along the way.

Danny
That's so important. You need to make the full commitment. As soon as you fully decide that you're going to be a successful entrepreneur building your brand. That's the only time you're going to start seeing that success and that you have to be all in. And I don't mean that in the sense that like, the way that everyone says you need to quit your job,

Sari
Right, cashing out your 401k

Danny
Once you made the complete commitment to your success, that is the only way that the universe will start to reciprocate that commitment. You'll see that success once you've fully you know, what did they say burn the ships like, give yourself a point of no return mindset, where you're all in so that you can see the results of being all in because otherwise, if you're just dipping your toe, you'll never be a great swimmer. And you want to be a great swimmer but you'll never get there just dipping your toe.

Sari
Yes, I've been using that metaphor a lot, actually, with clients about this, it's like you can read about swimming, you can google how to be a great swimmer, you can be in your living room practicing strokes. But until you actually get into the water, and you're like I'm in the water. And you know, you can kind of have some help nearby, right, to help support you, but you got to get in the water and that's how you learn how to swim. Like, we can't analyze the depth, we can only do so much research. And frankly, Googling your way to a successful packaged product business is not going to get you there.

Danny
You just jumped in the water. And let's say you don't know how to swim at all, you need someone in the water with you who knows how to swim, surround yourself with the people who have been teaching swimmers their whole life, and the people who have been swimmers their whole life, you need the community, you need the peer founders relationships as well as the sort of mentors and advisors and a lot of you know, we're in different times in the conventional world, you raise a ton of money and you had a board of advisors. And those people who would either earn equity or compensation usually both to be on your board and guiding the future of your business. A lot less businesses at this early stage that we're at, are not quite doing the hypergrowth huge thing. And we'd have to be scrappy with what we do have, we also still need to find happy ways to surround ourselves with peers and mentor going to make sure we avoid those mistakes. That's a worthwhile investment.

Sari
A 100%. And I should back up and say you have joined Fuel and inside Master Your Business, you are a coach in our programs. And so excited to have you in that capacity. You've already been so helpful. You're in the community chat, answering questions. And you're doing coaching calls, and you'll be in Master Your Business helping out as well. And it's so cool to have your expertise and your experience on the ground doing this stuff. And we complement each other so well. And I'm really excited, you're putting together some really cool stuff for our members. And we'll open it up, you know, paid workshops and things like that. But you were telling me on a call yesterday, how much you invested in getting that mentorship and community. And so do you mind sharing some of your initial investments that you made?

Danny
Absolutely, yeah. So, you know, I couldn't afford to just give equity out to a board or I didn't really know how compelling that would be. That's how new my business was, right? So, you know, recognizing I needed people who have been in the trenches, who have seen this industry for a while and seeing what works and what doesn't work, as well as people who work with entrepreneurs. And so the circles that I joined getting started have been exactly like Fuel, you know, finding not just the coaching that you need to be able to sit down with somebody and say, hey, Sari, I have to make a decision. Should I go into all of this chain of this grocery store tomorrow? Or should I decide that I'm not ready for that financially without a fundraising round, and we have these hard decisions to make probably hundreds of them, you know, it feels like a hundred every single day, and to be able to have somebody with experience that you can get into a call with and ask a question like that, I found invaluable. So I paid for things like that in the beginning for different circles, not just have I done a beneficiary and paid for you know, or been in the program with Fuel, Master Your Business, but you know, actually I was in other circles like that as well in the ecosystem. And it was always 100% worth it because there's that aspect, the sort of the advisory aspect and then there's also the community. This is a really lonely journey. And a lot of us founders need to talk to each other both for the emotional, just feeling seen about what we're doing, how hard it is, but also to help each other succeed. We're in this together. And if we have tools that are working for each other, you got to get in there with fellow founders, especially if you're isolated. If you're the only one in your family doing this, or in your friend group, those people aren't going to understand you or what you're doing. You need to get yourself surrounded by the people doing it too.

Sari
You were telling me that you started out with a $500 a month investment in a program, which I was like. incredible. And that's amazing. And I'm investing in programs like that, too. I just, you know, went in on a, I guess it would be $1,000 a month program now for me for this year.

Danny
Yeah, I paid monthly for coaching support the entire history of my business. Sometimes the coaches and programs changed. But, you know, I have realized, even therapy is helpful to a certain extent as a founder. But sometimes even therapists don't understand specifically what it's like to be an entrepreneur, because they've never done it. And so those investments are so important for the journey, in my opinion.

Sari
And it's so true. I mean, I think what we do as coaches is help people make decisions and help people solve problems. And the faster we can solve our problems, faster we can make decisions, the faster our business goes. And it might be do I go all in on this grocery store? Or it might be, you know, someone just posted yesterday, like, here's a draft of my logo, how readable is this? Do you like these color? You know, are these colors the right colors? And to get feedback on that right away so you're not just stuck in like, I don't know, I think it's good. You're showing it to your grandma and your shipping to like people who maybe aren't your customer, but to actually get people like yourself and me with all of this experience. It's a, you know, I don't know if I that's legible, or choosing between two colors. Or I go to eight farmers markets? Or do I go to two? Or all of those questions, I just implore people to get support, and whether it's our program, and I say our because you and I are in it, but or it's someone else's programs, get support. Because the faster you can solve problems and make decisions, the faster your business will go. And then the more you'll want to keep doing it, instead of it like getting really heavy, because you're not making any progress.

Danny
I couldn't agree more. Yeah, I mean, I don't know if I would still be in business if I didn't get support, and avoid some of the pitfalls that we could have made. Retail is exciting. There's a lot of caution around anything. You know, if you notice your ego being really excited about being in a store, that might not be the right thing for your business, but it might make you feel like you're doing something significant, but it might not be a good business decision. And sometimes you need somebody to intervene and say, yeah, whole foods would be really cool. But is that going to be what's making your business financially successful if you only did that, and that was your, and maybe it will. But for me, particularly, the advice I got when I was investing in this program, in the programs that I invested in, was to avoid that channel. And I might have been out of money if I didn't make the decisions that I made. As well as have the fellow founders to talk to, and validate oh my god, this is really hard for you too and we're both doing awesome things. And we love each other's products, and we're seeing each other, make these awesome, hit these awesome milestones and accomplish great things. We also suck at celebrating founders, like we suck at celebrating ourselves and noticing when we're kicking butt. And you need a community to help you see that sometimes because you're everybody's doing incredible things, but it's not in our psychology to notice them and celebrate them. And that's so important for the longevity of you as an entrepreneur.

Sari
I love that. Yeah, and that's something we do every week in Fuel, we celebrate our wins, and I do it on purpose because if we don't celebrate it, we're only going to look at the gap. We're only going to look at how far we still have to go or how long it's taken us to get to this point. And the reality is just the way we're wired is if we don't have little wins along the way, we're not going to want to keep going. And so for people listening who maybe have stopped and started, and stopped and started, I would really encourage you to go get support and find a community where you can celebrate the small wins. You know, one of the things that came back on the survey and I have a whole podcast about that but, that I'm going to talk about soon. But one of the things that came back was I don't think I'm ready for Fuel or I want to wait till I launch. And I don't think that that is the case and in fact you know, when you were talking about right at the very beginning kind of testing your product out, I actually think Fuel would be a really great place. It's kind of designed to say come and ask questions, learn from each other. This is a community where there is this expertise, and we can help you make decisions. What do you think now that you've been in Fuel for the last month answering questions?

Danny
Like I said, I think the best investments you can make are those that let you make contact with reality, that applies to every aspect of your business. You need a community where you can say, here's what I've built, I need feedback on packaging, what in your experience would be more likely to succeed? If you're over there thinking about, I don't know, my margin, I can't do retail math. I don't know what my sales channel strategy is. I don't know why I'm in business. Why do I even want to do this? What's my primary aim from E Myth Revisited? You don't know the answer to any of those questions. How do I come up with financial projections? How do I start marketing? Then you're a great candidate to join a community where you can learn the answer to all of those, and those are so important for the business. It's the thing, I think the most surprising thing for me in this space is how few people do the margin calculations and do the math, that is the deciding factor on whether or not your business will succeed or succeed in the right channels, or the channels you're pursuing. And so you're like, I'm delaying that I'm just going to formulate and try to do some farmers markets, but you're delaying doing these really important business model exercises, then you're a candidate for one of these programs, and you need to sit down and start doing that.

Sari
So the path that I recommend for folks, so if you're saying, no, I don't think I'm ready for that. Come join Fuel, when you just have a lot of questions. And you're even if you're not sure, or you're just launching, get Food Business Success, which is the online program that has all the modules, including calculating all of your COGS, you know, doing your margins, understanding marketing, and how to scale up. And then once you already have a business, then then Master Your Business. Create more systems, really understand the financials. Master Your Business is open right now when this podcast comes out, and we'll be starting February 6th. And as somebody who went through the program, and really you were already doing a lot of the work, but I'm curious, I'd love to get your take on that program for brands who have a business and are feeling out of control. Not sure if this is a good idea anymore. Can you speak to what you felt like the value was in that program?

Danny
Absolutely. The program always has some incredible cutting edge curriculum, often informed by even new books that are just being published, that we go through together and discuss. You know, I think I was in a unique situation where a lot of the books that were informing some really fascinating conversations and realizations I had already read. So when I was coming into the program, it was just like, finally implementing some of this information that I really knew was so valuable. And so I think I'm a little bit unique in that sense. For example, the primary aim is something you get into and in the course, and, you know, you read about in the E Myth, but I can't emphasize how important that is. Because the deeper in the weeds you get, the harder your journey becomes. You forget why you started, what the goal was, especially maybe you take on capital or something like that. You completely forget why you're getting into this to begin with. So just connecting with your purpose, and then helping your brand connect with that. The community was incredible, you know, in the program, so that cross pollination is a natural synergy that helps Peak State a lot as well as you know, I really just love how you bring in experts to have them teach you about different ways to grow your business, that ways that I never would have known. I started a whole ambassador program as a result of Master Your Business, learning about influencer marketing when you had Yash from Saral. And, you know, learned about ways to upgrade my social media in these modern times when I had been spinning my wheels on that for the longest time. You have these guest speakers that are helping us figure out how to overcome the obstacles that we're spinning our wheels on. Those are just a couple examples.

Sari
And just for clarity sake, when you join Master Your Business, that is the curriculum, this next level curriculum about creating systems and financial literacy and really being able to get more control over your business to create more sustainability and fun and profit and coaching calls. And then you also get a three month membership inside Fuel, which gives you access to Fuel VIP calls and additional coaching calls with you and myself, because what I quickly realized working with you in Master Your Business is that you have really good systems, you have your financial literacy down, and you have your business in a place where it is sustainable. And I was like, you need to come inside my program. And together, we will help more founders create a business that they love and feels fine and has more freedom, and is making more money. I wanted this podcast to be about kind of that mindset around making investments. And you are going to make investments in graphic designers perhaps or packaging or branded tents and those kinds of physical things, but also making investments in that coaching and community piece.

Danny
I'm just trying to tie it all together. Because I think the important thing is, whatever you're bringing to market isn't right yet. I hate to break it to you. It's not yet you need to surround yourself make the investments to be surrounded by people who are going to help make that right. And that's whatever, that's the pricing, the product, the strategy, the channels, something isn't right yet, you don't know what that is. But if you make the wrong mistake, that's going to be way more expensive than investing in something that's going to help you make the right choices for you. And the best choice is given the information that is available at the moment. So that's all one big picture in my opinion.

Sari
As we were talking about bringing you on board, you're like listen, Sari, my goal is to help brand founders save money and increase sales.

Danny
That's it. That's all I can justify every time somebody who would pitch me. Yeah, pay me money to do this. And I would say like, can you guarantee a return on my investment? And then say, no, we can't do that. That's almost impossible. Say sorry, because I can't afford to make decisions that won't return the investment. It's as simple as that.

Sari
We both believe in that. And I want people to get that full value. And you got to show up, you got to do the work. You got to be on the calls. You got to ask questions. Like if you don't participate, I'm all in on, let's guarantee that, let's get you results, that's why we're here.

Danny
I'm doing a hot seat. Bring your burning question, ask founders, fellow founders your burning question and let's use the collective wisdom of everybody and help you advance to the next level.

Sari
Amazing. Well, thank you, Danny, for coming on. And doing this impromptu podcast. I was like, this is going to sound so much better as a conversation. Not just me, me one sided saying what I think, so I really appreciate you. And I'm so excited for the work we're going to be doing and all the people we're going to help

Danny
Likewise, Sari. So grow our sales and reduce our expenses.

Sari
That's right. Amazing. All right, thanks so much. Have a great rest your day.

It's so easy to think about this business, this dream of yours, and fantasize about it and iterate in thought and think through all of it and analysis paralysis. But if you're really serious about making this dream a reality in 2024, I really want to invite you to invest in your business, to signal to the universe, that you're serious that you're taking action, and you're making this happen, and you got to get into the water, you got to commit, get your feet in the water, start learning how to swim, and make some investments in your business. And I encourage you, I urge you to join Fuel, to get Food Business Success or if you're ready for it, come to Master Your Business and get the support. Avoid costly mistakes and increase your sales quickly so that you stay in business so that it's fun so that you keep making progress. That's what entrepreneurs do. They get support. They get help they get mentoring, they get expertise because there is no time to waste. Get into the pool. Come join us. And until next time, have an amazing week.

The smartest thing you can do as an entrepreneur is to invest in a who to help you with the how to speed up your journey and help you skip the line. When you are ready for more support and accountability to finally get this thing done, you can work with me in two ways. Get me all to yourself with one on one business coaching or join Food Business Success which includes membership inside Fuel, our community of food business founders that includes monthly live group coaching calls and so much more. It's one of my favorite places to hang out and I would love to see you there. Go to foodbizsuccess.com to start your journey towards your own Food Business Success.