12 Top Tips for Starting a Gluten Free Business
“Failures are finger posts on the road to achievement.” — C. S. Lewis
If you have recently opened or are thinking of starting a gluten free business then reading this can save you a lot of money! Many points will also apply to other types of businesses but this advice is based on my experience and also mistakes I have seen other businesses making.
In 2005 I started my company Johnson’s Dietary Provisions, originally the plan was to supply gluten free food to catering businesses but I kept being asked if people could buy from us so I decided to open a shop and an online store. The figures looked good – 80,000 coeliacs in the UK and only one other website specialising in gluten free food at that time. Their website only sold products that were already available in the supermarket so I went in search of better quality artisan products. My website was the first in the UK to be run and staffed entirely by coeliacs – surely newsworthy enough for Coeliac UK? Apparently not, even though we were coeliacs helping coeliacs they refused us a write-up in the Crossed Grain magazine although they did acknowledge my acheivements in 2008 when I won the Awareness Raising Champion Award.
This week we closed the company – the effort involved was not worth the return, in the 4 years or so that the company was trading no fewer than 7 other ‘free-from’ businesses came and went. I spoke to several of them before they started and advised against it but sadly they ignored that advice. Another website opened a couple of months ago, again I had already offered advice to the person who started it but that was quite plainly ignored – let’s see what happens!
- The banks are not your friends! Work out how much money you will need to raise then multiply it by 10, if that scares you then stick to the day job.
- Make sure your website is professional and check it for spelling and grammatical mistakes. If spelling is not your strong point or maybe you are dyslexic then get someone to proof read it for you. I used a professional website designer, and have only ever had praise for its design and functionality so money well spent. I would not advise doing it yourself, unless you are a web designer and then you will make much more money designing websites so stick to that.
- When you are starting out use Paypal; merchant accounts are very expensive and have a minimum monthly charge. If you start getting enough orders to justify a merchant account play one bank off against the other and over-exaggerate your monthly turnover to get a better rate. If you join the Federation of Small Businesses you get an account at a greatly discounted rate. Don’t use their free account with the Co-op bank though, they have no understanding of businesses’ needs (see point 1).
- Check out the competition! Buy from them, and see what service they offer. Two new websites opened this year, they had not bought from us before so if they are not using the service why will others? Most products that are available in the supermarket will not sell on your website. It breaks my heart to see new websites stocking these products only to see them on ‘special offer’ a few months later knowing that they are going to have a lot of stock left over. Are you really sure there is a market for your service? The chances are that competing websites are not making much profit, check out their accounts on Companies House. One website that has been going for about 7 years still has the director lending the company money – that is stupidity!
- Don’t cut delivery charges, if people complain about them you don’t need customers like that! Bear in mind, although your delivery charges are probably a lot cheaper than the cost of a 60 mile round trip to a supermarket, most people will still go to the supermarket. By all means keep delivery charges at cost but don’t offer free delivery unless it is on orders over a very large amount such as £100 otherwise it eats too much into your profit margins. When looking for a courier to get the best price tell them you are sending out at least 100 orders a month, inevitably it will be less than that but once they have you they won’t want to lose your business.
- Don’t waste money on expensive advertising in Newspapers, I was shocked to see a new company advertising in the Guardian recently, even though it may be a special supplement on allergies 90% of the readership aren’t interested in it. The only advertising that worked for me (but even then not as well as I would have hoped) was with Coeliac UK. Sadly their advertising costs are overpriced and have increased a lot over the last few years which means only the big companies can afford it. If you advertise in Crossed Grain you will get a lot of phone calls asking for a brochure but only a very small minority will ever place an order and an even smaller minority will become regular customers. EXG works the best if you have a website, put an offer or a competition in to encourage people to give you their contact details. Don’t sponsor events or awards that is for big companies only.
- Avoid doing expensive Food Fairs and shows. People go to Gluten Free Food fairs for the freebies so more than likely you will not cover your costs. If you want to know which ones are the best please contact me for more details to save listing them all here. You cannot compete with the large companies giving away stuff even though it is crap. Be prepared for people to ask you: ‘Are your products in the Supermarket?’ or ‘Can I get it on prescription?’ Have a free draw to get people’s contact details. Local meetings are better because they are free and you have a captive audience. Talk to your suppliers and ask them to provide tasters and products that you can sell at a discount – after all you are promoting their companies too!
- Don’t give away free samples. I made that mistake at the beginning and these people never became customers. If they are not prepared to pay you don’t need them. Direct them to the manufacturers for samples. Have a Frequently Asked Questions page on your website so if they ask (and they will) you can direct them to that. Bear in mind that many Coeliacs and people with allergies and other conditions are pre-disposed to complaining so be prepared!
- Make your own products. The margins on selling other people’s products are very low so you will need to move huge volumes each month just to break even. The only successful gluten free companies make their own products and a lot of those sell other products in addition.
- Start from home, do not have a shop or warehouse, the overheads are crippling and even though people say they will buy from you approximately 95% of them won’t more than once. When we closed our shop in the summer of 2008 we were still getting e-mails over a year later asking what time we were open. Many people would say ‘Oh what a shame we always meant to come down.’ Sadly meant-tos don’t pay the rent! You can rent a self-store place for a fraction of the cost. Make sure you have an alternative source of income and if you find yourself funding the business – get out!
- Keep in touch with your mailing list regularly, don’t send plain text e-mails, they are boring and do not entice people to visit your website.
- If you would like any more advice or help, from what products to stock and help with e-mail and social media marketing to proofreading articles and creating a passive income for example or just need an understanding ear please feel free to get in touch. Business Link can be helpful only up to a point, the allergy business is extremely specialised and you will not know initially what is good advice and what isn’t – sadly I learnt the hard way but you don’t have to.
To your success!