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Need Some Raw Business Advice Please

So, my bf and I have just started doing a raw business at the encouragement of some of our new friends here. (totally new and small – not registered or anything – we are just trying it out).

We have given a few events (we get about 10 to 15 each time so not bad) and have made raw meals for people. Everyone seems to be happy with what we do (although, we haven’t had people do any repeats yet – I guess everyone is cash strapped)

Our problem is the price of food now is so outrageous! We try to include wild food in our meals since my bf is a forager but we can’t do everything wild and people like sauces (which means nuts) and those are so expensive.

I am NOT a business person. I am trying to figure out prices but it is hard. What we are doing right now so sort consulting with the person and find out what they like (spicy, creamy, sweet, ethnic etc) and make raw things they liked based on that. I like doing it that way because it is more personalized which allows me to be creative too but it is so hard to figure out the prices this way.

My bf wants to give a cheaper price on things which mean after we (or should I say I) pay for the ingredients we really aren’t making much per hour. I feel like I am harlding making much after the price of the ingredients. We want to stay cheap but I also don’t want to feel like I am not making any money. (this is hard too because we barely have room in our frig – wishing now I hadn’t sold the compact frig I had!)

I notice that many raw food services make certain things and charge a set price based on ounces. I have a scale so I could do this but I would really like the service to be more personalized than that.

For those of you who do a food service (or any service that offers a product that people will use up and buy again) how do you do the prices with out losing too much money on supplies? How do you factor in your “hourly rate”? I thought it woudl be easiest to figure out the cost of the ingredients and than add on how many hours we spend on making it (since we do it per person) – my bf doesn’t think this is the way to do it.

We are going to start buying in bulk but we can’t afford the wholesalers license and we make things in our little apartment kitchen (so we can’t be legal yet – hopefully some day will be but for right now we have to keep it this way – Please don’t report me).

Any tips for me? We don’t have a permanent car (we can borrow at times) yet - but should soon hopefully – so traveling around for cheaper priced supplies is tricky right now.

If anyone has any site I can order bulk and get a deal at that would be great! I am mostly concerned with the nuts and oils prices.

I am new at this so I am just sort of fumbling along here and trying to figure this out.

Comments

  • Hi cherie!

    Yes, thanks! We have thought of that. So far no one has wanted anything dehydrated except I am making potatoe chips this week for someone. My bf thinks the dehydrate cost is low (electric wise) but I disagree (well, I pay the electric bill and he doesn’t so I guess he wouldn’t notice). He thinks to just tack on an extra 50 cents and I think it is more than that. It takes 2 days to dehydrate something crispy.

  • omshantiomshanti Raw Newbie

    Hey Queenfluff, you really cant factor in a an hourly rate for your time it will make it cost prohibitive for the people buying…my advice is to charge 30 to 40 percent more than the cost of the meal since your business is personalized. and get good insurance! honestly, no matter how nice someone is if your food makes them sick and you are illegally prepareing in your kitchen…ugh this is CA the most sue happy state in the US. gourmet food( which raw cerainly is) should have a higher price tag than other stuff but cash is tight for everyone right now you want them to be able to believe they can afford it!

  • Omshanti,

    thanks! I hear ya! Yes, we have thought of this. We are looking into renting a kitchen because we are getting more customers and we make food for our parties too. We just started doing this so we are more trying it out to see if it will be popular in our area. So, it is going well so far. Most friends of friends etc. It might end up just being a part-time thingy for starts but it is fun so far. Believe me we are not going to get rich off of this. (it doesn’t pay all our bills in the least – at least, not yet)

    I am a bit worried about the sue thingy but we keep everything really clean (I am clean freak obviously vegan kitchen so no worries about contamination from meat) – we buy alot of our stuff from local farmers market when we can. A friend of ours said that not to worry about it at the beginning like this but after a few months we want to do the kitchen thingy. Hopefully we will have a car soon so it will be more doable.

    thanks for the advice on the price. that makes sense. Doing the hourly thing is so confusing – we weren’t sure how to tap that in and still be affordable.

    There is a vegan restaurant close to us and we were thinking about contacting them about renting their kitchen after hours. Although, I haven’t had too many requests yet – the dehydrated stuff will be tricky.

    I know that you were doing dehydrated stuff and selling it. Are you still doing that? Where were you making your stuff at? Where were you getting your bulk from?

    It kinda sucks as it sounds like in the UK you can have your home kitchen certified and inspected but you can’t do that here. Darn. Our kitchen is too small anyhow for a full time business.

  • omshantiomshanti Raw Newbie

    yep doing internet orders mostly now as my yoga studio buyer closed down! i am skipping the farmers markets and i use a wedding cake makers kitchen! mcuh more affordable thatn my first kitchen…i bought that super sized “D” from cabellas remember? anyhoo i am insured through the hartford for 350 a year for over a mil in coverage..i havent needed to buy in bulk yet believe it or not…. i found real raw almonds stll in thier fuzzy green skin at a persian market so check all ethnic markets for good values, also huge affordable containers of cold pressed organic olive oil too…. i know you are not a church gal, but churches often have certified kitchens….jsut a thought..teehee

  • BluedolfinBluedolfin Raw Newbie

    Here’s an off-the-wall suggestion for a kitchen to check out (from omshanti’s “church” suggestion)... Do you have a Hare Krishna temple near you? They are at least vegetarian, not sure if they are vegan.

  • Hi there!

    Congratulations on having the courage to start your business! I sincerely admire you for that. :-)

    Beware of dropping your prices too low, and don’t be afraid to charge what you’re worth.

    There are certainly plenty of affluent people who are willing to pay for the right experience, even in a “down” economy. Especially where you live! You might have to get creative to think of ways to reach these people and deliver something they’re interested in.

    There are several advantages to charging high prices. For one thing, starting a business is not easy, and a higher profit margin will allow you to absorb more of the inevitable mistakes that will arise along the way. For another, many people make judgments (like perceived quality) based in part or in whole on price, and there are even people who make the buying decision based on high price alone.

    For example, what if you specialized in catering yacht parties? I bet those clients could afford more than the average consumer.

    Don’t limit yourself by thinking too small. Competing on price is not a great place to be.

    For more information about targeting affluent consumers, look for materials by Dan Kennedy or Yanik Silver.

    You might check out these books:

    No B.S. Marketing to the Affluent by Dan Kennedy

    Marketing to the Affluent by Thomas J. Stanley

    Selling to the Affluent by Thomas J. Stanley

    Disclaimer: I haven’t actually read these books yet (they’re on my long, long list!) so I’m not officially endorsing them. But they do have good reviews on Amazon.

    Something else you could do is test your prices. For example, maybe higher prices reduces attendance but increases your take-home. Compare for instance 15 people at $30 each versus 10 people at $50 each.

    Also, you mentioned no repeat customers yet. Be sure to get the contact information of your clients: name, address, email address, and so on. Mail them a hand-written thank-you card after they come to you, and include a coupon for their next visit.

    If someone buys from you once, chances are high they’d buy from you again. Selling to existing customers is 10x cheaper than the cost of acquiring new customers.

    Those are just some basic starter ideas. Hope this helps!

    Best of luck to you and I wish you much success!

    Chuck

  • Thanks everyone for the advice -

    omshanti and BlueDolphin – We are looking into the kitchen thing. Yeah, I am not a churchy person but I don’t mind using a church kitchen. I dont’ think there is a Hare Krishna temple near us – I wish there was because that would definatley be at least veg. We would rather not make our food somewhere where there is meat. My bf wants to find a kitchenette – he said it would be smaller but cheaper and more affordable for us. We are also thinking about starting a Buyers Club since there isn’t one around here. A friend of ours has a wholesale license and we know people who would be interested in that.

    We need to go over our dishes to figure out costs. I really want to find some place with cheaper bulk stuff for the nuts and oils but no luck so far – we will hopefully be able to use the wholesale license. Produce and spices I can get great deals on – we live near a farmers market and I buy from a bulk online herb place (really great deals – mountainroseherbs.com!) but nuts and oils are hard!

    VeganBusinessOwner - Thanks for all those books recommendations. I haven’t read any business books yet except for ones on making herbal beauty products (something else I am doing). I think I am good at promoting and stuff. I do internet and flyers and business cards. I am not that great at figuring out the prices. We are going to start doing what Omshanti suggested – adding a percentage on to the total price.

    Well, we don’t live near any yachts but we are opening to catering etc. We do have several clients (more “well off”) who have been regularly coming to our events and have ordered food from us. We are having some repeat clients this week too. A customer posted some pics of our food online!

    We do events with themes too. We are having a raw brunch coming up with lots of “gourmet” raw food which I uped the price for since the cost of the ingredients and food prep is much higher than previous events we had – and yes, of course, a few people didn’t like the higher price. I don’t think most people realize that our events are actually cheaper than the other raw events around here. And they are! And most people don’t realize how expensive the ingredients are and how time-intensive the prepartion is. My dehydrator has been running non-stop all week and will continue until the event! That is how much work raw “gourmet” is.:)

    I know that lots of people are looking for deals now but one person wanted us to have an all you can eat raw gourmet brunch for only $20! I couldn’t help but be a little insulted in a way – I mean, you can’t even buy a jar of organic almond butter for less than that now! I think they were new to raw and don’t yet realize that it is a more expensive lifestyle than going to breakfast at McDonalds! They claimed they could take 3 people out for brunch for under $25 – where is that? Not a raw brunch!

    We have lots of information at our events about nutrtional benefits etc to attract people with health problems (natural medicinal drinks, fat burning recipes). Lots of people are interested in our foraging because that means picking free food – but those are not the “affluent” people you are speaking of (at least, most of them aren’t). But people only want to come when they can go for free with us. We probably will stop doing that – just for regular clients and friends.

    We are going to offer cheaper prices to existing customers. We are just starting so not lots of customers yet. Thanks for all your advice! I am going to look into those books!

  • BluedolfinBluedolfin Raw Newbie
    queenfluff~ A few ideas to encourage more repeat business would be to offer:
    • A discount for repeat customers (like 10% off)
    • Bring a guest and get a discount or reward points that can be collected and redeemed for another event (similar to the Frequent Partier Club but based on bringing guest)
    • Frequent partier “club” (eg. come to 4 events and get the 5th free or half price)
    • Prepay for X number of events that would equate to a discount
    A few other ideas for kitchens:
    • A bakery. Most do not make stuff with meat, but are heavy on the dairy (eg. butter). However, they do tend to use their kitchens in the wee hours.
    • Jewish Temple – A Kosher temple (Conservative and Orthodox) tend to either have two kitchens, one for meat and one for dairy, or one kitchen that is dairy only and no meat allowed
    • YMCA, Jewish Community Center, or another community center – long shot
    • Food bank/shelter kitchen that provides meals to the needy – these would have meat goings-on
    • Cooking store that has a cooking school/demos area

    Whatever you do right now, you will find a better option later so relax and go for it knowing that it is temporary. Just a few ideas to get some creative juices going… Do what works for you.

    Happy evolving… :)

  • Blue Dolphin -

    thanks!

    Yes, we are going to start doing the discount for repeats. We have to figure out how to factor it in. We are going to meet with a friend of ours who owns a busines and he is going to help us.

    I have figured out some prices for some of my items. Even adding 50% of the total item ingredients price onto the final total price is not ending up being too expensive sounding- compare to some of the raw restaurants/ meals around this area! Ours is cheap! I have been comparing prices and sizes etc.

    So, I think it is going to pretty reasonable for now. :) I am doing that right, aren’t I? (ie, ingredients cost for one batch of the item = $4.60 and total price for item is $4.60 plus 50% of $4.60 so final total is $6.90 – does that sound right? it is a pretty big batch – around 12 oz of sauce or dip ie – I might around up to $7.00 – is that OK? I really suck at math/finances.)

    Good idea about the guest! I sort of thought of that but we haven’t included it yet. Definately the next party! We will be doing Miracle Fruit party. We have also had a request to do a raw class so we are looking into how to set that up.

    The only downfall to the prepay for events thing is that it can be hard if people can’t make it to events or the event themes don’t interest them. If we get regular classes going, than I would definately do that for the classes!

    I was thinking about event discounts for our regular meal service customers for sure.

    We are going to contact the vegan restaurant near here to see if we can use their kitchen by the hour. It probably won’t work for dehydrating though! (I am definatley not lugging the dehydrator back and forth everyweek! I am thinking I need another one already!)

    They are open 7 days though so it might be tough. I am looking into area churches. Our town has a community center I believe – I know they have conference rooms etc – maybe a kitchen?

    Thanks for all the brainstorming!

  • BluedolfinBluedolfin Raw Newbie

    queenfluff~ My privilege. :)

    Looks like you are on your way… :) Decide on one discount program to keep it simple and “special.” If you have to many discount programs it can give the impression you are devaluing your services rather than valuing your customer.

    Your math is right. Start out with 50% markup and if you don’t get enough money, then increase.

    Do you have Excel or other spreadsheet program? If so, I suggest setting up a few spreadsheets that you can just plug numbers into it and it does the math… much easier that way. You can also keep simple biz records with it until your biz grows out of this simple bookkeeping method… then you will need to get a “realer” bookkeeping program.

    My ideas are intended to get the creative juices going rather then suggesting implementing them all. It’s a buffet… mix, match, make your own. :)

    What are you going to do for your Miracle Fruits event?

    That would be great if the vegan place works out especially if they have room in their dehydrator for some of your things… that would be ideal! If you go in either really early or really late (bummer hours for you) you wouldn’t interfere with their biz. You could be their “security company” for part of their off hours… win/win situation.

    Did you get my reply to your email?

    Much success to you. :)

  • Hi Queen~ It sounds like you and Bluedolphin have all the bases covered. My cousin, James started his bakery business by “borrowing” (with permission of course) the kitchen where he was employed to cook for a company cafeteria. He baked his breads during off hours until he could build up enough of a clientele to open his own bakery. He applied for a business grant through Hannah Grimes Marketplace Inc and they helped him with the business end of the process. If you Google ‘Bob’s Bread’ there is a very interesting article on the organization that offered him this business advise and support. It’s the second listing that comes up, entitled, “Bringing artisans to ‘the next level’ | New Hampshire Business …” It might give you some ideas about money and support being offered out there.

    Also, another thought… regarding the comment If anyone has any site I can order bulk and get a deal at that would be great!

    I don’t know if this is of any interest to you but, I just joined on with Elements For Life as a distributor. If you check out my new website www.NobleLifeElements.com/elementary you can order Raw Maca Powder, Cordyceps, Golden Inca Berries, Tibetan Goji Berries, Raw Cacao Nibs, Raw Cacao Powder (and other stuff). But, even better, if you wanted to make some extra income to fund your food shopping, you could also become a distributor. Just a thought. Check it out and let me know what you think. :D

  • BeTheChangeBeTheChange Raw Newbie

    I sware that this is the only place where people would want to offer advice to other businesses rather than being afraid of competition. Smiles for you all! :)

  • BlueDolphin -

    I had gotten a first email from you which I answered back but didn’t hear anything else. I wish I could afford the glyonutrient you were speaking of but right now we can’t even pay our rent (coming out of my 401K) – those are the mushrooms supplements right? My bf sometimes takes those.

    Yes, one discount is good – I think for the repeat customers – both discount on orders and for events, classes (if they want – probably the guest idea). There are people that come to our events that haven’t ordered food so maybe the event discount – just among people already on our events list.

    Yes, I have Excel and I am going to plug in my numbers. I already did this for my beauty products (yeah, I have all the ingredients and materials and all the numbers plugged in – I just haven’t put any of my products together yet – I got busy with the events and food making – I will do it soon!) I have been sort of proscasinating on it because people don’t seem to be buying things lately – I sell stuff on Ebay once and a while and I swear I can’t even unload my best clothes! People are not buying. I think food is once of the exceptions to that rule in a recession (health care is another one).

    But yes, I am going to input the numbers. Do you think my 50% is too low? I think it is good for now I suppose. I don’t know what the “norm” is – judging by the sizes/weights and prices of some other raw food places – it almost looks like they pay for all their ingredients in a big batch by selling ONE item of the food! That looks like a big markup! I would almost feel guilty for doing that – but I guess they have employees to pay, rent etc. so I guess I can understand that in a way.

    I must admit I am still getting used to the idea of this sort of lifestyle – I am still adjusting to the idea of the charging percentage of this and that so I can profit (or not profit in my case – just want to be able to pay my bills!)- I guess it is still pretty foreign to me. It is definatley a different way of living for me!

    My bf, never writes down his recipes, he “guessimates” how much it costs, which is starting to bug me.. He sort of wings it and I can’t calculate prices if he does that. (the kitchen looks like a cyclone hit it after he is in there – I am not allowed to go in because I will seriously have a heartattack! haha!) I told him he has to write down his recipe and give measuremnts so I can figure out costs. Grrr – men! :)

    The Miracle Fruit event is just that – we are going to order the “Miracle Fruit” and do dishes with it. It is actual a popular thing – a Miracle Fruit party. Here is some info on it if you haven’t heard of it before:

    http://en.wikipedia.org/wiki/Miracle_fruit

    http://www.ehow.com/how_2172707_throw-miracle-f…

    cute eh? Raw too! :) It was our friends idea to do this. I haven’t tried the Miracle Fruit before so I am interested!

    Actually the “bummer hours” would probably work out for us – I am a night owl as is my bf and often stay up until 3 or 4 am and sleep until noon. I know weird hours but for now it would work out OK if that was all that was available. I wouldn’t mind an afternoon kind of thing too. I thought maybe the vegan place might want to include some of our food in their menu (they are mostly asian veggie faux meat stuff right now). – mostly dehydrated stuff like my bacon.

    slcogliano – It is so funny you mention the Elements of Life because I just got an email about that! That would be great. We actually want to do an online raw store in the future and have several friends who want to do it too! I wish they sold nuts and oils too! :) I love raw cacao in my smoothies so I would love to get it at a discount even for myself! We have lots of raw friends would not mind getting in on those deals too! Zoe also gave me the idea of the business grant too a bit ago – I guess she won one for her business – I will have to look further into that! Thanks for all your advice!

    BeTheChange – Yeah, I thought of that before I posted. I thought “Hmm, is it really a good idea to post about what I am doing and ask for advice – lest someone steal my ideas?” I am a bit wary of competition but most peoples services are unique in many ways and not exactly the same. I figure that not everyone is doing the same things business wise and I look at this as an opportunity for others to learn too. I never believed this before but I am now realizing that when you put things out there “into the universe” you get answers/results back. I know people on here like to help one another and when you give out that help you get something back – learning, knowledge, friends!

  • Hi again QueenFluff. :-)

    Just a few things to add.

    I recommend avoiding using discounts, even for existing customers. Instead, offer something of value as a bonus.

    For example, rather than offering 10% off on a $50 item, add something for free that’s a $5 value: maybe a free dessert course, or a relevant book or something.

    Offering discounts sends the message that your price is flexible and perhaps inflated. In the end, financially it comes out to be the same for you, but the difference is in the perception.

    Also, the yachts were just an example I came up with on the spot. Maybe there’s something else more creative you can come up with.

    I think you’re on the right track with your themed events. For example, make it more than just food, make it an experience.

    Talk to your customers and find out what they want, and why the come to you.

    And you’ll occasionally run into those oddball customers who expect something for nothing or just plain don’t know any better. Don’t let them get to you.

    But probably the most important message I can offer is that your product/service is only part of the equation.

    In order to truly be successful, take charge of your personal growth and never stop learning. This means reading lots of books, especially ones related to sales, direct marketing, and personal growth/improvement. Try to read at least an hour a day. And take action with what you learn!

    The education you give yourself can never be taken away.

    Keep us posted on how things go for you…

    Best Wishes,

    Chuck

  • ZoeZoe Raw Newbie

    Sounds like you are doing really well Queen fluff! Don’t think I have anything new to add. For our raw delivery we used cost of food multiplied 4 or 5 times to get the price. Chris used to work in marketing for a Pizza Chain in the USA, apparently they all use that ratio in restaurants and fast food places. Good Luck, it sounds great ;)

  • you’ve gotten some great advice already. I too use The Hartford for my business liability insurance, and they are great… although I pay way more than that/year for my insurance, but my business involves products for babies, hence the higher cost.

    Definitely register with your state Board of Equalization. It doesn’t cost that much to get legit, but with a business license you can more easily obtain wholesale discounts. Also, you will have to pay taxes, but you can also deduct business expenses and if you operate at a loss the first year (very common for new businesses to not be profitable for a the first few years), you won’t have to pay taxes on the money earned anyway.

    Pricing usually works like this (at least with products) cost of supplies + cost of labor (estimate how much you want to pay yourself /hr) = wholesale price then you take the wholesale price and multiply it by 2. Some companies even mark up more than that! Definitely don’t undercut yourself; it is much harder to raise your prices than lower them. ;) Also, the higher end market prefers higher priced services and goods; they worry if it is too cheap, there is something wrong with it! In this stressed economy, I’d aim for the higher end of the spectrum for now, and then perhaps once you get more established you could offer some lower priced packages once you know how low you can go.

    Also, check out Nolo Press, they have great low cost books that have all the forms and info about different topics, like running your own business. I have the one about a craft business, but I’m guessing they have one that is more specific for your type of food service businesses. It was so helpful for me when I started out. You can also get free advice at your local SBA (small business association).

    Sounds like you’re off to a great start.

  • Hello all! I just wanted to add something; there is a business in my town called Turtle Island Refuge. They are raw vegan and creat wonderful crackers, snacks, dips, breads, raw ice cream, etc and sell them at local organic grocers (we have 2 in town). They also open up their house two days a week for 2 hours each day for lunches. They charge a fixed rate and you get what they have made that day. A very full plate, no seconds or anything, but you don’t need it.

    I know you said you can’t get your kitchen checked out, I guess colorado is different than California! but, anyway, I love the place and thought I’d share!

  • Thanks for all the great advice everyone! I haven’t had too much time to respond – we were busy making food for our Raw Brunch which went really well! :)

    I really appreciate the “formulas” for figuring out the price. I guess I sort of have “range” in mind in my head of what I would like things to cost (ie, they are reasonabley priced and I would pay that much myself for them). So, I have some definte prices for some of our items.

    littlegems – thanks for the info on the pricing! Yes, one of the problems we are coming across is there are people who want to pay whatever the price is for great food and than there are the people who complain and want everything for free. I mean, our prices are pretty low for raw food (plus our items are big – you get more than what you get somewhere else for raw food and we have to be compensated for our service too!) and it is specialized service. I guess because of fast food places and cheap groceries some people just except everything to be cheap. Kind of makes it hard for people in the “slow food” business.

    It almost makes you feel bad when someone complains that your prices are too high and you know they are not. Then I start wondering if they are but I know they are not (they should in fact be higher if I wanted to have them priced like other raw food places but I don’t want to scare people away) But yes, we have customers who think our food is amazing and who appreciate the service and think the prices are great – so we will be focusing on working with these people.

    I have a few of those book you are talking about. I haven’t gotten one for the raw food business yet though. :)

    As a new development, we might be moving to are area that is more “high end” and there is more of a demand for this sort of service. Than again, we also might be moving to Hawaii to run a raw food web business! So, there might be some major changes. But I am liking doing this for now – I just want people to like the food and feel like they got a good deal.

    Kirsten – I have heard of the Turtle Lake Refuge. It looks good. My bf and I want to go there some day.

  • I didn’t read through all the posts, so this may be repeat advice. Have you thought of networking to find someone who has a close friend or family member who runs their own small farm? You might be surprised by how many people who are passionate about organic and raw foods have some kind of familial connection to farming. I was surprised to learn how many of my friends have family who run them! People who have the same values really are drawn to each other without realizing it.

    The great thing is, if you can find a local farmer who is passionate about organic and sustainable farming, she/he might agree to work with you on price while you grow your business. You could bring them in as a new business partner.

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