This on-demand course features FFI Director, Tera Johnson, walking you through how to use FFI’s 13-week cash flow template. We encourage you to follow along with the video, it will make completing your own 13-week rolling cash flow forecast much simpler and faster.
We are offering this course for free as there is an immediate need for all businesses to manage their cash amid this pandemic. This is the tool to help them do so. If you have any questions please do not hesitate to reach out!
Survival Strategies for Food and Farm Businesses
We’re facing an unprecedented time in the food industry, and there are enormous ramifications for all of us. With COVID-19 sweeping the nation and Americans social distancing and sheltering in place, so many food companies and farms are facing precipitous sales declines, some falling to zero. On the flipside, other food and ag businesses are experiencing 100%, 200%, even 500% sales increases and can’t meet demand fast enough.
Without question, the entire food system as we know it has been disrupted—and nobody knows how long this will last or what it will look like on the other side. The old adage “it’s a marathon, not a sprint” rings piercingly true right now.
All that said, crises such as this do spring new opportunities. After all, before the pandemic struck, 54% of all food purchases came from foodservice. Though that percentage has since dropped considerably, people still need to eat, so those sales must shift to brick-and-mortar retail, online and direct from farmers. Some food and ag businesses are responding by shifting to e-commerce. Others are seeking new retail accounts, as most grocery stores have been deemed essential and must remain open but are struggling to fill their shelves. Some food manufacturers are even shifting gears to produce more in-demand products for the foreseeable future.
But for all food companies and farmers out there, the primary goal is keeping the business alive. And to do that, it’s time to zero in on managing cashflow. That was the focus of both our most recent podcast featuring Ted LeBow of Kitchen Table Consultants and Monday’s virtual huddle with FFI-trained consultants and entrepreneurs we’ve worked with.
Businesses should immediately create a 13-week rolling cash forecast (here’s FFI’s template) to see where they can free up money. Go through your P&L and look at cost of goods sold (do you have inventory left to pay for?), rent (will your landlord allow deferred payments?), debt service (can you defer or go interest only?) and labor (can you reduce staff and possibly share employees with other businesses that are hiring?). Also talk to your insurance agents and ask your bank about credit lines for working capital.
Food and farm businesses should also look into relief programs from government, private organizations and nonprofits. For example, the U.S. Small Business Administration has enacted its Disaster Loan Assistance program, and many states have or will offer financial help.
Once companies take a thorough comb through their cash forecasts, some may discover it’s wisest to hit the pause button for a while. This may be the best way to avoid digging a deeper hole and ensure they’re financially able to resume business once the dust settles a bit.
None of this stuff will be easy or painless, but it’s necessary given our reality right now, and there are excellent resources to help businesses through it. Reach out to us at FFI, and please join next Monday’s virtual huddle—open to everyone—to chat with other entrepreneurs in the same boat, along with trained consultants who can offer advice. When we all pull together, we can weather this storm and pick up valuable lessons along the way.
With all food and ag businesses facing major changes due to COVID-19, we’ve created weekly virtual huddles to unite entrepreneurs and consultants. Every Monday, we’ll answer questions, share important info and ideas, and discuss best practices.
ENTREPRENEURS: STRATEGIES FOR GETTING THROUGH THIS ECONOMIC DOWNTURN HUDDLE Hosted by Tera Johnson
Weekly on Mondays at 2:30 pm | 1 hour | Central Time
Click here for log in information!
CONSULTANTS: HELP CLIENTS THROUGH THIS ECONOMIC DOWNTURN HUDDLE Hosted by Tera Johnson
Weekly on Mondays at 1:00 pm | 1 hour | Central Time
Click here for login information!
And now, our roundup of the best food and beverage finance news, events and resources from around the web…
Business Model Insights
- 5 steps to succeed on Amazon amid COVID-19 (New Hope Network)
Online grocery sales are growing fast, underscoring a longer-term shift toward e-commerce selling. Here are five things food and beverage brands can do right now to set themselves up for ongoing success on Amazon.
- COVID-19: Inventory planning the name of the game as sales of food staples surge (FoodNavigator-USA)
- How companies can cope as coronavirus impacts the food chain (Food Dive)
- COVID-19 and the investment landscape for early stage brands: ‘There are a lot of folks out there very skittish right now’ (FoodNavigator-USA)
“While many packaged food firms have enjoyed soaring sales this month, startups that had planned to launch new brands, ramp up brick-and-mortar distribution and raise money this year are adjusting plans rapidly, while access to capital will get more challenging, say investors.”
- While the masses hoard toilet paper, innovators install bidets (Intertwine Group)
- Meat alternatives and indoor agriculture drive investment growth in agri-foodtech startups (AgFunder News)
- How COVID-19 is impacting natural sales, manufacturing and distribution (New Hope Network)
Natural food and beverage brands share how the coronavirus is impacting sales and how they are building redundancy into their supply chains to ensure they can keep making and selling their products throughout this global pandemic.
- ‘It’s a huge blow’: How businesses are moving forward after coronavirus canceled Expo West (Food Dive)
- Pivoting in a pandemic… and is Big Food set for a comeback? (FoodNavigator-USA)
- Stock-ups favor meat, but not forever (Produce Blue Book)
“Panic buying caused a 77% surge in meat sales, but there’s one vegetable keeping up with that pace… Potato sales were up more than 72% in consumer frenzy-buying to stock their ‘pandemic pantries.’”
- North American millers, bakers scramble to satisfy bread-buying binge (Reuters)
- Consumers pick up back to basics cooking skills and ‘stress baking’ during coronavirus quarantine (FoodNavigator-USA)
Farming and AgTech
- COVID-19 Could Cause $689 Million Decline in Sales for Farmers (Modern Farmer)
Economists project a drop in farmers’ sales of up to $689 million and a payroll decline of $103 million, potentially causing a $1.3 billion hit to the U.S. economy from March to May.
- Small Farms Also Struggle as Restaurants Shut Down Due to Coronavirus (Civil Eats)
- The Fight to Keep Farmers’ Markets Open During Coronavirus (Civil Eats)
- Bankrupt Dean Foods drops Dairy Farmers of America as lead bidder (Food Dive)
After objections from farmers and concerns about competition, DFA will no longer be the stalking horse—aka get the first bid and set the minimum selling price—for the sale of Dean Foods.
- Agri-FoodTech is global: here’s a list of the top 15 deals outside the US in 2019 (AgFunder News)
COVID-19-Related Resources for
Food and Ag Businesses
- USDA: Get answers to commonly asked questions about how COVID-19 relates to food.
- Farmers.gov: USDA’s farmer-centric page offers info on the status of USDA Service Centers, options for farmers and ranchers nationwide and answers to frequently asked questions.
- Food Industry Association (known until recently as the Food Marketing Institute): FIA’s website has an entire page dedicated to the virus’s impact on the food industry, including a comprehensive guide “Coronavirus and Pandemic Preparedness for the Food Industry” available for free download.
- Institute for Food Safety at Cornell University: This info-packed webpage provides answers to common food-industry-related questions, a food facility strategy checklist, access to virtual office hours with food safety expects and much more.
- OSHA: The Occupational Safety and Health Administration offers guidelines for businesses operating during the pandemic to help prevent exposure and infection among employees.
- Department of Labor: The Department of Labor’s Coronavirus Resources portal outlines workplace preparation, employees’ rights, wages and leave, and how to respond if the virus enters the workplace.
- Environmental Protection Agency: EPA provides a list of disinfectants approved for use against the SARS strain that causes COVID-19.
- FDA: Get the latest updates on COVID-19 and info on delayed domestic facility inspections and foreign facility inspections.
- Small Business Administration: SBA is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19. Contact your local SBDC center to help navigate disaster loans.
- American Farmland Trust: AFT’s Farmer Relief Fund will award cash grants of up to $1,000 to help farmers weather market disruptions caused by the coronavirus crisis.