Your Place Can Shape Your Business Model Path

Divergent Business Model Path

We often talk to people about business model “paths” i.e. divergent roads that entrepreneurs can choose to follow to achieve their business goals. Choosing one means saying no to another, at least initially, as each path has different scale requirements and requires different levels and sources of capitalization.

Part of that business model path decision is shaped by place and the scale that is possible in that place. In rural areas with low levels of population, it is especially hard to have food or beverage businesses locally produce their products for a purely local consumer base simply because there are not enough consumers to sustain the business. And, many people, funders and entrepreneurs alike, don’t necessarily know what it takes to make a rural business successful or what will work in a given rural area. This, combined with other factors, has unfortunately led to a dearth of capital for businesses based in rural areas.

At the end of the day, all businesses need enough market share of a large enough market to be financially sustainable for the long term. To make many rural businesses viable, there are two different over-arching paths to pursue to achieve this. One path is finding a way to bring enough people to the business’ physical location to achieve the necessary scale. Pick your own farms or on-farm wedding operations and other agri-tourism businesses are examples of this. Another path is getting the business’ products into regional or national distribution to reach more consumers through producing branded wholesale products that are defensibly unique in the category they are in.

It is important to remember: one path is not better than the other. Rather, each path has clear tradeoffs and business model requirements, like the number of people needed to buy the product. That path needs to align with the entrepreneur’s skills and goals as well as the realities of their community. It is our hope that understanding these tradeoffs will unlock more capital for rural businesses so they can grow and be financially viable for the long term.

And now, our roundup of the best food and beverage finance news, events and resources from around the web…

Business Model Insights

  • Why Food Manufacturers Shouldn’t Try to Be Tech Companies (The Food Institute) – “Technology can be a great thing. However, technology for technology’s sake is not so great, and is beginning to pop up more and more, even in the food industry. The journey of Juicero demonstrates an important point for those in the food industry. Just because you can use technology to make a product seem more modern and exciting, doesn’t mean you should. In many cases, creating a simple product that is accessible and on-trend is enough to be successful. While it is important to introduce technology where it makes sense for your business, it is essential to remember that it doesn’t always make sense for your business.”
  • Banza co-founder on staying focused, raising capital, saying no, and ‘shiny object syndrome’ (Food Navigator)
  • 5 Considerations For Building An Amazing Team (New Hope Network)

Raising Capital

Raising Capital

  • [Podcast] How to refine a pitch to woo investors and score retail distribution (FoodNavigator) –  “Whether it is trying to raise money, build brand awareness or convince a buyer to stock your product on store shelves, knowing how to successfully pitch your company, and yourself, to potential business partners and consumers is essential. Questions that should be answered include: Does the company have a sustainable business model with sufficient potential to scale? Does the company have a new product or technology that helps solve an existing problem? Is there traction – even if still early – that demonstrates sales or potential?”
  • 4 Best Practices For Raising Capital (ShareVault)
  • Fancy Snacks Are Having a Moment. Venture Capital Wants In (Eater)

Wholesale Brands

CPG/National Brands

  • The argument for authenticity (New Hope Media) – “We often focus inordinately on the latest tool or tactic, and as important as it is to utilize cutting-edge technology and pay attention to trends, it’s often more important to emanate something true and real that resonates with people on a personal level. As marketers, we manipulate a lot. But there is no substitute for a brand that radiates passion, adds real value to people’s lives and takes a stand for something. And you can’t fake a mission-driven organization or product that plants a flag. Consumers are jaded, and they smell the falsehood in your promotions, communications and advertisements instantly.”
  • Retailers are squeezing already struggling CPG brands (FoodDive)
  • Brand building through irresistible packaging design (Packaging Digest)

Grocery Store Produce Section

Market Trends

Old Grocerty Store In Small Town

Farming and Rural Life

Mergers And Acquisitions


Natural Products Expo East

Industry Events