Last summer I wrote about Fran Free, founder of Oh Baby Foods. She faced the start-up’s classic chicken-egg dilemma. She wanted to land a large contract with a major retailer, but lacked the resources to fulfill it, partly because she worked out of a leased restaurant kitchen, where her maximum output was 300 cases of organic, locally sourced baby food a year. On the other hand, she couldn’t ramp up production without the promise of some much-needed business. Oh Baby’s 2010 monthly sales were about $2,000. While its customers are devoted, the company has not turned a profit.
A lot has happened in the last year. For starters Ms. Free, formerly known as Fran Gunsaulis, got divorced and now uses her maiden name. Along with her 3-year-old daughter, she moved to downtown Fayetteville, Ark., from a nearby rural area and held a few part-time jobs to stay afloat after putting her savings into Oh Baby.
Ms. Free also made big changes within her company. She took readers’ advice and scrapped her time-consuming meal-delivery service. Several commenters pointed out that she desperately needed funding. One, SirWired, suggested she find an investor or throw in the towel. Ms. Free, who took no salary from June 2009 to June 2010, realized he had a point. “Last fall, I came really close to putting Oh Baby to bed for awhile,” she said. But just when the company’s prospects seemed bleakest, she said, “the clouds parted and the sun came out.”
While attending a Chamber of Commerce event, Ms. Free ran into two Oh Baby fans, a couple who bought the food for their daughter and who had previously expressed interest in investing in the company. Back then, Ms. Free had turned them down, determined to go it alone. “My need wasn’t so great at the time because I still had personal funds to put into the business,” she said.
With those funds gone, she accepted their offer to lend the business $100,000 at 5 percent interest for five years (the first six months of the loan term are interest-free). At the end of the five years, the couple, who are not professional investors, will have the option to buy 10 percent of the company. Ms. Free deposited their check last month.
The money allowed Oh Baby to contract with a manufacturer. Ms. Free has answered the chicken-egg question by opting to increase production, which will begin in September. She hopes — and has reason to believe — that contracts with major retailers will follow.
Since my last post, she has gotten her products into Whole Foods in Little Rock, Ark., and Tulsa, Okla., through the chain’s local forager program, which enables small retailers to bypass the longer, more complicated approval process required of foods sold regionwide. With sufficient sales data from those locations, Oh Baby will be positioned to present the line to the Southwest regional buying team, which purchases for 22 stores. Oh Baby is also sold in seven Harps stores and in several independent retailers.
Another big change is planned. Oh Baby is sold in the freezer section, in cartons that hold three rigid plastic cups. Shoppers must know to look for it there, instead of on the shelves with most other baby foods. But now that Oh Baby can meet the minimum volume requirements of a contract manufacturer, another relatively new packaging option is available that will allow the company to sell food in shelf-stable pouches. “When I started out, manufacturers weren’t really using the flexible pouch, so my options were jar shelf-stable or frozen, which is better nutritionally,” said Ms. Free.
On Nov. 13, Oh Baby plans to introduce a line of shelf-stable food. At that time, the frozen variety will no longer be available. Ms. Free is refining her new ingredient lists and recipes. She said Oh Baby will be certified organic this year.
Ms. Free also took the advice of a frequent commenter, Dominick Celentano, who urged her to learn more about the retail business. Toward that end, she has taken a part-time job with Horizon Marketing, a natural products broker that represents 40 food, body care and supplement lines to retailers regionally and nationally. “It’s the perfect job, because it lets me see how the process works,” said Ms. Free. Her responsibilities include setting up in-store demonstrations for the product manufacturers who want to get onto retailer shelves and maintaining Horizon’s database.
She realized that Oh Baby could use Horizon’s services as well and hired the broker to help get the line into retailers and to represent it in all chains and independents where it is sold in the region. “If and when the time comes, Horizon will also represent me nationally,” she said.
You’re the Boss: Oh Baby Answers Its Chicken-and-Egg Question
She Owns It
Portraits of women entrepreneurs.
Last summer I wrote about Fran Free, founder of Oh Baby Foods. She faced the start-up’s classic chicken-egg dilemma. She wanted to land a large contract with a major retailer, but lacked the resources to fulfill it, partly because she worked out of a leased restaurant kitchen, where her maximum output was 300 cases of organic, locally sourced baby food a year. On the other hand, she couldn’t ramp up production without the promise of some much-needed business. Oh Baby’s 2010 monthly sales were about $2,000. While its customers are devoted, the company has not turned a profit.
A lot has happened in the last year. For starters Ms. Free, formerly known as Fran Gunsaulis, got divorced and now uses her maiden name. Along with her 3-year-old daughter, she moved to downtown Fayetteville, Ark., from a nearby rural area and held a few part-time jobs to stay afloat after putting her savings into Oh Baby.
Ms. Free also made big changes within her company. She took readers’ advice and scrapped her time-consuming meal-delivery service. Several commenters pointed out that she desperately needed funding. One, SirWired, suggested she find an investor or throw in the towel. Ms. Free, who took no salary from June 2009 to June 2010, realized he had a point. “Last fall, I came really close to putting Oh Baby to bed for awhile,” she said. But just when the company’s prospects seemed bleakest, she said, “the clouds parted and the sun came out.”
While attending a Chamber of Commerce event, Ms. Free ran into two Oh Baby fans, a couple who bought the food for their daughter and who had previously expressed interest in investing in the company. Back then, Ms. Free had turned them down, determined to go it alone. “My need wasn’t so great at the time because I still had personal funds to put into the business,” she said.
With those funds gone, she accepted their offer to lend the business $100,000 at 5 percent interest for five years (the first six months of the loan term are interest-free). At the end of the five years, the couple, who are not professional investors, will have the option to buy 10 percent of the company. Ms. Free deposited their check last month.
The money allowed Oh Baby to contract with a manufacturer. Ms. Free has answered the chicken-egg question by opting to increase production, which will begin in September. She hopes — and has reason to believe — that contracts with major retailers will follow.
Since my last post, she has gotten her products into Whole Foods in Little Rock, Ark., and Tulsa, Okla., through the chain’s local forager program, which enables small retailers to bypass the longer, more complicated approval process required of foods sold regionwide. With sufficient sales data from those locations, Oh Baby will be positioned to present the line to the Southwest regional buying team, which purchases for 22 stores. Oh Baby is also sold in seven Harps stores and in several independent retailers.
Another big change is planned. Oh Baby is sold in the freezer section, in cartons that hold three rigid plastic cups. Shoppers must know to look for it there, instead of on the shelves with most other baby foods. But now that Oh Baby can meet the minimum volume requirements of a contract manufacturer, another relatively new packaging option is available that will allow the company to sell food in shelf-stable pouches. “When I started out, manufacturers weren’t really using the flexible pouch, so my options were jar shelf-stable or frozen, which is better nutritionally,” said Ms. Free.
On Nov. 13, Oh Baby plans to introduce a line of shelf-stable food. At that time, the frozen variety will no longer be available. Ms. Free is refining her new ingredient lists and recipes. She said Oh Baby will be certified organic this year.
Ms. Free also took the advice of a frequent commenter, Dominick Celentano, who urged her to learn more about the retail business. Toward that end, she has taken a part-time job with Horizon Marketing, a natural products broker that represents 40 food, body care and supplement lines to retailers regionally and nationally. “It’s the perfect job, because it lets me see how the process works,” said Ms. Free. Her responsibilities include setting up in-store demonstrations for the product manufacturers who want to get onto retailer shelves and maintaining Horizon’s database.
She realized that Oh Baby could use Horizon’s services as well and hired the broker to help get the line into retailers and to represent it in all chains and independents where it is sold in the region. “If and when the time comes, Horizon will also represent me nationally,” she said.
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Article source: http://feeds.nytimes.com/click.phdo?i=fdd1330b4f9d04712ef1b6b007463d4b