From Healthy Snacks to Healthy Valuations

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May 24, 2024
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From Healthy Snacks to Healthy Valuations

What did Schoolyard Snacks do?

We formulated, manufactured, and sold low carb high protein breakfast cereals and salty snacks. Our products were meant to be nostalgic and a healthy reinvention of classics like Coco Puffs, Froot Loops, Cheetos, and other childhood cereals and snacks. We sold our products online and in stores across the country.

How did you first decide to start Schoolyard Snacks?

We thought it was crazy that there were no healthy breakfast cereals in 2017. Even the cereals that were supposedly “healthy” were heavily filled with sugar. We thought there had to be a way to take out the sugar and add in more protein and this is how the idea for Schoolyard Snacks began.

What was the most challenging thing that you overcame while running your business?

There were many challenges we needed to overcome with running Schoolyard Snacks. The first big challenge was convincing a factory to work with us. No manufacturer believed you could make cereal without sugar. The factories that make cereal aren’t setup for startups and the minimum order quantities are normally hundreds of thousands of dollars. It was a slog to convince a factory to work with us and then to give us the time to figure out how to actually produce our product so we could launch. Eventually, after many months and hundreds of phone calls, we found a factory that agreed to work with us, we spent multiple days and nights at the factory, it was extremely stressful, we laughed, we cried, we screamed, we eventually got our first product run completed, and we ended up selling multiple months of inventory in 72 hours and this meant we had something! 

What was your best moment in running the business?

I think the best moment was the very first time we got an order. When we first went live we did so at midnight in California assuming no one would place an order until later in the day tomorrow (if at all) and we had set our Shopify account to make the cash register kaching noise and within seconds of going live we heard the kaching noise and a few mins later another one and then another and we knew we were on to something and that this might actually work.

What do the best business owners that you’ve interacted with have in common?

Generally they have an obsession with monitoring their KPIs, are hungry to succeed, and hustle.

What’s one tool or product that you couldn’t live without?

Beehiiv. It powers our newsletter (SMB Deal Hunter) and couldn’t imagine not using it.

What’s one piece of advice you have for other small business owners?

Recognize that when deciding to be an entrepreneur that you have a choice. You can start a business from scratch (a startup) or you can buy a business that is already producing cash flow. In the former option, you probably haven’t found product market fit when you get started, and you may never find it. You may never get past the startup phase. The chance of failure is high. Over 90%+ of startups don’t make it. 

With the later option, you are stepping into a business that already is cash flowing. 

There are pros and cons to both options but recognize you have a choice. Also recognize, some businesses require much more cash than others. 

A food business (like Schoolyard Snacks) requires huge amounts of working capital (think millions to tens of millions of dollars) to really scale. To get that money will likely cost you equity or will require you to take on debt, or both, and these things can limit your potential upside and control of the business especially if things don’t go according to plan. This doesn’t mean you can’t succeed but there are real obstacles you may have to navigate to do so.

Compare this to some other businesses  where money is paid to you upfront before you ever have to deliver your service (think an insurance business) or your product is digital and doesn’t require working capital to support inventory (especially inventory that has a shelf life, like ours did). 

For us, it is through these learnings that we’ve decided to focus our energies on investing and acquiring cash flowing businesses and to help others do the same over at our new business SMB Deal Hunter

Recognize you have choices and try to educate yourself about what those choices are so you can setup yourself to live the life you want to live and hopefully become all you can be. 

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