Melbourne sisters Sally and Jo established their wholesale grain-free bakery No Grainer based on their own personal need, given neither can eat standard bread: one is a Coeliac and the other is diabetic.
They make around 1,200 products weekly, but confessed that profits were proving highly elusive, despite operating in the booming health foods sector.
Working 16-hour days, the duo admitted they had borrowed between $70,000 and $80,000 from their parents to establish the business, but their average hourly earnings amounted to little more than $1 to $1.50 per hour.
Worse still, the business was weighed down with an estimated $15,000 in outstanding invoices.
“Because we don’t have enough money to buy new equipment, we add on hours and hours to our day,” admitted Sally, with their decades old commercial fridge “on its last legs”.
“It’s make or break time,” added Jo.
Is it a hobby or is it a business?
From the outset, Mr Bouris was critical of the approach displayed by Sally and Jo.
“Sally and Jo have a great product; that doesn’t mean they have a great business,” he said.
His first impression of their premises was hard to decipher, given they had no signage at all, making it difficult for suppliers, customers or visitors to know where they are.
Add to this a lack of processes meant that their kitchen was not organised, with ingredients just plonked around anywhere and no stocktaking system in place. Mr Bouris was left visibly unimpressed.
“Reliability is the number one aspect of any deliverable,” he said bluntly, comparing the sisters to a couple of 16 year-old girls than two women running a business, and insisting they need to “grow up” and stop falling back on the bank of mum and dad.
“If you want to [be reliable], you need to have systems.
“It’s like a dog’s breakfast, this is terrible: it’s really bad business.”
Don’t confuse confidence in your product with confidence in your business
Testing the professionalism of both sisters, Mr Bouris orchestrated a business pitch for No Grainer to pitch to several prominent local food businesses.
But he was quick to issue them a big fail on their effort, largely because of their propensity to offer excuses for why they are unable to do something. Despite their passion and their product, their apparent lack of reliability and professionalism turned off the prospective customers.
“I think you’ve got a real confidence around your product, but you need confidence around your business,” one of the prospect buyers remarked.
“Highlighting the problems in your business is just the quickest way for customers to lose all confidence in you,” Mr Bouris said.
“Stop making excuses … shit happens in business. It’s time for the fun and games to stop.”
Such blunt advice clearly resonated with Sally and Jo, who were left visibly stunned.
“When someone who is as busy and important as Mark says ‘you have wasted my time’, you feel pretty insignificant,” Sally said.
“Mark has pointed out the biggest weakness in our business: it’s not our product, it’s us. That’s really hard to hear, because you can’t help but take that personally.”
Making a good product into a successful, scaleable business
Having had their premises refreshed, signage and a servery added as well as the No Grainer website updated, Sally and Jo were given a fresh start to take their business more seriously, and commit to the changes needed to turn their efforts into profit.
This commitment included: holding weekly business meetings with a written agenda, to allow an examination of the past week and plan the week ahead, a repayment plan for the money borrowed from the bank of mum and dad, and an overhaul of the way they deal with customers and prospects in a more professional, reliable manner.
Suggesting the experience had made them “bakers, not fakers”, Jo and Sally suggested they are now working 40 per cent faster, were much more structured and the result was an uplift in their revenues.
Common problem in family business
Speaking with My Business after the show had gone to air, Mr Bouris said that family businesses can often struggle to make a strong idea into a commercial success because of a failure to treat the business like a proper, professional operation.
“There’s a difference between being a good plumber and being in the business of plumbing,” he said.
This confusion, he suggested, is why the problems facing all of the businesses appearing on The Mentor boil down to a few simple home truths:
“No systems, no structure, don’t hold meetings regularly, especially when it’s a family because they just assume because they’re talking about stuff that’s a meeting, but it’s not a meeting,” said Mr Bouris.
As a result, these “meetings” don’t result in written records, a list of actionable tasks or well-defined goals for the business.
“A lot of these guys tactically don’t have proper insurance policies, they’re not properly insured, they don’t know how to raise money, they don’t keep their accounts properly [but] if you want to expand your business, you need to either borrow money or you need to raise money through investors, and they will want records — properly kept records,” said Mr Bouris.
“There are all these systems out there that do this stuff quite easily and quite cost-effectively.”
See the results of previous business transformations on the show below:
- Overcoming dysfunction, hardship in a family business
- ‘Being too nice is killing your business’
- ‘Brave’ family business inspires others to seek help