Every business owner would love to have the “problem” of rapid growth. But it really can be just that a problem.
All vital parts of a business products, services, employees and equipment become even more of a concern.
Bob Shearer, president of Brewster-based Shearer’s Foods Inc., is one business leader lucky enough to have to worry about managing rapid growth. Now in its 25th year, Shearer’s has posted several years in a row of close to 30 percent growth. Its Grandma Shearer’s brand snack products are winning national industry awards and the company last year completed a $13.5 million expansion.
Shearer says the biggest risk factor for food-based businesses is the unpredictability of Mother Nature. Drought was a factor this year, but two years ago, floods virtually destroyed a bumper crop of potatoes in Florida. When severe weather pummels a food company’s raw materials, he says it’s hard to assess how much, if any, of the cost should be passed on to consumers.
“Every day is a challenge and a new opportunity,” Shearer says. “Do we feel like we have our growth under control? Definitely.”
Jim Allan, Shearer’s vice president of purchasing, says that the company’s limited sales area the Midwest, parts of the east coast and Canada helps it stay nimble.
“Because we aren’t a national company, we can make decisions and adjust more quickly,” says Allan. “But you have to step back periodically and look at what you’re doing.”
Shearer’s is fortunate to be part of a somewhat bulletproof industry. The snack and candy industries are widely considered invulnerable to recession. If the overall economy is good, as it has been the past several years, that’s good for business. If the economy is poor, people tend to stay at home, and Shearer says snack food sales actually go up when the economy is sluggish.
Coleman Caldwell, vice president of sales and marketing, is largely responsible for generating opportunities to grow. He says there are just two ways to grow: Grow your existing customer base or add customers.
“If your customers open up new stores, be part of that growth,” says Caldwell. “The other way to grow is to add new customers. What we’ve been fortunate enough to do over the last three or four years at Shearer’s is do both fairly successfully. We can always have a lot more room for improvement.”
Caldwell says growth is fairly fundamental. Part of it is discipline: You have to stay focused on traditional sales and marketing skills.
“There’s no silver bullet out there that says, ‘I’ve got the new widget that everybody’s going to beat a path to my door for and I can sell it for an obscene amount of money,’” he says. “When that happens which happens once or twice in a career or in the history of a company sometimes that’s great. But it’s the everyday consistency.
“It’s the everyday understanding of how you’re going to grow, having a plan, working your plan, executing it and then reviewing it. It can almost be fairly mundane to talk about.”
Of course, a company is not solely responsible for its own chance to grow. Its customers dictate if, when and by how much it will grow. Companies must keep expanding their potential client base, because not all of the prospects will become customers.
“So much of what we do has long lead cycles,” says Caldwell. “There’s people that I might be calling on today that won’t make a decision for six months, and after they make a decision, with all the internals, testing, packaging and this and that, we may not actually bill our first order to them for six months later than that.”
Caldwell says managing growth is a matter of getting enough “turns at bat.”
“If I’ve got an active account list or a new target account list of 15 or 20 people, they’re all going to make decisions at different times,” he says. “Six months from now, five of them may not be considered top prospects anymore, for whatever reason, so I’ll have to go out and replace those with five others.”
And a company can’t directly control its growth by simply willing it to happen. Instinct can and often is a factor.
“If all of your potential customers hit, you could grow significantly quicker than you thought, and at the same time, if none of them hit you’d say, ‘Boy, I really had some grandiose plans that didn’t come to fruition.’ You don’t really decide, ‘Today I’m going to go out and grow X percent,’ but after a few years, you gain confidence and you get a sense of what your gut intuition tells you,” says Caldwell.
“I don’t want to say we’ve had control over our destiny, but we’ve had a little bit of a feel for how we could grow. We set the bar pretty high.”
Caldwell sets lofty goals for his sales team, what he calls “stretch targets.”
“Let’s strive as hard as we can for it, but if we come up just a little bit short, we’ll still have had a phenomenal year vs. setting it at a comfort level,” he says. “I believe that you are what you strive to be or what you think about, and if you think you’re only going to grow so much and you’re satisfied with that, you’re selling yourself short.”
New industry trends also affect the growth of a business, but keep an eye out for excessive hype. In the snack food business, “healthier” baked or Olestra-based products were supposed to be revolutionary. It didn’t happen. (Caldwell thinks that most people are eating their favorite snacks in moderation instead.)
It is also impossible for a company to grow while providing every product imaginable. Small businesses must focus on their strengths and let the industry leaders take most of the responsibility for developing products that appeal to minor portions of the market.
“We see these ‘healthier’ snacks as something that’s here to stay, but at this point in time, there’s nothing that indicates it’s going to be a significant part of the overall snack food industry,” Caldwell says. “While 7 or 8 percent of the market is valuable, we can’t be all things to all people.”
Providing consumers with quality products is also key in any growth strategy. People are no longer willing to settle only for value, Caldwell says. The food industry is a perfect example. Generic products were the next big thing several years ago. They offered value, but little in terms of quality. Now, grocery stores are promoting high quality products with their own names on them. In fact, 30 percent of Shearer’s Foods’ business is making private label snacks for stores.
“Every chain is going to have a different rationale for it, but generally they want to have some identity,” Caldwell says. “They want to be something different to the consumer than just a place to go buy national-brand items. All of a sudden, the store is the brand. Branded products command premium prices.
“The private-label business is growing. The quality of private-label items is much, much higher than 15 years ago when generics meant low quality, low price. Now, private label means equal to or better than national brands. They’ve gone down the avenue where it was just price, and the road didn’t go too far.”
Hiring qualified, reliable people is also fundamental to growth. Shearer’s has many employees who have served from the beginning, but in the past two years, it doubled its work force due to expansion. The company now employs about 280 people.
“Everybody starts a business that way, hoping for success,” says Shearer. “A lot of luck is involved. You hope for success, and you’re happy when that happens.
“Our desire for going into business was to make a good product.”
How to reach: Shearer’s Foods Inc., (330) 478-2179
Bret Adams is a Canton-based writer.