PTM 012: Making Extra Money by Starting a Small Food Business

Alright, today I am with Jennifer Lewis of PetitFourLegs.com, and Jennifer actually started a handcrafted dog treat company on the side and also happened to write a book entitled Starting a Part-Time Food Business.

Philip Taylor: So, welcome, Jennifer.

Jennifer Lewis: Thank you. Thank you so much.

Philip Taylor: It’s good to have you here today and learn a little bit about making special dog treats. First I want to ask you what made you want to make some part-time money?

Jennifer Lewis: Well, I actually started the business … I realized that the business celebrated its fifth birthday on Monday, so it has been around for 5 years … but, I was in grad school at the time, and as a grad school student you are always looking for a little extra money. So, I started it literally out of the kitchen of my tiny little apartment when I was in grad school in Chicago.

Philip Taylor: Oh I see. So financially speaking, this filled a need for you, or was this just a passion?

Jennifer Lewis: Just a little bit of both. I certainly had the financial need. I was at graduate school to get my MBA, but prior to that I had actually been a professional pastry chef. So, I loved cooking, and I knew I wanted to somehow stay in the culinary industry and had actually done an internship with Nestle Purina at one point and so realized that there was this need and this desire for speciality dog treats that none of the big mass manufacturer folks could meet. So, I spent a couple months pulling a business plan together and really looking at the financials because I wasn’t willing to throw some money into starting a business if I didn’t think it was going to pan out. So I spent some time pulling together the business plan and then realized, “You know what? I think this can work, and I think this can work while also going to school.” Right now I work for a nonprofit part time, and then I also have this Petit Four Legs business part time, so it has worked out. It has been a great way to bring in a little bit of extra income and still meet that culinary need that I have.

Philip Taylor: I see. So, talk about that a little more in detail. What is your full-time gig now, and how does this part-time job work with that?

Jennifer Lewis: So, I currently work for a zoo here in Seattle. I am in their marketing department.

Philip Taylor: Oh, okay.

Jennifer Lewis: I mean animals are a big love of mine in all aspects that I do, and so what I have worked out with them is that usually 2 days for a couple hours I rent commercial kitchen space, I will leave the zoo, and I will go do that for a couple hours and then additional time on the weekends. And then I certainly spend a fair amount of time at night. I will be packaging up orders. I just had a bunch of orders shipped this week, and I dropped the last one of those at FedEx today. So, like I said, it takes a little bit of coordination of the schedule to make it all work, but what I really love is that with the part-time business it gives me the creativity and the artistic freedom that you don’t always find (granted, I work for a zoo, but it is still a corporate environment) in that corporate environment. But, the full-time job kind of gives me the paycheck, which certainly my business makes money, but it is nice to know that every 2 weeks I’m getting a paycheck.

Philip Taylor: Yep. That’s good stuff, and I am writing down a question for later. That’s interesting – work in marketing for a zoo. Okay. And, when did you pick up that job?

Jennifer Lewis: I have been at that one now almost a year.

Philip Taylor: Okay. Have you always had a full-time job like this along with the business?

Jennifer Lewis: So, it was school first. Then there was probably about 7 months where I didn’t have a full-time job, and I was working a couple, what I would consider, odd jobs.

Philip Taylor: I see.

Jennifer Lewis: Basically I kind of tried to find my place, but I was on Petit Four Legs in addition to that and then after that had another full-time job or a variety of jobs.

Philip Taylor: I see. Was the MBA in marketing specialized, or was the MBA what helped drive you toward the entrepreneur thing?

Jennifer Lewis: It was both. My concentrations were in entrepreneurship, marketing, and finance.

Philip Taylor: What made you decide on this particular business over something else?

Jennifer Lewis: Actually I spent a lot of time. I knew I wanted to stay in the culinaries because that’s where my expertise was, and that was the area I felt most comfortable in. I actually explored a couple of different options. I remember that I had looked at doing sort of a high-end artisan ice cream wholesale business. Just as I was starting to figure out the logistics involved (With food you know there are some other components which are different from everyday businesses. You know we have health food permitting and USDA requirements that have to be met depending on your business.), dog treats were the one for me since I knew it was going to be part time, the one that I could actually see was going to be feasible with essentially the rest of the lifestyle that I wanted to have, being able to have another job, and still being able to be home and see my family.

Philip Taylor: Yeah. I like it. Good stuff. So, tell me about those initial stages of growing the business. How did you I guess develop a product, and how did you maybe start advertising that product to folks who would be interested?

Jennifer Lewis: Initially I first thought of the idea in the summer. Then it took me probably till about December to come up with the first 2 products that I thought were in line with what I was looking for. I knew that it couldn’t be an everyday treat because all the big mass manufacturer folks do everyday treats, and they are going to be able to always underprice me. So, I knew that I wanted to be a very special gifting treat. I knew the packaging had to be in line with that. You know, it is something that captures your eye on the shelf, and you get it on the holidays for your dog or Aunt Sophie’s dog who you know she is crazy about.

Philip Taylor: Right.

Jennifer Lewis: It took about 6 months to go through that whole process and then set the business up. Actually my very first client of all people was Neiman Marcus. You know looking back naively I sent them samples thinking, “Well, why wouldn’t they like it? It’s a great product.” At that point they weren’t carrying any dog treats at all, and so I actually got a contract with them to drop ship the product for them, and it was on their website. That was the moment where I said, “Wait a minute. If Neiman Marcus actually really wants this, I think I have something here.” And so, I actually took it to a business tradeshow that September and got a bunch of wholesale clients from that and then developed the website and started to do more business-to-consumer advertising, though I will say that the majority of my business is still my wholesale business.

Philip Taylor: I see. How did you get to Neiman Marcus? Tell me about that process. How did you get on their radar?

Jennifer Lewis: You know the old story of networking? Of all things my mother played bridge with somebody who used to be an administrative assistant at Neiman Marcus. It was the most roundabout connection. It had been so long ago, she only knew 1 person who was still there, and she gave me that name. They weren’t even in the right department, but I just contacted that person. I said, “So and so gave me your name.” She put me right in. I do think that, especially nowadays with the benefits of stuff like Linked In and Facebook, if you kind of “do your homework,” you can get into most places. It doesn’t mean that once you get there they will always listen to you, but it’s certainly made it a lot easier to get in for most folks now.

Philip Taylor: So, was it a particular way you pitched the idea, or was it you think just the niche aspect of your product that really caught their attention?

Jennifer Lewis: When I pitched it to them, I sent the samples. I knew if I just told them, “Hey, I’ve got these great dog treats!” at that point when people thought dog treats, they were thinking, “It’s a bone shape. It’s in like a plastic bag. Great. Why do we want to carry it?” So, I knew they had to see the packaging because that’s really one of the things that makes it stand out. I think, like I said, I was going after a niche market. You know with Neiman Marcus our markets happened to collide. They are going for that luxury consumer who is specifically looking for gifts to buy, and so the product fit in well with them.

Philip Taylor: I see.

Jennifer Lewis: At that point I will also say there was nobody else who was doing this type of product at that level and with that kind of very, very fine-tuned niche. Once I got in front of them, it was easy because there was nobody else who was doing that.

Philip Taylor: I see. So, is the product still in Neiman Marcus stores everywhere?

Jennifer Lewis: It is not. I ended up taking it out about a year and a half later only because I had some other folks who would not work with me with that relationship. While the relationship was good from the standpoint I think it helped build my brand’s equity, it financially just made more sense to actually break that relationship and be able to bring on a variety of partners. One of my favorite folks now – we work with Front Gate who is sort of a very high end home goods catalog. I do a lot of drop ship with them.

Philip Taylor: I see. Explain drop ship for someone who may not know what that is.

Jennifer Lewis: Oh yeah, so drop ship (it depends if you want my sarcastic answer or not) basically means that for example they put the dog treat on their website. They have the markup, so they will let’s say show it for $15. When you as the consumer go on and buy the product, I actually get an e-mail telling me it needs to be shipped. They send me the shipping slip. I ship on their shipping account. But, I get the wholesale price. So, essentially the retailer is able to take the margin, and they don’t have to worry about carrying the inventory. They also don’t have to worry about packaging the product. From my standpoint though I actually really love drop ship because it means that I can make sure that every product that is going out the door to a customer is the absolute freshest product versus any of these larger folks. When they order in, they have to order in 500-1000 units at least, and who knows how long that might sit in their warehouse. I don’t know if that warehouse is climate controlled and everything else, so for me it actually helps from a product quality standpoint.

Philip Taylor: Yeah. And, it keeps you from having to sell, right? Do you have any retail space of your own or any online retail shops or anything?

Jennifer Lewis: I have an online retail site on my website, and I do a little bit of advertising around it, but the majority of the consumer advertising I do is actually to promote my retailers. I do a lot of work with the little mom and pop pet boutiques, so I want them to be able to walk into Joe’s Dog Store down the street, see my brand, and recognize the brand. So, I have an online presence myself, but I don’t focus on really pushing a lot of product through that channel.

Philip Taylor: So, what percentage of your business goes through the drop ship method of selling?

Jennifer Lewis: I would say right now I probably have maybe 25%, though I am currently trying to negotiate with a couple of other new catalog folks in addition to Front Gate, so that may go up this year. Then, I would say probably another 60% is wholesale relationships that I have with individual boutiques, and then about 5% would probably be online sales.

Philip Taylor: I see.

Jennifer Lewis: I do a couple of local festivals, that type of stuff, and that is the last part of it.

Philip Taylor: So, is there a network to allow you to get into that sort of drop shipping relationship, or do you just have to reach out to the retailers individually?

Jennifer Lewis: You have to reach out to them individually. The way that I was originally “discovered” was actually through an industry tradeshow. For the pet industry there are 2 or 3 big tradeshows every year, and I was at one of those when Front Gate came over and approached me. I will say when you go that route, it took me about a year to get in with them and make sure that they are happy and get everything working as it should, both on their end and on my end. It is not a quick turnaround process. Even with the catalogs that I am trying to work with now, these are people that I have built relationships with for the last 2-3 years. For whatever reason, I have not had the right product mix for them. So, just as I learn more about them and learn more about who their customers are and what they want, I am able to kind of tweak some of my products a little bit to hopefully try and better meet that. So, again for me it is a great relationship, but it is certainly not a quick win.

Philip Taylor: I see. Well, that’s some good stuff, and I know people who are really interested in maybe having a food business of their own and using this method to distribute the food would want a little more detail, and so I would probably suggest them to go to your book, Starting a Part-Time Food Business, correct, to get a little more detail about how this works?

Jennifer Lewis: Yeah, yeah. The book is the culmination of basically not only everything I know, but I also interviewed 6 other part-time food entrepreneurs, and they are everything from a 20-something who has no savings who started up an artisan ice cream company to a mom who works a full-time job and has a cupcake company on the side, and then my favorite was a construction worker who found himself unemployed last year because of the bad economy, and so he started up a meat jerky company. I actually just talked to him the other day. Even since when I wrote the book and I put his interview into the book, his company has basically doubled since when I talked to him. So, in addition to these interviews that kind of give you real life, it goes through the ups and the downs for these entrepreneurs, but it also lays out the steps. Like I said, the food world is a bit quirky and can sometimes seem a bit overwhelming as people start to look into it. So, it lays out the steps of what you need to do, how to get all your health permits, what applies to you, what doesn’t apply to you, how to find commercial kitchen space, all of that good stuff so that people can get started because right now food is hot. Handmade food is really, really hot right now.

Philip Taylor: Okay. So backing up a little bit, how long did it take before you were making some decent money with your business?

Jennifer Lewis: By year 2 I was making decent money, and then year 3 the economy turned. I remember it because the stock market dropped on a Friday, and my biggest tradeshow of the year started the next Wednesday. All the buyers were walking around, and nobody was buying. They were all there because they had already committed to be there, but nobody was buying. So, year 3 was a little bit ugly for us. I look at it as a positive. It was not great, but it taught me that I needed to pull back on my spending a little bit in terms of advertising and just some of the other things that we were doing. By doing that, last year not only were sales much better than year 3, but I actually had a better profit last year than I had year 2. So far this year things are looking even better.

Philip Taylor: So what was your profit last year?

Jennifer Lewis: Before or after taxes?

Philip Taylor: Before taxes.

Jennifer Lewis: Before taxes the profit was about … I hesitate to say publicly … but it was probably right around …

Philip Taylor: You can give me a percentage if that is more comfortable with you, maybe a percentage of your full-time income.

Jennifer Lewis: Oh okay. That’s fair. I would say honestly it was probably about a third of my full-time income. Keep in mind I work for a nonprofit, so I am not making millions of dollars at the nonprofit, but it is enough to make a difference in our day-to-day living.

Philip Taylor: Gotcha. That’s awesome! So possibly pay your mortgage each month? Somewhere around there?

Jennifer Lewis: It probably is just a little shy of that. Seattle is a very expensive city for housing, so it would probably be, as I kind of calculate that out, just a little bit shy of that, but you know what, the way this year is going, I would not be surprised if at the end of this year it actually could pay the mortgage.

Philip Taylor: That’s awesome! You want that, right? You want to keep growing this?

Jennifer Lewis: Yeah, I absolutely want to keep growing.

Philip Taylor: It seems like it.

Jennifer Lewis: I always toy with the idea of making it full time, so it might get there, and at some point I might be ready to step off that ledge.

Philip Taylor: Gotcha. Alright, well good luck in that for sure. It sounds like you’re very interested in the business and actually the business process itself which is what I think is going to allow you to go to that next level. So, you are not just a technician, right? You are actually interested in growing the business part of it itself which I think is key to taking it to the next level.
Jennifer Lewis: Thanks, thanks. I really do. That’s the part that makes it fun too, just keeping abreast of what’s going on, not only in the food industry but marketing as a whole and social media and everything else and then figuring out where you can take what you learned and apply it to your own business is what makes it fun.

Philip Taylor: So I think I saw (I think it was you) you on the Today Show, or did you get your product somehow on some morning news, big morning media outlet?

Jennifer Lewis: I did. It was Good Morning America. They were doing kind of their Christmas product roundup. I wish I could tell you how I knew that they found out about us, but they literally called me up one day and said, “Oh, you’ve got a great product. You have to send it to us tomorrow.” And so I did, and it got on the show. When I followed up, she couldn’t honestly remember if a friend had seen it, if it had just been a web search – she didn’t remember. But I will say most interestingly kind of the power of just random PR, about 2 years ago I had written a press release. I had switched over to using green packaging, wrote a press release about it, didn’t expect a whole lot. Just about 2 weeks ago I got a call from a reporter from Inc. Magazine who was interested in doing a story about green packaging and had found me because Google Search could search the press release that was on my website. So, it kind of taught me that lesson. It is like everything that you do that is good for your business, the New York Times may not be reading the press release, but at some point with the beauty of search engines, somebody might, and it might be really beneficial for your company.

Philip Taylor: Oh, that’s good. That’s good stuff. So, after the Good Morning America show, were sales really taking off at that point? I am always curious how these morning shows do in terms of actual conversion.

Jennifer Lewis: Yes and no. I think in my head it wasn’t what I would have expected. I would have expected 1000 or 10,000 orders after that, and I certainly didn’t get that. For me, though, we probably had I would say about 2000 orders. My problem was that this ran like 2 weeks before Christmas, and I didn’t have a whole lot of inventory ready. I kind of was scrambling up until Christmas to get everything out the door, and I remember shipping stuff off, and it was getting to people (because I can obviously track it) on Christmas Eve. It was a little bit frantic because I had not had any warning to build up inventory for it which is the downside of the food business. It was still well worth it, and I am so glad we did it.

Philip Taylor: That’s great. So, last question about your business – do you make all the product there yourself at home?

Jennifer Lewis: No, I have commercial kitchen space which I rent out for probably about 20 hours a week. It is a commercial kitchen space that meets all health code requirements. I make everything by hand there, package it all up, and ship it out, so it is all made by hand. I am very proud of the fact that it’s all made by hand. All of the ingredients are U.S. sourced. Then, I would say now 80% of our packaging is eco friendly.

Philip Taylor: I see. That is probably besides advertising your biggest expense – just the rent and actually creating the product right?

Jennifer Lewis: Yeah. I’ve thought for a while about I have a shed in my back yard that I would love to convert into a kitchen because it would save me on the rent. That is far and away my biggest cost. It is my biggest fixed cost every year. I have not done it yet, but it is one of those things I keep toying with.

Philip Taylor: I see. So, just for future food industry entrepreneurs out there, why not just do it in your own kitchen?

Jennifer Lewis: Unfortunately, most states don’t allow that. Technically for dog treats I actually could, but now the amount of production I’m doing, it’s too big for my own kitchen. For a human food business, most states won’t allow you to do it in your home kitchen. Depending on what type of food business you start, you could always rent out a kitchen space from a local church. I know somebody who rented kitchen space from a synagogue/community center. There are other workarounds. Since I now know kind of what my inventory needs are on a month-to-month basis, I sort of know that I will need more time than that, so renting the space is the easiest solution for me.

Philip Taylor: I see. So, Jennifer, any mistakes you’ve made along the way that you would like to share with the listeners?

Jennifer Lewis: Yes. The biggest mistake I ever made, and I will apologize in advance to any PR folks out there (I put this in my book), is I hired a PR firm that my gut said wasn’t the right one, but I kind of let myself be talked into it, not that PR was a bad decision but that this firm was the bad decision. I ended up losing $17,000 on a PR firm that didn’t understand my market, that didn’t understand that again the food industry is very fickle. You can’t say that, “Oh, I use organic ingredients.” – you can’t say that unless you use a certain percentage of organic ingredients, which I didn’t, so I never advertised myself as organic at the time. They were putting press releases out there saying that I was organic. It was as $17,000 mistake, and for a part-time business that was just painful to lose. It still stands as the single biggest mistake I ever made. So, if I were ever to hire a PR firm again, I would hire a firm that is very, very focused on my industry and knows exactly not only what is required in the industry but also all the contacts and how the industry works.

Philip Taylor: Good. Good to know. Just to follow up from that, where is a good place for people to find a PR firm to work with? Or maybe how they could trust a particular PR firm? Things to look for?

Jennifer Lewis: So, I think 2 things. I think that depending on what your industry is for a part-time business, try to find other folks that you can talk to within that industry. I am part of a group called Pet Industry Wholesalers. Even though some of us are direct competitors, it is a big enough country we are not fighting one another. We provide a lot of information for one another. Through them I actually found a graphic designer who specializes in the pet industry. So, that really helps. If you don’t have that type of network or don’t have access to that type of network, I think you have to know what type of questions to ask – which I didn’t do a good job of at all obviously. You have to essentially quiz them. You want to make sure that they’re as passionate about your industry and your company as you are because you are paying them to be, and you are paying them to kind of be the voice that is out there for you. You need to understand that if you are doing construction part-time that they can’t be going out there and saying, “XYZ,” or you don’t want them going out there and saying, “ABC.” So, you have to proactively ask them those questions which I think you need to sit down and ask yourself first what’s important, who your niche market is and then make sure that they understand that.

Philip Taylor: That’s great advice. Good stuff. Well, Jennifer, any other bits of advice or something you want to leave the listeners with?

Jennifer Lewis: I would just say that starting a part-times business, whatever it is – whatever your passion is, is honestly to me the best way to go. Like I said, it gives you the flexibility to where you’re a stay-at-home parent and meet those responsibilities and do something else on the side, or in my own situation have a full-time position and then do this on the side. It gives me the creativity. It gives me the flexibility to make decisions quickly without red tape. In today’s economy, (I always choke) I may go in tomorrow, and I may be given a pink slip from my job, but nobody is every going to give me a pink slip from my part-time job. There is something very freeing about that. If anybody is considering doing a part-time business, I would highly encourage them to do it.

Philip Taylor: Alright. Excellent advice. Perfect. Alright, well what’s next for you? Maybe give the readers a way for them to find your product and find out more about your book.

Jennifer Lewis: Sure. What’s next for me? Getting ready for the summer season at the zoo – it’s a busy time. In terms of taking a look at Petit Four Legs, that is available at PetitFourLegs.com, and then those nights that I am not packaging up Petit Four Legs treats, I write a blog for small food entrepreneurs titled SmallFoodBiz.com. On there you can get a whole bunch of information, either about starting up your own business, or you can get links to the book, you can figure out how to contact me, so all that good stuff. I love to hear from folks, so drop a note and say, “Hi.”

Philip Taylor: Awesome! I’m sure they will. Well, thanks for being on with me today and good luck in the future.

Jennifer Lewis: Thank you. I really appreciate it. Thanks so much.