Is a Broker Right for Your Food Business?
If you’re a new brand, you might’ve heard the word broker thrown around in your conversations without knowing exactly what it means. Many entrepreneurs equate a broker with a sales person, but that’s not the case. A broker does often get paid on commission, but they do much more than sell your product to stores. A good broker serves as a guide for your merchandising, marketing strategy, and large retail relationships. Their goal is to get you the best deal from your wholesalers and ensure your products’ success on the shelves.
Can you afford a broker?
A good broker is expensive. Though a commission or retainer fee may not seem like much, consider that your product margins are already tight. Do serious accounting, and make projections about the potential success you’ll achieve with the broker, before you make a decision to put anyone on payroll. And remember, they have multiple clients, not just you. You’ll be required to sell your product as much as they have to sell their services.
Before the meeting
A comprehensive list of questions to ask a broker, and to ask yourself, can be found here, from The Balance. Here are some of our key takeaways:
- Understand your wants and needs. Knowing what you want to get out of the relationship will set expectations and pave the road for success. Where do you want to grow? Where do you need improvement?
- Develop the supporting materials. Before you reach the broker stage, you’ll need a toolkit of marketing materials (such as your sell sheet) that will allow your broker to hit the ground running.
- Know you positioning and strategy. A good broker will make the most of your strategy and goals, but they won’t draft it for you. Get in the game with a clear knowledge of where your product stands in comparison to others in the category and how you’ll succeed ahead of them.
There’s no reason to rush into a broker relationship, but finding one can be an incredible tool for a business with an established set of needs. Being organized and proactive will go a long way towards making the relationship, when you decide to enter it, a success for all.