Why Do Food & Beverage Businesses Fail? The Main Reasons Why and How To Avoid Them

26 Oct 2021 Helpful Tips

60% of food and beverage business fail within their first 3 years of trading. Running a food and beverage distribution business is not an easy job. With so many things on the to-do list many businesses often get side-tracked working in the business then on the business.

This brings us to the question, why do so many food and beverage businesses fail?

Here are 6 of the main reasons why food and beverage businesses fail and how your business can avoid them.

Late payments

The biggest challenge to food and beverage businesses is late payments. It takes 23 days on average for a food and beverage business to get paid. No matter what industry you are in, you won’t last very long waiting almost a month for payments. How would you pay your overheads? Or staff costs? The answer is you couldn’t. To be successful, vendors and distributors need to have automatic credit card payments.

Automatic credit card payments offer great benefits for both your business and your customer. Customers want simplicity, offering automatic credit card payments makes your customers transactions fast and simple. The easier it is for them to pay their invoices, the faster you will generate cashflow.

For your business, automatic credit card payments streamline your entire invoicing and receipting process.

  • Customer invoices are generated and sent automatically at the correct interval
  • The payment is taken automatically at the agreed time
  • The payment is automatically allocated and receipted to the correct invoice
  • Reduces debtors

Related article: Why Getting Paid on Time is so important for distribution businesses.

Too high overheads

No matter what industry your business is in if you can’t keep your overheads down - you will quickly go out of business! If your business is having trouble paying staff, rent, or products - you could be in some serious trouble.

To minimise the risk of insolvency, you need to frequently assess your overhead costs. You need to know where your business sits and what you can do without. There is no point investing money in areas that are not viable or don’t provide a healthy return. Shop around, look for the best product prices, have a look at different areas you can cut costs, any area where costs can be minimised that doesn’t affect the businesses overall position look at it.

If there is more money going out of your business, then what is coming in you could be another number on that frightening statistic.

Related article: 5 ways to save costs in the food distribution industry.

Not having goals and KPIs

Many vendors and distributors work on “gut feel” and that’s simply not viable. If your business doesn’t implement goals and work towards KPIs you could be risking your future!

It’s so important that your business has defined goals and KPIs that you and your staff want to achieve. Let staff know what is expected, monitor their performance, and make strategic changes to areas that need to be improved.

The greatest benefit of enforcing KPIs is it gives you a clear tangible performance tracker that indicates if your business is operating successfully or if it isn’t. If something isn’t working you can instantly change it, instead of relying on “gut feeling”.

Poor Customer Service

Take care of your customer and they will take care of you. It may be cliché but it’s true. If you don’t fulfil your customers’ needs, they won’t return.

Simple great customer service techniques include:

  • Offer Online Ordering options to your customer
  • Remind customers if they have missed a regular order
  • Cater for all payment options
  • Provide electronic POD copies
  • Offer the best price!

Related article: How EasyVend helps you retain your customers.

Inefficient use of time

We know how busy food and beverage businesses are on a day-to-day basis, if you find yourself getting caught on one job - another job will suffer and that can’t happen.

To stay on-top of your daily tasks food and beverage businesses need to automate common daily tasks such as Inventory control, invoicing, receipting and delivery management. A way to do this is by using a food and beverage management software. Which brings us to our next point…

Related Article: How to increase your business efficiency.

Not using a management software

On the topic of software, a big mistake many food and beverage businesses make is not investing in a management system. Some distributors may be reluctant to invest in one or think that the process that they have been using for years is the way to go – which simply just doesn’t cut it anymore.

To be successful, you can’t afford to be working in the business. You need to be working on the business and the only way to get time to do that is by using a food and beverage management system. A food and beverage management system automates all common tasks such as inventory control, invoicing, receipting, accounting, payments, and route management.

The benefit of using a management system is it frees you up to focus on growing your business into the future.

About EasyVend

For food vendors and distributors, EasyVend supports and automates every part of your business, freeing you up to grow your sales unlike other ERP systems that are designed more for wholesale suppliers than for distribution businesses like yours.

EasyVend includes all your everyday needs like Inventory Management, Online Ordering, Invoicing, Receipting, Route Management, Automatic Credit Card Payments, Customer Reminders, Xero Integration and so much more.

For a free no-obligation demo of EasyVend contact us today on 1300 473 744 or submit the form below.

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