Friday, September 7, 2018

Anita's Yogurt - Brooklyn, NY

Anita's Yogurt - Brooklyn, NY

When Anita Shepherd, a chef and baker, made the switch to a vegan diet, she had to figure out how to replace ingredients like butter, cream and eggs in her recipes. Her pursuit of and passion for vegan recipes led to the creation of Anita’s Yogurt, which also met a growing market need. Getting the right funding has been essential in Anita’s growth, and Excelsior Growth Fund (EGF) helped Anita secure two significant loans in just six months.

Here’s how Anita, in her own words, combined a great product, personal passion and professional experiences to drive sales that have increased from less than $100,000 in 2013 to $1.4 million in 2017.

How did you create a new product in the food industry?

I worked in restaurants and had a baking business for many years. Then several years ago, I transitioned to a plant-based diet for health reasons and wanted all of my recipes to be vegan. A chef friend encouraged me to experiment and create a vegan yogurt because nothing like it was available then.

I became obsessed with using coconut milk and cultures to try and get the exact combination that I wanted. I tested them with different recipes and on other chefs for feedback. Eventually, I had the taste and texture that worked.

Soon, I realized that there was huge market potential in a coconut-based alternative to dairy-based yogurts. I also began to see that focusing on a single product line meant I could maximize efficiency, controls and profits than in my previous baking business. So in 2013, I launched the new yogurt business.

For many years, your business was a one-woman show. How did you know what to do?

I took advantage all the free business resources I could find, including classes through the Small Business Administration, SCORE, Evergreen Exchange and New York Business Development Corporation.

From those, I learned how to write a business plan and about the economics of business and profitability, bookkeeping, marketing—areas that are necessary to run a business well.

How did you go about production, packaging and distribution?

Because no one was making coconut milk yogurt alternatives when I started this, there weren’t any online recipes to follow and no resources. I turned to Cornell University’s Food Venture Center for help with things like finding suppliers.

Sourcing materials and packaging were all learned by talking to anyone I could find that might have information that I could use, like conversations with farmers about where to get processing equipment and cultures.

Eventually, you get connected with the right people if you knock on enough doors.

What are your plans for scaling up the business?

The business has grown quickly. In 2013, I did everything myself. By the second year, I moved to a shared commissary kitchen and hired my first employee. In the third year, I opened a home equity line of credit with my parents to hire more staff and get a small manufacturing facility built out. On the day I finished training the new staff, I gave birth to my daughter.

In 2016, with a great team in place and the right equipment, we hit $1 million in sales. By 2017, we got to $1.4 million.

Then we hit the ceiling. We’d grown so quickly that we outgrew everything—the space, the equipment, everything. We couldn’t keep up with demand.

So, we took a huge step back this year to focus on production and quality.

On the production side, scaling up means finding a suitable co-manufacturer who can take over manufacturing, which is hard when you’ve got a new product. Most co-manufacturers aren’t designed to be innovative—they’re designed to maximize revenue through standardization.

On the quality side, getting the exact balance of coconut milk and cultures right in large quantities isn’t as simple as just doubling or tripling everything, so much of what worked before doesn’t anymore.

You waited several years before you applied for a business loan. What changed your mind?

Making big moves takes capital. Once we outgrew our facility, we took a huge hit because we had demand but no product to sell.

It’s really important to me to keep the business as my own right now rather than have investors, but the time came when we just couldn’t do what we needed to do without additional funding, so I decided to take on business debt. Even a relatively small influx of capital can fuel tremendous growth.

How did you find out about EGF?

I do my personal banking with an outstanding local credit union, Brooklyn Cooperative Federal Credit Union. I’ve been with them for 10 years and they helped me turn my life around, working with me to establish credit, save money and teach me and my husband about financial management.

When Samira Rajan, director of the credit union, found out I was looking for funding, she recommended EGF and I took her advice, of course. And it was the right move—while most banks only consider numbers, EGF looked at our whole picture. EGF considered the potential in the product, my experiences and our ability to overcome obstacles and grow the business. I felt like my goals were understood.

How did EGF help you with financing your business?

EGF helped a lot. First, in February, I was approved for a $100,000 EGF SmartLoan™, which was critical to stay afloat while working out the production process. It also provided essential working capital.

After securing that, I got to work with my EGF advisors on refining my business plan. EGF also connected me with a certified public accountant who helped me get my financials in order and provided advice on how to prepare for the next round of financing.

Then, in July, we received a $350,000 SBA 7(a) loan [through EGF affiliate NYBDC]. This will make it possible to keep some of our operations in Brooklyn and to redevelop products in ways that are scalable for large-batch production.

Things went pretty smoothly with the EGF loan, but I wasn’t quite prepared for the SBA loan process. It’s definitely best to work with advisors like EGF on this. It’s not always an easy process, but it’s definitely worth it.

Anita’s Yogurt also received Women-Owned Business certification recently. That was a demanding process, too, but I was better prepared for it because of the loan preparation.

What advice do you have for other small business owners facing huge challenges?

First, it’s all about product—nothing else matters if you don’t have a product people love or need. So, when you have an idea, road test it. Do “pop-up” shops, test it on people in the industry, make sure it’s something people love and want.

You also have to keep believing in yourself and your business, even when no one else can see the potential. When everything goes sideways, you have to keep going as straight as you can. And funding is important, but never undervalue scrappiness—resourcefulness goes a long way, too!

What are your upcoming goals?

The idea now is to get the business to become a national brand and to hit quality marks that exceed our competitors’. The dream is that someday, we’ll bring Anita’s Yogurt all back to Brooklyn, with our own large-scale production and distribution facilities here, doing things the way we want to and know we can.