I Revived a Defunct Snack Brand and I’m Loving the Journey! Here’s What I Consider Before Acquiring a Business
A few months ago, I decided to purchase a defunct snack brand—not out of a desire for a bargain, but because I believed acquiring an existing business would simplify my chances of securing a loan. (Spoiler alert: I was completely mistaken!)
After facing consistent rejections while trying to launch my own food or beverage brand from scratch, I had my fair share of setbacks. I applied for loans for my consulting venture and a software project, but was denied thirteen times, which negatively impacted my credit score. At one point, I even contemplated returning to the corporate world.
I interviewed at a couple of promising Y Combinator startups, but the thought of becoming an employee again just didn’t resonate with me. Then, it hit me: “What if I could secure a loan to buy an existing company?”
However, I soon discovered that banks are hesitant to lend money for small business purchases unless they demonstrate consistent revenue. By that time, I was too invested to turn back. I did manage to get approved for a $25,000 personal loan from American Express at an unfavorable 11% interest rate (not ideal for acquiring a business), and I decided to take the plunge.
Here’s my approach to evaluating a business before making a purchase, along with the insights I’ve gained since acquiring it.
What I Evaluate Before Purchasing a Business
- Product-Market Fit (The Key Element)
Although product-market fit leans more towards intuition than analysis, it’s usually evident when a product has it. The real question is: Are customers craving this product?
- Are customers eager to reorder?
- Do they express emotional connections to the product?
- Do they miss it when it’s unavailable?
In this instance, the previous owner shared numerous examples of customers reaching out via direct messages, emails, and comments on social media, asking him to bring the product back. Wholesalers were also inquiring about purchasing it.
He provided access to his former Shopify data, and here’s what I discovered:
- Nearly 300 individuals had subscribed for monthly or quarterly deliveries of the chocolate-covered dates.
- The brand boasted an impressive 4.86/5-star average rating, with reviews that read like love letters.
- The initial launch sold out a 300-unit batch in just three days at a local farm market.
To me, these indicators suggested the product wasn’t the issue; it simply needed someone to breathe new life into it.
- Identifying Challenges in the Customer Lifecycle
Even with demand, I needed to understand why the business faltered and how I could improve it. I break down the customer lifecycle into three stages:
Awareness (How people discover the product)
– Was the original founder advertising? Somewhat, but not effectively.
– How strong was the social media presence? It existed but wasn’t impactful.
– Was there any influencer or affiliate marketing? Not at all.
This indicated a significant opportunity to enhance marketing efforts.
Acquisition (Converting visitors into buyers)
– The website wasn’t optimized for conversions.
– The checkout process was clunky.
– The email flows (abandoned cart reminders, post-purchase follow-ups) were lacking.
These basic fixes could immediately boost revenue from existing traffic.
Retention & Lifetime Value (Encouraging repeat purchases)
– No upselling strategies.
– No cross-selling opportunities.
– No post-purchase engagement to keep customers connected.
While customers loved the product, the business wasn’t structured to foster repeat sales. This was a clear area for improvement.
Insights Gained Post-Acquisition
- Rebuilding Momentum is More Challenging Than Anticipated
Despite having a 2,000% increase in our email list, many subscribers had lost interest.
2 Comments
bdadmin
What an inspiring journey you’ve shared! It’s interesting to see how you’ve navigated the challenges of acquiring a defunct snack brand, and your insights on product-market fit and customer lifecycle management are incredibly valuable.
Your emphasis on the importance of storytelling really resonates; in today’s market, having a strong narrative can truly set your brand apart, especially in a crowded space. It’s also a smart move to hire globally, as it not only helps reduce costs but also brings diverse perspectives to your team.
Rebuilding momentum can be tough, and it’s a reality many entrepreneurs face when reviving a brand. Your proactive approach to addressing that is commendable, especially as you work on reconnecting with both customers and retailers.
I’d love to hear more about the specific strategies you’re implementing to enhance your marketing and reach those new audiences. Are there any particular channels or campaigns that have shown promise so far? Keep pushing forward—the potential for this brand sounds exciting!
bdadmin
What an inspiring journey! It’s fascinating to see how you’ve approached reviving a brand that had untapped potential. Your emphasis on product-market fit really resonates; it’s often the overlooked treasure in acquiring a defunct business.
It’s also interesting to hear about the challenges you faced in the customer lifecycle—particularly in the areas of awareness and retention. Your observation about the need for better marketing strategies is spot on. In today’s digital landscape, leveraging social media and influencer partnerships can be game-changers for revitalizing brand presence and driving initial interest.
Furthermore, optimizing your website and streamlining the checkout process could indeed lead to increased conversion rates, as you’ve identified. Have you considered implementing customer feedback mechanisms post-purchase to continually gauge interest and improve the customer experience? Engaging your audience through tailored surveys or loyalty programs might not only rekindle their enthusiasm but also create a community around your brand, boosting retention.
Lastly, given the shift in engagement from your email list, it may be beneficial to run a targeted re-engagement campaign. This could involve special promotions or sneak peeks of upcoming products to rekindle interest among those who may have lost touch. Best of luck as you navigate this exciting journey! I’m eager to see how your insights evolve as you further develop the brand.