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8 Things Learned From Our First Year in the Organic Tea Business

John Grams Mana Organics tea business

8 things I learned in from our first year in the tea business cover image

If you have ever researched starting a business, you have found a plethora of articles featuring copious amounts of armchair quarterbacking, but little reality.

Mana Organics just celebrated its first year of USA operations. We’ve learned a lot, and wanted to share some of those lessons today. We have not put these lessons in any particular order, but hope that they provide a sense of the realities that come with starting a business.

1. Get a sales department

I’m a Berkeley trained economist by academic background. I wish that sales was a simple as Dr. Zilbo explained. “A product is collection of utility propositions versus a price. All you need to do is strike the right balance and your business will fly.”

If you have B2B customers, sales needs finesse. One needs to understand not only the product that’s being sold, but each buyer, and their needs individually.

We realized the need for a sales department early in our launch. Not only has our sales team been able to provide consistent follow up and targeting, they have helped us communicate the story behind our tea. They have likely been the best investment we have made to date.

2. What sells doesn’t always match your first hypothesis, so test everything.

When Mana started, we thought that our customers would value the social development aspect of our work. Turns out, customers really just want a quality product. They want to hear about all our organics practices and how that improves the flavor and quality of the tea. But about our social projects—not so much.

While we have no regrets with the social development work we continue to do, all the work positioning ourselves as a social business has come to naught on the bottom-line. We have had to pivot our focus from a socially responsible product, to a quality product.

That doesn’t mean you avoid creating customer personas, writing copy, and engaging on facebook when you start out. Rather, you must test everything. Then you pivot when things don’t work until you find something that does.

3. For e-commerce, in Pay-Per-Click advertising, cheap doesn’t cut it.

When evaluating opportunities for Pay-Per-Click marketing, one could think it wise to eschew expensive keywords for cheaper ones. However, there is a reason those keywords are cheap: they don’t convert. It doesn’t matter how many clicks a keyword might you get, if the clicks do not produce sales, they are worthless. Often, it is better to compete for those more expensive keywords that actually lead to sales.

4. Have a target market. You can’t sell to everyone.

This is kind of at odds of the pivot, pivot, pivot ideology, but one must balance the impulse to shotgun your marketing budget with the need to find a beachhead market from which to grow.

5. Freeing cash flows is as difficult as washing a mongoose.

When we looked at our first year’s P&L, I was surprised to see we were in the black, despite feeling like we are always hurting for cash.

So where is all the money going?

Inventory. We had reinvested all the profit from our sales into procuring more to make the next sales.

Reality is, if you want to grow the business, you can’t put the money in your own pocket. A business has a natural market share beyond which it cannot grow, then it stabilizes and you can start making money. But knowing when that moment has come is the challenge.

6. Be excellent in Excel.

I use it every day. I recommend anyone who wants to start a business learn the following features and formulas: Tables, Goal Seek, sum(), sumproduct(), and NPV().

7. Understand your competitors, and how you are competing with them.

It would be easy to say that all other tea companies are our competitors. But that does not recognize how truly dynamic the market place is. Are we really competing with Chinese or Japanese teas? With herbal infusions or weight-loss teas? With brands primarily sold through grocery stores?

A better definition of a competitor is one with a product attempting to serve the same need, and communicating with potential customers through the same channels. Starting from customer needs and understanding how we fulfill those needs differently allows us to carve out our market share.

8. For niche players, having a great product is a marketing must have.

It’s not that great products sell themselves. Yes, sometimes you can strike an unstoppable product-market fit if you are smart/lucky, but that is rare.

As a niche product, customer acquisition costs are inevitably high. However, one can have actual relationships with their customers unlike a national brand. To do that, one must have products that keep customers coming back repeatedly.

At Mana Organics, we have managed to deliver teas that our customers love. Our Mana Organics Assam Black Tea Bags are developing quite a following. Customers keep coming back for more.

Looking back, it’s amazing how much we learned in our first year. If we had known the reality versus the armchair quarterbacking, we would have saved ourselves a lot of stress, time and money. We hope some of our learnings can help you save on those three!


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