CASE STUDY - THE EXPERTS' ADVICE:NOTHING IN life is easy and building a business and brand, literally from nothing, is challenging. I admire Sue in how she has taken her fledgling business from the kitchen table to a business that now supports a number of employees. Many brave decisions were made along the way but now more than ever Sue needs to be brave.

Sue's immediate challenge is the imminent closure of her manufacturing plant and what to do next. But this decision cannot be made in isolation as it calls into question Sue's long-term plan for the business.

I often heard that before you get into business you need an exit plan. I'm sure this is something Sue has thought about but now is the time to revisit it.

Sue has considered selling the business. The question here is: after three or four years in business, has Sue built up enough brand equity to get a decent return? Has the current downturn diminished her chances of selling? Has the advance of own-label supermarket ready-meals (eg M&S) reduced her market opportunities or grown them?

These are questions only Sue can answer. Although many people are consumed with the current recession/depression, it's a great time for opportunities. Now is the time to shop around and buy so maybe Sue might be lucky and meet the perfect buyer.

In the meantime Sue needs to continue to make great meals, continue to build her brand and continue to make a profit. Then it's a matter of luck - and I define luck as when "preparation and planning meets opportunity".

So should Sue invest in manufacturing or find a new outsourcing partner? The value is in the brand. For Sue to maximise her price she needs to increase sales and brand awareness. This means finding another outsourcing company but this time Sue should find a strategic manufacturing partner. By this I mean a production company that not only will produce the product but is also interested in taking a small stake in Sue's company.

This may prove enough for the production company to give Sue preferential rates and preferential treatment when it comes to scheduling runs and - just as importantly - preferential treatment when it comes to running smaller experimental projects (eg a new concept meal).

One final thing: Sue should not rule out outsourcing her distribution, especially on the export market. If she finds the right distribution partner, her brand could really take off (albeit at reduced margins).

- Bernard Walsh

SUEHAS to move very quickly to ensure there is no break in supply of products to her customers. She must fulfil orders and service her new export accounts as flexibility and cooperation from her customers may be even thinner on the ground than before if she has supply problems.

Sue is in a much stronger position now than when she first approached manufacturers for outsourcing. She has customers and can predict volumes. She has exact product specifications and knows the plant and equipment needed to manufacture to those specifications, so she can target manufacturers with suitable facilities. She knows the costs involved in outsourcing.

In the current economic climate many manufacturers may have spare capacity and may be delighted to get into production of vegetarian foods. If she pulls together a summary of her needs and works relentlessly on getting a manufacturer, while also seeking the advice of her Enterprise Board, Enterprise Ireland, Bord Bia, her customers and anybody who helped her in the past, she should be able to get a new manufacturer. She has less than six months to find a new supplier and should consider a temporary solution if she is to save her business.

Finding a buyer for a fledging business in her situation and the current economic climate would be nigh impossible but Sue could find that in the pursuit of a new manufacturer she may come to a partnership/arrangement. This could take time so even if Sue decides to follow this route, getting continuity of supply is still paramount.

Sue was wise to decide not to try to do everything herself from the beginning and it would be very difficult to set up her own production from scratch in six months. She would need to find a food-approved premises, suitable plant and equipment, raw-material suppliers, and to employ a production manager, quality manager and staff to produce the products. While this would be much easier to do at this stage because of all the experience and knowledge Sue has gained and the availability of staff, premises and second-hand machinery, it is a strategic decision with financial implications and cannot be entered into without due consideration.

- Connie Doody

ITIS IMPORTANT to focus on the positive: Sue has a six-month window of opportunity to solve her dilemma. Sue should establish in real numbers the following goals:

- Market size in Ireland and the UK

- Level of ambition

- Can a dedicated manufacturing site be scalable to match your ambition?

- What profit margins are available to a new manufacturing company?

- Quantity and quality of financing.

Sue's focus for the next few weeks must be on understanding the process needed to transform raw ingredients into a finished product, and align this knowledge with the opportunities/constraints listed above.

If Sue has the ambition and marketing skills to duplicate her home-based growth in the UK over the next three years, then owning her own manufacturing site is not an option; it will be impossible to commission and recommission the correct size plant to move from €500,000 turnover to €5 million turnover in the next few years. To take on the UK, Sue should start looking for a solid new partner to help produce her product. The current economic slowdown means her business will now be attractive to some of the larger companies that did not bother to quote you three years ago.

I have assumed that after three years Sue's turnover is in the range of €500,000 to €750,000. A goal of consolidating current market share and targeting growth of 10 per cent per annum suggests Sue should now take control of her own manufacturing provided she understands the costs involved and her accountant approves her gross profit-margin target.

The trading difficulties experienced by the outsourced company have a silver lining in that there are many premises, including food-grade production kitchens, now available to rent with increasingly flexible terms. Overheads must also include costing a core management team to cover the following areas: logistics/bookkeeping, chef/production, sales/marketing and delivery/customer support. I advise Sue to revert to looking after the existing established customers during the transition stage, as continuity will be more important than new sales. The numbers of staff must be limited to match the production level. A busy work force is a happy place, and a small group will put in the extra effort once leadership is given.

Sue should immediately engage a bookkeeper (with some cost accountancy experience) to work with her to analyse product margins, and to establish the level of automation, batch sizes, labour content, ingredients and packaging. Frequent visits to the subcontract company - in particular when the next batch of product is manufactured - is the fastest way to gain insight. Take the time to talk to all production staff and listen to how the job gets done. Obviously see if key personnel and equipment are available now and/or in six months and also ask why the current company has gone out of business making product.

- William Despard