Help with business model

[catherine]

If you recall, I started a local food delivery service several months back. I've been going at it, very, very slowly, because I do have a lucrative "day job" and I don't want to compromise what I give to either endeavor. So I have one regular CSA customer! But I love having one customer because it establishes a routine, it gives me confidence in what I might do if I have TWO customers, and at least I can say my business is moving ahead! Shoot, if I double my customer base every year, in ten years, I'll have 516 regular customers!

Well, I know I can do better than that. One of the logistical barriers I foresee is actually getting the food to where it needs to go efficiently and cost-effectively. At first, I figured DH, BIL and I would do all the deliveries. But that's labor intensive. One of my newest ideas is to recruit independent "local food facilitators." So I would get all the food to a hub (I'm serving three counties, and I could very easily find a space where the three counties meet.)

Then, neighborhood local food facilitators would pick up their food and distribute it to their customers. I would give a commission to each new regular subscriber they sign up, and they would also get 75% of the delivery fee/tips. I would sell them marketing materials at cost (just brochures--I'd give them business cards). The idea behind that would be to have a "freelance" sales force, but more importantly to build neighborhood networks. I would want them to "own" their customers. There's benefit there for me, them, and the customers!

The delivery schedule as its set up now is one day per county, so theoretically, the LFFs would need to work a few hours one day/evening picking up their orders and another few hours distributing them. I would set up incentives for increased sales/interactions with their communities. We would also do "team meetings" on a regular basis--maybe once a month, maybe once a week, I don't know. The idea would be to connect with each other as a company, and motivate people.

If one LFF has 20 customers in his/her neighborhood, they would get $100 commission ($5 each) for getting the customer, and a weekly $100 for servicing the customer. They would also get their own local groceries wholesale. Is that enough to incentivize someone to do something like this? It's a nice part time job one/one-and-a half days a week, and it's a community service as well.

My question is, do you see any downside? If you had an opportunity to do this, would you?

[razz]

Too many people creates too many problems, so if it cannot be done with a minimum of people, it is not feasible in the long-term - you will spend too much of your time finding and interviewing replacements for each step in the process. How will you pay for your time in administration of the personnel?

[catherine]

Great point, razz. Yes, in this model I see a big part my role as team management. Also, I honestly am not anticipating that there would be dozens of people to start out with--I'm just trying to project long term, and if the company does grow, how do i stay true to the "small town" vision and get stuff delivered on time.

[SteveinMN]

I would try to speak with some people who run newspaper-delivery, pizza takeouts, and courier services. They, too, rely on a rather independent workforce to de facto represent their company to their customers. Ask them the challenges they have in attracting and keeping good workers. Not that I know what they are, particularly. But I see such organizations advertising constantly for drivers and deliverers. Either they're growing like crazy or they're dealing with a fair amount of turnover.

I see a couple of challenges.

First, what are you prepared to do to retain these folks? Pay better than average (what is average?) Offer unusually-good benefits? "Small-town feel" implies knowing and trusting the person with whom you're doing business. That depends on continuity, not a series of "It's Thursday. I'm your new deliveryperson" encounters.

Second, beyond just handing prospective customers a brochure, do you expect the runners to do any kind of evangelization or to at least be knowledgeable and enthusiastic about your service? Restaurants offer their staff "family dinners" so when the waitress tells you the Shrimp Al Cuoco is terrific, it's because she's tried it and liked it, not because the chef said so. Maybe your "runners" should be existing customers incentivized to make deliveries and talk up your service, rather than people hired to deliver.

Third, I agree with razz that, with success, this could move you or someone you designate into a role of largely managing people. Nothing wrong with that if it plays to the interests and skills of the person holding that position. But it's something you should consider as business expands. The pleasure you derive from the business may have nothing to do with the cat-herding that is managing a group of employees.

[iris lilies]

Random interjection about running delivery routes:

Our neighbor, a sharp young guy, is talking about leasing a UPS route. Apparently UPS already does this, or is moving toward leasing their routes to independent contractors. That's interesting.

We are still dinosaurs who get a morning newspaper. Over the decades we've had spurts of bad delivery. At the moment the guy is awful awful, getting here late all too often. By the time we curse the content of the liberal lefty newspaper and then bemoan the absence of it when we want it, might as well forgo the product entirely.

[catherine]

I see a couple of challenges.

First, what are you prepared to do to retain these folks? Pay better than average (what is average?) Offer unusually-good benefits? "Small-town feel" implies knowing and trusting the person with whom you're doing business. That depends on continuity, not a series of "It's Thursday. I'm your new deliveryperson" encounters.



To tackle both your first and second questions, yes, I'm hoping that these will be people already on-board with local food and do it as a mission, as well as a cheap way to get their local food, as well as an opportunity for a little extra money. So, I'm hoping the motivation would be a small flame that I just need to fan, via team-building. I got my inspiration from my experience with Mary Kay. I actually hated selling Mary Kay because that model is multilevel, and also depends on you exploiting your friends and neighbors for sales.

But not to throw the baby out with the bathwater, I do think that as long as you keep it one level, not multiple, and no one has to recruit under them, and no one has to invade their neighbors' living rooms for parties, you can still keep the idea of community, one person helping and advising another, and sharing profits as an independent consultant.

I think your last point, and razz's is valid.. I have to think about how I want to spend my time--driving, or managing people. Something to think about.

BTW, IL, that's funny about your newspaper delivery!! You're right--you might as well get an iPad and start reading online!!

[Gardenarian]

Our CSA drops the boxes at certain points and customers go and pick them up. Drop off points are the community college, the public library, and individual's homes (one person will get 20 or so boxes, to be picked up.) This seems to work well and eliminates a lot of the CSA's driving time.

[Zoebird]

Our raw milk provider makes deliveries to certain neighborhoods/regions, and then you learn where the pick-up spot is.

This way, you can receive delivery of all of the goods from the different farms, create the boxes, and then deliver the boxes to set locations on a circular route or what have you.