Chocolate Business Lessons

Hello and good day!

Several people have mentioned a recent news segment to me.

Here is a link to the video if you'd like to check it out.

The subject is a new chocolate company in Ghana. The founder of the company is a Ghanaian woman who was raised in the United States and who has moved back to Ghana to start her business.

Her goal is to help Ghanaian cacao farmers earn more for their cacao while running a successful and profitable enterprise.

This is something we know a thing or two about and the wonderful folks who shared the story with me suggested that I reach out to the company to offer advice.

As soon as I am done writing here, I will do an outreach.

We're fifteen years into our chocolate journey and I think that we are just now understanding how all the pieces of our puzzle need to fit together.

The cold water for any new business owner is that they have at least 3-5 years of hard struggling before the venture becomes sustainable.

Some people get lucky and find great success straight out of the gate, but it is rare.

Even with a functional and proven work plan, there are still a million little details you need to work out.

Systems need to be built around the details.

A team must be assembled and managed to carry out the operational systems.

And then you have to execute on the operational cycles over and over again, day in and day out, forever.

That is business.

I remember reading a quote from Elon Musk in which he said something to the effect that designing rockets is relatively easy but manufacturing them is hell on earth.

We've paid our dues nailing down the methodology for how to rework a cacao supply chain such that cacao farmers get a much better deal.

It would be my great pleasure to share this information with anybody who asks.

But then comes the execution part and that requires a ton of grit.

My brother lived in the jungle full time with cacao farmers for ten long years building up and running our cacao buying and processing operation.

And frankly, this is a big part of what it takes to revolutionize a cacao supply chain.

Somebody has to get out there and fully understand the reality on a grass roots level so that the necessary changes can be implemented in a way that conforms to local conditions.

Every cacao growing region is different.

Within Peru, agricultural zones are by no means homogeneous.

Weather patterns vary from one place to another.

Roads in and out run the gambit from dirt and mud to decently paved.

Cultural and political considerations change from place to place.

Some groups of people are open to innovation while others are very conservative and afraid of change.

All of this needs to be analyzed and integrated into a plan that leads to win/win partnerships which can stand the test of time.

If I could go back and do it all again, I would suggest starting with very basic business axioms that have nothing to do with chocolate and working backwards from there.

Even with the very specific goal of launching a chocolate business that helps cacao farmers get better prices for their crops, I'd still lead with more general questions.

I notice in the video that the founder of the new company says that she saw a problem and moved to solve that problem.

As an aside, I know a hand full of Ghanaians here in the United States and they all strike me as being culturally savvy at entrepreneurship.

I mention that because I wouldn't want to discount this woman's instincts about her business model.

She might be better at business that we are, and I might be wrong about what I'm saying.

But this is what our experience has taught me.

Her chain of thought appears to be that the problem is with prices paid to cacao farmers and that is what needs to be addressed.

I think this puts the cart before the horse.

A better question to ask is what do customers really love?

Sometimes customers have a problem that needs to be solved and that is the purpose of the product or service.

In that case, it makes good sense to think about what problems need to be solved.

Pain medication alleviates pain.

Dirty teeth ruin a smile and teeth whitening improves a smile.

These are solutions to problems.

But note that these problems are customer facing, not supply chain facing.

In a somewhat distant and abstract way, customers like knowing that their favorite products are made ethically.

It is a nice add on that what you are buying makes the world a better place.

All things being equal I personally make an extreme effort to do business with companies who make a positive impact in the world.

However, knowing that a company does things ethically is not enough to overcome certain fatal flaws.

Nothing, and I mean nothing, will overcome a bad product or crappy service.

Based on the disposition of the young lady in the video, I find it highly unlikely that she would provide crappy service. She seems like a very pleasant and conscientious person.

But she would have to make sure that her team adheres to the same level of great service as well.

That is a non-negotiable for any small business who wants to stick around.

Any company that wants to flourish, stand out, and generate word of mouth should set their goal as outrageously good service.

With regards to product quality, fine flavored chocolate requires well fermented cacao. There is simply no way around that.

We spent two full years with no income learning how to ferment and dry cacao up to a world class standard.

The variety of cacao that we use in our chocolate naturally has a very high potential for deliciousness and we meticulously process the cacao to make sure we extract its full potential.

Cacao is native to the Amazon jungle.

Most of what has been planted in Ghana is industrial hybrids with a lower potential for making exquisite chocolate.

Given that customers don't want or need yet another mediocre chocolate option, it behooves any new chocolate company who wants to make a positive impact on the lives of cacao farmers to focus in on world class post-harvest processing.

This is especially the case when you are starting out with a less than optimal ingredient.

If the fermentation is poor on a suboptimal cacao, it will be very difficult to put out a product good enough to create customer loyalty.

The only remaining option for subpar chocolate will be to compete on price but that nullifies the original purpose of your company which is higher prices for cacao farmers, and you'll never be able to beat huge industrial companies in a price war.

I'm running out of space for today.

I will continue on with this line of thought in the coming days.

Thank you so much for your time today.

I hope that you have a truly blessed day!

Adam