Julie Busha has cooked up a whole new way to enjoy hot dogs, hamburgers and pretty much anything at a barbeque. Eat it with Slawsa — the condiment Busha swears will change your life. The delectable hybrid of cole slaw and salsa is far more nutritious than relish and miles more flavorful than sauerkraut. It first appeared on store shelves in late 2011 and now comes in five flavors: original, spicy, garlic, spicy garlic and fire.
Busha sought a $150,000 investment for 15% of her business onShark Tank. (Season 5, Episode 9, Nov. 15, 2013) All of the Shark Tank star investors, except for Robert Herjavec, liked the product. But none of them bit on her tearful, bittersweet pitch even though QVC queen Lori Greiner devoured two other Sharks’ plates in addition to her own.
The CEO, as in “chief effort officer” of Cramerton, N.C.-based Nicole Foods, Busha was honored in this month with Progressive Grocer’s Top Women in Grocery Award for 2015. She shares what she learned from her failed Shark Tank appearance, her best advice for fellow entrepreneurs and how cabbage is the Rodney Dangerfield of foods.
Ky Trang Ho: So you didn’t get a deal on Shark Tank. What do you think happened?
Julie Busha: I don’t know that there is an adjective to describe the shock I felt to not get an offer. And I still wonder to some extent today why it didn’t happen. Was it because I pitched last on a Sunday night? Did they think I’d be fine on my own?
I think in general, very few Sharks have a comfort level of investing in the grocery space, mainly because ours is an industry that takes longer to mature. They like high margin businesses to get their investment back almost immediately. There’s a lot of risk in food.
And I think their experience with other grocery products perhaps have taught them to be very cautious when considering investments in the space. Our industry is just based on volumes, and historically, it takes time to work up to those volumes.
Ho: What would you have done differently?
Busha: I felt like I answered every question I could have. And while it didn’t make the edit, I spoke to my background in marketing and have had a major food manufacturer as a client for nearly a decade. Should I have been more boastful about my past successes? Should I have smiled more?
I think you worry to some extent about the edit if you talk too much about your accolades and qualifications. After all, how many times have educated people get slammed? Obviously, I showed passion when I explained to the Sharks some of the financial hurdles I’ve had to overcome, based on the fact that my previous partner requested that I buy him out.
It was a shocking request given how much I had put into growing the business to that point, both financially and with effort. To have worked so hard over the previous decade to build up savings that would allow me to accept that request hasn’t made growing business easy.
I’ve always taken full responsibility for those sacrifices and that decision. Perhaps I shouldn’t have shown emotion. But given how serious and focused I was during my time with the Sharks, they were probably happy to see the passion, even if for just a minute.
Ho: How did you value your company when you appeared on Shark Tank?
Busha: $150,000 for 15%, in my opinion, was a more than fair valuation for the consumer packaged goods, CPG, industry. Considering year two sales were projected to finish out at $500,000, mature food companies are selling at more than four times their previous year’s gross sales. For example, General Mills’ (GIS) purchase of Annie’s Organics or McCormick’s (MKC) purchase of Stubbs.
In fact, two Shark Tank grocery product companies have settled deals of $2 million and $3 million, off of $250,000 or less in sales. Given Slawsa’s growth, uniqueness and the fact that several major retailers like Kroger (KR) and Walmart (WMT) had already shown confidence by having Slawsa on the shelf before the casting process began, I thought my conservative ask would garner multiple offers.
Ho: Have you gotten other investors to invest in your business? Who? How much?
Bush: Many folks have approached us, from people who just wanted to see how they could be involved for $10,000 to $20,000, all the way to people offering a better valuation than what I had offered the Sharks.
The accredited investors that approached me seem to want to only be financial contributors. I am looking for someone who could bring some value to the table beyond financial. I haven’t found the right match just yet.
Ho: What did you learn from your Shark Tank experience?
Busha: I obviously didn’t have the outcome that I had hoped for or expected. But I’ve learned that you should never let someone else’s inability to see your value determine your worth. I may never know why a Shark didn’t see the vision that is so clear to me, but when one door closes, another opens.
A good example of that is several very influential Food Network personalities, and celebrity chefs saw my episode and their curiosity was peaked enough to give Slawsa a try. When someone like a Lisa Lillien, a.k.a. Hungry Girl, speaks, people pay attention. In essence, she gave us the flavor edit that was less of a focus on the show. I am eternally grateful for their generosity to voice their opinions about Slawsa.
Ho: Had one of the Sharks given you the $150,000 for 15% you were seeking, how much would s/he made by now?
Busha: I’d have to sit down and crunch the numbers. But I would have hoped that I settled with a partner who understands the industry as much as I do and would want to defer payments early on for the bigger payout down the road. I guess it depends on short-term greed versus long-term gains. Savvy investors will usually see the bigger picture.
Ho: When you went on Shark Tank, you said you weren’t drawing a salary from your business. Are you now?
Busha: When most people start businesses, they can’t draw, and that’s very normal. I was very serious when I told the Sharks that it was not my plan to take money out of the business for several years to come. It was a fact then, and it is a fact now. Can I? Sure. But it’s smarter for me right now to keep reinvesting those profits back into marketing for the long-term growth and health of the brand.
I liken the strategy to putting money away for your retirement. When you’re in your 20s, you’re making less. But if you can invest strongly during those early years, versus starting to save in your 40s, those dollars will make a much bigger difference down the road. The CPG grocery industry is no different.
Overstuffed With Motivation
Ho: How do you stay motivated when you aren’t getting a salary from your business?
Busha: I am perhaps one of the most motivated people you’ll ever meet. Here’s a fun short story. I started running my freshman year in high school. Because I was small, I figured cross country/track might be something I’d be decent at. But I started off the worst girl on the team.
By the first race of my sophomore year, I had beaten the reigning state champion on her home course. It wasn’t because of talent; it was because of hard work, drive and my desire to be the best that I could be.
Money isn’t a driving factor for me. The internal gratification I have comes from taking Slawsa from zero sales to where it is today, despite the additional hurdles. And that is motivation enough. Reading emails from fans who took time out of their day to write in to tell you how much your product means to them. It doesn’t get any better than that.
Ho: How did your business grow after appearing on Shark Tank? What were your annual sales before and each of the following years since the Shark Tank appearances?
Busha: Slawsa was on a pretty aggressive path for growth before going on the show. In fact, I believe we were in 4,200 stores at the time of my taping and in nearly 5,000 by the time we aired.
Our year one sales were around $225,000. At the time of taping, I was projected to finish out our year two sales around the $500,000 mark. I’m not at liberty to discuss sales since, but as suspected, Slawsa continued to grow.
Regarding increase in sales, it would be difficult to say that increases were the result of the show itself versus the other marketing that we’ve had going on especially given that the Shark Tank airing was during the off-season.
In our industry, a nice judge of how well a product is doing is the weekly movement per store. UPSPW (units per store per week) per SKU (stock keeping unit) of our top performing stores is now over six, which is strong movement for a new brand. In all of our retailers, that movement continues to grow while we add distribution in existing and new territories. I venture to guess that brands just launching are less than on UPSPW per SKU regarding movement.
Ho: How many employees did you have before and how many did you hire?
Busha: I was the only employee at the time of taping and currently. However, I think it’s important to know that I’ve surrounded myself with dozens of people throughout the country to support the business and consider myself the quarterback of a much larger team. They support our manufacturing efforts, freight, warehousing, sales and merchandising support, etc.
Most start-up CPG (consumer packaged goods) businesses start this way to not only invest more dollars back into marketing and into the business in general, but to also run more efficiently.
It makes more sense to sub-contract out experienced support than to hire one or two people and expect them to do the collective work of many, not to mention the cost savings in travel alone to support accounts scattered across the country.
Cooking Up Delicious Deals
Ho: What kinds of distribution deals / retail sales channels did you score after being on Shark Tank?
Busha: We’ve been able to continue our pace steadily since airing. But that pace was set from our launch. Of course, winter air dates for a spring/summer/fall seasonal product is less than ideal. We have to work on annual category review cycles regardless. While it’s been in the works for over a year, we finally launch this month in Ahold’s Stop & Shop and Giant banners (750+ stores) after a successful summer force-in.
It was nice that our buyer didn’t want to wait until summer passed to give customers a taste of what is to come. Walmart (WMT) and Albertson’s continue to expand us, and we’re in the midst of waiting on some resets with some of the Albertsons/Safeway banners. We’ve opened more wholesale distribution channels that will launch Slawsa in many more smaller chains and independents come spring 2016 resets.
One of the other nice things that just came to fruition is Slawsa’s introduction on the menu of HERO Certified Burgers, an upscale QSR (quick-service restaurant) chain based out of Toronto. It’s known as the official burger of the Toronto Maple Leafs and Raptors. It’s an ideal situation for us because HERO not only has Slawsa on the menu but also sells jars in their restaurants. I’ll be working with them on some bigger things in the not-too-distant future.
Foodservice opportunities like that, while it may be lower margins, really does a lot for not only customer trial but also marketing. I thought having a product that can so seamlessly crossover in foodservice opportunities would be really appealing to a Shark.
Ho: What are you doing now to move your business forward?
Busha: I’m introducing a nice merchandising display that retailers are supporting with incremental merchandising of Slawsa in the meat departments to drive bratwurst and meat sales. I continue to work to bring retailers more multi-manufacturer opportunities. And I’ll be doing a nice grilling-themed giveaway with several retailers in May that will trickle down to their customers.
Ironically, there is some groundbreaking cancer research being conducted on sulforaphane in cruciferous vegetables (cabbage being one of those superfoods). While they’re already several years into the American Institute for Cancer Research-funded study, the results may very well encourage consumers to look to cabbage in a different light. Hopefully, they’ll be making wiser choices by picking up Slawsa versus some of the traditional pickle-based relishes.
Ho: What are the health benefits of Slawsa?
Busha: Cabbage is widely considered “the Rodney Dangerfield of vegetables” and doesn’t get near the respect it deserves as a superfood. My mission is to change people’s view of what they think something as simple as a relish is or could be.
Here are some facts:
- One tablespoon of Slawsa has 20% of the daily allowance of Vitamin C while pickle relish has virtually none.
- Most pickle relishes on the market contain preservatives, whereas Slawsa is all natural.
- Slawsa has roughly half the sodium as a dill pickle relish or jarred salsa for that matter.
- In addition to Slawsa being all natural, it is also fat-free, cholesterol-free, gluten-free, low in sodium and kosher.
- From a versatility and flavor perspective, Slawsa is superior to pickle-relishes.
Ho: How much did you personally invest in your business?
Busha: My contract with my former partner prohibits me from talking about the buyout but in addition to that and legal expenses, I believe I had about $50,000 tied up into production/start-up expenses. I was profitable early on. But like with any other CPG company, especially in an industry as competitive as grocery, you have to have a dedication to reinvest your profits back into marketing heavily the first several years.
Ho: How did you get the money to start your business initially?
Busha: My husband and I always lived in a manner that allowed us to contribute greatly to our retirement and savings from the start. It was a conscious decision from the beginning to not have financial worries in our life because you never know what will happen to disrupt that. While I both earned strong incomes for over a decade, we lived off of one income. We had no credit card debt, and we always paid extra on our mortgage.
I was the first in my family to graduate from college, and both my husband and I earned scholarships (mine was athletic and academic, his athletic) to make graduating without student loan dept possible. We worked hard for those scholarships. We bought our first home at half the cost our lender approved us to buy. We’re not people who put a great deal of value into “things” or “vacations.” We drive American-made cars, and we’ll drive them into the ground before we buy another. I’d never lease a car.
By our early 30s, we built up a nice savings that allowed me to take a leap of faith to no longer work in an industry that was safe, but to grow something that was much bigger than myself. Again, I never anticipated my former partner asking that I buy him out, but it happened. As I said, you never know what will disrupt your path. Having that savings allowed me to take on that much bigger risk. And I would venture to guess most people at my age would never have been able to entertain the idea.
Ho: What’s the best advice you can give other entrepreneurs who are looking for investors?
Busha: Having the right partner who sees both the long-term vision and brings something of value to the table is key. Don’t settle for less.
Ho: Which business books do you recommend most and why?
Busha: I like the humor and call-it-like-it-is attitude of Larry Winget’s books. Some people just need a swift kick in the pants reality-check for those “excuse-makers” that Larry delivers.