Outsourcing: Cheryl Tallman’s Key Move

Cheryl and Joan (who partnered with her) were smart enough to stick to their knitting from the very start of Fresh Baby.

Think of how bad the typical commercial baby food smells and tastes. Well, there was no way Cheryl Tallman was going to feed that foul, preservative-laced stuff to her newborn! So her sister, Joan Ahlers, told Cheryl how to make healthy baby food. And as a former marketing executive – eureka! — Cheryl quickly recognized that she could capitalize on the anxieties of other doting mothers and turn homemade baby food into a great business.

But deciding exactly how to refine her idea into a company was tricky. Even the biggies of the baby-food business, Gerber and Beechnut, have been selling healthier food lines for awhile. Cheryl wanted to avoid the complications of actually producing food, anyway — while still exploiting the growing marketplace interest in putting purer stuff into babies’ mouths. So she came up with a simple kit for making fresh foods, with a blender, into frozen cubes that are thawed for a baby’s next meal

Then Cheryl’s marketing expertise took over. She created a catchy brand name. “I was always calling my son ‘Fresh Baby’ because he was so precocious,” Cheryl remembers. “It was perfect.”

She also decided to position Fresh Baby as an antidote to the childhood-obesity epidemic that was attracting a torrent of media attention, and Cheryl got dozens of placements in the press. And she targeted pediatricians and other medical professionals for B2B marketing with the idea that they would recommend Fresh Baby to their patients.

The result: Sales jumped from $100,000 in 2003 to $300,000 in 2004, and Cheryl expects that same exponential growth as Fresh Baby gains distribution through powerhouse retailers such as Whole Foods.

Cheryl’s Key Move: Outsourcing.

Cheryl and Joan (who partnered with her) were smart enough to stick to their knitting from the very start of Fresh Baby. In-house, they do only what they’re expert in – things like marketing and sales – and outsource everything else the company does. That meant contracting with someone else to do their manufacturing, warehousing, distribution, accounting and even most customer relations

“If we’d tried to develop competencies in all this other stuff, we’d be reinventing the wheel and distracting our attention from what we’re really good at, and I’m not sure Fresh Baby ever would have ever gotten off the ground,” Cheryl says. “What we chose to keep in-house were things we consider our competitive advantages: product development, corporate strategy and some customer touchpoints.”

Make no mistake: Cheryl may have outsourced all these functions, but she stays on top of her contractors. For example, Cheryl is still supervising quality control. Ever notice those little injector marks from plastic-molding machines that look tacky on plastic products? Cheryl makes sure those little blemishes don’t show up on her Fresh Baby trays and jar lids.

“We have quality-control manuals at our plastics manufacturer that cover what we’re looking for both functionally and aesthetically,” Cheryl notes.

Choosing what to farm out and what not to requires some thinking – and Cheryl has chosen wisely so far. A contracted call center fields customer phone calls to 1-800-40FRESH, for example, but Cheryl and Joan themselves respond to each e-mail message to [email protected] .

“During this early phase in our business, we’re trying to establish ourselves as experts in the industry. So we handle every e-mail personally,” Cheryl explains. They also sign their e-mail newsletter “Cheryl and Joan.”

The sisters also must be willing to let go of even more functions as the company grows. Joan personally handled most sales calls until Fresh Baby started penetrating Whole Foods. The chain is by far the most important gatekeeper in natural-foods retailing. But to bust your products into Whole Foods’ aisles, you have to do it region by region, and store by store.

“It began to be a real pain,” Cheryl says. “So this year we decided to outsource our sales to a broker network. We can still attend the trade shows and skim off the people who can actually do their buying at the show. But if we want to work ourselves into the fabric of this industry, we have to have a broker business in place.”

Cheryl is convinced that Fresh Baby would have experienced only sluggish growth without her Key Move of outsourcing so many functions. “I also don’t think that we’d have the same attitude,” she says. “We are somewhat fearless in our approach because of it. I can honestly say that we never have to turn down an opportunity because of manufacturing capacity, fulfillment, logistics or manpower.”

Cheryl’s Bonus Insight:

Don’t be so eager to rush into the next phase of your business. For Cheryl, it’s tempting to want to expand into accessories, say, or bring out a food-making kit for toddlers. But expanding too fast could endanger what she’s already accomplished.

“This year we’ve decided to sell what we have, build up our credibility as experts in terms of healthy eating and children, turn a profit and get our cash flow in place – and then blow it all in product development next year,” Cheryl says. “But that’s so expensive. This year it’s a sell-what-we’ve-got-and-be-proud-of-it year.”

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