Forbes — Secret Sauce: Four Bootstrapping Tips From A Salad-Dressing Startup In Louisiana


Richard and Kate Hanley sampling their Hanley’s salad dressings at a Whole Foods store.

Bootstrapping is a way of life for Richard Hanley, the CEO of Hanley’s Foods in Prairieville, Louisiana.

He was working as an art director at a New Orleans advertising agency when he got the crazy idea that he should quit his day job and bottle his own salad dressing.

Staring at a supermarket shelf of condiments one day in 2011, he had his entrepreneurial epiphany: no one was selling the Baton Rouge specialty known as Sensation, a creamy, garlicky dressing with plenty of romano cheese, and sometimes blue cheese, as well as lemon and parsley. It’s poured over iceberg lettuce.

“I grew up as a child thinking there was Ranch, Balsamic and Sensation,” the 31-year-old entrepreneur tells me. “You had to make it, not buy it.”

Richard and his wife, Kate, held a salad party with friends and family to judge competing Sensation recipes. Richard’s recipe, which has no blue cheese in it, was the hands-down favorite. In September 2012, they whipped up their first three cases of Sensation  dressing and sold out at the local farmer’s market in just two hours. The next week, they doubled their inventory, and it sold out too.

“I knew we were onto something,” says Richard, who launched Hanley’s with just $3,000 by increasing the size of their car loan.

Hanley's 2016 lineup

Hanley’s dressings come in five flavors. Photo courtesy of Hanley’s foods.

Of course, just because you see a vacant market niche, it doesn’t mean you should fill it. Hanley’s  is just one of hundreds of  little natural-foods companies who are battling for recognition and shelf space.

What the husband-wife team does have seem to have going for them, however, is an almost superhuman tolerance for bootstrapping.

When Richard quit his day job, Kate went back to work full-time as a medical assistant, although she preferred to be home with their daughters. The Hanleys moved in with Richard’s parents to save money. Eventually, as business picked up, Kate joined Richard in the business full-time. They pay themselves a small monthly salary, if you could call it that.

“We’re doing everything it takes to grow this thing,” says Richard.

richard-hanley-at-food-incubator_15208560082_o

Richard Hanley, CEO of Hanley Foods. Photo courtesy of Hanley’s Foods.

Hanley’s, which rang up about $150,000 in sales last year and projects revenue will double in 2016, has just two full-timers, Richard and Kate. Even so, they’ve managed to expand distribution to 400 stores. This year, they hope to gain national distribution, Richard tells me.

The company is now producing five varieties of natural salad dressing, including a dairy-free ranch, which has a creamy consistency without any dairy or eggs, and a strawberry vinaigrette. Richard also promises me they’re working on a “plant-based” version of Sensation that will taste as good as the original.

This year, Hanley’s is also going after the institutional and restaurant market with two new powdered products, and they’re developing more recipes that use their “bettermilk,” a proprietary dairy-free, egg-free ingredient made from Canadian yellow peas, cocoa butter and coconut cream.

“We want to be a natural food company for the next 100 years,” Richard says without a touch of irony.

As the startup picked up steam, Kate joined Richard full-time. Last year, after a costly near-disaster with a manufacturing partner (more on that later), they had to hand-mix and fill over 50,000 bottles of salad dressing, the equivalent of 13.4 tons.

The Hanleys haven’t taken on any investors yet – by design. But they have accepted several very short-term loans, with interest, from a friend, says Richard. This may be the year they’re ready to scale up and bring in outsiders, he says. In the meantime, bootstrapping has it decided advantages.

“I’m putting  in 100 hours a week to avoid working 40 hours a week,” says Richard. “I wear 15 hats.  If I were taking an investment, I’d just wear one or two.” And that means he has learned a whole lot in the process, he says.

Clearly, the Hanleys aren’t joining the one percent anytime soon, but at least they’re very close to break-even, selling each bottle of dressing for about $4.99 at retail. I asked Richard what he’s learned so far from his bootstrapping experience. Here are his tips:

1. Get smart help.

The real game changer for Hanley Foods was teaming up with Louisiana State University’s Ag Center Food Incubator,  run by Gaye Sandoz, Richard’s good friend and mentor. Richard got access to food scientists at LSU to help with product development. He also benefited from student labor and free courses for incubator members in food science and regulatory issues. Once Hanley scaled to a certain size, the company graduated from the incubator.

He’s also attracted experienced entrepreneurs to his board, such as Justin Gold, who built a national nut-butter brand.

2. Do your due diligence.

“I’ve always been person to do a ton of research, but the one time I didn’t, it almost put me out of business, ” says Richard. Last year, he made a hasty choice in manufacturing partners. After migrating all of their production to the facility – about 800 cases – they ended up having to recall product that was  improperly capped and leaking onto store shelves. That mistake ended up costing Hanley’s as much as $40,000, he says. Fortunately, LSU let them come back to their incubator kitchen, while they spent nine months carefully choosing a new manufacturer.

3. Put it on the calendar.

When you’re a two-person team, staying organized and motivated is critical. Richard sets goals and commits to a deadline — such as when he was going to launch his first product, Sensation salad dressing. Whether it’s a launch date, or a personal goal, seeing it in writing makes a big difference, Richard says

4. Turn off, tune out.

Inhuman work weeks mean that Richard teeters dangerously close to burnout. (He postponed our scheduled Sunday night conversation because of a big, last-minute order from a local supermarket chain.)

“You have to find a way to turn off,” he says. He goes for long runs, plays with his daughters and reads fiction for a break.

Most of all, he turns off all his electronic devices.

Robin D. Schatz is a New York-based business writer. Follow her on Twitter @Robin_Schatz. Read her Forbes stories here, or access her full portfolio.

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