PROFIT W100: Staying on a kicking horse

Written by Jim McElgunn

#64 Kicking Horse Coffee Co. Ltd.

2005 revenue: $6 million

Companies don’t adopt formal business planning for the fun of it. Most do so only after they hit a crunch that make-it-up-as-you-go management can’t address.

For Canada’s top seller of organic coffee, that crunch came when it couldn’t keep up with skyrocketing demand for its product. By 2005, sales of Kicking Horse Coffee’s fair-trade beans had soared 229% over three years. Kicking Horse, based in the small B.C. Interior town of Invermere, had climbed to No. 1 nationally in grocery-store sales of super-premium coffee — ahead of even mighty Starbucks. But its push into markets east of Manitoba, combined with 40% annual growth in existing accounts in Western Canada, had left it unable to supply as much coffee as its clients wanted.

Like many entrepreneurs, Kicking Horse CEO Elana Rosenfeld and her husband, president Leo Johnson, were so focused on day-to-day operations they had neglected to develop the organization, infrastructure and resources needed to scale their firm to keep up with booming sales.

Sure, rapid growth may look good on a bar chart, but without adequate planning, it can spell chaos for those trying to manage the surge. Rising above the daily demands to see the big picture may be difficult. But such forward thinking — and a detailed blueprint to get there — plays a key role in ramping up your business to the next level instead of running it off a cliff.

Kicking Horse’s production crunch was a wake-up call for Rosenfeld: it was time to get religion about planning. As luck would have it, in late 2005, the Business Development Bank of Canada awarded Kicking Horse $5,000 worth of consulting as part of its Ongoing Achievement Award for a firm that sustains growth well past its startup. Rosenfeld says Kicking Horse received “invaluable, absolutely necessary” advice on planning from BDC Consulting.

As a result, Kicking Horse developed detailed sales forecasts and determined its future capital needs. That allowed it to adopt a more systematic approach to anticipating its space, people and equipment requirements. It has since hired two experienced managers to bring more structure to production and has become more disciplined in choosing which opportunities to pursue. It has also found a balance that allows it to grow fast, but not so fast that the co-founders must break their “never any overtime” pledge to themselves and their dozen staff. “In our 10th year in business,” says Rosenfeld, “we’re slowly coming out of our infancy.”

Planning didn’t stop there. The consultants also found what Rosenfeld calls “a black belt in lean manufacturing” who helped them design production flow at a plant they were building. Rosenfeld says the consultant laid huge sheets of paper on the floor, then moved around cut-outs of equipment as she showed how to adopt elements of Toyota’s “5S” system to eliminate waste and speed up production.

The advice paid off. “When we built our new plant, it was pretty seamless,” says Rosenfeld. “We had enough space and there were no surprises.” Clients such as Safeway, Loblaws and Provigo still can’t get as much Kick Ass Coffee and other Kicking Horse brands as they could sell. Still, thanks to the new plant’s efficiency, Kicking Horse is ramping up output and starting to close the gap between supply and demand.

Rosenfeld points to two key benefits from her planning mindset: it has made day-to-day operations smoother and freed up more time for the co-founders to set the overall direction. “Part of planning is articulating who you are and what you believe in so you can stay on the path,” she says. This has helped her and Johnson resist retailers who’ve urged them to sell bulk ground coffee, which would compromise quality because ground coffee quickly goes stale when exposed to the air.

Instead, Kicking Horse plans to diversify by opening cafés in up to 10 Canadian cities, a concept it will test early next year in Invermere. Rosenfeld says this will showcase its products and build a direct relationship with consumers: “We want to raise the bar on quality and what coffee is, the ritual and civility of it, people having coffee in a china cup, having a conversation and taking the time to enjoy what it’s about.”

Kicking Horse has also embraced the idea of setting a “big, hairy, audacious goal” at a meeting later this fall. Rosenfeld’s preference: to become the No. 1 coffee of any kind in Canada by making organic fair-trade coffee the mainstream.

If Kicking Horse adopts a BHAG that ambitious, clearly there will be a lot more planning in the future.

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