Goldberry Distributors, Inc. is a small business that is thriving in a crowded field. Run by two siblings in Northern California, this local food distribution company has been in the industry for almost two decades, and sells meat, seafood and fresh produce to supermarkets, restaurants and more. Goldberry is profitable today, with annual revenues of $60 million, double what it was 5 years ago. As a smaller company that competes with an estimated 33,000 establishments in the U.S. wholesale food distribution industry, that is no small feat.
“This is a highly competitive market with numerous small- and medium-sized distributors clustered,” says Stewart Wong, first vice president and manager of commercial banking at East West Bank. “Margins can be quite thin, and Goldberry’s success over the last two decades comes down to their dedication to product quality, transparency and customer service.”
As with many smaller and local startups, gaining traction in the market wasn’t easy, especially with 50 of the largest companies generating half of the food distribution industry’s revenue. Goldberry had to get their cash flow in order and manage their capital to propel the business up to a higher level.
Carrie Tsang, vice president and cofounder of Goldberry, decided to leave her work as a pharmacist 14 years ago to join her brother in running the business when he asked for her help. “Chris needed more hands on deck, but was also running into the problem of not having enough money to run the business,” says Tsang. While the startup desperately needed more people to maintain smoother operations, Goldberry didn’t have the cash to hire new people. Tsang had to quickly learn the ins and outs of the food distribution industry to help transform the business balance sheet from red to green.
Cash flow is the biggest headache for most business owners and is the reason why 82 percent of small businesses fail. “I think that cash flow is the hardest thing to manage,” says Tsang. “There has to be a lot of foresight when being in charge of the money, and you have to make sure there’s enough in the reserves, because you never know when an opportunity might arise.”
As the market middleman, Goldberry was constantly in a flux when purchasing and selling products. “Your customer may not pay you immediately after they’ve purchased your products, but you still have to operate business as usual,” says Tsang, “and all of that requires working capital.”
Paul Lau, first vice president and portfolio manager of commercial banking at East West Bank, stresses the importance of businesses staying alert for external and internal factors that may affect cash flow. “For any business, cash flow is like the blood for a body. If it doesn’t flow smoothly, your health will deteriorate very quickly,” says Lau. “There are always areas for businesses to work on to improve cash flow. Renegotiating supplier contracts, incentivizing customers to pay faster, automating systems, and/or identifying money-losing products are good starting points.” Having ample cash in hand and assets with good lendable value will position business owners at an advantage when faced with unexpected circumstances.
“Paul suggested that we put some money into the company in the form of an asset-based loan, and that helped us increase cash flow and run the business,” says Tsang. Once there was more liquidity, Goldberry was able to acquire more business, make faster turnover times and process more transactions.
Today, Goldberry maintains multiple loans and lines of credit with East West Bank. “We got our first warehouse using an SBA 504 loan through East West Bank,” says Tsang. “We actually just got three loans approved, as well, for upcoming improvements to our warehouses like a solar (power) system and renovation project for our parking lot.”
Over the years, Tsang states that she and her brother have gotten more confident about their business’s cash flow. “I’ve learned over the years that managing capital is so important for business, and getting the bank to be your ally and provide a line of credit or a loan to help with moving capital is crucial to financial success.”
Goldberry CEO Chris Tsang had an extensive background in food distribution before he started his own company and already had established relationships within the market, so it didn’t take long for Goldberry to find prominent brand-name customers. With brands such as Tyson, Foster Farms, Cargill and Hormel Foods in their roster of clients, it was imperative to maintain good relationships and stellar customer service. “Everything is sourced locally, and we sell our products, both in and out of state. So, the timing and turnover must be seamless, efficient and well-monitored,” Carrie Tsang says.
“I’ve learned over the years that managing capital is so important for business, and getting the bank to be your ally and provide a line of credit or a loan to help with moving capital is crucial to financial success."
In addition to ensuring good quality products, Goldberry also has a competitive advantage when it comes to pricing. “I really credit our company’s competitive advantage to my brother’s strong purchasing mentality,” says Tsang. “Basically, he’s on top of the market all the time. He has impressive bargaining skills and is able to buy his products at a lower cost, which then allows us to distribute and sell to our clients at a lower cost, as well.”
When it comes to customer service, the Tsangs believe that their company’s smaller size is an advantage. Responding to, modifying and customizing customer requests are never easy, but Tsang admits that it’s easier to do when the business is smaller and nimbler. “Meeting the unique needs of every customer, providing exceptional customer service and offering superior products are definitely the keys to our success,” she says.
In addition to a food distribution business, the Tsangs now own four restaurants that source produce and fresh ingredients directly from the Goldberry warehouses. “The most recent restaurant we opened is Katsuo Sushi & Grill, and all four of my restaurants have been financed through East West Bank,” says Tsang. “It’s just so convenient because all of my commercial properties and restaurants are linked to one bank.”
Goldberry and East West Bank have established a strong relationship and foundation since 2007, when Goldberry first became a client. “Whenever Goldberry has a new financing need such as business expansion, equipment purchases, or property acquisition, they always come to us first, even in the very preliminary stage for our advice,” says Lau.
During the next five years, the Tsangs plan to focus more on saving money and taking control of how their businesses can best play off each other. “We are in discussion about supporting the build-out of Goldberry’s second freezer, which will double their in-house freezer capacity and bring down their rent expenses,” says Wong.