Alright – so today we’ve got the honor of introducing you to Kristen Blue. We think you’ll enjoy our conversation, we’ve shared it below.

Kristen, appreciate you joining us today. One thing we always find fascinating is how differently entrepreneurs think about revenue growth and cost reductions – both can be powerful ways to improve profitability. What do you spend more of your time and energy on?

‘You have to spend money to make money’, people say. That rings true to our business. We chose a very labor intensive, craft product to manufacture in-house. We operate in an industry that is notorious for labor exploitation and not paying fair pay for farmers. If we started this business from a perspective of making as much profit as possible, we would have outsourced this entire chocolate making process (or use pre-made industrial chocolate as most chocolatiers do) and would be paying the lowest cost for cacao possible.

It’s a high-cost product to make – not only from sourcing ingredients in a thoughtfull way, but also in machinery and labor costs. It takes us a week to transform a cacao bean into a chocolate bar, with machines running 24×7 for days at a time and a lot of hands on crafting.

Growing the business and cutting costs go hand-in-hand as a means to survive as a business, but it doesn’t need to be viewed as a way to cut corners. Cutting costs can simply mean finding efficiencies. Labor is our biggest cost and currently is high because we have a small-scale production setup that can only produce a very small amount of bars within a week. This caps our business from growing, and also keeps our cost very high. If we invest our money into larger machines that can enable us to produce x4 times the volume of chocolate with the same amount of time and labor cost, that will make us more efficient, which can reduce our cost of labor per bar. “Cutting costs” on each bar while increasing our output in this way provides us with more opportunities to find ways to increase our revenue.

Working backwards from the cost of the machine, the estimated profit per bar, and figuring out how many bars you’d need to sell to break even on the machinery investment is a crucial aspect of the business. If you believe in your idea, have proven your market fit, and it aligns with your business objectives and strategic goals you’ve set– it’s worth the financial risk to make purchases like large-scale machinery.

A lot of this comes back to running accounting problems, considering long term business priorities, and constantly asking how to become more efficient.

Kristen, love having you share your insights with us. Before we ask you more questions, maybe you can take a moment to introduce yourself to our readers who might have missed our earlier conversations?

We make bean to bar, slow made chocolate with no refined sugar. It takes us a week of labor to turn raw cacao beans into chocolate bars. Sonhab works with a thoughtful importer, pays more for the cacao beans, and lists each origin and farm on the bars. In 2022, we began donating our cacao husks (food waste) to a local food garden. We also include adaptogenic herbs in some of our chocolates to provide additional benefits, reduce inflammation, and help customers relax.

Cacao found me during a serious illness that turned my life upside down. I recovered and avoided immunosuppressants by making diet modifications guided by a specialist. This changed my relationship with food and forced me to find a new way to appreciate it. Herbs, supplements, mushrooms, and cacao were a big part of that journey. I began making ornate chocolates with adaptogenic herbs and flower petals as part of my healing journey. Organically, years later Sonhab came to fruition as an experiment.

I never imagined I’d be running a bean-to-bar chocolate and meditation company, but here we are!

We’d really appreciate if you could talk to us about how you figured out the manufacturing process.

We manufacture everything we make in-house, meaning we do not use a copacking factory to create our product for us. We’re incredibly involved and every bar takes us about a week to transform from cacao bean into chocolate bar.

This poses a serious challenge – we are competing with bars who outsource their production. We are strapped by our machinery. Off the top of my head, I can easily think of $70k in machinery we need to really scale our business production up. We also make a niche product that requires machines that aren’t common, so it’s challenging to find any used machinery or machinery to lease on the market.
If we started our business journey from a perspective of outsourcing the manufacturing, it would change our relationship with the food. We enjoy being hands on with every bar that we produce and know it’s a higher quality product because of that. Most food is outsourced to a manufacturing plant and the company pays someone else to make the food and slap their logo on it. We make craft chocolate, meaning we manage the process from end to end and we’re involved with every step of the process. It’s our art.

In hindsight, it would have been a much easier business to scale if we went the outsourcing route, but it would change the part we love the most – making handcrafted great craft chocolate.

Can you talk to us about how you funded your business?

Funding is challenging. To start a business, especially a food manufacturing business it requires some investment. It takes money and time to begin a business. We started in our kitchen and began making chocolate in the most low fidelity way you can imagine. We couldn’t afford a cracking machine, so we used a mortar and pestle, cracking small amounts of beans and using a hair dryer to winnow them. We hand peeled beans until our hands ached. We purchased everything in tiny quantities. We found our cracking machine on Offerup. We purchased our kitchen equipment used on Craigslist and for what we couldn’t find used, we chose to purchase smaller machines. I financed machinery and ran up credit cards. Our full time day careers went into funding the business and all of our sales went back into the business.  As we’ve grown, we’re now making leaps into larger machinery by saving, saving, saving, every dollar that comes into the business to put towards the very expensive machinery we need to continue building our business.

Because we started so scrappy, we also had to operate our business as so. In the beginning, our photography was shot on my iPhone and I edited our photography through Facetune (and often still is). We do our own email marketing and we don’t run any paid ads. I taught myself hacky graphic design basics simply because we had no budget to hire externally and I worked with friends when I couldn’t execute on larger projects like packaging designs and molds. I asked for a used camera for my birthday that I use to shoot product photography. I took financial, accounting, product photography courses to teach myself how to do it all the best I could. I designed and built our website, run our google analytics, work on our SEO, and review our reporting every month on analytics, inventory, and financial reporting. I’ve also learned to edit video footage and create content for social media. We manage our own accounts, emails, customer service, wholesale – it’s all us. By not having a big financial backing, we have had to learn to do it ourselves and really be IN our business. This was a great learning experience to start and gave us a great pulse, to be so close to something you are building and putting your own sweat into growing and understanding your market and your customers. That can only take you so far. To continue growing, you need to take into account who is on your team, the experience you bring to the table, where your weaknesses are, where your strengths are, what you enjoy doing, and assess how to get to the next stage. You should always be working ON your business, regardless if you are IN it as well. If you find yourself only working IN your business, invest (hire) to ensure you can continue working on it to continue growing – or you won’t stay in business very long.

We often get compared to really large CPG companies with millions of dollars in funding who run expensive paid ads, have large teams, and they outsource their manufacturing. Behind the scenes, there’s two of us working regular full time careers, self-funding, and running all ends of our business in a very scrappy DIY way – making chocolate and running financial reports at midnight.  We believe in doing more with less and taking calculated but cautious risks to continue growing. It’s also important to make sure you are moving fast enough to keep up with demand and a competitive market. You’ll know when the time is right to begin taking larger financial risks or investments to move things forward.

Contact Info:

• Website: https://sonhab.com/
• Instagram: https://www.instagram.com/sonhab/
• Facebook: https://www.facebook.com/SonhabChocolate/

Image Credits
Kristen Blue of Sonhab, Leigh Patterson of Moon Lists, Jocelyn Pacheco