Kokako sell-down a smart move

Kokako in Grey Lynn. Photo / Babiche Martens

Relinquishing control is never easy for business owners, but for organic food and coffee business Kokako it was key to getting through the recession.

Managing director Mike Murphy bought the business in 2007 and has been working on turning it into a leading sustainability brand in the sector. He said selling shares was a key way to get through the downturn.

He sold 35 per cent of the company, then he and the new shareholder sold another 17 per cent.

"It was hard, but I accept I've tried to grow the brand in a difficult financial climate and I have been under-capitalised. At least the brand is still growing."

Accountant Aaron Wallace has been acting as Murphy's adviser and said getting the structure of the business right was key to its success. "What you want is a structure that provides choices."

Kokako sold its Parnell cafe in 2010 to put capital into the organic coffee and wholesaling side of the business.

Murphy said he did not have the capital to sustain both sides of the business properly.

"We did notice growth when we consolidated the product range. Rather than selling the whole range, we have focused on products with a reasonable margin."

The focus now is on re-establishing its retail presence in the coffee scene and Kokako opened a new cafe in Grey Lynn last month. Murphy said consumers were becoming more aware of what was in their food and he expected the organic sector to continue to expand.

"The best advice I can give other small business owners is to try to step back and look at it more objectively," Murphy said. "Anything that is not making you money, cut it out."