How to Start a Food Business

Do you have an amazing recipe you make that all your friends and family tell you, you should sell? Is it so good and so unique that you know that once you introduce it to the people, they will go crazy for it!? That’s kind of how it started for me.  If you don’t know the story behind the Cookie Chew, it started from the creation of the “truffie” a truffle stuffed cookie.  I made decadent truffles and stuffed them inside a chewy brown sugar cookie. There’s was nothing like it on the market and they were delicious! Everyone told me I should start a business with my truffies and with my delicious invention and business degree armed in hand, I went off to start the Cookie Chew. I had an amazing run, learned an incredible amount about business & the food industry and that experience is what ultimately led me to start this blog.  This blog is where I hope to share those experiences and lessons learned, so if you’re hoping to start a food business of your own, you are armed with all the knowledge to be a huge success!

First things first, starting a food business is a huge undertaking and there will be lots of hard work involved.  You have to have passion for what you are doing or the possibility of burn out will be very high no matter how successful you are.

1.) Find your niche and check out the competition.  If you have an amazing lasagna recipe,  see what other lasagna products are on the market.  If it is saturated and the market is exhausted by what you are producing, you will want to think about how much capital you can dedicate to marketing and making your product stand out among the competition.  Or you may think about ways in which you can differentiate yourself and your product. Sometimes it can be hard to take the emotion out of a family recipe passed down from generation to generation but when it comes to business, decisions based on emotion is never a good idea. The Specialty Food Magazine, The Food Institute and Gourmet News are both great resources for learning more about the industry.  The Specialty Food Magazine posts the State of the Specialty Food Industry reports each year that offers great insight on the market and the specialty food consumers. If your product is a baked good, the Retails Bakers of America Organization and Bakinbusiness.com are also great resources.  Even after you have found your niche,  keeping up to date with changing trends and upcoming events are very important.

2.) Research the existing laws, permits and license you will need to start your food business in your local city & state and determine the costs involved.  In San Diego, there are definitely quite a few different licenses and permits you will need in order to begin producing and serving food.  The Cookie Chew was involved at the Farmer’s Markets, we wholesaled to local coffee shops and sandwich shops, we catered at weddings and events and we sold our cookies online across the nation.  Because of all these different niches we operated in, we had to get many different permits for the state, county & city.  In total the fees were close to about $3k.  Of course you can start small and see where your business takes you.  In San Diego, the most important things you will want to make sure you obtain is a Food Safety Certification, a Business License and a Health Permit which will depend on where you will begin selling your product. The state approved food safety certification exams are the National Restaurant Association EducationalExperior Assessments aka Thompson Prometrics & National Registry of Food Safety Professionals. A business license is very affordable obtained from the City of San Diego, or your relevant city.  It is always a good idea to have this to protect yourself no matter how you legally structure your business.  A Health Permit is typically granted by the County but again it depends on where you will be selling your product. In San Diego, you will need to contact the  County of San Diego Department of  Environmental Health to obtain a health permit. California also required any food product to be manufactured in a certified commercial kitchen so if you rent space from a facility that has already been certified, you will fall under their permit with a commissary letter.  However under the new California HomeFood Act that passed earlier this year, that has changed.  So make you research it to determine if you can start with a food business from home.

3.) Write a business plan.  People always ask whether it is important to write a business plan if you do not plan to look for investments or loans, and I always say YES! A business plan is a really good idea to help focus and guide your business.  I have provided an example of my business plan to help you get started.  Keep in mind, this was written in 2005 so much has changed since then.

4.) Develop a marketing plan.  I truly believe the success of your business is probably 70% based on your ability to market your product and your company brand.  I actually decided to take a basic UCSD extension marketing course to refresh my knowledge and gather new ideas when I first started the cookie company and it was one of the best decisions I made.  It not only offered a chance to network and form important connections but we also created the marketing plan I created for my business that help grow it exponentially.  Here is a quick worksheet you can work through to help you start thinking about your target customer and how you will market to them.

5.) Determine proper food labeling.  Food laws are always changing as well as the labeling requirements enforced by the FDA so make sure you are correctly labeling the food you are producing.  Basic requirements on food packaging is the name of the food, quantity and contents, name and address of the food business & the list of ingredients. If you are selling unpackaged foods for resale, you must supply a list of ingredients to the retailer.  Typically you can contact your local health department to submit an example of your label before taking it to print to make sure it meets all the necessary requirements. Nutrition information isn’t typically required until you get to a certain size so you most likely won’t have to worry about it starting out.  It is always good to get a basic idea of your calorie count however and there are many online tools that can help you do that.  I was often asked especially in sales meetings how many calories were in a truffie.

6.) Obtaining proper insurance.  Food can be  a scary industry because of the liability involved no matter how clean or OCD or careful you are.  To start, make sure you obtain a general liability policy to cover any accidents that can happen and a product liability in case there are any defects in your product.  As your business grows there may be other types of insurance you will want to consider so it will be smart to speak with your insurance carrier as your business grows.

7.) Source your suppliers. When I first started, I honestly shopped at my local grocery store, target & Walmart for ingredients.  Not smart. Research your local wholesale suppliers which sell in bulk and will help you save a ton on costs.  In San Diego, the Costco business center is a great resources for certain ingredients, as is Restaurant Depot and Lakeside Poultry.  Lakeside Poultry is located quite a ways away from central San Diego but they deliver on orders over a certain amount.  So, I actually ended up teaming with other local producers to combine our delivery into one to meet the minimum.   For specialty items considering looking online. I oftened purchased specialty chocolates from Gourmetfoodstore.com.  Packaging and printing suppliers I also found most frequently online. Here are a list of packaging suppliers I used on occasion especially during Holidays and other celebrations.
Nashville Wraps
Bayley’s Boxes
BRP Box Shop

8.) Network as much as you can!! I can’t tell you how important this is and how much this will grow your business to meet other business owners and foodpreneurs.  I signed up for Meet Up  right away and joined local networking groups as soon as I got a chance.  Research different websites, facebook groups, linkedin groups and goole hangouts to find food entrepreneur forums and involve yourself in the discussions.  Get to know other business owners and you will be amazed at all the opportunities that come about.

Other tips and resources to help get you started on your food business

1.) See if you can “intern” or volunteer at a local business that does what you eventually want to do.  If you have the time it might be smart to go behind the scenes of a bakery if you’ve never worked in one before if that’s eventually what you want to own one day.  I spent some time volunteering my time at a local bakery just to understand how things operated and what it really took to have a successful bakery.

2.) Find a mentor or a business coach.  There are so many fantastic services that offer mentorship programs and coaching programs if you are looking to really take your business to the next level. SCORE is a free service available in most cities that offer coaching sessions with entrepreneurs that have walked in your shoes at some point in  their lifetime.  I went to Score counselors quite often when I was first starting and they always took the time to ensure they paired me with the perfect partner for each specific need I was seeking guidance on. Eventually as my business grew, I also hired a business coach.  When looking for the right coach, I think the most important thing to look for is trust & credibility.  If they have accomplished the things they say they will help you get and if they are genuinely interested in seeing your success. Trust your gut.  Business coaches can run anywhere from a few hundred dollars a month to a few thousand dollars a month but you have to believe you are investing in yourself and you are obviously worth it.

3.) Consider attending food events and conferences.  There are numerous food shows and trade show events that happen throughout the year all over the country.  Research potential shows that might be close to your home that you may be able to attend.  Trade shows are a great place to gather resources, stay in touch with industry trends and connect with others in your same industry. I attended the Fancy Food Show every year and even when I couldn’t afford to show, just attending was huge in connecting with retail buyers across the nation.

4.) Developing your recipe for mass production.  Make sure you spend some time developing your recipe in bulk and larger production sizes, especially in baking.  Ingredients don’t always translate one for one when you increase your production size so make sure you test this carefully when scaling up.

5.) Run home based tests for shelf life until you can afford professional tests.  Starting out, I would put cookies in separate bags labeled with different dates and see how long it took before you could tell a significant difference in taste and quality. I would also test how long cookies could last in the freezer and refrigerator.  This will at least give you an idea of how long your product will last before you won’t want to put your name and stamp of approval on it.

6.) Learn time management skills and don’t forget things that it’s okay to take a break sometimes and let yourself relax. I worked from 7 am to 3 am everyday for a year straight and no matter what my list was never completely done.  Take time to separate yourself from your business and communicate as much as you can with your loved ones.

These are just a few suggestions to help you get started.  As this blog grows, I hope to continue to provide guidance and resources to help you start & grow a successful food business.  Please let me know if there are any specific questions or issues you struggle with that we can help with. Congrats on pursuing your dream!

 

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