27 Tips to Open Edible Food Industry

Open Edible Food Industry: Starting any business in today’s environment is difficult.

But the food business has an advantage over other businesses; we all have to eat!

We also have different tastes and desires in our diets which allow very “niche” based food products to succeed.

Once you’ve decided you want to start a small business.

See also: 22 Tips to Start Home-made Ketchup Process 

Open Edible Food Industry: BusinessHAB.com

Open Edible Food Industry

Open Edible Food Industry

Formulated your business plan, lined up financing, and secured a site.

The time will finally come to actually open up shop.

While planning a business may present challenges.

The actual act of opening a business.

And bringing the business concept to fruition has its own set of difficulties.

To have a better chance of long-term success.

you need to get your business off to a good start.

Here are a few tips on how to legally establish your business.

Hire your first employees, spreading the word, and organizing a grand opening.

1. Ensure you have a business plan.

A business plan is critical to the success of a business and can be seen as a plan that describes your business, products/services, market, and describes how your business will go about expanding for the next three to five years. It is essentially a “road map” for your business to follow going forward.

Read on: 29 Tips to Start Young teens Security Company 

2. Determine the legal structure of your business.

Before starting your business and filing the necessary papers, it is important to decide on how your business will be legally structured. Generally speaking, you will be establishing either a sole proprietorship; partnership; corporation; or limited liability company (LLC). There are important legal and tax implications for each.

  • A sole proprietorship is owned and run by one person, and there is no distinction between the owner and the business. This means that all the business’ profits, losses, debts, and liabilities are your responsibility. Choose this if you are the sole owner and want full responsibility for the business.
  • Partnership. A partnership occurs when two or more people share ownership.

    Open Edible Food Industry

  • In a partnership, each partner has equal share (unless specified) in the profits, liabilities, and management of the business. This can be useful in terms of pooling capital and expertise to start the business.
  • Corporation: A corporation is an independent legal entity owned by shareholders. Generally, this structure is not appropriate for small businesses.
  • Limited Liability Company (LLC): An LLC is similar to a partnership, except members are protected from personal liability for actions of the LLC. For example, if the LLC is sued, the personal assets of the partners are typically exempt. If you are worried about personal exposure to lawsuits or debts arising from your business, this may be a good option.

See also: Top 10 Computer Peripherals Business Tips 

3. Form the necessary legal structure.

A different procedure exists for forming each one of these structures, and some require more work while others are extremely simple.

Open Edible Food Industry

4. Register your business name.

Unless you are running the business under your own name, such as “John Smith Painting,” most states require you to register a “Doing Business As” (DBA) name for tax and legal purposes. Registering a DBA is done with your state government or county clerk’s office. Search the specific requirements of your state online.

5. Obtain a business license.

The city or county which you operate within will require a business license. Typically, these forms can be found on the website for your city.

  • These forms will require your business type, address, # of employees, EIN, and possibly information regarding revenue (estimations will work fine here).
  • Keep in mind that licensing requirements often apply to online and home-based businesses as well as typical brick-and-mortar businesses. Requirements do vary according to location, so be certain to contact your local and state government to determine specific requirements.

    See also: Top 16 Voice Training Business Tips 

6. Inquire as to other necessary permits.

Unfortunately, each city or county has different permit requirements for businesses. These can include things like “Home Occupation Permits” for home based businesses, “Alarm Permits” if your business requires a commercial alarm, or various alcohol and firearm permits.

  • Contact your local government’s permitting bureau or similar authority, or seek out the local chamber of commerce or business association for advice.

7. Have Passion Enough to Make a New Product a Success 

Industry statistics make it clear that you need passion, but practical passion composed of great marketing, product positioning, and shelf strategy is necessary to increase your chances of success in the consumer food arena.

Most food entrepreneurs are high in passion, and like most people new to business have a large degree of “I don’t know what I don’t know.” You probably think all you need is a great tasting product to get on the shelf. Well, that sounds logical because most of us like great tasting food. In the food business, great taste is akin to a car having brakes. When you buy a car, you expect it to have brakes. You do not make your purchase decision based on this attribute of the car.

See also: 11 Tips to Start Formal Wear & Costume Rental Business 

Open Edible Food Industry

Great taste is an expectation on the consumer’s part. Technically, you can say it is a selling feature, but in reality, it is an expectation the consumer has when they pick the product off of the shelf.
Newcomers to Consumer Packaged Goods (CPG) do not realize this is a distribution channel intensive business with many gatekeepers along the way. Gatekeepers in the business are buyers, merchandisers, distributors, and brokers.
Additionally, the business of food has a high degree of complexity that newcomers don’t’ know about, creating hurdles that slow you down or stop you in your tracks.

8.  Apply Your Kitchen Food Production Ideas

Food is an idea many people pursue as a business. Besides the fact we love to eat, food is easy to prototype; you can do it in your kitchen inexpensively. You also have the enjoyment of sampling for your friends and making them happy with the wonderful recipes you took from concept to plate.

Foodpreneur clients, Wine Duets, Lycoberry, Fun to Eat Fruit and World Empanadas all started in the Kitchen, and all share the practical passion for recognizing that food is ALSO a business.

See also: 6 Tips to Start Mobile Power Plant Rentals Business 

Open Edible Food Industry

9. Establish a bank account for your business.

It is very important not to mix business and personal finances, as this can lead to issues with the IRS.

Having separate bank accounts for business and personal transaction simplifies accounting and makes tax requirements easier to understand.

  • To open a business account, simply contact your local bank or credit union.

10. Hire the right people.

The first impression is critical for a new small business, and unless you’ll be doing all the work yourself, that impression will be made at least in part by the people you hire.

  • Ideally you can find someone who is familiar with the business — someone who has twirled dough if you’re opening a pizza shop, for instance — but even more important is finding a person who is willing and eager to learn. You need employees who want to learn to do things (and represent your business) your way.
  • You do have to be willing to let go a little, however. This business has been your baby for a long time, but as you let it out into the world, you’ll need help taking care of it. Look for employees who are eager to contribute ideas and adapt as the business goes through its early growing pains.

    See also:  Top Plowing Operation Tips/Business 

    Open Edible Food Industry

  • Do your homework. Look over resumes. Call references. Don’t just hire your nephew to make your brother happy. (Wait until your business gets on its feet.)
  • Key questions like “Can you provide an example of a problem that you successfully solved?” may offer insights into a potential employee’s ambition, ingenuity, and work ethic.. Keep in mind that such questions are common, however, and the interviewee may have prepared stock answers already. (An inability to answer effectively is thus a bad sign.) In addition, try to think up a few problem-solving hypotheticals, for instance, that are specific to your small business.

12. Know Who is Your Competition

The Fancy Food Show is run by the National Association to the Specialty Trade NASFT and occurs twice a year.

It is an amazing array of the most fabulous specialty foods, both domestic and imported.

For anyone thinking of pursuing their passion for food, this show is a must-see.

Over a three day period, you will have a firm foundation of what products are currently in distribution and new products not yet on the shelves.

It is fun “visual” market research helping you decide if your food idea is a real opportunity providing a unique offering to the consumer or one of many “me too” items.

If you see too much competition, then you know it is time to go back to the drawing board.

That does not mean you give up; it tells you to consider a new idea.​​

See also: 12 Points to Start Rental Audio Visual Equipment & Accessories 

Open Edible Food Industry

13. Get the Recipe for the business

The competition, both large and small, are becoming very entrepreneurial.

They are getting really good at coming up with ideas, determining if the idea is a profitable opportunity and then successfully executing great shelf strategy.

The recent IRI annual New Product Pace Setter report shows less than 20% of new products exceed $7.5 Million in sales annually within 18 months of their introduction.

14. Create Your Brand

You’ll need a brand, a product name and a logo.

You’ll at least want to create something basic, even as you start at the beginning stages of your business.

If this sort of work isn’t your forte, think about hiring a branding company before you take your final product to print.

The labels on your product will have a large impact on your overall sales– though remember, labels aren’t everything.

See also: Top 112 Audio Equipment/Accessories for Rentals Business 

Open Edible Food Industry

Remember that in the long run, you’ll also need a website and line cards for each of your particular products.

These line cards will give information to buyers about a particular product (or line of products).

And will include photos, pricing information, nutrition, case layouts and sizes and more.

You can work on these larger marketing pieces over time.

If you have made the journey from Kitchen to Shelf to the Plate and you want to share your experiences, good or bad, drop me a note. Maybe you will be featured in an article?

15. Decide Who Will Be Making Your Products

Once you’ve attended the Fancy Food Show (and gotten a good dose of inspiration and business answers).

You’ll need to begin working on your operations/manufacturing plan.

When it comes to actually making your products.

There are a number of ways that you can structure your business plan.

You can set up your own manufacturing plant, which you’ll have to scale as you continue to grow.

You’ll be responsible for all of the production, sales, marketing, and business admin side of your new company.

As you grow, you’ll need to hire employees, move into a larger space, set up a production line and more.

This system requires capitol for investment.

And will take a substantial amount of your time to actually produce the product (and/or oversee your facility and team).

See also: 12 Tips to Start Meeting/Stage Rentals Business 

16. Open Edible Food Industry

You can work with a co-packer or co-manufacturer (which stands for contract packer or contact manufacturer).

Their job will be to assemble your product exactly as you specify.

Using the packaging you choose, your design, your labels and your ingredients.

They will also deliver the loads of finished products to the locations you specify.

Sometimes co-packers are responsible for ordering raw ingredients, and sometimes you will be.

Every co-packer will have their own minimum requirements to do a production run for you.

And they will expect that you will continue to increase your sales.

17. Open Edible Food Industry

The advantage to this co-packer system is that it takes production off of your plate.

And utilizes their full scale production line that’s already been set up.

This keeps your operations working at max-efficiency.

And allows you to spend your time actually selling the product and growing the brand.

A good co-packer can be hard to find though, and relationships take a long time to build.

We suggest looking through the following listings for co-packers:

  • Specialty Food Resource | Co-Packer Listing
  • BBF Direct | Working With Co-Packers Article

If you work in a particular industry, you may contact a complimentary company to yours (but don’t try a direct competitor).

And ask if they would be willing to work out a co-packing arrangement.

Even if they don’t do this for their primary business, they might be willing to consider your proposal.

18. Prepare your site.

Whether you have a physical or virtual business site, the impression it makes on your initial customers will go a long way toward determining your chances of success.

  • If your business involves a storefront — a candy shop or used-book store, for instance — set up your space to represent your vision for the business. Coordinate color patterns and décor with your logo, for example, or consider personalizing it with family photos to establish your essential connection to this business. Consider hiring a professional interior designer and/or decorator.
  • A web presence is becoming (if not already) essential for any new small business, so don’t take this aspect for granted.

    Open Edible Food Industry

  • Especially if your business has a substantial web-based component, make your site intuitive, manageable, and suited to the brand identity you want to build. Hiring a professional web designer may be a good idea.
  • If your budget is tight, and/or your business does not require a traditional storefront, don’t overspend on a fancy space. A local coffee shop can make a good place to meet clients, or you can rent a space as needed for such gatherings. Wait until your business has a solid foundation before expanding into a nicer space.

19. Consider a “soft” opening.

There is no rule that says your first day of business has to also be your Grand Opening. Give your business a chance to work out the kinks before announcing itself to the world.

20. Do Sales Presentations And Demos

To really complete the start-up process you’ll need to sell something. Even if you just produce a few sample runs of your product and you do some demos to buyers, this is a good way to start the process.

You’ll need to set up meetings with buyers as they’re analyzing your particular category once every year or two.

It will require calls and presentations, as well as providing samples for them to try your products.

Once one grocery chain picks up your products, that will prompt a distributor to get your item set up in their system. From there, selling will get easier because you’ll already have one distribution channel in place. This means that companies who work with that same distributor can simply add your products to their current orders.

21. Start early.

Don’t wait until opening day, or even until you know when opening day will be.

Be proactive in establishing brand awareness and generating anticipation.

A “coming soon” sign on your in-preparation storefront is a good start, but not enough on its own.

  • Preserve the bulk of your initial marketing budget for the Grand Opening, but before that time utilize budget-friendly options like flyers, targeted direct mail, and a social media presence.
  • Try to build your brand even before your location is ready. If you’re going to be selling handcrafted necklaces or handmade pierogies, seek out a local craft or food festival where you can set up a table and sell your wares. (Be sure to advertise your forthcoming retail presence.) If you’re an accountant, maybe you can volunteer to offer tax advice at the local community center or library (and hand out business cards).

22. Establish a marketing budget.

The run-up to opening and first few months of operation may very well make or break your new small business, so make sure you give your initial marketing push a strong effort.

  • One suggestion is to dedicate 20% of your first year’s marketing budget to your Grand Opening. This amount should be significant enough to spread your message widely at a time when your ads are likely to be their most effective, but at the same time isn’t an “all your eggs in one basket” situation that leaves you with limited ability for subsequent advertising.
  • Spend, for example, $4,500 advertising your Grand Opening, because that amount should be sufficient for two media buys. If that amount is beyond your reach, you may be able to utilize a mix of flyers, direct mailings, promotional items (balloons, banners, etc.), and a “sign spinner” at a busy intersection for around $1,500.
  • This, of course, assumes you have a fairly large marketing budget of $22,500 ($4,500 is 20% of $22,500). Since many businesses have much smaller marketing budgets (maybe only a few thousand dollars), always work within whatever 20% of your marketing budget is.

23. Use traditional media.

If your marketing budget allows, consider using traditional media like radio or newspaper. If you can manage television advertising as well, it is always a good idea to diversify your ad presence.

  • Before tossing radio aside as an outdated media format, note that some three-quarters of Nigerians adults listen to radio at least occasionally, and often do so when driving somewhere. Thus, radio can be a particularly good advertising method for retail stores and restaurants. Target your advertising by format (Top 40, Country, Talk, etc.) and time of day to maximize impact.
  • Newspapers are popular among over-35 adults, but even a decent percentage of younger adults read a paper occasionally. Newspapers are still a cost-effective way to reach thousands of potential customers.

    Open Edible Food Industry

  • Consider including coupons as well; they provide not only motivation to visit but a tangible connection between a potential customer and your business. It is also easy to track their effectiveness, as more coupons coming in mean they are doing their job.
  • You may assume that TV advertising is beyond your small business budget, but there are options for producing and placing lower-cost ads, sometimes with the assistance of the local broadcast network. Consider bunching your ads during programs relevant to your targeted customer base — TV judge shows for a legal practice or the nightly news sports report for a golf training academy, for instance — so that you seem like a major sponsor.

24. Consider when to make your opening “grand.

As mentioned, there is no requirement to hold your Grand Opening on your first day of business.

And it is often advisable to wait even a couple of weeks before staging it.

25. Make it an event.

Work hard to build excitement in the days and even weeks leading up to your Grand Opening.

  • Use the term “Grand Opening” in your marketing — it makes it seem more special than just an “open for business” notice. Create excitement by offering prizes, giveaways, demonstrations, special deals, etc., for visitors that day.
  • Hire a photographer to capture the event for media (traditional or social) consumption. Bring in live entertainment, extra staffing, even security if you expect an especially large crowd.
  • If your business and/or its location aren’t conducive to a large public Grand Opening, consider having an event more along the lines of a “launch party” at a nearby restaurant, banquet hall, etc.

26. Guarantee a positive customer experience.

Plan ahead and do whatever you can to ensure that attendees walk away from your Grand Opening with a positive first impression of your new business. Oversights as simple as inadequate parking, long food lines, or running out of paper products in the restrooms can sour an otherwise enthusiastic reception.

  • Have extra staff on hand to make sure customers don’t have to wait too long for service or attention.
  • If parking may be an issue, try to work out arrangements beforehand with other businesses or community groups — perhaps setting up satellite parking at a nearby church, for instance.
  • Send attendees home with a token of your appreciation — ideally something with your logo on it — along with a coupon / special deal for a return visit.

27. Involve the community.

Establish your connection to the local community from the very start of your business. Let people envision your business having a positive community impact for years to come.

  • Invite the local press to your event, but also other local business and community leaders. Network with as many as possible and establish yourself as a member of the local team.
  • If possible, align your Grand Opening with a community event, when local crowds will already be gathered. Make it seem like a part of that larger celebration. Sponsor the entertainment at the holiday lighting celebration or midsummer festival. Advertise both your business and your deep connection to the community.

Open Edible Food Industry

Conclusion

Each article to follow will present one or more principles to help you learn a lot more than just creating great tasting food to have a chance of getting on the shelf.

The process of starting your new specialty food company will not always follow these steps as outlined.

This progression is not as clear and linear as it may appear on paper.

It can be complex, with some steps taking months.

And then sometimes all of the pieces come into line at once and you’ll need to make all of your decisions immediately!

Starting your new brand will always be challenging.

Your business decisions will not always be straight forward or outlined.

But will it be worth it? I think you already know the answer to that.

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