Don’t Bite Off More Than You Can Chew: 5 Things to Consider Before You Launch Your Food Business

Photo Courtesy of Creative Market

How many times have you heard the refrain? “These brownies are amazing. You should sell them!” Replace brownies with salad dressing, jam, kimchi, or granola and every talented cook has heard this more than a few times. Because you know, running a food business is exactly like creaming butter and sugar and adding that secret ingredient that makes your food so crave-worthy. Or not.

There are a lot of things to consider before you take your recipe to market, from how to source ingredients efficiently to the best place to buy liability insurance. Yes, that’s a thing when you’re selling food to the public. Establishing a social media platform and buying the right takeout containers are all in the job description when you’re a business owner as well as a baker.

Whether you’re applying to sell at your local farmers’ market or ramping right up and making your pitch to the buyer at Whole Foods, here are five things to consider before you light that fire.

Before you decide exactly what to sell, how to price it and where to market it, imagine your dream customer and how your product will capture their imagination. There are plenty of jams on the market, but do you add mint to your marmalade to give it a tropical twist? Have you discovered how to make brownies that fit into a paleo lifestyle? (If so, call me, stat!) There’s nothing wrong with tackling a crowded market. Americans love choices, as evidenced by the long aisles of breakfast cereals in every supermarket. But your product will need a way to grab buyers’ attention, whether it’s an unusual flavor combination or clever branding.

Know your target shopper and differentiate your product and you’ll stand out even in a crowded field.

Want to avoid all the work involved in operating a food business? Show up to a tasting panel and tell the farmers’ market managers that today’s batch isn’t your best. Or start selling at a popular market and then try to explain to a returning customer why the size of today’s loaf is completely different from last week’s. Why is fast food so darn popular, even if it’s not the best tasting or healthiest thing to eat? It’s consistent. Consumers like knowing what to expect, and that’s a promise you have to make to your buyers in any food business. What’s in the food has to match what’s on the label and what your customers have come to expect.

Determine the precise quantities of every ingredient and prepare it the same way each time. Save the creativity for developing new products to add to your line.

Ask any food maker or restaurant owner what the most predictable thing about the business is and they’ll tell you it’s the unpredictability. Suppliers go out of business and suddenly that herb that gave your most popular recipe its zing is almost impossible to get. Do you throw in the towel, or search out a farmer who’s willing to plant a few rows just for you? The local health department decides to reinterpret the regulations and now you can only manufacture your popular spinach dip if you use a dairy-certified facility. Do you cry in your cappuccino or find other makers using dairy products and band together to rent a kitchen?

Equipment malfunctions, power fails and rules change but successful foodpreneurs keep on making their products no matter what obstacle is thrown their way. Be conscious of your capacity for coping with challenges.

There are a number of small businesses that can start with very little cash investment, but food businesses are definitely not at the top of that list. Products the public will put in their mouths are one of the most heavily regulated things. Federal, state and local regulations generally translate to permits, fees and higher overhead. Perfectly delicious products will only sell if the packaging is equally as appealing. Making a perishable product? Spoilage and waste can have a serious affect on the bottom line. Whether you use savings, credit cards or crowdfunding, you’re going to need cash upfront and some more in the bank to be sure your new food business succeeds.

Be realistic about costs and have the funds in place to start, with a healthy reserve set aside for unexpected expenses.

First, pick an outlet. If you’re outgoing and don’t mind hauling inventory and tables, the nation’s 8,600 weekly farmers’ markets offer the best profit margin, since makers keep the whole retail price. With a built-in flow of shoppers, market businesses ramp up faster than most, and individual markets’ limited hours mean it’s easy to launch your business as a side hustle. Face to face with your end user you’ll need to make eye contact, flash a big smile, tell your story and offer a tempting taste to close the deal.

If you’re an introvert more interested in manufacturing than marketing, wholesale may be a better route. In addition to supermarkets, lifestyle boutiques are finding artisanal grocery products a profitable use of shelf space. You’ll still need to sell to secure your spot in the store, though. Emphasize product quality and packaging that will attract shoppers, and get ready to negotiate on price. These buyers will be crunching numbers before they bite, so make sure your formula allows both you and them to make a profit.

Know your real cost, price your product right and practice your pitch, then show them what you’ve got and ask for the order.

The specialty food industry is thriving. Walk the aisles at the Specialty Food Show or your neighborhood market to see where your idea fits and hone your skills at the annual InTents Conference and with books like Good Food Great Business by Suzy Wyshak. Combine these ingredients and you’ll have the recipe for success.