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Food Entrepreneur Resource
Center
Basics | Business & Marketing | Glossary | Product
Development
Agencies,
Regulations | Small
Co-packers and Commercial Kitchens
Specialty
Food Business Basics
This
Section of the Food Entrepreneur Resource Center is intended
to give you an overview of the business. The pages in this
section address challenges and rewards, helping to answer
the question, "What is the Specialty
Food Business, and do I want to be in it?"
Contained
in this section:
- Assistance -
discover what assistance NECFE at NYSFVC provides to
its clients. Includes links to facility information.
- Pros and Cons -
Itemizes some of the rewards and challenges of being a Specialty
Food Entrepreneur
- Steps to Start -
Lists the common steps in starting a Specialty Food Business
Assistance
and Facilities
The Northeast Center for Food Entrepreneurship at the New York State Food Venture Center offers assistance in the following areas:
-
Product and Process Safety Evaluation
-
Regulatory Compliance
-
Process Development and Recommendations
Shelf-life analysis, Test-production facilities
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Processing
Operations Assistance
Referrals to Co-Packers, Labeling Assistance,
Suppliers
-
Business
Assistance/Referrals
-
Laboratory Assistance/Referrals
Microbial, Chemical, and Physical
Analysis
-
Certification and Training
Many services,
including initial consultation, reference lists and referrals
are provided free of charge. Services for which we charge
include: process approval and filing, amendments & filing,
laboratory work, etc. The rate for these services is $50.00
per hour. We also provide access to our Pilot Plants, which
are certified for commercial food production, to help entrepreneurs
do their test batches. The fees for Pilot Plant use vary.
Facilities
Pros
and Cons of Starting a Specialty Food Business
The specialty food business
can be rewarding and exciting. It can also be a real struggle.
Listed below are some pros and cons of starting and running
your own specialty food business. The list is intended to
provide a realistic picture of specialty food manufacturing.
Keep in mind that several of the items listed are qualitative,
that is, their importance depends largely on how strongly
you feel about them.
Advantages:
- Being your own boss.
- Creating your own work environment:
hours, flexibility, etc.
- Doing something in which you believe
- Reaping the benefits of hard work
and long hours directly.
- Variety, challenges, and opportunities
for creativity, full use of knowledge
- More open earning and growth potential
- Satisfaction of a successful venture,
a product well received
- Empowerment
Disadvantages:
- Risk of failure
- Time Commitment — 60-70
hrs per week is normal
- Financial strain as assets become
tied to business start up and success
- Strain on family due to financial
and lifestyle change
- Emotional burnout
- Unavoidable business
roles/requirements you’d rather not fill
- Rejection of your product by consumers
Should you decide to pursue
a specialty food business start up, there are a number of
things you can do to minimize risk and maximize your chance
of a successful, rewarding venture:
- Develop a Business Plan
- Regularly review your business plan
to remind yourself of goals and maintain focus
- Develop a marketing plan
- Learn and follow food regulations
and requirements
- Maintain accurate, current records
- Analyze your financial status on a
regular basis and make necessary adjustments
- Comparison shop for quality inventory
in a timely fashion
- Learn to recognize and solve problems
promptly
- Draw a line between your personal
life and your business life and stick to it
Steps
to Start a Specialty Food Business
Introduction:
The following is a list of the basic steps to starting
a specialty food business. While each specialty food business is unique and
subject to specific product requirements, the list below outlines the overall
process. The steps are grouped by topic. Keep in mind that each topic effects
the others: your product type and packaging will effect your labels; the
ingredients to make your product will effect your cost and production plans. The Product
- Develop a prototype. Test it out on
people. Collect and incorporate feedback on flavor, texture,
and appearance.
- Determine the market form you would
like the product to have: shelf-stable, refrigerated,
frozen, baked, canned, etc.
- Determine the batch size you will
need for commercial operation. A good start-up size for
a liquid product (dressings, etc.) is 5-10 gallons. For
solid product, consider a 15-25 pound batch.
- Consult a Process
Authority to scale up your recipe. Take the following
into consideration:
- The formulation may change
due to regulatory and food safety requirements.
- Testing (pH,
water activity, etc.) may be required for compliance
with regulations.
- It may take several attempts
to achieve a scaled-up product comparable to
the original; ingredient amounts will not change
proportionately. For example, you may double
the tomato sauce in a BBQ recipe but find you
only need to slightly increase the amount of
garlic.
- Get approval for your recipe from
a Process Authority. This resulting document, a Scheduled
Process, will help avoid product safety and quality
issues.
- Determine the cost of ingredients
based on your approved, scaled-up recipe.
Business Planning
- Write a Business
Plan. It will help you focus your business goals
and determine if you need funding.
- Consider liability insurance. It is
affordable and can protect personal assets in the event
of a problem with your product.
- Determine a form for your business:
sole proprietorship, corporation, partnership, limited
liability, subchapter(s) corporation.
- Register your business with the state.
- Get assistance from business resources:
state agricultural departments, state extension organizations,
SBDCs, SCORE, NECFE, local economic development agencies.
(Click here for a
agency information.)
Labels
- Decide on a product name.
- Determine applicable
regulatory requirements. Ask your state regulatory officials
for help or contact NECFE
at NYSFVC. Consult the FDA Food
Labeling Guide.
- Determine what storage information
must be on your package: refrigerate, refrigerate after
opening, etc.
- Choose a size and shape which is compatible
with your packaging.
- Invest as much in your labels as possible.
They are the first thing customers will see.
- Make test labels, or labels for small,
initial, batches, on a computer printer to cut costs.
- Decide if you wish to make health
claims. If you do, you must have nutritional analysis
done and invest the time and money for FDA compliant
nutrition labeling.
- Decide whether or
not to invest in a bar code. The registry fee is $500,
but most large stores and chains will not consider your
product without one. If you do not plan to sell to large
distributors, you don’t need one.
Market Decisions
- Write a Marketing
Plan. It is a framework for research on competition,
ceiling prices, target markets, etc. and structures
your marketing goals and methods.
- Decide where you will
sell your product. Generally, start off small — at
farmers markets, fairs, road-side stands, etc. These
are also good places to test market your product.
- Determine a selling price for your
product, taking the competition and your financial needs
into account.
- Develop a distribution method: your
car, the mail, a fellow specialty food entrepreneur,
distributor, broker.
Production
- Decide where you will produce your
product: commercial kitchen, pilot plant,
co-packer.
- Find storage space for ingredients,
packaging, and the final product.
- Schedule time with experts at the
production facility to learn about equipment.
- Determine when, based on ordering
supplies, you can produce and package product.
- Schedule time at a processing facility
to produce your product.
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