Getting Started: Steps to Start
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.
- Scale up your recipe. This is often done with the help of a contract packer or food consultant, or you can work on scale up by trying things on your own.
- 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.