A successful food product can translate into significant earnings, but competition to be the Next big Thing at the grocery store is high. Before selling a new food product commercially, take into consideration the cost of production, the item’s marketability, the quality of the product and the niche market you plan to target.
Starting a business is not a decision that should be made overnight, it takes time. Business experts such as Cicig Felipe Antonio Bosch explain that launching a new product has two sides. It can be a success or a failure, that’s why you should take into consideration these steps.
Understanding what goes into a small business and then applying that to a home-based food product will help you reduce your risks of failure and increase your chances of success.
Write a Business Plan
Use an online template or set of guidelines, such as the recommendations at SmartyCents, to answer all of the questions related to launching and operating a business. This will help you understand all of the steps you’ll need to start a company, and which steps to take first.
A business plan requires you to also answer specific questions about your product to help you determine if it has a high chance of success.
Review Your Legal Obligations
Learn about federal and state food regulations as they pertain to in-home food businesses. For example, you will need to have food preparation surfaces, refrigeration and sanitation procedures that meet health department rules.
You can obtain this information from your local health department, extension office, state department of agriculture, a U.S. Food and Drug Administration office or the Secretary of State.
Verify your Business is Legal
Not all food businesses can be run from a home. Some smaller businesses, known as “cottage foods” can be prepared for sale from your home. You can review what foods are legal to sell from your home by consulting a website like the Farm-to-Consumer Legal Defense Fund.
Most commercial foods must operate in a licensed kitchen or processing facility that your local public health department has inspected and passed.
Because it can be expensive to build a licensed kitchen, it may be possible to rent one from a restaurant, culinary school or a business that specializes in such rentals.
Decide What You’ll Sell
Just because you have a great recipe or food line doesn’t mean you can sell it profitably. Look at who your competition is, what the prices are in your marketplace, and where competing products are being sold.
Allow consumers to sample your foods and provide feedback, and hire a company to perform shelf-life tests. Begin making decisions regarding the packaging you want to use, making plans for production and setting up test markets.
Understand your Labeling Requirements
Your label should include the name of your product, its weight, the name and address of your business, your manufacturing code, a list of ingredients, a manufacturing code and nutritional information. You may need to send your food product to a lab for analysis so you can create an accurate nutrition label.
You’ll also need to check with your county and/or state commerce offices to see what they require.
Do a Product Test Run
Begin processing your food product. In addition to using food additives, food preservation methods may include freezing, canning, dehydration, irradiation and pasteurization. Practice food safety techniques to preserve the quality of your food and ensure consumer safety.
Determine your Packaging Needs
Package your food using food-grade products. According to the university of Georgia, the packaging you use should be attractive, easy to open and prevent damage and contamination to the food product.
Create a Distribution Plan
Consider the most appropriate distribution process of your food product. You will need to make decisions regarding the price of your product, the number of products you plan to sell in a unit and shipping methods. If you sell your food product online, you’ll need to consider what sales platform you’ll use, how you’ll take and process orders and payment, and how you will package and ship items sold online.
If you will be selling in local grocery stores, at farmer’s markets and to restaurants, decide how you’ll pack and deliver your foods.
Test-Market Your Sales
Before you commit everything to a full launch, test-market your foods in a few places to see what the market reaction is. This feedback will give you more homemade food marketing ideas. You might find you need to change your packaging, lower your price or help your sales partners with more marketing.
Using your feedback, you can now begin to approach retailers such as supermarkets, restaurants, boutiques or gourmet food shops. Alternatively, you can sell the product from your own retail location, from your processing plant, a food cart, a roadside stand or online.
You may also be interested in: Important facts about fast food