So You’ve Got a Recipe and You Want to Sell a Food Product
You’ve been making this recipe forever and every time you share the results, someone says, “Wow, this is so good! You should sell it.” And that’s where you gets stuck, because you have no idea what to do next.
When you’re at this stage, at the very beginning with no clue what to do next, you don’t know what you don’t know. You don’t know even know what questions to ask. Eight years ago I was in your shoes. I needed help; I knew I needed help, but I didn’t know where to turn.
I stumbled along, making mistakes, spending money I didn’t have and sometimes getting lucky and finding solutions that worked. I looked for help from people who’d “been there” too. Shari Fitzpatrick, founder of Shari’s Berries, and I had a conversation during which I recall asking the most intelligent questions I could come up with. She was very kind in sharing her experience, but in hindsight, and to my point, I’m not sure I got as much as I could have out of that conversation. First because it was only about 15 minutes long and more critically, because I wasn’t sure what to ask. I wonder if she hung up from that call thinking, “ha, good luck to that girl ’cause she does NOT know what she’s doing.”
Eventually, I managed to piece together enough of what I needed to know to get the right incorporation, licensing, business and liability insurance, registration for sales tax, space in which to bake, ingredient, packaging and shipping vendors and so on. Quite possibly, I may have (unknowingly) violated some laws. This was not the fast track, but there wasn’t any other way, and I was determined to keep moving forward!
There is plenty of information “out there” about starting a generic business. Much of it applies to your start-up business whether you’re a food entrepreneur or a hair stylist. And it’s still confusing. Add in that you’re producing a product that people EAT, and laws that change frequently, and now it’s even more confusing and yet important that you get it right.
Here’s a brief checklist of the first crucial steps you need to take if you want to turn a recipe into a successful food business.
1. Determine to WHOM you are going to sell. Is there even a market, beyond your well-meaning friends and family, for your product? Many of the rest of your decisions depend on this one. PS: “Everyone” is not the right answer.
2. Incorporate your business. It’s important for tax purposes as well as liability and asset protection. Which type of incorporation you choose depends on your personal situation and merits discussion with your CPA.
3. Get liability and business insurance. Especially with a food business, there are too many factors and risks lurking to play around here.
4. Take care of these first two steps BEFORE you sell one bite of anything!
5. Register your business with the state and get any local city or county licensing.
6. Find a place to produce your product that fits your (probably) limited budget. Be realistic about how much you can sell, how much space you need to produce, and how much time it will take you to do it. Some states or counties allow you to start out in a home kitchen. Many do not and you have to find a commercial facility.
7. Figure out the most cost-effective way to buy ingredients. There’s a catch-22 when you’re starting out. You aren’t producing in large enough quantities to buy from a food distribution company and you can’t afford to buy ingredients at retail grocery stores. Wholesale clubs are one solution or depending on what kind of facility you’re using for production, you may be able to participate in a group order.
8. Determine what the best equipment to get the job done is. Do you need a mixer, oven, extruder, freezer, steam juicer? Will you have to buy it or can you find another way to get use of whatever equipment you need?
9. OR, are you going to work with a co-packer/contract producer and have someone else make your product on your behalf? Make sure you get referrals and ask all the right questions before committing to this kind of arrangement.
10. Find one or two or ten reliable packaging suppliers. Get samples of what you think you want to use. Test it all out and make sure it works for your purposes. BTW, if you only have one place from which to order your “unique” packaging, what happens when they can no longer supply you? (Trust me, I speak from panicked experience on this one.)
Lots of people have great recipes and many of them have thought about selling their food products. Some even take the leap and pursue the dream. The only ones who succeed are those who find the right resources and help along the way, whether deliberately or by sheer dumb luck. Are you going to rely on luck or would you like a roadmap?