By Jay Savulich, Chief Operations Officer, Rising Tide Capital
Starting a food business can be a scary time. You’ve finally decided to take a leap of faith and transition your hobby into a money-making business venture. Help set yourself up for success by having a well-defined plan. Make sure you have key information available to develop your business plan. The following checklist identifies what you need to get started.
1. A business description that clearly identifies in detail what you are selling. What is your business name; what products or services do you provide; and how long have you been operating your business?
2. A description of the location from which you are selling. Are you planning on opening a brick and mortar location, purchasing a food truck, or selling at farmers markets and events? Will you sell your products or services online?
3. An operations plan that describes how you will go about making and selling your product, as well as who will be the key players on your team. Describe your production/manufacturing practices, location, suppliers, inventory, and distribution strategy. You want to be detailed and time-specific as much as possible to outline a realistic plan.
4. A clear and specific description of your target market. Ask yourself: Who is my customer? Be detailed in your description and include information about your ]ideal customer’s lifestyle as well as their gender identity and age; where they live; their salary and level of education. Remember, you can have more than one target customer but you cannot serve everyone.
5. An inclusive list of your chief competitors and their key attributes such as product description, pricing, location, and target audience. For this competitive analysis, also consider your competition’s strengths and weaknesses; and how their product is packaged or service is sold.
6. A thorough pricing strategy, including target retail and wholesale pricing, if relevant, as well as your cost of goods sold. When determining your pricing, consider your overall marketing objectives, consumer demand, and market and economic trends.
7. An explanation of your business structure and details on the ownership structure. What is your legal entity (sole proprietor, limited liability company, c-corporation or s-corporation)? Are you the sole owner of your business or do you have partners? How many employees do you have and what are their roles and responsibilities?
8. Three years of annual sales projections, itemized on a monthly basis. Be sure to include the quantity of products (or services) that you plan to sell each month. Also, note if your sales are subject to seasonal behavior.
9. Three years of annual projected cash flow that includes all sources of sales and identifies all known expenses. Cash flow is the money that will flow in from the sale of our product or service and out to cover your expenses of your business each month.
10. A startup budget and a description of total funds required to get the business up and running. Be sure to include fees for business formation; food business-related licenses and permits; as well as marketing materials and insurance costs. Don’t forget to also budget for your point-of-sale solution, ingredients, equipment and supplies.
Proper planning will help you get your food business off on the right foot. Don’t derail your dreams by cutting corners or skimping on the details. Ensure you have a solid foundation by doing your homework, understanding your competitors, defining your differentiators, and establishing a realistic plan for startup and growth. Now is the time to get serious about your business, or your business will never be serious enough for you, your customers, potential partners, or possible investors.
Rising Tide Capital is a non-profit organization whose mission is to assist struggling individuals and communities to build strong businesses which transform lives, strengthen families, and build sustainable communities. For more information on their programs and services, visit www.risingtidecapital.org