New Year, New Business: How to Get Started

So you have been dreaming of starting a food or beverage business and now its time to put in the work. You’re excited about your new venture and ready to get going.  Where do you begin? Running a successful food or beverage business is about more than just the food or beverage. Before you start designing logos, creating a website, test driving food trucks, and looking at commercial real estate, take a step back to consider the following:

Determine what type of business you want to start.  Your business goals will give you a strong foundation upon which to build your business.  It’s important to know WHY you want to start your food or beverage business—that reason that will help sustain you through the tough times, and that reason that will help you celebrate the small victories. Ask yourself: Will your business be a side hustle so that you can make additional money to cover household bills or pay for vacations? Or are you looking to quit your day job and replace your income? Or do you want to create a business that you can pass down to your children or other family members and leave as a legacy?

Develop your food or beverage concept.  Get into the kitchen to brainstorm about your idea by experimenting with different recipes and flavors. Set aside time and begin playing around with and researching new flavors, new combinations and creations. Obviously, there will be a lot of trial and error — with some disasters and wins along way. Enlist friends and family to taste your product, talk about your ideas and share their feedback. As you are developing your new idea, consider: What’s already on the market and what’s missing from the market? What do consumers want or need? Does your product solve a problem? Is your food idea a real opportunity to offer something unique to consumers? Or how can you refine or put a new twist on an existing product? And what are the latest trends? And how can your product tap into those trends?

Interested in learning more? Sign up for our next Food Business Bootcamp.

Conduct a market and competitive analysis. Once you have determined your concept, it’s time to understand the marketplace and your potential competitors.  Think of the market analysis as an overview of the market that you plan to enter. Search online for resources that look at trends, growth patterns, and factors that influence your industry. For example, if you want to launch a premium ice cream product, you may want to know the overall size in dollars of the ice cream market, which companies have the most market share, what the demand is for particular flavors, and how the trend towards healthier eating may affect your new business.  

A competitive analysis is an evaluation of your competitors’ products and how they conduct business. It allows you to assess their strengths and weaknesses as well as potential threats to and opportunities for your business. Take a visit to area supermarkets, restaurants, farmers markets and festivals to look for and taste similar concepts. Also, search online for competitive products. Once you have identified your competitors, visit their websites and social media accounts to gather information about their target market and how they price, where they sell, and how they market/advertise their products.  

Define Your target market. It’s a mistake to think that your business can be all things to all people. You will fail that way. It is better to focus on a particular niche that will help you know where to direct your marketing dollars and brand message so that you can reach the people who are more likely to buy from you.  Think about your ideal customer. What is their age, location, gender identity, income level, education level, marital or family status, occupation, and ethnic background? Describe their lifestyle, personality, attitudes, values, interests/hobbies, lifestyles, behavior.  Then determine if there are enough people who fit your criteria, if your target audience will really benefit from your product, and if they see a need for it.  Also consider if they can afford your product and how you will reach them with your marketing message.

Determine what it will cost to make and sell your product profitably.   If your business is not profitable, you have a hobby not a business. When pricing your product for sale to consumers, you’ll not only need to know the cost of your ingredients but you’ll also need to look at the cost of running your entire business.   Below are startup and operating expenses to consider as you are planning to open your business.

Start Up Expenses

  • Business formation registration fees – up to $125 (depending on business structure)

  • Food safety handlers certification – $60 (good for two years) or food safety managers certification $125 (good for 5 years)

  • Liability insurance – $299+ per year  

  • Website, domain name and hosting – $150-200 per year

  • Marketing – logo, promotional materials (business cards, banners), public relations, samples

  • If you have employees, worker’s compensation insurance, payroll expenses

  • If farmers market or event-based:

    • Canopy or tent, tables and chairs

    • Credit card reader

  • If food truck:

    • Truck purchase and graphic design for custom vinyl wrap

    • Equipment

    • Vehicle insurance

  • If physical location:

    • Architects’ drawings

    • Municipal construction permits

    • Constructor supplies and fees: plumbing, electrical, mechanical for equipment, drainage, venting

    • Commercial kitchen equipment, fixtures, tables, chairs

    • Point of sales system, tablet, printers, cabling

    • Property insurance

    • Legal fees for lease negotiations

Operating Expenses

  • Supplies and technology – internet, office supplies, telephone, etc.

  • POS system monthly subscription

  • Bank and credit card fees (3% of sales)

  • Employee salaries and benefits

  • Municipal health and fire permits (fees vary based on one-time, seasonal or annual sales; retail or wholesale, etc.)

  • Transportation – gas, parking, tolls

  • Legal, accounting and tax preparation fees

  • If farmers market or event-based:

    • Kitchen and storage rental—$20–30/hour plus storage (varies based on amount of space)

    • Booth or table rental and electricity fees

  • If physical location:

    • Rent

    • Utilities: electric, gas, water (may be included in rent)

    • Trash and grease removal

    • Pest control contract

    • Laundry and linens (towels, aprons, etc)

Interested in learning more? Sign up for our next Food Business Bootcamp.