How to Start a Food Product Business

Many people have a special recipe or extraordinary cooking talents and think of developing a line of food products to capitalize on their gifts. However, more than a good-tasting dish is needed to start and grow a food business. In addition to legalities, which vary from state to state and even city to city, you will need to tackle marketing and developing relationships with retailers. If you have the ambition and drive, starting a food product business can be lucrative and rewarding.

Step 1

Focus on a specific type, or niche, of food to produce. This should be something you're familiar with making, and that you can make in a way that's better or different from foods currently on the market. For instance, you can make vegan fudge sauce, soul food seasonings or organic dessert mixes.

Step 2
Contact your state's department of public health and ask what are the requirements for starting a food product business. You may be required to obtain specific permits, such as a food enterprise license, or to rent a commercial kitchen to produce your food.

 

Step 3
Write a business plan detailing how you will start and grow your food product business. Include information about your chosen niche; startup costs; three-year detailed operating expenses; three-year profit projections; analysis of your competitors; marketing and public relations plan; plans for expansion and growth.
 

Step 4
Obtain the business permits needed in your area to run a retail business. This may include a fictitious name certificate (DBA), Employer Identification Number or state tax identification number. Your local small business development center can let you know what is required in your city.

Step 5Become familiar with U.S. Food and Drug Administration guidelines concerning the production and sales of food, including safety and sanitation regulations, how to choose appropriate packaging and how to properly label food products. Visit the USFDA's official website for the information you need at FDA.gov.
 

Step 6
Develop appealing packaging for your products. For example, if you start out by placing your spice mixes in simple jars, you can design attractive, informative labels for them. Packaging that stands out will encourage curious consumers to try your brand, and will give retailers an incentive to carry your products.
 

Step 7
Secure venues to sell your food products. Options include an internet marketplace, such as Foodzie, flea markets, fairs, festivals, wholesale to food retailers and grocery stores, or via your own e-commerce or brick-and-mortar store.
 

Step 8
Join a professional food producer's association, such as the the National Association for the Specialty Food Trade. Doing so will help you meet new suppliers, get business tips and ideas from peers, connect with potential clients and keep up on industry trends.
 

Step 9
Market your food product line. Send news releases to food product reviewers and publications that cover specialty food products, launch a promotional blog or website, and hand out samples at the events you attend.

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How to Start a Business Selling a Homemade Product

Starting a business making and selling a homemade product can save you the considerable startup expense of leasing and equipping a facility. In addition, owning and operating a home-based business allows you to move easily between work and personal activities. This is an advantage if you are disciplined and focused, but it can be a problem if you are easily distracted.

 

 

Step 1

Research the guidelines for producing a homemade product in your area. If you are interested in starting a food business, your options will probably be limited by regulations restricting the types of items that you can produce in a home kitchen as opposed to a dedicated commercial kitchen. You will most likely encounter few restrictions if you are producing homemade products such as sewn blouses or paintings, but you may need additional permitting for businesses such as welding or glass blowing, which can be dangerous.
In addition, the scale of your business may determine whether or not you can operate it out of your home. For example, if you make soap in limited quantities to sell at your local farmers' market you probably won't encounter much difficulty making your products in your home, but if you are manufacturing soap to distribute nationally you may run into zoning restrictions limiting street access for pickup and delivery, or manufacturing odors.

 

Step 2

Dedicate an area of your house to your business. You will operate your company more efficiently if you are able to keep your equipment and inventory ready for use than if you have to pack and unpack your business infrastructure every time you want to begin production because your business space is also your dining room table. If necessary, start with a small space and expand over time as your business grows. If possible, make minimal changes to your home to limit startup costs.

 

Step 3

Consult with your accountant about the tax ramifications of operating a business out of your home. For the most part, the IRS allows you to write off a portion of your rent or mortgage if you use your home for your business, offsetting your taxable income from your business. To legitimately take this tax deduction, you must measure the amount of space in your home that you use for your business, calculate the percentage it makes up of your total square footage and then take that same percentage of your rent or mortgage as a tax deduction.

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