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Cooking Up a New Business

Entrepreneur.com

Are you famous for your chocolate chip cookies, maple syrup or strawberry preserves? Do you have a can't-miss idea for baby food, a healthy snack or a newfangled beverage? Perhaps you've sold on a small scale at local fairs or to friends and family, but now you're considering retail channels such as gourmet food stores or supermarkets. If so, you probably have a lot of questions about how to take your food "invention" to market.

While many of the same steps to inventing apply, food products have a special criteria. If you're starting from scratch with your food business, here are some basic points and resources that will keep you informed.

1. You can't do it from home. Your home-based candy-making operation may work on a small scale, but a food product on a retail scale requires a larger facility. You can do this by building your own facility and purchasing equipment (most risky and expensive), by renting an existing facility or by outsourcing production to an existing food manufacturer -- called "co-packing." The third option is useful for start-up companies with a limited number of products. To find potential food manufacturers with various specialties, try this resource: Thomasnet.com.

2. Be aware of the technical issues. Your food product isn't just a business, it's also a science. And while a degree in food science is probably infeasible, consulting experts with this knowledge is essential. Look for books, magazines or courses to begin your education in food science. Your local university's food science department may also be a place to turn. These are some of the issues to look into.

• Shelf life -- Ensuring your product has an adequate shelf life is key, so that consumers won't buy spoiled food that is at worst, a health risk, and at best, a guarantee they'll never buy it again. In addition, grocers that carry your product may require your product to have a certain shelf life before carrying it. This means you'll also need to learn about adding preservatives to your food, which can be accomplished through laboratory testing -- something you probably never thought about in your home kitchen.
• Food development -- Your local warehouse store may be ideal for purchasing the quantities of ingredients you require now, but manufacturing on a larger scale means finding new sources of ingredients. And as you use different ingredients and different methods of processing those ingredients, you may need to modify your original recipe. Again, a food scientist or consultant may help you determine how to mass-produce your food product without compromising the taste or quality. Search your local Yellow Pages or the Internet for food and beverage consultants. Or check with your local university for recommendations.
• Safety -- We trust that all the food products we buy at the store are safe for consumption because they're regulated by the government. Companies can and have gone out of business -- and people have become seriously ill -- after product batches were found to contain pathogens. As an entrepreneur, follow local, state and federal regulations before launching your product. These regulations address the ingredients you use, your production facilities and even your product labeling, to protect consumers. In addition, you need heavy liability insurance for your own protection. If someone else is doing your manufacturing, they may require that you have liability insurance as well. For more information on food safety, go here.

3. Get it out there. Producing a food product that's safe, delicious and attractive to consumers is only half the battle. Getting it on store shelves is a challenge in itself. Unfortunately, you can't walk into your local chain supermarket store and ask the manager to carry your product. You must instead approach a grocery chain's corporate buyer.

For this reason, you may wish to hire a food broker to represent you. Begin your search for a food broker at Careersinfood.com. Click on the resources button, and then on the Food & Beverage Trade Association button, which will provide a comprehensive list of product-specific trade associations. Food brokers can advise you on Food and Drug Administration requirements, local health and packaging requirements and even marketing and packaging design. As with everything, be sure and check references.

There are a few other points you need to be aware of when it comes to distributing your product, including "slotting fees" -- sometimes up to $25,000, depending on the chain -- to get your product on a supermarket's shelves. The retailers that carry your product may also charge a promotional and advertising allowance, or even "failure fees" if your product doesn't have the sales volume you projected. So even if your product is accepted by these stores, there may still be some financial risk attached.

4. Packaging and marketing is key. Not only do you need to follow legal guidelines for your packaging, but you must also ensure it's attractive and eye-catching to consumers. You may wish to seek out a design firm with experience in food packaging, and you will also need to find a manufacturer who actually produces the food-safe box, plastic container, can or bottle that houses your product.

One resource for finding an experienced packaging manufacturer is Core77.com. Click on "Firm Listings" and then "Packaging." It also helps create demand for your product before potential consumers even enter the supermarket. This can be accomplished through PR efforts on a local or national basis -- ads, product placements in newspapers, magazines or Web sites -- and free sample giveaways at large events.

Finally, this Web page from Penn State University will lead you to many more articles and resources related to launching and running a food business.