March is “Business Ideas” Month on the Mompreneur Advice blog and I’m sharing some of my favorite business ideas with you all month long! So far we’ve talked about:
Today I’m excited to share with you 5 Tips for starting a Successful Home Food Business! This is really exciting for me because my first very successful business was a Home Food Business! Learn more about my story here.
I’ve been in the food industry since I was 15 and am a graduate of the California Culinary Academy of San Francisco. It was during my schooling that I learned the ins and outs for creating a profitable food business, including catering and selling food products. Today I want to talk about how to start a Home Food Business selling Food Products!
P.S. – In Tip 5 I share a super easy Food Costing Excel Spreadsheet Tool you which you can purchase to keep you organized and make sure your profit margins are on point! Read below for details.
Let’s get started!
Tip 1: Choose a Niche
Theses days the food industry is SUPER competitive and people are launching new food businesses every day. If you’ve got a product idea, or just want to start a food business, make sure your product is in a niche category. This will help minimize your competition and give you an edge when pitching to new markets. When I first started my food business it was during the beginning of the huge Gluten Free craze. I was able to identify this upcoming trend and create an entire product line for a specific audience – celiacs and people with gluten intolerance. This greatly helped the success of my company and set us apart from other competition in the Baking Mix category.
Tip 2: Choose Your Branding and Company Image From the Start
You’ll want to put some serious thought into how you want to brand and market your home food business right from the beginning to help you avoid costly image overhauls. Hiring a graphic designer is key to helping your product line stand out and look professional. Upwork is a great service for finding quality graphic designers specializing in packaging design. If you need a logo, our affiliate friends at the Logo Company offer logo design for just $149.
Make sure you double, and then triple check, your artwork before sending it to the printers. I’ve made the mistake of not doing this and then receiving artwork that had COMPLETELY wrong information on it, making all of the labels I ordered completely useless and that money went down the drain.
Tip 3: Consider Hiring a Co-Packer
Thankfully, these days there are many co-packers, also known as co-manufactuers, happy and willing to make your food product for you! Once you are doing enough volume (making enough sales) these co-packers will be eager to take on your business as a client. Some great things about hiring a co-packer is they:
- Have the appropriate equipment to mass produce your food product
- Have proper storage for your food product and raw materials (ingredients, boxes, labels, etc)
- Have the necessary certifications and permits to make your food product
- Have systems in place to maintaining detailed records in case you need to perform a recall on your food product
- Can easily work with large distributors to coordinate large pick ups and deliveries
Once your home food business grows, and becomes a large food product operation, you’ll need the help of a co-manufacturer. The other alternative is to invest all your money into creating your own manufacturing facility but keep in mind that it takes A LOT of time and effort to maintain a manufacturing facility. I believe, for a start-up home food business, starting with a co-packer is your best bet. Here’s a great list of food product co-packers.
Tip 4: Choose Packaging that is Cost Effective
Once you’ve decided on who will be making your product for you you’ll need to consider what type of packaging you’ll want your food product to be in. I would suggest doing your research on the following before committing to a specific package design:
- How much does your food packaging cost – each additional penny takes away from your overall profit
- How long will it take to put your food product into the packaging – each additional minute adds to your production costs
- How long will it take to seal your food product packaging – if it takes a long time this will add to your overall cost to manufacture
- How many labels will your food product packaging require – each additional label adds more cost
- How heavy is your food product packaging – each additional ounce adds more cost
- How does your food product packaging look on grocery store shelves – if it is not noticeable people won’t see it
- What do other people think of your food product packaging – if people aren’t giving you a good response, consider altering your packaging to make it more attractive
- Can your co-packer make your food product in your chosen food packaging – make sure your co-packer has the ability to package what you need
Tip 5: Keep a Spreadsheet for All Your Food Product Costs
Food product costing is KEY to running a successful home food business. You’ll want to use a detailed spreadsheet to keep track of every penny that goes into your food product to keep you updated on your profit margins.
Costs to include in your spreadsheet are:
- Cost of every ingredient that goes into your food product
- Cost of every part of your food product packaging including the outside box
- Manufacturing costs
- Shipping costs
If you’re looking for a super easy tool to keep track of your Food Product Costing my super handy spreadsheet, which you can purchase for just $4.99, lets you input your food product data and calculates your food product cost and profit margins for selling to Direct Customers, Wholesale Customers and Distributors.
This is the same Excel spreadsheet I use for calculating food product costing and has saved me so much time, effort and money because it keeps my products organized and keeps me up to date with exactly how much a product costs when a customer is asking me for pricing. I highly suggest using a tool like this if you are going to be selling food products.
Here’s an example of what the Food Costing Spreadsheet looks like:
So there’s my 5 Tips for Creating a Successful Home Food Business selling Food Products! Are you just getting started and have more questions? I’d be happy to answer them below in the comments section! I’d love to hear from you.