How to Start a Food Business: First Steps to Act on Your Vision
We’ve all had that moment where we came up with the next revolutionary invention while daydreaming in the shower. Maybe after a drink or two (or three) with a group of friends, someone says something completely random that sends you on a long ideation session. The world has no shortage of ideas. Some people, like Netflix co-founder Marc Randolph, go as far to claim that there is no such thing as a good idea. “What you need to do is immediately collide your ideas with reality…hundreds if not thousands of times.”
Further, Randolph notes that the key to success isn’t a good idea. Instead, create systems and processes that allow you eliminate all of the bad ideas on the way to landing on the ones that actually work. “That has been one of the concepts at Netflix from the very beginning, and I fundamentally believe it is one of the most important things that they do that allows them to constantly stay ahead of the curve.”
As a new business owner, there is no amount of Google searching that will fully prepare you for the road ahead. The natural twists and turns will teach you lessons far greater than anything you can find online. The only catch is that you won’t be in a position to learn unless you get started!
We’ve already worked through the ideation phase of building a business; creating a strong foundation for turning your passion into a business, as well as figuring out where your business fits in the market. Now that it is time to actually operate as a business, what comes next?
Many early-stage food business owners skirt around regulatory requirements, such as business licensing and food liability insurance, as a way to save time and money. The relatively small size of their business allows them to go undetected. While these issues don’t typically jeopardize the integrity of their products, they do eliminate the ability to grow.
This is true, even for cottage food operations where home kitchens are permitted. If you are a cottage food baker that creates great products and you have a strong customer base, the convenience of a home kitchen will eventually evolve into a restriction. The need for a true commercial kitchen can stand between taking on additional clients, expanding operations, and increasing sales potential.
At the end of the day, it is ultimately your decision when it comes to what is best for your business. However, if you want to set your business up for long term growth, here are the key steps to go from business ideation to operation.
Choose a Structure & Register Your Business — You don’t actually have a business until you register it. In future pieces, we will really break down the pros and cons of each formation structure but the most common structure chosen by new business owners is the limited liability company (LLC). If you’d like to go ahead and dive into more about business formation options, here is a great resource provided by the SBA.
Get Your Food Manager Certification — The most commonly known and widely accepted provider of Food Manager Certifications is ServSafe. For those already comfortable taking the exam, it is $99 for a package that includes the online exam with a verified proctor. They also offer packages that include their ServSafe Manager’s Book that provides all of the knowledge necessary to pass the exam.
Select Your Insurance Policy — If you plan to spend countless hours creating and building your business, it would be wise to protect it. While you could go through just about any insurance provider to get coverage for your food business, the big-name providers typically don’t tailor policies specifically to food business needs. In many cases, this can mean you end up paying for coverage you don’t even need.
The Food Liability Insurance Program (FLIP) is a great resource for food business owners. For as little as $299/year (it is $399/year for businesses doing between $50,000-$100,000 in annual revenue), you can get a comprehensive policy that is designed for food businesses. Additionally, if you use the promo code ingredient10 at the time of purchase, you’ll receive $10 your annual premium.
Obtain Business Licenses — You will need to acquire your Federal Employment Identification Number (FEIN) via the IRS for most business license applications. The name of the license and the regulating authority behind it will vary depending on the city, county, and state you are operating in.
An easy way to introduce yourself to this process is to talk to others that have gone through it. There are some amazing Facebook groups for cottage food operations, food truck owners, private chefs, meal prep, or any other food business you can think of. Most of the communities are very willing to share their experiences and advice.
- Cottage Food Bakers
- Food Truck & Trailer Life
- Food Entrepreneurs & Business Owners Group
- Cottage Bakers Cookies and Cakes
- Food Entrepreneurs Alliance
- Cottage Food Law Group
- Chef’s Life
In addition to these groups, search for groups specific to your geographic area. This will give you a better idea of what you need specific to your location. As an Orlando-based business, we’ve found some amazing groups (such as Orlando Chefs and Cooks, Florida Cottage Food Bakers, and Florida Chefs) that have provided invaluable feedback.
If the task of doing it all yourself seems daunting, there are plenty of business service providers that will hold your hand through the process. You can eliminate a lot of the headaches associated with time spent researching and on hold waiting to speak with someone that may or may not have the answers you are looking for.
At Ingredients, we focus on helping food business owners get through these steps. Our goal is to help you focus on what you do best while setting your business up for future success.
We are passionate about providing food entrepreneurs and culinary professionals the ingredients they need to start and expand their food business. In addition to offering commercial kitchens across the United States, we work with food business owners to acquire the proper business licensing, insurance, and certifications required by city, county, and state regulations. We try to make it as easy as possible to get your business operational and into a kitchen that you can afford.
If you’re interested in finding a commercial kitchen or need guidance in starting your own food business, visit Ingredients.Kitchen to learn more!
For more articles in the “How to Build a Food Business” series, make sure to check out…
UP NEXT: Picking the right commercial kitchen for your food business.
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