The subsidized and dynamic global culinary market reached $2,750 billion in 2021 and still has plenty of room to thrive and expand. That’s what makes food-related startups so attractive to today’s business owners. However, it is also what makes them so challenging.
The appetite for the food business is increasing big-time, which means that food makers are springing up like mushrooms. So, if you’re looking to jump on the food industry bandwagon, you’ll need to get started on the right foot. And that’s the hardest part–starting.
There’s a lot to learn, but we will help you ace the essentials of starting a food business.
Starting a food business
You likely already have a fresh idea for your food startup. Before you jump right into it, though, take a moment and consider what it actually means to start a business. Of course, passion and interest can get you a long way, but then again, hard work and business smarts will take you to the finish line.
While nobody expects you to know everything off the bat – especially if you’re a first-time business owner – every major undertaking has its ups and downs. So, when you run across something you don’t quite understand or know how to do, knowing how to find resources for help will set you back on track. Case in point: it’s not all concrete steps like finding the right business structure and funding.
There is also that soul-searching question you need to ask yourself: Am I truly willing and capable of doing this? Write down your strengths and weaknesses, brainstorm, research available resources, and reflect on your support network.
That said, let’s get into the nitty-gritty, concrete details, and fundamentals of starting your food business.
1. Draft a solid business plan
The benefits of creating an effective business plan for your startup are manifold. It can provide clarity on all aspects of your new business, help you devise a business strategy, and define how you’ll achieve your business objectives. In essence, it should help business owners sleep peacefully at night.
For instance, defining your budget is one of the first things you ought to consider. It includes the costs of starting your business, funds for operating the business once it is up and running, and a long-term look at your expected income. Some other steps include choosing a concept, defining a budget, identifying your target customers, marketing your brand, etc. It is also a good idea to assess your competitors.
The food industry is saturated in competition, and knowing who else is out there, their strengths and shortcomings, etc., will point to all the holes in the market you can fill with your business.
2. Choose a business entity
The business entity you choose will impact not only your ability to raise money but also the personal liability you face, the paperwork you must do, the taxes you must pay, etc. Whether you decide on sole proprietorship, LLC, or cooperative will depend on your individual circumstances as a business owner. For instance, if your business lends itself to potential liability and you cannot personally afford that risk, sole proprietorship or partnership may not be the best choice.
3. Secure your financing
Sorting your finances is the next essential step in starting a food business. However, for starting entrepreneurs, the choice of starting a business is a risky plunge. So, they hesitate. Thankfully, there are plenty of alternatives to using your personal funding for your new venture. Some of the many different instruments available in the market include business loans, investors, equity partners, crowdfunding, and government aid. Of course, expect things to be tight at first, and remember that it will likely take years before you start making any real money. For this reason, it’s best to start small and then scale up.
4. Get your licenses and permits
Next, you’ll need to ensure you are legally licensed to prepare and sell food. Of course, every country, county, and the city is different from the next. Plus, there are many different licenses and certifications, and which ones you might need will depend on the type of food establishment you are opening, where it is located, whether you’ll be serving alcohol, etc. For this reason, it’s best to check in with your local regulatory office and get some legal advice about your next steps.
5. Choose your suppliers
As a restaurant owner, you will be working with a variety of suppliers who will provide all the necessary equipment, appliances, supplies, POS systems, and, of course, food. However, with so many available on the market, picking the right one can be quite daunting and confusing. So, start by scoping out your short-term and long-term budget and creating your wish list.
When hiring cold chain logistics services, you may want to ask for recommendations from industry professionals. One of the essential factors impacting a customer’s choice of a place to eat out is the food quality that the place provides. So, you want fresh, high-quality products, and for that, you need to be able to rely on the right partner. Word of mouth may be the best way to make sure of that.
6. Hire the right people
One of the essentials of starting a food business and setting it up for success is assembling your team. Labor and staffing considerations will, naturally, be different from one food business concept to the next. Mostly, it will depend on your needs. For instance, a food truck or a cloud kitchen may require just you and maybe one or two other people.
However, if you’re planning to start a full-service yet cosy restaurant, you will need quite a few servers, bartenders, hosts, and complete kitchen staff. One thing’s for sure, though, choose the extra set of hands you hire carefully. Make sure to conduct thorough face-to-face interviews, check their work experience and track record, and call their listed references to ensure there are no major red flags.
7. Get insurance
Few things can force your restaurant doors to close as fast as a costly lawsuit or a kitchen disaster. To prevent that from happening, you’ll need certain types of small-business insurance, such as:
- General liability insurance
- Worker’s compensation
- Commercial property insurance
- Auto insurance
- Cyber insurance
- Mobile food vendor insurance
8. Create your online presence
Last but not least, one of the essentials of starting a food business is establishing your online presence. You need to figure out your game plan regarding digital marketing, PR and advertising. The best way to reach your target audience and attract more customers is to create an online presence with a domain and website.
The new word of mouth is online reviews, and most consumers make sure to visit a company’s website before making a purchase. So, having a functional and well-designed website is one of the nitty-gritties of ensuring your online presence is top-notch.
Update your working hours, contact details, product offering, and anything relevant to your business. In the future, you can even turn your website into an ordering platform. Finally, getting your business on social media channels is a good idea as it will open new opportunities concerning content creation.
For instance, you can post promotions about the opening day and mouthwatering photographs of your products, which will generate some extra hype.
Wrapping up
Food is an exceptional industry to get into, especially for food lovers who dream of turning their passion into a career. But getting started on your culinary journey is no easy feat. That’s why acing the essentials for starting a food business is so important. We wish you the best of luck!