What You Need to Know About Starting a Business in the Food Industry
Are you an entrepreneur hoping to enter the food industry but don’t know where to start? As it turns out, now is a great time to take the plunge. After many businesses have shut down due to the global pandemic, things are back to normalcy. However, while many food businesses worldwide have fully reopened and traffic patterns are significantly improving, the industry still faces several challenges. So, before you get too excited about opening your business, take the time to do your research.
Here’s what you need to know about starting a business in the food industry.
1. Know the Costs
The initial cost is the first thing to figure out when opening a business. Knowing how much startup money you need can help avoid cash-flow issues until your business starts scaling off and earning a profit.
The cost will depend on several factors, such as the overall scale of your food business. Are you opening a stall selling street foods or a full-scale restaurant? Will you be selling online and offering deliveries? These are some things to ask yourself to determine the approximate cost of opening your business.
Once you have developed a killer food product, you need to factor in the cost of the design and packaging. It can be challenging for many small food businesses since there are fixed costs to cover, and most packaging suppliers will only produce massive amounts of packaging units.
Different food products have different sales routes, depending on your target market. Their storage requirements will also vary and are among the factors that could affect the initial cost of establishing your business. Try to keep the costs low and scale them in a controlled way as you assess the viability of different options and determine how your products will sell.
Once you have mapped out the finances, you can establish a strategy for business growth. Knowing the initial costs is essential for knowing if you have enough funds to acquire new products and hire new employees.
2. Make a Solid Business Plan
Most business experts will advise would-be entrepreneurs to establish a solid business plan before entering a new business venture. To create a business plan, you need to research diligently. Spend weeks or even months getting a deeper understanding of the broader landscape of the food industry. Get to know your target consumers, find out the latest trends, and determine who your fierce competitors are. Once you have all this information, you can start writing a business plan.
Along with establishing your business plan, you must determine the type of food you will offer and your menu. Carefully think about your menu and the food products to offer. Find out the latest trends, especially those that will be a big hit to your target market.
Once you have created a business plan, conduct a test to see how your business goes. Search your target consumers and gather their ideas, thoughts, and impressions. You can do this through surveys or polling a handful of customers on the street to conduct market research.
3. Rules and Regulations
Not following rules and regulations is a common mistake among new business owners. Non-compliance can result in costly consequences, something you should avoid while still in the initial stage of developing your business. Regardless of size, every company must comply to remain in business and avoid legal troubles that can have devastating results.
Every company in the food industry should comply with food safety and hygiene regulations. If you can, consider taking a training course in food safety compliance before starting your food business. The training focuses on the health risks associated with improper handling of food. It highlights the proper procedures to minimise the risk of foodborne illnesses in the food business and ensure you comply with the laws and regulations.
Compliance with business laws and regulations can minimise the likelihood of hefty penalties, fines, work stoppages and potential lawsuits. For instance, if one of your customers got sick from the food you are selling, you could be subjected to a hefty fine by the local authorities. In the worst cases, it can lead to the closure of your business.
4. Register your Food Business
Once you are ready to open your business, it’s time to register it. Registration of food business applies to companies engaged in selling, cooking, and distributing food products directly to the public. It can apply to any company selling from home, temporary premises, and mobile units.
Those companies that operate from an office and are engaged in food distribution, brokerage, and food supply must also register. If you plan to open in multiple locations, you must register each premise with the local authority of their respective site.
Companies supplying food to the public must register as a food business. Any company selling, cooking, storing, handling, or preparing food should register as a food business.
You must register your food business at least 28 days before operating. If you are already trading but have not registered, you must register as soon as possible since this is a legal requirement.
5. Choose your Location
Deciding where to locate your food business is crucial. Location plays a significant role in attracting your target customers. The right area can significantly boost your business performance.
Choosing your business location will depend on several factors. Unless you rely on foot traffic, you do not necessarily need to base your business in the hottest areas in the city centre.
The cost is a significant factor to consider. How much can you afford to spend on rent? Think about your projected sales. Will it be enough to pay off the rent and other expenses in maintaining your business location?
Another essential factor to consider for location is accessibility. How can your customers reach your restaurant? Will they get there by foot or by public transport? Will the area have a parking space for those with cars?
You also have to consider the proximity of your competitors to your business since this can influence customer traffic. Map out what’s around you and determine how this could affect your operations.