Small Business Development Center FOOD SERVICE BUSINESS START-UP

Small Business Development Center FOOD SERVICE BUSINESS START-UP

Michigan SBDC Services Welcome Logistics Program Attendee Record & Evaluation Introductions/ SBDC and Facilitator

The Michigan SBDC The Michigan SBDC is funded through a cooperative agreement with the U.S. Small Business Administration (SBA), the Michigan Economic Development Corporation (MEDC) and matching funds from Local Network partners in each region. Michigan SBDC State Headquarters Grand Valley State University Seidman College of Business I-69 Trade Corridor Region Kettering University Phone: 810-762-9660 www.

Michigan SBDC Services: No cost 1:1 consulting Business education Information based planning assistance Technology commercialization Serving: New ventures, existing businesses, growth companies, advanced technology companies Consultant Teams: Small Business, Growth, Export, Technology

Michigan SBDC Facilitator Introduction: Approx 100 consultants statewide deep and wide bench of expertise Experienced, professional business people the majority owned or still own their own business My background. Let s get STARTED!

FOOD SERVICE BUSINESS START-UP Agenda Tour kitchen incubator 15 Second Sales Pitch Presentation Marketing ideas

FOOD SERVICE BUSINESS START-UP Agenda/Objectives Explain process from kitchen to market Cottage Food Bill Tour kitchen incubator Introduce food business startup needs Explain need for business plan Marketing stages Next steps

GROWN IN THE THUMB

Getting started You have a great food product. Now what?

The BIG Picture $100,000 The average cost of getting a single packaged specialty food on the shelves of major grocery stores, even before a single piece has been sold.

TEST and DEVELOP SMALL SCALE SAVES BIG MONEY! Promo1on Packaging Product Pricing Processing

Goal of Cottage Food Bill The cottage food bill was created to provide a testing ground for food products before they go into large scale production. Tests: Viability of product Consumer demand Prices Packaging types Processing methods

Cottage Foods Made in home kitchens Sold directly to consumer Labeled as made in home kitchen Limited kinds of food No special zoning needed Limited to $20,000 sales yearly Can sell at farmer s markets, bake sales, roadside stands. Packaging is up to you. INSURANCE: $3 Million Rider on your homeowners insurance policy is recommended.

Cottage Food Limitations You can make these: Breads Cakes & Cookies Fruit pies Dried herbs/mixtures Popcorn Cotton Candy Vinegar/Flavored Vinegar Jams/Jellies in glass jars that can be stored at room temperature. You CANNOT make these: Meat, fresh or dried Canned fruits/vegetables Salsa Fish/Smoked Fish Canned pickled products Milk/dairy/cheese/yogurt Raw seed sprouts Pies that require refrigeration (cream/custard type) Cut melons Beverages

Cottage food Label Sample MADE IN A HOME KITCHEN NOT INSPECTED BY THE MICHIGAN DEPARTMENT OF AGRICULTURE Chewy Chocolate Chip Cookie Made by Arnie Pinkster 123 Foodstuff Lane Casserole City, MI 49494 Ingredients: Enriched flour (wheat flour, niacin, thiamine, mononitrate, riboflavin, and folic acid), buoer (milk, salt), chocolate chips (sugar, chocolate liquor, cocoa buoer, soy lecithin, buoerfat), walnuts, sugar, eggs salt, arrficial vanilla extract, baking soda. Contains: wheat, eggs, milk, soy, walnuts Net Wt. 3 oz.

Cottage Foods continued CANNOT be sold to restaurants, retail stores, or via the internet or mail order. CANNOT be promoted on any websites, print ads, radio or email newsletters. Signage CAN be used at your Farmer s Market booth, or from your roadside stand. This is mainly to keep you from going head to head in competition with the manufacturers that are required to have regulated, inspected commercial kitchens.

Business Plan Produce How you will make the product. Promote How you will market the product. Profit How you will make money.

Why You NEED a Business Plan Financing your business Guideline for product development Necessary to use kitchen incubator Necessary to get food products tested Necessary to get food brokers to represent you Time invested in a written business plan will save you money and time in the long run and the short run!

Market Analysis Who will buy your product? Why will they choose you? How do they buy? Where are the customers? What will they pay? Where do they shop? What makes you stand out from others?

Michigan Market Maker www.mimarketmaker.msu.edu Market Research Demographics Competition Ingredients Sales Channels

Ways to Sell Your Commercially Produced Product Direct to Consumer at Retail Direct to Resellers at Wholesale (Stores) Wholesale or Retail on the Internet Through Brokers or Distributors Search www.macraesbluebook.com Through Food Consortiums

Brokers and Distributors Food Brokers are like agents are for actors. They pitch your food to the big stores in exchange for a cut of the profit. Distributors buy large quantities of your product all at once, and re-sell it to their client base of grocery stores.

Starting Small Farmer s Markets www.mifma.org Home Party System (like Mary Kay) Online (EBay or Gift Baskets) Regional Fairs or Showcase Local Shops www.localharvest.org Farm Stand

Pricing Your Product Cost of ingredients, labor, packaging Generally, cost of ingredients x 4 = retail Build in enough to be profitable if you go to retail Consider distributor margin, retailer margin, production costs and your profit You cannot raise your price after you start selling it, so plan ahead

Business to Business Local Grocery Stores & Markets Specialty Food Stores & Deli s Gift Shops Health Food Stores Café, Tearoom, or Sandwich Shops Made in Michigan Stores To sell in stores, you must have a Nutritional Label and SKU

Exclusivity If a business is willing to give you shelf space or feature your product, don t sell to another place in town. But exclusivity comes at a price be sure to offer this with a good sized minimum order.

Marketing Stage 1 Packaging Labeling Container type Branding Logo

Marketing Stage 2 Website Informative Flyers Letterhead Business Cards Promotional Kit Signs Shipping Boxes Press Releases

Marketing Stage 3 Coupons Samples Recipes Contests Loyalty

Taste Tests WIN Customers! Free samples in a grocery store Free tastings at the local fair Free gift with purchase Trunk Sales of your product line Contests that use your product as the main ingredient! Home tasting parties with gift basket sales.

Labels Branding Attention Colors Copy Price Quality Nutrition Ingredients

UPC Labels When you get into distributing to grocery stores, you will need to get UPC codes assigned to your products. GS1 is the ONLY place to officially get a manufacturer's ID to create the UPC. The site is www.gs1us.org Do NOT purchase a single UPC/GTIN-12 from a supplier who has purchased a manufacturer's ID and doles out individual numbers or number ranges. The UCC/GS1 cannot protect against this and it really won't work in mainstream retail.

Next Steps Read Cottage Foods guidelines Read Steps to Starting A Specialty Food Business Review Michigan MarketMaker website Start writing plan -- SBDC training & assistance Contact Frank Gublo of MSU Extension Take Serv-Safe testing www.servsafe.com Fill out & Submit Kitchen Incubator Application Refine Recipe and Processing Methods

Business Resource Centers - BRC Located in the following local Michigan Works! offices: Bay City (Euclid at Wilder) 989.667.0500 Midland (Washington Street) 989.631.3073 Saginaw (Bay Road) 989.249.5232 Standish (M-61) 989.846.2111 MarleOe in Thumb Works Building, Room 101 Annex Located in the following local Libraries: Delta College LLIC 989.686.9560 Tuscola County Libraries 989.673.2849

Michigan SBDC I-69 Trade Corridor Region Shiawassee, Genesee, Lapeer, St. Clair, Sanilac, Tuscola, Huron For SBDC Assistance: Additional training: Check out VPO Write a DRAFT Business Plan put your idea on paper what, where, when, how, how much Go to: www. and complete an online Application for Counseling you ll be contacted to set appointment

Michigan SBDC Business Education The SBDC provides numerous business education programs to help entrepreneurs and business owners launch and grow their businesses. Venture Start Venture Plan Venture Plan Online Venture Forward Workshop Series Six to Ten Week Course Eight Week Online Course Ten Week Course Five courses to choose Starting a Business Build your Business Plan Build your Business Plan with digital tools Grow your current business to the next level Writing a Business Plan Financial Management Marketing Your Business Business Legal Issues

Venture Plan Online - VPO 8-week online program to assist you in building your business plan Hour-long, live webinar sessions led online weekly by business and industry experts Video and electronic textbooks for addironal learning LivePlan interacrve business planning sodware Consultant /coach guides you through the process

Thank you! Please complete: Attendee Record Training Evaluation www.