There's so much to think about when starting any new business, and if you’re a food or drink business, you've got to get on top of labelling and certification, as well as finances, marketing and the product itself. Don't know where to start? Follow these 10 tips from food business gurus Jo Densley and Claire Hooper of Relish Marketing.
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1. Get on top of your finances
Maybe the least sexy area for some but very important nonetheless. Are you going to be a limited company? VAT registered? What are the financial implications/benefits? Do you need an accountant? Most accountants will be willing to advise you on what you need to do without charging you at that stage so it's worth a phone call. Also, how are you going to fund your business growth? Will you need to look at attracting investors to help you scale up in future? If so, now's the time to be working on getting your brand established so you have a strong platform from which to approach them.
2. Find out about your customers and market
This is critical, but don't worry; it doesn't have to cost a fortune. Having a proper profile of who your customers are and what they want will allow you to make decisions about your brand based on evidence and understanding, rather than guess work or generalisations. You'll need to be able to prove to retailers that there is demand for your products and that consumers like your brand; knowing them inside out will help you to tailor your product offering more accurately, too. Alongside your growing understanding of your customers, you'll also need to get a clear picture of what’s happening in your market place, what your competitors are doing, how their pricing stacks up against your plans and the latest trends in food and shopper behaviour.
3. Sort out your manufacturing and certification
"If you target larger retailers, you'll need to get your production site certified, so you can prove the food you make is safe and legal." Claire Hooper
You may well still be making your products in your kitchen, but you will need to think about where you will go to scale up the volume, as well as meeting regulatory requirements in terms of food safety and hygiene. It's worth looking at production kitchens such as The Olive Grows as a possible first step. They'll have all the relevant approvals in place so you can move up without having to commit to production runs.
Alternatively, if you#re looking to outsource straight away, the British Contract Manufacturers and Packers Association will be able to put you in touch with possible partners. At the same time, if you have plans to target larger retailers, you will need to start thinking about getting your production site certified by an appropriate body, so you can prove the food you make is safe and legal. SALSA certification is usually the best bet in the beginning. It's only granted to suppliers who are able to demonstrate to an auditor that they produce safe and legal food and are committed to continually meeting the requirements of the SALSA Standard. SALSA was set up with the express aim of helping small businesses and is now widely recognised by the retail trade as an acceptable form of accreditation.
4. Calculate your likely costs and pricing
It's critical to have a good handle on your costings. You'll need a clear picture of what your selling price will need to be to make profit and also check that this selling price will fit in your target marketplace. Building in retailers and/or wholesalers margins, transport costs, ingredients, your time or a labour cost, marketing and all the other things you’ll need to allow for early on will ensure you have no nasty surprises further down the line.
5. Position your brand
It's important to start thinking about this at an early stage. Knowing what your USP (unique selling point) is will be critical in helping you target your consumers effectively. Even if you have a fantastic product, you still need a point of difference if you are going to persuade retailers to list your brand. Don’t forget, you are competing for space on their shelf against numerous other brands. It doesn't have to be revolutionary; just a point of difference that means something to your consumers, a story to get the retailers to listen and see incremental sales potential in it. Tied in with your consumer research showing there is a demand for you product, you will stand a much better chance of getting your product listed.
"Even with a fantastic product, you need a point of difference if you're going to persuade retailers to list your brand." Jo Densley
6. Design your packaging
You’ll need to think about what type of packaging to put your product in so the product inside is safe and legal, as well as ensuring it appeals to your consumer with an eye-catching design that sells what your brand stands for. You may need help with this from a packaging technologist, such as the guys at Design Fruition . The type of packaging you choose could also affect what shelf-life you can give your products. Don't forget that it will need to protect your product through whatever channels you decide to sell it, too. whether that's online, wholesale or direct to retail. Even if you are currently selling direct to the customer at fairs and markets, it is worth thinking about these aspects now if you are plan to grow your business.
7. Know your labelling requirements
We've heard horror stories about people copying label info from products similar to their own and ending up in a sticky situation when that doesn’t meet legal requirements! Our advice is don't do it! It's worth speaking to a food technologist or your local Trading Standards Officer to check that you comply with regulations. At the same time, consider what your type of customer is likely to want to see. For example, if your product is aimed at the health market, nutritional information that’s easy to read will be critical.
8. Work out your shelf life and buy a barcode
To find out how to get your product shelf-life tested, contact your local Environmental Health Officer. Their details will be available on your local council website under Environmental Health.
The good news is that you can still get your product listed in delicatessens and farm shops while waiting for your shelf life results, especially if your products are likely to have a long shelf life. To begin with, you could try going for a slightly shorter shelf life than that of an established competitor, then amend it when you get the definitive answer from your own lab tests (contrary to our previous advice, following what someone else does is ok here!). Barcodes are quick and easy to get. Visit the likes of Barcode1 UK for more information and to buy a barcode online for just a few pounds. The barcode image will be sent to you by email then you can provide it to your packaging designer quickly and easily. While not every independent retailer will require them (they're only needed for computerised tills, ordering and stock control systems), if you have plans to grow it’s worth sorting them out in the early days; you'll need a separate one for each product.
"You'll need to raise awareness of your brand, build relationships with potential customers and show retailers that you’re doing your bit to drive sales."
9. Think about your distribution channels
You may think you don#t need to look at this right at the start if you're just selling directly to customers at farmers' markets or fairs. However, if you’re thinking of using a wholesale distributor further down the line to try to get into stores further afield, it’s a good idea to build their margin in right at your initial costing stage. This way you can see whether your brand will be profitable in the long term. While the effect of this extra margin on your profits may seem a bit scary, don’t forget that the increased volume will eventually bring down all your other costs, and using a wholesaler will also save you time and money on chasing payments, handling orders and invoicing.
10. Write a marketing plan
It doesn't have to be a multi-million pound TV campaign, but it's worth having a skeleton marketing plan in place, even at the very beginning. You will need to raise awareness of your brand, build relationships with your potential customers and demonstrate to retailers that you're doing your bit to drive your own sales and that there is demand for your brand. Starting out with social media, a blog, some interesting plans for food fairs or targeting your local press will be enough in the very early days, as well as a willingness to support your local farm shop, delicatessen or other stockists, perhaps with tastings in store, for example.
We hope this has given you lots to think about!
Jo and Claire run the award-winning Relish Food Marketing Club website aimed at helping small food producers get their ideas off the ground, grow their brand and get into retail. You can also follow Relish on Twitter.
Running a food or drink business? Join Enterprise Nation's food and drink focused small business trade mission to Paris on 27-28 March. Find out more here.
This post was originally published in 2013.