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Federal, State, and Local Laws Regarding the Sale of Food Products
Selling food products is subject to more legal scrunity because of health and safety issues. Part of learning how to start a business selling jams and sauces is making sure you are aware of and can abide by all regulations. These regulations will vary based on the location of where the business will be opened and maintained. Certain small businesses will be exempt from some regulations due to size.
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Using a Co-Packer
When starting a business of this kind, there are two options: do-it-yourself, or use a co-packer. Using a co-packer will require an investment, but will also take care of most of the areas where individuals run into problems. A co-packer will use the recipe(s) to make, package, and distribute products to meet federal guidelines. With a co-packer, issues such as insurance, licensing and permits, ingredients, and packaging are taken care of. Though this sounds wonderful, it is not only expensive, but may remove complete control of the product from the individual.
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It is important to carry insurance to protect yourself and your business, in the event something goes wrong with the product. Find a provider with special focus on insuring homemade goods to get the best advice on the amount and type of coverage to carry. Homemade goods businesses may need to carry up to $1 million in insurance.
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Before any business is started, it is important to have the proper business plan in place. The plan should outline:
- what the business is
- how it will run
- what it needs to get started
- what it needs to run efficiently
- where it fits in the market and how it will work around competition.
- product pricing structure, and sales projections to get the business in the profit margin.
Learn more about how to write a simple business plan and before going any further in the process, make sure your plan is written. This will make it easier to get through the rest of the process, and will likely be required to help secure start up funds from investors, banks, and other financial sources.
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Marketing and Advertising Plan
Part of the business plan will address marketing and advertising, but to go the extra mile toward business success, it is important to develop a plan for marketing and advertising the products to the masses. The marketing plan should include:
- product plan: what products you will release and when they will be released over the course of three years.
- pricing plan: how will the products be priced?
- place plan: where will you be selling the products?
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Developing the Product Line
Sit down and get some recipes together and play around to determine the products. Think about how well the recipes will work when multiplied in large batches. Consider preparation will not be done in a home kitchen, due to legal regulations. Don't share all the products at once, focus on launching a few at a time to not only judge response and save money, but to drum up excitement later.
Prepare test batches for tasting, and have them tested by a lab for shelf life. This will ensure the batches taste the same each time they are made, as well as provide important health and safety information about the product.
When developing the product line, also take time to consider labeling and packaging. Depending on the size of the business, the label may require lists of ingredients, though certain ingredients may be left off the labeling. Consider nutrition information as this will also likely have to be on the label. When deciding on packaging, for cost, presentation, and efficiency for shipping, delivery, and consumer usage.
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Selling the Product
Once the legal aspect of the business has been taken care of and product inventory is available, it's time to sell the product. Start small, building a client base with friends, relatives, and other acquaintances. Look to the marketing and advertising plan for help growing the business.
- Use the local flea market.
- Build a website to expand the customer base nationwide. There are several cost effective ways to get a website online, so even small businesses can afford it.
- Ask other local businesses to display your product or business cards.
- Post flyers.
- Offer small free samples where and when you can.
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Don't expect to start the business overnight. The more planning and preperation that goes into developing the business initially, the better the business will run in the long run. It takes time to start and nurture a business. Sure, we all want to make money like the CEOs of Fortune 500 companies, and some of us will; but, it is important to remember they worked their way up the ladder, too.
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