SBDC Advisor Newsletter Fall 2008 – Tips & Tools: Steps to Start a Specialty Food Business



	in this issue SBDC News & Information SBDC Helps Researcher Gain $3.5 Million to Develop Power Packs Consultant Profile: George Boehm How to Thrive in an Economic Downturn Results of SBDC’s Defense Assistance Felt Ten Years Later Food Businesses Require Prep Time to Succeed Steps to Start a Specialty Food Business Capitol Views SPECIAL ISSUE: Presidential Candidates Forum Congress Working on Improvements to Small Business Innovation Research Bill Awards Events Educational Programs First Step Workshops Educational Programs Want More? Get the Advisor in your Inbox Download PDF SBDC Services Return on Investment	Steps to Start a Specialty Food Business Pag-Omar Farms Market, Inc. in Wellsboro expanded operations this year with help from the University of Scranton SBDC. Are you considering a specialty food business? The University of Scranton SBDC offers the following basic steps to help you get started. While each specialty food business is unique and subject to specific product requirements, the list below outlines the overall process. Remember that each category influences the others: your type of product and packaging will affect the label you use; the ingredients used to make your product will affect your cost and your plans for production. The Product Develop a prototype and ask people to test it. Gather and incorporate their feedback on flavor, texture, and appearance. Decide on the market form you would like the product to have: shelf-stable, refrigerated, frozen, baked, canned, etc. Compute the batch size you will need for commercial operation. Get in compliance with the Pennsylvania Department of Agriculture regulations, test for pH, water activity, safe water supply. Determine the cost of ingredients based on your approved recipe. Business Planning Write a marketing plan. Include information on your competition, target markets, marketing goals and tactics, etc. Obtain product liability insurance. Select a form of organization for your business: sole proprietorship, partnership, limited liability company or corporation. Register your business with the state.
	Labels Follow Pennsylvania Department of Agriculture rules on food labels. Determine what storage information must be on your package: refrigerate, refrigerate after opening, etc. Choose a size and shape which is compatible with your packaging. Invest as much in your labels as possible. They are the first thing customers will see. Decide if you wish to make health claims. If you do, you must have nutritional analysis done and invest the time and money for FDA compliant nutrition labeling. Decide whether or not to invest in a UPC label. The registry fee is several hundred dollars but most large stores and chains will not consider your product without one. If you do not plan to sell to large distributors, you don’t need one. Market Decisions Choose where you will sell your product. You can start off small and sell at farmer’s markets, road-side stands, fairs, etc. These offer a great opportunity to test market your product. Determine a selling price for your product, taking the competition and your financial needs into account. Develop a distribution method: specialty food store, the mail, the internet, distributor, broker, etc. Production Decide where you will produce your product: home kitchen, commercial kitchen, shared kitchen, co-packer. Determine where you will store the product including the ingredients, and packaging material. The University of Scranton SBDC’s Agribusiness and Food Specialty Centers can help you with these and many other decisions you’ll need to make for your specialty food business. You can also obtain assistance from business resources: Pennsylvania Department of Agriculture (www.agriculture.state.pa.us) Pennsylvania Technology Assistance Program (www.penntap.psu.edu) Penn State Cooperative Extension (www.extension.psu.edu) For additional information, please visit www.pasbdc.org/agribusiness.