Published on March 7th, 2016 | by Millennium Magazine Staff0
7 Tips for Starting a Food Business
By Mariama Bramble, Contributor
Starting a food business has to be one of the most challenging businesses to get into. The harsh reality is that most fail within the first year. The restaurant business in notoriously tough, but where there is a will there is often a way! While vision and ambitions are important, turning that ambition into success requires research, planning, capital, business acumen, and perseverance, more research and more planning. Here are some tips that can help entrepreneurs start, operate, and grow their fast food business successfully and within the law.
Do Your Research
The food industry in general is very competitive so it is imperative that you do your research before getting started. Business networking events (such as those operated by Small Business Development Centers, SCORE, and local Chambers of Commerce) offer a great venue for picking the brains of fellow business people. Try to find out what works, what doesn’t, and what they would do differently. If you are aware of restaurants that have failed, try to identify why. Online community forums are a great way of gauging market need and customer opinion about local food service businesses.
Doing your research will help you to define your target market, niche opportunity, and identify your greatest risk factors, so that you can build a strong business case and move forward. Whether it’s specializing in authentic Chicago deep dish or cupcakes – focus on providing a unique and quality product – don’t try to be all things to all people. Be specific!
Consider Starting Small
You should consider testing your idea before you go all out with a pop up location. It will give you an opportunity to run through your idea without all the risk. Many food businesses start as a hobby at home and once they outgrew the space they moved on to something bigger. Going straight from a business plan to the opening a storefront is a big step; the idea is that you have an opportunity to get the kinks out. You can rent a food truck for a month or try a local market just to see how things go. When you do finally make the move to permanent location you can scale up.
Alternatively, fast-food franchises might be an option worth considering for entrepreneurs who are not quite ready to make the leap into full business ownership.
Build a Business Plan
A business plan doesn’t have to be an overly formalized document, but going through the process of building and constantly tweaking your plan will help you match the strengths of your business to the opportunities the market presents. It can also help you better deal with threats as they emerge.
A business plan is also essential when it comes to communicating with others – such as customers, partners, and investors – if you want any of these to believe in you, you must be able to convince them that you know what you are talking about when it comes to your business.
Not all businesses need investors to get started, particularly if you start small. However, there are ranges of options from very small microloans that can help smaller fast food outlets get started, to more comprehensive small business loans such as the popular SBA 7(a) and 504 loan programs.
If you are seeking investment, plan it out. Use your business plan and the knowledge you’ve gained from your pop up test as the basis for a loan proposal or investment plan. Investors and lenders will want to know everything about your business idea or venture. Also, be realistic about how much money you need. You can save lots of capital just by buying local produce and purchasing surplus equipment.
Start Your Business the Right Way
Whatever your business type, you must take care of the fundamental regulatory and legal steps involved in starting a business. From tax ID numbers to licensing make sure everything is in order.
Know Your Food Laws and Regulations
This should be part of your research to begin with, but it’s worth making it a one off tip. Know what the laws and regulations are in your state! From labor laws to food safety laws understanding and achieving compliance with legal and regulatory requirements can have a big effect on the success of a food operation big or small.
Find a Business Mentor
Talk to your local SBA office, SCORE, or Small Business Development Center (SBDC). They can give you unrivalled, objective, and FREE advice about the local market and the process of starting a successful business.