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Small Business Development Center
FOOD SERVICE BUSINESS START-UP
SBDCMichigan.org
Michigan SBDC Services
Welcome • Logistics • Program Attendee Record & Evaluation • Introductions/ SBDC and Facilitator
SBDCMichigan.org
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.
The Michigan SBDC
Michigan SBDC State Headquarters Grand Valley State University Seidman College of Business
I-69 Trade Corridor Region – Kettering University
Phone: 810-762-9660 www.SBDCMichigan.org
SBDCMichigan.org
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
SBDCMichigan.org
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!
SBDCMichigan.org
FOOD SERVICE BUSINESS START-UP
Agenda • Tour kitchen incubator • 15 Second Sales Pitch • Presentation • Marketing ideas
SBDCMichigan.org
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
SBDCMichigan.org
GROWN IN THE THUMB
SBDCMichigan.org
Getting started…
You have a great food product.
Now what?
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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.
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TEST and DEVELOP
Product
Processing
PricingPackaging
Promo1on
SMALL SCALE SAVES BIG MONEY!
SBDCMichigan.org
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
SBDCMichigan.org
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:$3MillionRideronyourhomeownersinsurancepolicyisrecommended.
SBDCMichigan.org
Cottage Food Limitations Youcanmakethese:• 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.
YouCANNOTmakethese:• 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
SBDCMichigan.org
Cottage food Label Sample
MADEINAHOMEKITCHENNOTINSPECTEDBYTHEMICHIGANDEPARTMENTOFAGRICULTURE
ChewyChocolateChipCookie
MadebyArniePinkster123FoodstuffLane
CasseroleCity,MI49494
Ingredients:Enrichedflour(wheatflour,niacin,thiamine,mononitrate,riboflavin,andfolicacid),buOer(milk,salt),chocolatechips(sugar,chocolateliquor,cocoabuOer,soylecithin,buOerfat),
walnuts,sugar,eggssalt,arRficialvanillaextract,bakingsoda.Contains:wheat,eggs,milk,soy,walnuts
NetWt.3oz.
SBDCMichigan.org
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.
SBDCMichigan.org
Business Plan
Produce• How you will make the product.
Promote• How you will market the product.
Profit• How you will make money.
SBDCMichigan.org
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!
SBDCMichigan.org
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?
SBDCMichigan.org
Michigan Market Maker
www.mimarketmaker.msu.edu
Market Research Demographics Competition Ingredients Sales Channels
SBDCMichigan.org
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
SBDCMichigan.org
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.
SBDCMichigan.org
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
SBDCMichigan.org
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
SBDCMichigan.org
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
SBDCMichigan.org
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.
SBDCMichigan.org
Marketing – Stage 1
Packaging Labeling Container type Branding Logo
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Marketing – Stage 2 Website Informative Flyers Letterhead Business Cards Promotional Kit Signs Shipping Boxes Press Releases
SBDCMichigan.org
Marketing – Stage 3
Coupons Samples Recipes Contests Loyalty
SBDCMichigan.org
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.
SBDCMichigan.org
Labels • Branding • Attention • Colors • Copy • Price • Quality • Nutrition • Ingredients
SBDCMichigan.org
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.
SBDCMichigan.org
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
SBDCMichigan.org
Business Resource Centers - BRC
LocatedinthefollowinglocalMichiganWorks!offices:
§ BayCity(EuclidatWilder) 989.667.0500§ Midland(WashingtonStreet) 989.631.3073§ Saginaw(BayRoad) 989.249.5232§ Standish(M-61) 989.846.2111§ MarleOeinThumbWorksBuilding,Room101Annex
LocatedinthefollowinglocalLibraries:
§ DeltaCollegeLLIC 989.686.9560§ TuscolaCountyLibraries 989.673.2849
SBDCMichigan.org
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.SBDCMichigan.org and complete an online “Application for Counseling” – you’ll be contacted to set appointment
SBDCMichigan.org
Michigan SBDC Business Education
Venture Start Workshop Series
Venture Plan Six to Ten Week Course
Venture Plan Online
Eight Week Online Course Venture Forward Ten Week Course
Five courses to choose Build your Business
Plan Build your Business Plan with digital tools
Grow your current business to the next level
Starting a Business Writing a Business Plan Financial Management Marketing Your Business Business Legal Issues
The SBDC provides numerous business education programs to help entrepreneurs and business owners launch and grow their businesses.
SBDCMichigan.org
Venture Plan Online - VPO
• 8-weekonlineprogramtoassistyouinbuildingyourbusinessplan• Hour-long,livewebinarsessionsledonlineweeklybybusinessandindustryexperts
• VideoandelectronictextbooksforaddiRonallearning
• LivePlaninteracRvebusinessplanningsodware• Consultant/coachguidesyouthroughtheprocess
SBDCMichigan.org
Thank you!
Please complete: Attendee Record
Training Evaluation
www.SBDCMichigan.org
