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ContentsPrefaceChapter1WhoPutsthe“Specialty”inSpecialtyFood?

TheCurrentStateofSmallBusinessinAmericaTheSmallBusinessAdministration(SBA)ServiceCorpsofRetiredExecutives(SCORE)TheSpecialtyFoodIndustryasaWholeHomebasedTheRetailStoreProductionandDistribution

ProductionMarketingDistribution

OtherSpecialtyFoodVenuesStrictlySpecialOrderFoodTruckPersonalChef

RetailFoodStoreRegulationsSitestoKnow

Chapter2YouLiketoEatbutIsthisBusinessRightforYou?

TestYourselfSmall-BusinessPersonalityTraitsOtherThingstoConsider

ThePressureofPerishablesDeadlinesTheWaitingGame

Chapter3MeetYourMentors

ConfectionatelyYoursToffeeKitchenDebaucheryJamsandJelliesLincolnOliveOilShopYummyYammySalsaWinnipesaukeeChocolatesJudyalaCarte

Chapter4PasstheSaltandPepper:BusinessBasics

It’sAllinaNameOnaMissionChoosingaBusinessLocationBusinessTypes

SoleProprietorGeneralPartnershipLimitedLiabilityCompanyCorporations

LicensesandPermitsChoosingInsuranceForms

ProposalsAgreementsInvoicesReceipts

Chapter5You’veBeenChopped!:MarketResearch

IndustryResearchTheSpecialtyFoodBusiness

TheSpecialtyFoodAssociationStateoftheIndustry

PackagingPackagingMarketResearchRetailMarketResearch

TheResearchDeterminingStoreSize

ProductionSpaceSpecialDietsRetail/ProductionComboMailOrder

FocusGroupsWhatMakesYouStandOut?

Chapter6TheNecessaryIngredient:Financing

FirstThingsFirstDon’tForgetLifeFindingFinancingGetYourCreditinShapeNetworkingYourBusinessPlanTheComponentsofaSuccessfulBusinessPlanBuyingEquipmentandInventoryEssentialEquipmentInventory

Chapter7HomeIsWheretheStoveIs:Location

CottageFoodIndustrySuppliesforYourHomebasedFoodBusiness

TheCommercialKitchenTheRetailShop

OutsideInsideSpecialDisplayNeedsBackOffice

TheRetailProviderStagingSpaceGettingProducttoMarket

MailOrder

ShippingServiceSpecialConsiderations

DistributorsFoodLabels

Chapter8AllThingsDigital

MobileWebsitesSettingUpaWebsiteDesignWebsiteMust-Haves

TheHomepageDrillingDownTheRestoftheSite

ContactingYoufromaWebsiteUpdatingMarketingYourWebsiteYourWebsiteURLKeep’EmInterestedChoosingaWebHost

Chapter9Chef,Sous-Chef,andKitchenHelp:Employees

WhotoHireReachingOuttoCandidates

AdvertisingInterviewing

InterviewingStrategiesPayTrainingLettingEmployeesGo

SeasonalWorkersLayoffsTerminationforReason

VendorsProfessionalHelp

Chapter10HowtoNotCooktheBooks:Accounting

FinancialStatementsPayingVendorsPricingYourProductsGiftCertificatesMarkupMaintainingCashFlow

Break-EvenPointTaxes

DeductingExpenses

Chapter11When“ToMarket”MeansSomethingElse

WhyMarketing?NetworkingtoBusinessSuccessTheInsandOutsofAdvertisingTheSmallbutMightyBusinessCardInformationBrochuresDirectMailNewslettersPressReleasesThePowerofCustomerServiceRetainingCustomersthroughTop-NotchCustomerServiceGivingBacktoYourCommunityBuildingYourImageTraditionalMediawithaDigitalTwist

EnewslettersPressReleasesvs.EventListings

Chapter12SocialMedia

BlogsFacebookLinkedInTwitter

Photo-SharingPlatformsPinterestInstagramSnapchat

AppendixSpecialtyFoodResources

BooksConferencesConsultantsMagazinesOrganizationsPackaging

Glossary

Index

SPreface

tartinga specialty foodbusiness isnot for everyone. Justbecauseyoulikefood,andevenifyouliketopreparemealsforyourfamilyordoitregularlyforafewfriends,makingfoodyourbusinessandhavingfoodprovideyouwithincomeisadifferentkettleoffish.

First,youneedtohavethatentrepreneurialgeneortheunwaveringdesiretostart and build a business. There are certainly myriad businesses to get intobesides the food business. You can even get into the food business withoutdealingwith food—as a foodwriter, a supplier of food-business-related itemslikepackagingormarketingservices,orbuildingcommercialkitchens.

Butforrealfoodies,theactualfoodisthething.Andforthespecialtyfoodfoodie, itgoesevenonestep further—takingperhapseveryday food itemsandmaking them into something new and exciting, blending flavors or creatingastoundingpresentations.

So, if you can stomach the stressof perishables, swallow the ficklenessofthe consumer of specialty food, and fortify yourself to keep upwith the ever-changing trends in the specialty food category, perhaps the specialty foodbusinessisforyouandyoucancreateanincrediblyrewardingandfunbusiness.Readingthisbookwillhelpyougointoitwithyoureyeswideopen.

Thespecialtyfoodworldisalmostliterally,astheclichégoes,youroyster.Theterm“specialtyfood”coversawiderangeofproducts.Thementorsprofiledinthisbookarepurveyorsofallsortsofspecialtyfoodsfromtoffeeandoliveoilto sweetpotato salsaandgourmetchocolatebars.Specialty foodalso includesbeverageslikecarbonateddrinks,cider,craftbeer,andlocalwine.Thenthereisyogurt, ice cream, pizza, homemade pasta, organic baby food . . . the list isendless.

And it doesn’t stop there. Specialty food can fall not just underwhat youproducebuthowyouproduceit:gluten-freepasta,organicproduce,sulfite-free

wines.Anditcanalsoincludehowyoupackageit:drinkableyogurtandwineina box come to mind. It really is an industry that you can enter into undercountlessumbrellas.

Throughoutthisbookyouwillseestatisticsthatpointtoagrowingindustry.Consumersarebecomingmorediscerningofthefoodtheyeat.Andwiththathascome a desire for local and specialty food. As you enter the specialty foodindustry,youmust,however,alwayskeepinmindthataspecialtyfoodbusinessis stillabusiness.Youmaymakespecialtywhoopiepies,whichsounds likeaheckof a lotof fun,but thebottom line is there is still abottom line to thinkabout. If youwere always the one tomakewhoopie pies for your friends andfamilyanddecide tomakeabusinessoutofmakingandsellingwhoopiepies,you will need to put a different cap on once you start thinking about yourwhoopie-pie making as a business. All the things that make a business workapplytosomethingasseemingly“fun”asfood.

Thatmeansyoustillneedtocreateasolidbusinessplan;youlikelyneedtofind funding; location—whether it’s a retail shop or a production facility—iscritical;employeesstillarethehighestcostofdoingbusiness.Addkeepingtrackof inventory and cash-flow issues and trying to fit in all the social mediamarketingthatseemstobearequirementintoday’sbusinessworld,andyouwillquicklyrealizethat“business”isstilltheoperativewordevenwhenitcomestofood.

Allofthementorsinterviewedforthisbookpointedconsistentlytoplanningasakeytosuccess:Makeabusinessplan,planforaperiodoftimewithoutthebusiness making income, and plan to start your business with more upfrontinvestmentthanyouthinkyouwillneed.Maybeyouevenneedtoplantoplan.If you do more planning than you think is necessary you will go into yourbusinesswithyoureyesopen.

Aswith anybusiness, read everythingyoucanget yourhandson and talkwitheveryonethatisevenremotelyinvolvedwiththefoodbusinessbeforeyouspend a dime on your business idea. And, our mentors also consistentlymentioned, think about the kind of lifestyle youwant to have andmake sureyourbusinessmodel fits that lifestyle—there isnothing thatwillgetyoumorequickly out of the business than creating a business that does not fit yourlifestyleandyourpersonality.

Small-businesssurvivalstatisticshaven’tchangedmuch.Moreentrepreneursthan ever opened small businesses in 2014—but, according to the SmallBusinessAdministration,abouttwo-thirdsofbusinesseswithemployeessurvive

at least two years and about half survive at least five years(www.sba.gov/sites/default/files/Business-Survival.pdf). Despite all the oddsagainstasmallbusinesslasting,afteryoureadthisbookyouaregoingtogointoit so well prepared and have planned so thoroughly that your specialty foodbusinessisgoingtonotonlysurvivebutitwillalsothriveandgrow—youwillbeoneofthosestillaroundinadecade!

Sosettle inwithagoodcupoforganicallygrownherbal tea, somegluten-free crackers smothered in goat cheese, and a few handmade truffles and bepreparedtogetexcitedaboutstartingyourownspecialtyfoodbusiness.

F

CHAPTER1

WhoPutsthe“Specialty”inSpecialtyFood?

rom cheeses, meats, and seafood to shortbreads, toffee, and maplesyrup,thespecialtyfoodindustryhassuchawiderangeofentrypointsthat if youhave a food skill and feel passionately about lettingothersenjoythefruitsofyourskill,youshouldcertainlyconsidertakingit to

market.Andnotonlyistherangeoffoodtypesbroadbutyoucanchoosehowtoparticipate—asaproducerofaspecialtyfood,youcanmakeyourproductandsell it in your own retail store or via mail order or be strictly a producerprovidingyourproducttoretailstoresormailordercatalogstosell.

Butfirst,let’slookatsmallbusinessasawhole.

funfact

Thisheadingprobablyshouldbe“Eew!”buttheSpecialtyFoodAssociationreportsthatthenextwaveintheedibleinsectmarketmaybecookingoilsmadefrominsects.Whoknewthereevenwasan“edibleinsectmarket”?

TheCurrentStateofSmallBusinessinAmericaAccording to theU.S.CensusBureau, smallbusinesses (definedas thosewith250orfeweremployees)employ56.1millionofthenation’sprivateworkforce.

Firmswithfewerthan100employeesmakeupthelargestpartofsmall-businessemployment.

That said, small business is far from immune to the ups and downs ofbusiness cycles. It has taken a while for the small-business sector to recoverfrom the recession in the late 2000s. Just in 2015 did birthing of companiesexceedexitrate,atrendnotseensince2007accordingtobusiness.com.“Smallbusinessesaretheforefrontofoureconomy...everyminute,anewbusinessintheU.S. is started and according to some people,more than 50 percent of allworkers will be self-employed by 2020.” (“The State of Small Business in2015,”May5,2015,byBetsyScuteri,www.business.com.)

StateofSmallBusiness

WaspBarcode is a barcode and system software technology company.Their“StateofSmallBusinessReport”(www.waspbarcode.com)foundthe following statistics: 47 percent of small businesses were moreconfidentintheeconomyin2015thanayearbefore.

Productcompanieswereanticipatinghigherrevenuegrowththannonproductcompanies.57percentexpectedrevenuegrowthin2015.56percentexpectedtoinvestlessthan3percentinmarketing.38percentwereexpectingtohireemployeesin2015.38percentplannedtospendmoneyonITin2015.35percentviewtheircompanywebsiteasveryorevenextremelyimportant.54 percent spent over $5,000 in on IT-related equipment andsoftwarein2014.

TheSmallBusinessAdministration(SBA)With statistics like the ones from theU.S.CensusBureau showing that smallbusiness(definedasfewerthan250employees)employ56.1millionpeople,it’sno wonder the U.S. government has an administration devoted to smallbusinesses. Anyone thinking about starting a business should have the SBA(www.sba.gov)bookmarkedforquickaccess.There isawealthof informationon this site; you couldn’t domuchbetter to start your small-business research

here.

tip

“Theglobalcheesemarketisexpectedtosurpassthe$120billionmarkby2021,andgrowatacombinedannualrateof4to4.5percentoverthenextsixyears,accordingtoarecentreportbyDecisionDatabases.com.”Reportedinanarticletitled“GrowingCheeseIndustryRevealsOpportunitiesinNewMarkets”ontheSpecialtyFoodwebsite(www.specialtyfood.com).

The SBA started in 1953. It is an independent agency of the federalgovernment helping Americans start and grow small businesses through fieldoffices throughout the U.S. and its territories. The SBA was designed byCongress to also ensure that small businesses get a “fair proportion” ofgovernment contracts and sales of surplus property. You can quickly see thatusingtheSBAtoitsfullestisonlytoanysmallbusiness’sadvantage.

Throughtheyears,theSBAhasmetcurrentchallengesinthesmall-businessarena suchas focusingonminority-andwomen-ownedbusinesseswith specialprogramsandeducationtohelpthesebusinessesthrive.TheypublishtheSmallBusiness Resource magazine and annual national resource guides. Theseresources contain educational information on things like how to apply for agovernment contract and keep you up-to-date on current legislation andadvocacyonbehalfof smallbusinesses,aswellas somesmall-businessbasicslikeadviceoncreatingabusinessplanandhowtoobtainfinancing.

TheSBAwascreatedforyou.Youwilldoyourselfafavorbyreferringtotheirsiteandcontactingthemwheneversomethingcomesupinthestartupphaseorasyouestablishyourspecialtyfoodsmallbusiness.

statfact

Withconsumerscontinuingtobehealth-andwellness-conscious,thedemandforspecialtyfoodssuchasgluten-freebakedgoodsandlow-fatsnackscontinuestorise.

—U.S.SmallBusinessAdministrationwww.sba.govServiceCorpsofRetiredExecutives(SCORE)Imagine 13,000 volunteer mentors at the service of the small-business world.That’s what the nonprofit organization SCORE (www.score.org) is all about.Therearealmost400SCOREchaptersthroughouttheU.S.inurban,suburban,andruralcommunities.Formedin1964,morethantenmillionAmericanshaveusedSCORE’smentoringservices.Thesementorscanhelpyouatanystageofyourbusiness,fromplanningtostartuptogrowth.

GototheSCOREwebsiteatwww.score.organdclickonthelinktofindinga chapter near you. A check of the zip code 03801 (Portsmouth, NewHampshire) produced one chapter right in Portsmouth and five other chapterswithina50-milerangeofPortsmouth.

After locating a chapter near you, you submit a request for amentor, gettogetherwithyourmentortogethelponspecificgoals(orhelpcreatingspecificgoals!), and follow upwith yourmentor throughout the life of your business.SCOREoffersonlineresourcesthatyoucansignupfortohaveemailedtoyouandtheyofferlocalandonlineworkshopsandwebinarsforfurthereducationaswell as community events such as roundtable discussions and seminars. Thewebsitehaseverythingyouneedtolocatealloftheseservices.

warning

Manysmall-businessleaderspointtohealthcarecostsalongwithEPAregulationsandincreasedstringencyinOSHAcomplianceasmakingitharderandhardertodobusinesstoday.Youshouldn’tletthisdeteryoufromstartingyourbusiness,butyoushouldbeveryawareofthesecostsasyougetstarted.

TheSpecialtyFoodIndustryasaWholeThe specialty food industry has far exceeded the realm of the niche market.While some items within the industry may be niche-driven, overall specialtyfoodisitselfaforcetobereckonedwith.

Throughout thisbookyouwillhearfromthosewhohavedoneit—atoffeemakerwho tookover the familybusiness; thepersonwitha full-time jobwhotook her hobby of making jams and jellies from local in-season produce andmadeasidebusinessoutofitthenputitonholdandhasplanstorevitalizeandexpand the business; and the chocolatiers who have a commercial kitchen attheirhomeandaddedanin-townretailstorethattheyhavedecidedtoclose.

Thereareseveralavenuesyoucantakeifyouwanttostartaspecialtyfoodbusiness.Theseinclude: Ahomebasedbusinessthatisself-limitingfromnotonly space but also state and federal food production and sales laws Ahomebased business that has more opportunity for growth because you havecreatedacommercialkitchenspace inyourhome Yourownretailshopthatincludes a production area Production-only specialty food business thatdistributes to a network of retailers Production-only specialty food businessthatfocusesonmailorderOfcourse,acombinationofoneortwooftheseisnotonlyapossibilitybutquite likely.Which is tosay thatwith thespecialty foodmarket,thesky’sthelimit!Youneedtodosomesoulsearchingandfigureoutsomelogistics todecidewhichapproachmakessenseforyouandthebusinessyouenvision.

warning

Thefoodindustryisheavilyregulatedineverystate.Donotignoretheselaws.InNewHampshire,oneofthegenerallawsaboutfoodstores(RSA143-A:4)reads:“Itshallbeunlawfulforanyperson,unlessexemptedunderRSA143-A:5,tooperateafoodserviceestablishmentorretailfoodstorewithinthestatewithouthavingobtainedafoodservicelicensetobeissuedbythe[DHHS]commissioner.Fornewestablishmentsorestablishmentsthatchangeownership,anapplicationmustbesubmittedalongwiththeappropriatefeeandaninspectionmustbeconductedbeforealicensewillbeissued.”

beforealicensewillbeissued.”

HomebasedThe SBA offers the following five steps to help you decide if a homebasedspecialtyfoodbusiness is rightforyou:1. Ensure thatyouandyourhomeareproperly equipped for thebusinessof foodproduction.What doyou intend toproduce? Do you have the equipment? Do you fall within the limits of localzoninglaws?

2. Financeyour homebasedbusiness.TheSBAdoesnot giveout loansbuttheydohaveaguarantyprogramwithbanksand lenders thatyoushouldcheck out.TheirMicroloan programguarantees loans averaging $13,000withthehighsideat$35,000.

3. Taketheappropriatestepstolicenseandregisteryourhomebasedbusiness.Itisnotworthittotrytoskirtaroundtheregulations.Youdonotwanttoriskyourbusiness.

4. Understand the regulations thatgovern foodproduction.Again,youneedtoknowwhatyouarerequiredtodoandyouneedtodoit.Itisnotworthriskingallyourhardworktryingtoskirtaroundregulationsthatjustseemtoodifficult.Contactyourcounty’spublichealthdepartmentandfindoutallyouneedtoknow.

5. Marketingyourfoodproductorserviceonline.Don’tlookattheinternetasregulation-free.Thefoodbusinesshasveryspecificregulationsgoverningonlineorderingandmarketingoffood,knowningeneralas“ecommerce,”muchofwhich,theSBAsays,isstate-regulated.Ifyouplantosellacrossstatelinesitgetsevenmorecomplicated.Findoutwhattheseregulationsarebeforebettingyourwholebusinessononlinesales.

aha!

Whosaysyourspecialtyfoodsbusinesshastobefoodforhumans?Thepetfoodbusinessisaboomingone.PetownersarespendingbillionseachyearonFidoandFifi.Buyingthemspecialhomemadetreatsisoneaspectofthatboomingmarket.Perhapsyoufindpetspecialtyfooda

aspectofthatboomingmarket.Perhapsyoufindpetspecialtyfoodamoreappealingmarketorperhapsyoucanadditasasidelinetoyourspecialtyfood-for-peopleretailstore.

TheRetailStoreStartingandrunningaretailstoreisananimalallitsownandonethat,accordingtotheSBA,morethanaquartermillionpeopleintheU.S.earnalivingdoing.TheSBAoffersthefollowingtipstogetyouoffontherightfoot: Determinewhich type of retailmodel is right for you. If youhavedecidedon a physicalstoreasopposedtoonlineretailing,youmightwanttoconsiderwhetherthereisanexisting store for sale thatwouldmeetyourplans. Ifyouaregoing to startfromscratch,besuretocheckalltheregulationsforretailingthespecifictypeofspecialtyfoodyouareplanningtocreate.

Find the right location.Aswe discuss inmore detail inChapter 7, youneed your location to be where your target market goes. The SBArecommends making sure to “combine visibility, accessibility,affordability,andcommercialleasetermsthatyoucanlivewith.”Finance your retail venture. In other words, make sure you have theproper financial backing to fund your startup until the business starts toearnincome.Thisisoneofthekeyreasonsthatsmallbusinessstartupsdonotmakeit.Chapter6walksyouthroughfinancing.Determineyourbusinessstructure.Doyouwant toheadoutaloneordoyouthinkapartnershipofsomekindmightmakeitmorelikelyforyourbusiness to succeed?While you can certainly hire employees to staff aretailstore,apartnerwilleasethatburdenandfillinotherskillsthatyoulackorarenotinterestedin.Chooseapartnerwhocomplementsyourownskillset.Partnershipscangosourveryeasily,butifyoudoyourupfrontduediligence, itmight endupbeing thebest decisionyoumake for thesuccessofyourbusiness.Take care of the regulatory requirements involved in starting andoperating a business. The food business has some unique and strictregulations thatyouwillwant tobe sure toknowandadhere to. Ifyourretailstorehasaproductionarea,youneedtoknowtheregulationsfortwoverydifferentaspectsofyourbusiness.

ProductionandDistributionYoumaydecidethataretailstoreisjustnotrightforyou.Youhavedecidedthatyouwillproduceyourspecialtyfoodbutleaveittoothersmoresuitedtoretailtosell it for you.Your product still has to get to the retail stores, and the storesneedtoknowaboutyourproduct,sothereisastillalottodobesidesproduceyourspecialtyfood.

Iftheideaofmarketingandtheorganizationaldetailsofmarketing,selling,andshippingdon’tappealtoyou,youhadbetterplantofindsomeonetowhomthatdoesappeal,becausegettingthosethreethingsrightwillmakeorbreakyourbusiness.Youcanproduceallthegreatproductintheworldbutifnooneknowsyouhaveit,andnoonesellsitforyou,yourbusinessisgoingnowhere.

ProductionTheactualsitingofaproductionoperationiscoveredinChapter7,buttomaketheinitialdecisiontodotheproductionandletothersdotheselling,youneedtofocusongettingthatproductionfacilityjustright.First,asalreadystated,makesure you check with state regulations about a production facility. One of thementorsinthisbookdecidedtocreateherowncommercialkitchenatherhouse—she found the processwent very smoothly from planning the kitchen to itspassing state inspection because she did some upfront work of having theregulators in her state help her before anyone pounded a nail to create thekitchen.Youshoulddothesamewithyourproductionfacility.

Youcanchoosetobuyanexistingfacilityorbuildoutyourown.Itcanbeontheoutskirtsoftowninastripmall(thesefacilitiesareusuallydesignedtobeveryflexibleinrenovatinginteriorspace)orinawarehouseareainyourtownorevenatyourownhomeifyouhavethespace.Itisoftenbesttolocatenearyourtargetmarket.Inordertodeterminewherethatmightbe,useFigure1–1:TargetMarketWorksheet.Butnomatterwhereyouchoosetolocate,theregulationsforthe insideof theproductionfacilitywillbe thesame.Besure to findoutwhattheyare.

statfact

Smallbusinessescreated108,000jobsinMarchof2015.—ADPPayrollServices

FIGURE1–1:TargetMarketWorksheet

warning

NYCisthefirstU.S.cityto“requirechainrestaurantstoincludeasaltshakersymbolnexttomenuitemsthatexceedthedailyrecommendedlimitof2,300milligramsofsalt...”–Time(“NewYorkCityMenusWillSoonHaveSaltWarnings,”Michal

Addady,9/9/15)

MarketingOnceyouhaveyourproductionfacilityplannedandyouknowwhenyouexpectto start rolling out your first product, you will need to make sure to startmarketing to the retailers that youhopewill sell yourproduct.Beprepared toprovide samples to potential retailers. You can run a sample batch of yourproduct(evenifyouhavetorentacommercialkitchenforthat).Youcansendsamplestopotentialretailersorattendatradeconferencewhereretailerscheckoutwholesalerbooths/products (checkwww.specialtyfood.comforone inyourregion).

Howeveryoudecidetoapproachretailers,besuretosendtheproductintheactualpackagingyouplantousesotheycanseethefinishedproductandhowitwill lookontheirstoreshelves. Ifyouarenot100percentsureof thefinishedpackaging, use potential retailers as an unofficial focus group and ask theiropinionsaboutdifferentpackagingpossibilities.

save

AccordingtoInboundLogistics,“Somepackagingsolutionsthatpreventproductdamagewhilecuttingcostsandboostingefficienciescanbecounterintuitive.”Theyrecommendthatmanufacturersconsidertheentirespanofthesupplychain.“Anywastedmoneyiswastedoverandoveragain,”saysDanLafondofpackagingmanufacturerRehriginanInboundLogisticsarticle“FindingCostSavings:It’stheWholePackage”bySuzanneHeyn(inboundlogistics.com).Reusablepackagingmaterials,plastictrays,andpalletshavebecomemorecommon,thearticlesays.

DistributionYou’velandedseveralretailersaroundtheregion,oreventhecountry(besureyouarelegal,foodsafety-wise,ineverystateyouplantodobusiness!),tocarryyourproduct.Nowyouneedtogetittothem.Thisiswhereyouneedtodecideonthebestshippingmethodtoensureyourproductgetstotheretailerintact,thewayyou intend it to look.Oneof thementors in thisbookhasdecidednot toinvestinallthehot-weatherpackagingrequiredtoensuresafedeliveryoftheirchocolatebars;therefore,theydonotshipduringthehottestseason.Theydonotwant their carefully created beautiful chocolate bars to arrive “as a puddle ofchocolate.”Youdon’twantsomethinglikethattohappeneither.

Mail order specialty food retailer Omaha Steaks has created a shippingmodel for their frozen meats to ensure safe delivery. Their products ship viaovernightmail and are flash frozen with dry ice inside a Styrofoam shippingcooler.Recipientsareinstructedontheoutsidepackagingtounpackandputthecontentsinthefreezerassoonaspossible.

Not only do you need to decide on distribution range and packaging, butyourfacilityneedstobeabletoaccommodatethepackingandshippingprocess.Thisisawholedifferentanimalfromcreatingthespecialtyfoodyouplantosell,so,onceagain,ifthisisnotsomethingthatrevsyouuptogetoutofbedandgettoworkeachmorning,makesureyouhiresomeonewhohastheskilltogetanefficientdistributionprocessunderwayandoperating.

tip

Onewaytodecidehowyouneedtodistributeyourproductsisfromthebottomlineincomeyourbusinessneedstomaketosucceed.Ifyouhavethebaseinyourregiontomeetthatgoalwithoutcastingyournetwider—great.Youcanalwaysexpandlater.Dokeepinmindthatmanyretailersdonotappreciateitifyouspreadyourproductsowidelyintheregionthatsalesoutletsarecuttingintoeachother’ssalestotals.

RetailSecretsYouShouldKnow

Hereareafewthings,accordingtotheRetailDoctor’sBlog(“41ThingsNo One Told You About Starting a Retail Business” atwww.retaildoc.com) thatmight surprise you: As soon as you figureoutwhatyourcustomerswant,theywillwantsomethingtotallydifferent.

People inyour townwillassumeyouare richbecauseyouhaveyourownbusiness.Youwillworkweekendsandholidays;ifyoudon’tlikeit,don’tgointoretailing.SometimesaTuesdaymightbeyourbestday;othertimesitwillbeaSaturday.Inthisbusiness,thereisoftennoconsistency.Thecustomerisalwaysright.Youwillrarelyhaveaforsuredayoffagain.Just because someone asks for a discount doesn’t mean theywon’tbuyifyoudon’tgivethemone.Runningabusinessisharderthanyouthinkit’llbe,butyouwon’treallyhavetimetonotice.

Ifyoufindthesehelpfulandinteresting,gotowww.retaildoc.comtoreadtheother33.

OtherSpecialtyFoodVenuesPerhaps you have an idea for a specialty food that you feel could make abusiness but the thought of producing food and getting it to the consumerthroughtheretailmarketormailorderdoesn’tquitesuityou.Thereareseveralotherwaysyoucouldgetintothespecialtyfoodbusiness.

StrictlySpecialOrderYou couldmake your specialty food—say it’s chocolates or lollipops or cakepopsorgoatcheeseformedintheshapeofagoat—andsimplysellitviaspecialorders. Corporate gifts to put in gift baskets, maybe those famous baskets ofhigh-end items that the stars get in their hotels at the Academy Awardsceremony, wedding receptions, other big parties—the list of possibilities isendless.Inthiskindofbusiness,youwouldhavetohavesamplestooffer,but

yourproductisalwayspresold.Youwouldstillneedaproductionfacility.Youcould lease a commercial kitchen, but then you would still have to put it alltogethersomewhere—plateit,wrapit,boxit,howeveryouplantopresentittoyourclient.

Theotherthingaboutthisapproachisthatyouwilleitherneedtospendasmuch time on sales as on making your food item or you will need to hiresomeone(ortakeonapartner)todothesalespartforyou.

warning

Eventhoughyouareoperatingoutofafoodtruck,therearestillplentyofhealthandfoodsafetyregulationsyoumustfollowaswellasgenerallicensingfeesandfeesspecifictoyourvendingoperation.Checklocalandstateregulationsforthelawsspecifictowhereyouwillbeoperating.

FoodTruckFoodtruckscontinue tobehot incertainpartsof thecountry.They tend todowelleitheronMainStreetwheretherearealotofpeopleorinruralareaswherelunchoptionsarefewandfarbetween.

Afoodtruckisagreatplacetosellcertainspecialtyfoodconcoctions—fromspecialcreationslikeveggiehotdogswithyourspecialhomemadesauerkrautorgourmet pretzels with a variety of dipping sauces or fruit dipped in differentchocolate and sauces, crepes,meatballs, cupcakes—the possibilities are nearlylimitless.

There aremany advantages andunique features to food trucks.Here are afew,accordingto“FoodTrucks101:HowtoStartaMobileFoodBusiness”byEntrepreneurPressandRichMintzer(www.entrepreneur.com/article/220060):You can choose a variety of locations from street corners to train and busstationstoresortsandconferencecenters,corporateparkinglots,evenbeachside(howfunisthat?).

78percentoffoodtruckshavefourorfeweremployees.Themobileunitcanbemoved ifyoufind theareayousetup in isn’tas

busyasyouthoughtitmightbe.The food trucks themselves have become capable of housing verysophisticatedequipment.

There are, says the article fromEntrepreneur Press, two different kinds offoodtrucks:1. TheMFPV,or“mobilefoodpreparationvehicle,”wherefoodisprepared as the customer waits 2. The ICV, or “industrial catering vehicle,”whichsellsonlyprepackaged food—sortofavendingmachinewith lotsmorechoicesOfcourse, the ICV tends tobecheaper than theMFPV—whichcouldrunupwardsof $100,000—because theunitwhere food is preparedneeds lotsmoreequipment.Thefoodcartisthecheapestofall,likelycostingunder$3,000forausedone.

warning

Foodtruckshavetheuniqueissueofbeingoutintheweather.Youcancreateafoodtruckthatkeepsyoucomfortableinmostconditions,buthowlikelyareyourcustomerstostandinlineinablizzard?Youneedtoaccountforthosedayswhenyoujustcan’tsetupshop.Thiscanbedifficultforpeoplewholikeregularityandneedtocountonthatincomeeveryday.

Don’t get duped into thinking the food truck business is easy! It may be“easier” than opening a storefront or a distribution center, but it has its ownquirks.Asmostofourmentorspointout inChapter3,youneed to figureoutwhatkindofbusinesssuitsyourpersonalityandlifestylepreference.

Somethingstokeepinmindare:

Staffing the food truck itself is likely toonlybe a small portionofyourday. Prep, office work like ordering supplies, and picking up suppliestypicallytakesacouplehoursofthedaybeforeand/orafterthetruckitselfisinoperationon-site.Cleanupiskey.Yourfoodtruckneedstobeasneatandcleanasanyother

foodoperation.Getting toandfromyourdestinationcan take time.Ofcourse, ideal is ifyoucankeepyourtruckon-siteevenifitmeanspackingitupandmovingit a few hundred yards. But you may then fall under some differentregulationssinceyouaretechnicallynotamobiletruckunit ifyoudon’tmove.Marketingdoesn’tgoawayjustbecauseyouaremobile.Unless,andevenif, you are set up in a busydowntown area, people need to knowaboutyou.Socialmediacanbegreatpromotionforthiskindoffoodbusiness.

tip

Decidewhereandwhattimeyouwanttosetupshopandstickwithitforawhile.Ittakestimeforpeopletogetaccustomedtoyourpresenceandtelltheirfriendswheretheyaregettingtheirgreatlunchormidafternoonsnackandcoffee.Youdon’twanttokeepthemguessingaboutwhereyouaregoingtobe!

Entrepreneur andMintzer’s article estimates that if you take an averageof$60,000forpurchaseofafoodtruckandadd: $1,000forstartupingredients;$2,000 for permits and licenses; $2,000 for the first month’s rental of a

commercial kitchen; $300 for the first month of parking and truckmaintenance; $2,000 for packaging; $1,000 for your home office forbookkeeping, etc.; and $500 for miscellaneous costs, You can get into thefoodtruckbusinessforjustunder$75,000.Andifinafewmonthsitisn’twhatyou thought itwould be, you can likely recoup a lot of your vehicle costs byselling it used to the next personwho thinks hewants to give the food truckbusinessatry!

PersonalChefBeingapersonalchefforpeopleonaspecialtydietcanbeaveryrewardingwayto get into specialty food. Cancer patients, especially those on chemotherapy,

can really benefit from a personal chefwho knows how tomake food that isespecially appealing when chemotherapy drugs make food unappealing butwhen it is important to maintain nutrition for strength and the best healthpossible.JamesHaller,formerchefinPortsmouth,NewHampshire,whoranthelocally famous gourmet restaurant The Blue Strawberry and is credited withestablishingthenowvigorousPortsmouthrestaurantscene,becameengagedinfood specifically for cancer patients, including writing the bookWhat to EatWhenYouDon’tFeelLikeEating(RobertPopeFoundation,1994).

Othertypesofspecialtycookingforhealthreasonsinclude: Low-sodiumandotherhigh-bloodpressure-relatednutrition Diabetesandlow-sugardietsHeart disease and low-fat, low-cholesterol cooking Celiac disease andgluten-freecooking

statfact

AccordingtoStatista(www.statista.com),specialtyfoodstorerevenuesintheUnitedStatesin2010totaledalmost$8billion.Besidesbeingpersonalchefforthosewithchronicdiseases,youcanalsoget

intospecialtycookingasapersonalchefforworkingcoupleswithchildrenwhofeel like they don’t have time to cook healthfully for the family.Or for thosewhoare inpositions tohost frequentparties, events, and social functionswhowantsomeonetheycancountontocomeintotheirhome,takeoverthekitchen,andwowtheirguestswithfoodwithinwhateverbudgettheysetforyou.

There are some extra credentials you will need or want to successfullypromote yourself in the specialty food personal chef business for those withchronicillnessesorhealthdietaryconcerns.Thismaybeaslittleashavingago-toconsultantinthemedicalfieldforthatparticularchronichealthissue.Oryoumay want to get some training yourself in the specific field. The diabetescategory,forinstance,hasaveryformalizedsegmentintheindustryondiabeteseducation.Registereddietitianscanspecializeinanyofthesefields.AndwhileyoumaynotwanttodotherigorouseducationforbecominganR.D.,theyoftenwork independently and you can line them up as consultants. Contact theAcademy of Nutrition and Dietetics (formerly the American DieteticAssociation)atwww.eatright.orgtofindregistereddietitiansnearyou.

funfact

AccordingtotheSpecialtyFoodAssociation,botanicalssuchasgingerinbeveragesisagrowingtrend,especiallyinEuropeanmarkets.Inthefirstthreequartersof2015,12.7percentofcarbonatedsoftdrinklaunchesintheU.K.containedgingercomparedto3.3percentin2010.DoeswhatstartsinEuropebecomeaU.S.trend?Perhapssomeonemighttryitandfindout!

RetailFoodStoreRegulationsOnceyoustartthinkingaboutcombiningthefoodindustryandretail,youhavealottothinkabout.Checkwiththestateinwhichyouplantodobusinesstogetthemostup-to-dateinformationaboutthelawsandregulationsyouneedtoabidebytoprepareandsellfoodtothepublic.InNewHampshire,for instance,youwould check with the Department of Health and Human Services. An onlinesearchof“sellingfoodinNewHampshire”bringsyoutotheDHHSsitewherethereisinformationaboutlicensingmobilefoodunits,foodsanitation,andmore.Some regulations you may encounter include: To establish a food servicebusinessorfoodstoreinNewHampshireyoumust,amongotherthings,submitaFoodEstablishmentFloorPlanwithafee,whichasofthiswritingis$75.

Notonlydoyouneedtosubmitthefloorplan,awatersystemplan,andawastewaterplan,butyoualsomustincludeinformationthatisrequiredofallnewretailestablishmentsandbusinesses.Ifyouplantobuyorsellafoodserviceestablishmentorretailfoodstoreyoumustsubmitatleast30daysinadvancealistofseveralitemstotheFood Protection Program including the establishment’s license, writtenrequestforthechange,aletterfromthemostrecentowneracknowledgingthe impending transfer, as well as a floor plan checklist, water systemscomplianceplan,andwastewater systemcomplianceplan—andany feesofcourse!Look into the requirements from the Food Sanitation Inspection and

Licensing Program, which will do routine inspections and investigatecomplaints.Theyalsowillhelptrainfoodserviceworkers,andtheyissue90-dayprovisionallicensestonewbusinessesandthosethathavechangedownership.

Every state has different laws that may be administered and regulated bydifferentdepartments,orevenmorethanonedepartment.Theonusisonyoutodotheproperresearchandcontactdepartmentsandgetthelicensingyouneedtolegallyoperatearetailfoodstoreinyourstate.

Thebottom line is therearea lotof angles to thinkaboutwhenopeningaspecialtyfoodbusiness—andmanyofthemarenotspecificallyaboutfood!Butthe specialty food industry is well entrenched in the U.S. retail consumers’mindsandcanbewellworththeefforttogetyouruniqueorsame-old,same-oldjustmoreexcellentthanwhatisouttherefoodbusinessofftheground.

warning

Ifyouaredealingwithliquoronanylevelbesuretocheckwithyourstate’sliquorcommissiontofindoutwhatrulesyouneedtofollowwithregardtoliquorsalesorconsumption.

SitestoKnowToworkwith foodyouwillwant tobecomeas familiar asyoucanwith foodsafety standards as mandated by the FDA. Bookmark these websites:www.foodsafety.gov.Adisseminationsitebilledas“YourGatewaytoFederalFoodSafety Information.”Here youwill find safety alerts such as salmonellaoutbreaks and the latest news regarding food safety and handling. This isprimarily a consumer-oriented website, but it is well organized andcomprehensive.

www.fsis.usda.gov.ThisisthewebsitefortheFoodSafetyandInspectionServiceandisanotherplacetofindthelatestnewsregardingfoodsafety,recalls,andotherfood-relatedpublichealthconcerns.

www.fda.gov.Mentionedseveraltimesinthisbook,thisisthesitefortheU.S. Food and Drug Administration. You can register here online as afoodfacilitythatmanufactures,processes,packs,orholdsfoodforeitherhumanor animal consumption.There is also informationabout labeling,packaging,additives,andotherguidance.www.usda.gov. This site has a “food and nutrition” section that includesgeneralinformationonthingssuchasthefoodpyramidandchildnutritionaswell as information on food safety, recalls, security issues, and otherfood-relatednews.

statfact

Seventypercentofconsumersintheagegroupof25to34werelikelytopurchasespecialtyfoods,accordingtoStatista.Nextwere18-to24-year-oldsat69percent,followedby35-to44-year-oldsat60percent.Thelowestrankwasamongthoseover65,butevenstillthatwasarespectable45percent,whichisalotofconsumersconsideringtheover-65crowdrepresentsalargepercentageofthebabyboomgeneration.

D

CHAPTER2

YouLiketoEatbutIsthisBusinessRightforYou?

ecidingwhetherornotthefoodbusinessistherightbusinessforyouiscritical toyoursuccessonceyoudoget into it.A lotof timeandlikely considerable expense goes into creating a thriving foodbusiness.Theremaybealittlebitoflucktoo,butifanyonetellsyou

a lot of it is luck, don’t listen.A lot of the success in specialty foods is fromexcellent, detailed planning and good old-fashioned hard work to make yourplanareality.

funfact

Pop-upstores(retailshopsthatopeninanemptyspacejustforaseason)aresaidtobeperfectformillennialswho“valuenewexperiencesoverownershiporpossessionofproducts,”saysWernervanHuffelen,ownerofTheDesignStrategistintheNetherlands(“ThePowerofthePop-upBusiness”byAlexandraGibbs,www.cnbc.com,8/21/15).

TestYourselfOneofthebestwaystofindoutifabusinessfitsyourpersonalityandlifestyleistoworkinitforawhilebeforeplunginginandsettingupyourownshop.Ifyouare in a full-time job, there are many possibilities for part-time work in the

specialtyfoodbusiness.Itcanbeeducationaljusttotakeapart-timetemporaryposition in a chocolate shop during the busy holidays or pull an evening shifttwoorthreenightsperweekataproductionfacility.Maybeyouarelookingatcraft beer, or cider, orwine as a potential business; even a couple of shifts aweek as a bartender at a small brewery can get you in the atmosphere of thesmallbrewbusinesstogetasenseofwhattoexpect.Plusyoucanearnalittleextracashwhileyouareatittoaddtothebusinessstartuppiggybank!

When you work in a similar job or as you get started in planning yourbusiness,thinkaboutthefollowing:

Do the typical hours mesh with your preferred lifestyle? If you areinterested in opening a craft beer brewery, do you need to be up late atnightwhenbeinganightowlisn’tyourusualstyle?Bakeriestendtogetstartedearlyinthemorning;isthephrase“earlyriser”onethathasneverbeenpartofyourvocabulary?Ifyouhavealwaysbeenaccustomedtotakingoffonatripwheneverthespiritmovesyou,openingaretailshopisprobablynotagoodmatchforyou. Perhaps a production setup in a category that has a couple ofextremely busy seasons and then slower periods where you could shutdownforaweekatatimewouldworkbetterforyou.Someone with a gregarious personality might not want to open a one-person production businesswhere you are by yourself all the time.Andsomeonewhoisnotfondofspontaneousinteractionswithstrangersisnotagoodcandidatetoopenandrunaretailstorefront.

This is not to suggest that everypossible aspectof a foodbusiness canbeself-selected around your personal idiosyncrasies.But don’t set yourself up togetintoabusinesstypethatisjustgoingtomakeyouregretyourdecision,dreadgoing to work, or not feel like putting a 110 percent effort into your newbusiness.Thatisarecipeforfailurebeforeyouevenbegin.

Ofcourse,allof this ismoot ifyouhaveabusiness thatcanafford tohireemployees to do everything you don’t particularly enjoy doing. But that isatypicalofastartupbusinessofanykind,andcertainlyofone in thespecialtyfoodindustry.

warning

Don’tgetajobtotestthewaterswithinthesamemarketyouplantosetupin.Driveatleastacoupletownsaway—youdon’twantyourpotentialcompetitorstothinkyouwerespyingonthem.Gettingtheinsidestoryaboutacompetitorisnotyourintention;yourintentionistogettheinsideexperience.

Small-BusinessPersonalityTraitsTherearesixtraitsthatareconducivetosmall-businesssuccessaccordingtoanarticlebyBenPopper inBusiness Insider called “SixPersonalityTraitsEverySmall-Business Owner Should Have” (January 13, 2011). The articledisseminates the results of a study by the Guardian Life Small BusinessResearch Institute which found “that there were certain traits that stood outamongthemostsuccessfulventures.”Thesesixtraitsare:

1. Beingcollaborative.Knowwhenandhowtodelegateandmotivateothersonstaff.

2. Curiosity.Haveaninterestinscouringtheworldforwaystoimproveyourbusiness.

3. Focusing on the future. Business owners that plan cash flow andsuccessionplanningdobetter.

4. Self-fulfilled. Thosewhowould rather be in control of their own destinythanfeelsecureinacorporateenvironmentaremoresuccessful.

5. Tech-savvy. It’s here, it’s the world, use it to your advantage andmakeyourbusinessmoreefficient.

6. Action-oriented. Adversity actually makes strong business leaders workharderandmotivatesthem.

tip

Ifyoursmallbusinesswillhaveemployees,now’sthetimetostart

learningaboutleadership.“Agoodleaderallowsbothemployeeresponsibilityandcreativitytoencouragegrowthandnewideas.”(“5LeadershipLessonsfromSuccessfulSmall-BusinessOwners”byRoyaleScuderi,OpenForum,www.americanexpress.com)

One group (RingCentral) reporting on this study in a blog post actuallypulled “desire to delegate” from the “being collaborative” trait and thought itwasimportantenoughtobeatraitofitsown.Itisprobablyunlikelythatanyonepersonisstronginallthesetraits.Butthinkthemthroughandthinkaboutyourownapproachtoanyoneofthem.Thenfigureouthowyoumightstrengthentheones you are weaker in, even if the solution is something like delegating tosomeoneelsetobetech-savvy!

UsingTrendstoYourAdvantage

Some basic trends mentioned in the article “Finding the Right SmallBusiness forYou” fromwww.bizfilings.com that areworth keeping inmindasyoumakedecisionsaboutyourbusinessare:

1. Bothhusbandsandwivesarewageearnersintoday’smarket.Thismeansthattasksthatwereoncecommonlyperformedbyastay-at-homewife/mom(likemealpreparation) areoftennowdelegated.Isthisaserviceyoucanprovide?

2. Outsourcing is popular in today’s businesses. Employees havebeen laid off and outsourced replacements brought in. Is theresomething in this trend that youcan capitalizeon?Maybenot inthe specialty foodbusiness,butbeingcreative is thenameof thegame.

3. Is therea technological approach thatyoucouldmakeabusinessfrom?What if you spent an hour on your computer in the earlyeveningandoffered10peopletoemailyouwhattheyhaveintheirfridge and you suggest a meal to them? Even technology iscreative!

Be sure to spend time interacting with the community. Join in on

sidewalksalesanddemodays.Attendchamberofcommerceeventsandoffer to bring samples of your product. Join the localRotaryClub andinteractwith business leaderswho canbringbusiness yourway.Thesearesomewaysyoucanexpandaretailoperationintomuchmorethanthefourwallsofyourshop.

statfact

AccordingtotheCensusBureau,womenown36percentofallU.S.businesses,andofthose,89percenthavenoemployees.

OtherThingstoConsiderThe foodbusiness is acategory likenoother.Whilea specialty foodbusinessdoesnothavethepressuresoftherestaurantindustry,therearesimilarthingstoconsider.

ThePressureofPerishablesDealingwithfoodoftenmeansdealingwithperishableproducts—whether it istheproductyoumakeortheingredientsyouneedtomaketheproduct.Keepingtrackof your inventory andyour product is a key chore for the foodbusinessowner. You need to be meticulous in your records and with your orderingprocess.Itissomewhatsimplertodaytodo“justintime”ordering,butthathastobebalancedwithmakingsureyouhavewhatyouneedtotakeonthatsuddenhugeorder that couldgiveyourbusiness thebestweekever—ifonlyyouhad200poundsofflouronhand.

Youcanfillinwithpurchasingatoneofthebigboxstores,butyoumayfindit means less profit on your big order, and sometimes it might meancompromisingthequalityofyouringredients,whichisprobablynotworthit.Ithelpstofindacoupleoffoodiebusinessfriendsandsetupanetworkwhereyoucanhelpeachotheroutinthesekindsofcircumstances.

Theotheraspectofperishablesisthatwhatyoudon’tsellinyourretailstore

becomesday-oldafteraday.Forsomeitemstheshelflifeisabitlongerthanaday.Thisisanissueforbakedgoods.Someofityoucandealwithbypackagingfor longer life. Bakeries and other best-when-fresh food purveyors can set upwithanonprofitsoupkitchentodeliveranyunusedfoodattheendoftheday;the food is stillgood, it justmightnotpresentwell forcustomers topurchase.There might be other nonprofits who might be able to use that day’s unsoldgoodsataneveningmeetingorevent.Andyoumightevenbeabletowriteoffthosedonations.

funfact

Thefivebeststatesforwomen-ownedbusinesses,accordingtoThumbtack,are:

1. NewHampshire

2. Texas

3. Kansas

4. Oklahoma

5. Colorado

Whateveryoudo,youneedtofigureoutifyoucanhandlethepressurethatcomeswithperishablesandifyouhavetheorganizationalandplanningtoskillstoorderascloselyaspossiblesothatyoucansellmostofwhatyoumake.

DeadlinesThespecialtyfoodbusinessyouhaveinmindmaybeachocolateshop—asmallstorefrontwithaproductionareainback.Yougetupinthemorningandmakewhateverconfectionyoufancymakingthatday.Yourcustomerslovecomingintoseewhatyou’vecomeupwith to join thesolid-sellingstandbys.But ifyoualso make your business work by taking orders for special occasions, bepreparedtoworkunderdeadlinepressures.

ChoosetheRightBusinessforYou

In the online article “Finding the Right Small Business for You,”Bizfilings’ Business Owner’s Toolkit (www.bizfilings.com) offers thefollowing three common mistakes that people make in choosing abusiness(andreasonsthatoftenresultinbusinessfailure):

1. Not doing the right amount ofmarket research on demand for aproduct or service that is currently your hobby that you “thinkwouldmakeagoodbusiness”

2. Notplanningenough

3. Notaskingforhelp

Don’tsuccumbtothesepitfalls.Thereisplentyofinformationoutthereonsmall-businessstartupsingeneral,onspecifictypesofbusinesses,andcertainly on the specialty food industry. Read everything you can getyourhandson,callpeople,networkandactuallycontactthepeoplethatcome as a result of your networking, and ask for help from thosewhohave been there and from the professionalswho are in the business ofhelpingsmallbusinesses.

Youaretheownerandyoucandecidehowyouwanttowork—setupyourbusinessinawaythatdoesn’tmakeitunpleasanttogotoworkeachday!Thismaymean doing something a little different fromwhat you originally had inmind.Withasmallbusiness,thisisnotjustajob,it’syourlife!

TheWaitingGameRetail is retail nomatterwhat you are selling.Retailmeans having a shop inwhich you sit waiting for customers to come in and buy your stuff. You canalwayshire someone tostaffyour retail store,but that justmeans thatyouarepayingsomeoneelsetositinashopandwaitforcustomerstocomeinandbuyyourstuff.Thisiswhyseveralofthementorsinterviewedforthisbookwerenotat all interested in opening a retail outlet for their product—YummyYammyownerLisa Johnsondidnot evenconsideropeninga retail store forher sweet

potato salsa; Seattle toffee maker Susan Burns lets other retailers carry herproduct and theextentofher retail interaction is todo severaldemos in thosestores;WinnipesaukeeChocolatesownersJonathanWalpoleandhiswifeSallyopened a retail shop a few years into their chocolate-making business only todecideafewyearsintoitthattheynolongerwantedtobetieddowntothestoreandtheydidn’twanttheexpenseofhiringsomeonetostaffitforthem.

TheFactoryModelversustheFruitStandModel

George Horrigan, business planner and founder of FoundationheadConsulting Group and author of business books including Creating aThrivingBusiness(MorganJames,2013),talksaboutthe“factorymodelversus the fruit stand model” of growing a business. Almost allbusinessesstartoutinthe“fruitstandmodel,”wheretheownerishighlyinvolved and opens the doors in the morning, and if the owner is notthere the business does not make money. And some businesses arenaturally in the fruit stand mode longer than others. But for thosebusiness ownerswith the goal of expanding or eventually having theirbusiness work for them, Horrigan encourages establishing theirbusinesseswith the intentionofquicklymoving to the“factorymodel”where theowner isdealingwith thebiggerpicture issues that lead toathrivingbusinessandsetsupprocesseswhereday-to-daybusinesscanbedelegated to others. This is what Horrigan feels leads to a thrivingbusinessthatissetuptogrowfromthebeginning.

Butformanypeople,retailistheirdream.Allthisisfineifretailiswhatyouwant for your business—although it is probably rare for small retailers to getwealthy,manyretailbusinessownersmakeasufficientlivingandlovetheretailshopatmosphereandinteractingwithcustomers.

Also,retailcan(andprobablyshould)bemuchmorethansittingwaitingforcustomers. You will want to use your retail shop as a home base for yourbusinessandspend timesoliciting large-ordercustomers.Youcan tryoutnewpackaging and new products on basically an impromptu focus group of thepeoplewhohappentowanderinthedoorthatweek.

aha!

aha!

Eachyear,Thumbtack(anonlineservicematchmaker)ratesU.S.citiesfortheirsmall-businessfriendliness.Thefiveworstfor2015were:

1. Hartford,CT

2. Albuquerque,NM

3. Buffalo,NY

4. NewHaven,CT

5. Winston-Salem,NC

T

CHAPTER3

MeetYourMentors

here is no better way to learn the ins and outs of starting any smallbusiness than to talkwith business ownerswho have done it—eithersuccessfully or not. In fact, sometimes those who have not beensuccessfularetheonesyoucanlearnfromthemost!

Thefollowingspecialty foodbusinessesarestill inoperation.Youwill seethat theirownersarepassionateaboutwhat theydo.Theywilloccasionallybementionedinotherpartsofthisbookwithtipsinpertinentchaptersspecifictoatopic.Thereforeitseemsappropriatethatyoumeetthemnearthebeginningofthisbooksowhentheyarequotedlateryou’llalreadybeacquainted.

ConfectionatelyYoursToffeeSusanDesjardinsBurns’husband’sauntdevelopedatoffeerecipeinthe’70sintheSeattleareaandsolditwholesaleaswellas inhercandystore.Inher80s,shewasstillmakingthetoffeewhichhadbecomepopular.Butwhilethetoffeewasuptoitsusualstandard,the80-year-oldcandymakerstartedtoletbusiness-related things like licenses lapse.AuntLilawas ready to giveup the businessandofferedtoletSusanandherhusbandtaketherecipeandcontinuethefamilytradition.

WhenitbecameclearthatSusanwouldbethetoffeemaker,shebegantogetherarmsaroundthebusiness.“Therewasalittleguiltfactor,”Susanadmitswitha smile. “Youhave todo thisormy toffee recipewill diewithme.”Susan, anursebytraining,wasnotabaker,notachef.AuntLilataughthereverything.“Ichangedonlyonethingabouttherecipe,”shesays.“Iuseagavenectarinsteadofhighfructosecornsyrup.”

Thatwasin2005.Fiveyearspassedandthetoffeewasmakingaprofitand

shewas able to save a littlemoney.Up to that point, Susan had been rentingspaceinacommercialkitchen,whichmeantitwasasharedspace.“Ifoundthathard,”shesays.Sosheusedherfiveyearsofsuccessandsavingsandbuiltherowncommercialkitcheninagarageattheirhome.

InWashington State, theDepartment ofAgriculture regulateswholesalers.Susancontactedthemtolookatherspacebeforeshespentthe$24,000ittooktobuildthecommercialkitchen.Therepresentativesgavehersomeadviceonhowtodoit.Thekitchenwasdesignedtobesealedfromthegarageandwithitsownentrance.

She filed her paperwork and design to the state. “There were fees, but Ididn’t feel theywere excessive,” she says. Susan feels this upfront interactionwith the regulators prior to building seemed tomake the processwork better.Someoftheregulationsarealittlevagueandshewasabletogetclarifications—for instance, whether a floor drain was needed, which would require someexcavation.Herplanwasapprovedinrecordtime,shebuiltherkitchen,andsheisnowverypleasedwiththatdecision.“Iknowwhatisgoingoninmykitchen,”Susansays.

Confectionately Yours has no other employees besides Susan. “It is toomuchexpenseandIfeelyoulosequality,”shesays.Hercollege-ageddaughtercreated the companywebsite. The only printedmaterials she has are businesscards.Hermainmarketingisdoingdemosateachoneofherretailoutletsfourtimes per year. This helps her remain on theirminds in a competitivemarketwherestoresaretryingnewstuffallthetime.

“Iwasn’tkeenonitatfirst,”SusanadmitsabouttakingonConfectionatelyYours,“butnowIloveit.Ilovebeingself-employed.”

KitchenDebaucheryJamsandJelliesThefirst timeJoniVanGeldercooked,itwasat12yearsoldasanaupairforfivechildren.TheonlythingsheknewhowtocookweregrilledVelveetacheesesandwiches. She expanded her repertoire to spaghetti and meatballs and keptexpandingitasthekidsgrewolder.

Yearslater,shemarriedamanwhowasraisedinHollandandMexico.Hermother-in-lawwaswell-traveledandhadculinaryexpectationsofherdaughter-in-law, showingher how to preparemeals and fancy appetizers. “This gotmeinterestedinlearningaboutcooking,”Jonisays.

The company she nowworks for has annual themed parties, and the first

timeshecontributedfood,thecompanygotwindofJoni’scookingskills.Theystartedhiringhertocookfortheparty.Thenshestartedgettingcateringjobs.

“Myshortcoming,”shesaysabouttakingthiscateringgigfurther,“wasthatIdidnothavethekitchentodoacateringbusinessfrommyhome.Icouldn’tdoitaboveboard[withthefoodlicensesnecessary]soIdidn’tdoit.”

AtsomepointJoniaddedjamandjellymakingtohergrowinglistoffoodtalents. “I started going to local farm stands and pickingmassive amounts offruit.”Shestartedmakingherownjamandgivingitawayasgifts.Peopleloveditandaskedformore.AtonepointJoniwondered,“WhytheheckamIgivingitaway?”An accounting friend offered to do a pro forma business P& L, andKitchenDebaucherywasborn.

The Homestead Act had just been passed allowing an easier entry intohomebasedfoodbusinessesthatdealtinfoodsthatwerenotconsideredrisksandhadothercriteriaforkeepingbusinessessmall.Jonidocumentedeverythingsoifanyonehadquestionsshehadplentyofbackup.

AKitchenDebaucherynewsletterwentoutregularly.Shecreatedapricelist.Andmostly the businesswas a success. But a full-time job, a couple of newgrandchildren, and the inability to expand the business without considerableexpensehasleftKitchenDebaucheryonthesidelinesforthetimebeing.

The exciting news for Joni is that she is in themidst of designing a newhousetoputonherNewHampshirelakesidelot.WhileJoniisn’tbuildinganewhousejusttohaveanexpandedkitchen,itisdefinitelyabenefitthatwouldallowhertotakethebusinesstothenextlevel.Thisiswhatistakingupherfreetimeatthemoment.

Besidestrulybelievinginyourselfandyourproduct,Joniadvisesnotstartingouttoobigandnotoverwhelmingyourselffromthestart.“Thinkassmallasyoucan, then cut that in half,” Joni advises about starting a small specialty foodbusiness.“It’slikeaddingsalttosoup—youcanalwaysexpand.”

LincolnOliveOilShopLincolnOliveOilShopownerRobBaker initiallyhookedupwith some shopowners in Colorado forwhom an olive oil shopwasworkingwell. They hadshops inFortCollins andBoulder.Using thatmodel,Rob opened his shop inLincoln,Nebraska,whosehistoricHaymarketdistrictofferedasimilarvenuetothose in which the Colorado shops were doing so well. “We tweaked a fewthings for the localmarket,”Rob says, butotherwise the setup forhis store is

basically the same as the ones he learned from. Everything comes to themwholesale and they bottle in the store; 7 to 8 percent of their sales are fromonlineordersandanother7percentfromoffsiteevents.

The store itself is organized as a tasting bar—customers get a free guidedtasting touraround thestore, testingoliveoils fromtraditional18-year-aged tooilsinfusedwiththingslikegarlictodarkchocolateandcranberrypear.

Robadvisesspecialtyretailstartupstoneverunderestimatetheimportanceoflocation. “On Saturdays, the largest farmers’ market in the Midwest wrapsaroundthefrontandbackdoorofthestore,”heexplains.“Nomatterwhatyourbusiness,locationiscritical.”

Rob trieda shop inOmaha inamall location,but thesaleswerenotgoodenough to pay for the costs associated with being in a mall. The LincolnHaymarketlocationhasworkedperfectly.

Inhiskindofbusiness,Robalsoexplains,youhavetodomorethanjustturnthe“closed”signto“open”eachmorning.At$20perbottle,hisoliveoilisnotan inexpensive purchase. It’s important to educate customers so that they areconfidentinbuyingyourproductandknowinghowtouseit.Tothatend,theyhavebothpublicandprivatecookingclassesat thestore.Theyconductoffsiteeventsaswelltospeakabouttheiroliveoilsandtheservicestheshopprovides.Andon topofall that, theyhaveanonprofit fundraisingprogram. If that isn’tenough,toaddtotheshop’sappeal,LincolnOliveOilShopalsocarriesawidevarietyofothergourmetitemssuchascheese,pasta,spices,andawidevarietyofsaucesfocusingonNebraska-madewherepossible.

A store like this is labor-intensive from a customer service standpoint, sostaffing is key. “Youneed toprovide customerswith a total experience,”Robexplains.Hehasemployees,especiallyoverthebusyholidayseasonandontheSaturdayfarmers’marketdays.

Rob has a background in marketing and feels that marketing is not onlysomethingheisskilledatbut iscriticalfor theshop’ssuccess.“For12yearsIopened new stores forWalmart,” he says. “When you open aWalmart store,people just come. That’s not true with a small specialty food business.”Surprisinglyeventohim,Robhasfoundnewspapers tobethebestadvertisingmediumforLincolnOliveOil.HehasjoinedauniqueprogramwiththeLincolnJournalStarwheretheyofferaweeklydealtoreaders.For$25consumersgeta$50giftcertificate to thebusiness featured thatweek.Theconsumersends themoneytothenewspaperandthefeaturedbusinessgetsdollar-for-dollarvalueinadvertising in thepaper.LincolnOliveOilhonors thegiftcertificatesandgets

exposure to new customers and the potential of the customers redeeming thecertificate buyingmore than the gift certificate’s value.And of course the netcosttohimismuchlessthantheretailvalueofthe$50.It’sawin-wininRob’seyes.

TheystoppedradioadvertisingbutcontinueadvertisingonTVonlyon theABC affiliate during the daytime foodie show, The Chew. By focusing, Robsays,theresultsaretenfoldoverwhathecallsthe“whack-a-moleapproach.”

Afterallthesemarketingeffortsandgettingcustomersintoyourretailstoreand capturing them with your incredible product, enticing displays, andeducation, the final key is to get them coming back. To be successful, Robwarns,“Youhavetoturnthosepeopleintorepeatcustomers.”

YummyYammySalsaYummyYammyofVermontwasbornofownerLisaJohnson’sdesiretogetthenutritious so-called “super food” sweet potato into her two young daughters’diets more frequently and easily. U.S.-grown sweet potato salsa (with notomato!)washersolution,and,astheysay,therestishistory.

Lisa,who ran natural food stores formany years prior to startingYummyYammy,basedherbusinessonthepremisethat“productslabeled‘food’shouldhavenothingbut food in them”and that food that isgood foryoucanalsobedelicious.Hersalsahasnofillers,preservatives,orchemicals.

Lisaisconvincedthatoncepeopletryhersalsatheywillberepeatcustomersand theywill tell all their friends. To that end,while the thought of having aretail storenever crossedhermind, she isoftenoutdoingdemos in the storesthatcarryYummyYammy.Ifyouaregoingtogotoalltheefforttododemos,Lisasaysthatyoushouldmakeapointoftellingpeopletospreadtheword.ShealsocreatedtheYum-bassadorprogramwhichgivesyoufreeshippingonyourfirstYummyYammyorderonAmazon.com.Fromthereshe isconvincedyouwillbeYummyYammy’sbestadvocateandspreadthatall-importantword-of-mouthadvertising.Lisaalsodoesotheruniquethingslikegivingjarsasprizestotrailrunners,agoodtargetmarketforherhealthyproduct.

Likemanyspecialtyfoodstartups,YummyYammystartedinLisa’skitchen.Now she has a co-packer who bottles and labels, and she goes to everyproductionrun.

“Ithas takenmefiveyears tofindmytargetmarket,”Lisaexplains.Whenyoufigureoutwhoyourtargetmarket is,shesays,“figureoutwheretheyare,

wheretheirconversationsaretakingplace,andjointhoseconversations.”Likemostof thestartupfoodbusinesseswetalkedwithfor thisbook,Lisa

makesonepointloudandclear:Ittakesalotmoremoneythanyouthinktogetabusinesslikethisoffthegroundandtothepointoffeelinglikeitisasuccess.

“I thought five to ten thousand dollars,” she says, “and I’m going to getstarted, reinvest, andgrow. I really believed that.”She learned that you eitherhavetorealizeit takesa lotofmoneyora longtimetogetbeyondthestartupphase. “Eitherplan to set aside a lotofmoneyor findan investor right away.And don’t forget, not only is it very expensive to get into the specialty foodmarket, but you don’t get paid right away; you have tomake your product inadvance and store itwith an average of 90 days for themoney on your sales[fromwholesaling] tocomein. In themeantime, therearea tonofexpenses—things like promotions, demonstrations, and giving discounts.” And if you’veinventedanewfood, likeYummyYammy,itespecially takestime.“It takesalottobethefirst,”Lisasays.

AnotherpieceofadviceLisahasisthat“it’sagreattimetoexperimentwhileyouaresmall.”

WinnipesaukeeChocolatesJonathan and Sally Walpole of Wolfeboro, New Hampshire, started theirchocolate business ten years ago, but it all startedwaybefore that. Jonathan’scourtshipofSallyincludedaspecialValentine’sDayboxofchocolatesthathehad learned to make himself. She married him, of course, and he has beenmakingchocolateeversince.

They moved to the Walpole family homestead and built a commercialkitchen on the property. There theymake the chocolate bars that gracemanyretail countertops around the region. The home production center works outgreat.“Wecantakebreakswhenwewant,”Sallysays,whoalsohasapotterystudioattheirhome.“Itreallysuitsourlifestyle.”Andthedayofthisinterview,theirbusinesshadjustbecomecompletelysolar-powered.

“The firstyear,”Sally says, “we researched thekindofbarswewanted tomake.”Theychosea thickbarbecause it allowed for layersof chocolatewithinclusionsofnutsandberriesthatactuallycouldbetastedintheirentiretywitheachbite.Theyblendthechocolatetocomplementtheflavorsofthebars.Eachchocolatebaseisalittledifferent.Itmakesitalittlemorecomplicated,butitisjustthekindofdetailthatputsthe“specialty”inspecialtyfood!

Justayearafterstartingthebusiness,theWalpolesopenedaretailstorefrontin downtownWolfeboro, a resort town that has a large summer tourist influx.They thought the tourist aspectwouldmake the storeworth it but found on aday-to-daybasis,peoplewanted tobuythemore inexpensivecandybarwithalocallabeltogiveasvacationgifts.And,ironically,localfolkstendedtolookatthe chocolatebars as touristpurchases.Theybegan to feel like the retail storejusttookuptoomuchtimeandtiedthemdown,makingitmoredifficulttovisitchildren and grandchildren. They thought the retail shop would give themvisibility in Wolfeboro with the skyrocketing summer population. And eventhoughtheshophasbeenbusyduringJulyandAugustandaroundtheChristmasholiday,thatjustwasn’tenoughtomakeitworthwhile.Unwillingtospendtheirprofitsonemployees,theWalpoleshadrecentlydecidedtoclosetheretailshop—again, a business decision based on lifestyle choices—letting other retailerssellthebarswhiletheyonceagainfocusedexclusivelyonproduction.Wholesaleordersmakeup80percentof theirbusinessalongwithlargeordersforspecialeventsandmailorder.

Besides the chocolate and inclusives themselves, another unique aspect ofWinnipesaukeeChocolatesisabeautifullydesignedwrapper—threeofthebarsshow original paintings by a local artist of local lakes andmountain scenery.Theywantedtheirbusinesstohelpsupportthelocalcultureallaroundthem,sotheyalsotrytouselocallysourcedingredientslikehoney,andforotherthingslike the printing of thewrapperswhenever possible.And if that isn’t enough,Jonathan and Sally are highly conservation-minded and chose to donate aportion of their profits to local conservation groups, helping to preserve thelandscapethattheybothloveandinwhichtheygrewup.

Theyhave lots of advice for those thinking about starting a specialty foodbusiness.But their focusofadvice is related to that important timebeforeyouevenmakeorsellthatfirstproduct.

“Sit downwith a business consultant and do a five-year plan,” saysSally.“The first year—or even three to four years—you aren’t going to make anymoneyat it,or ifyoudo, itwillgoback into thebusiness.Howwillyoudealwiththat?

“Thinkcarefullybeforeyougetstarted.Makesureyouthinkabouthowyoureallywanttoliveyourlifeandmakesureyourbusinessfitsintothatqualityoflife.Youwanttohavealivingbutyoualsowanttohavealife!”

JudyalaCarteJudyGilliardsellsherownsignatureblendofspices,butafteracouplehaltingstartsatsellingittoawidermarket,Judynowsellsitthroughjustonespecialtystore.Shemostlyenjoysmakingittogiveasgiftstofriendsandfamily.

Judy’slifeinfoodhasincludedhavingbothwonandfailedwithrestaurantsand other food businesses. She has also been the guest chef on cruises, doneproduct demos in specialty stores, and has written several books (The FlavorSecret:UsingHerbs&Spices toPutFlavorBack intoLow-Fat,Low-Calorie,Low-CholesterolCookingco-writtenwithJoyKirkpatrick,was the impetus forherspiceblend)andhasalongtimeradiobroadcastingcareerwithasyndicatedfoodprogramcalledJudyalaCarte.Alloftheseexperienceshavegivenherlotsofexposuretothespecialtyfoodmarket.WhichleadsJudytoreiteratethepre-startupadvicethateveryotherspecialtyfoodsproducerhasagreedon:

Makeaplan.Havefundingforatleasttwoyearstosupportyourselfwhilegettingyourbusinessupandrunning.Ifyoucan’tdothelatter,startveryverysmallwithalimitedproductline.

Andlast,Judyfeels thatyouneedtoreallyhaveapassionfor thebusinessyouarestarting.It’ssuchhardworkthatattheendoftheday,thebusinessneedstobeverymeaningfultokeepyoumotivated.

These entrepreneurs have basically been there, done that. You would doyourself a favor by listening to their advice and thinking about how theirexperiencesstartingtheirspecialtyfoodbusinessesrelate toyourstartupplans.Hereareahalfdozentake-awaysfromthesementorsthatcamethroughloudandclear:

Planaheadbeforeyouputasinglefooditemforsale.Andwhenyouthinkyou’veplannedenough,planalittlemore.Setasideacashsupplytocarryyouthroughthestartupphase.Assume that startup phase will be two or three times longer than youthoughtitmightbe.Startabusinessforwhichyouhaveapassion.Inthisbusiness,itishardtokeepmotivatedtobuildsomethingifyouarejustdoingitformoney.Themoneyislikelyslowtocome.

Planyourbusinesstosuitthelifestyleyouwouldliketolead.Forexample,if being stuck all daywithin fourwallswaiting around for customers tocome insounds likeprison toyou,don’topenyourownretailoutlet foryour product. Make your product but leave the retail sales to someoneelse.Carryyourpersonalbeliefsintoyourbusiness—chemical-freefoods,non-GMO ingredients, healthy choices, high-quality ingredients—and hangyour toque (check theglossary!)on thosebeliefs.Thepeoplewhoshareyourbeliefswillbuyyourproduct,andthosewhodon’tknowaboutthesethingswillbeintriguedandimpressedbyyourdevotion.

T

CHAPTER4

PasstheSaltandPepper:BusinessBasics

hischaptercoversmuchofwhatyouwillneedtodobeforeyouopenyourdoors—namingyourbusiness,determiningitsbusinessstructure,andfindingalocation.Italsoincludesadiscussionaboutacquiringthenecessarylicenses,permits,andbusinessinsurance,whicharecertainly

not the fascinating and fun parts of your business but are critical to a solidbusiness.

It’sAllinaNameThereisnoquestionthattherightnamecandrawyourtargetmarkettoyou.Itcanalsosingleoutyourspecialtyfoodbusinessfromothersandkeepitsharpinclients’memories.Beforeyoudecideonaname,youwillneedtofirmupwhatkind of specialty food business you plan to have, the scope you want yourbusinesstohave,andwhetheryouwanttoconveyaparticularimage.Willyouhave a highly specialized service (e.g., supplying gourmet whoopie pies tobirthday parties orweddings) or amore general one (e.g., a retail outletwithcatering services offering whatever specialty food strikes your fancy at themoment)?Willyour rangebe local,national,or international?Doyouwant toproduceonlyhigh-budgetfooditemsordoyouwanttocovermostpriceranges?Dependingonyouranswers to thesequestions,agoodnameforyourbusinesscouldconsistofanyofthefollowing:

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Fromsmartphoneapps,toiPads,toTwittermarketing,tocellphonecredit-cardprocessing,bepreparedtousetechnologyinyourbusiness.Everyoneelseisusingit—fromyourcustomerstoyoursupplierstoyourcompetition—andtheyexpectyouto,aswell!

Descriptionofyourservice(e.g.,GourmetPartyFood,Inc.)Advantages:Helpspotentialclientshoneinonyou.Disadvantages:Creativitysometimessuffers.

Thetypeoffoodyouspecializein(e.g.,WhoopItUp!)Advantages: Helps clients find you. You’ll get fewer calls for types offoodsyoudon’toffer.Disadvantages:Yourspecializationmightchange.What ifyoudecide todootherkindsofbakedgoodsorevensavoryitemsandbeyond?

Yourname(e.g.,AnnSmith,Inc.)Advantages:Peopleyoumeetwhilenetworkingneedrememberonlyyourname. Ifyouuseyour fullname,youmay improveyourpersonal creditratingasyoubuildyourbusiness.Disadvantages: Customers won’t know what type of business this is.Worse, the IRS could confuse you and your company. And if yourcompany goes under, your personal credit ratingmay suffer. Finally, ifyouchoosetosellyourbusinessatsomepoint,yournamewillbecomealiability.Prospectivebuyersprefertobuyacompanythatisnotassociatedwith a specific name. If Jane Doe were to buy this company and thenchange thenametoJaneDoe,Inc.,shewould lose thenamerecognitionthatAnnSmithworked tobuild.Althoughyoumaynotenvision sellingyour company, life has a habit of throwing some unanticipatedopportunitiesthatyoumightdecidetotakeadvantageofandmightmeanhavingtosellyourbusiness.

Qualitiesyourbusinessembodies(e.g.,JustDesserts)Advantages:Helpsestablishtheimageyouwanttocreate.Disadvantages:This kindof namepigeonholes your business.Thatmaybeokay, justbeaware that ifyoudecide in the future to include savory

pies,mainmeals, salads,oranything that isn’tdesserts toyourofferingsyouwillhaveahardtimeeasilygettingthatacrosstopotentialcustomers.

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Makesurethenameyouselectisnottoorestrictive.Forinstance,ifyouchoose“ExclusivelyCupcakes”youarelimitingyourselftocupcakes—ortocustomersassumingallyoudoiscupcakes.Chooseanamethatencompassesabroaderscope.

TheNameGame

After you’ve short-listed some ideas, ask yourself the followingquestionsabouteachname:

Isiteasytopronounce?Peoplearereluctanttosayanamewhenthey’reunsureofitspronunciation.Thisreluctancecouldbefatalinanindustrythatreliesheavilyonword-of-mouthadvertising.Isitshortenough?Lengthaffectseaseofpronunciation.Plus,youand your employees will have to say this name all day on thephone and still have time to do other tasks. ThusSupercalifragilisticexpialidocious, Inc. is probably not the bestchoice, even if you specialize in children’s food items. (Thisnamesuffersfromotherproblems, too, thatprobablydon’tneedspellingout.)Is iteasyandlogical tospell? Ifsomebodyhearsyourcompanynamebutcan’tfinditorcallitupontheinternetorspellittoaphone operator because of a unique spelling, you will losepotential clients. For this reason—and others—don’t opt for asillyspellingofacommonword.For instance,don’teven thinkofanamelikeKountryKupcakes.Is it memorable? Despite all the abovewarnings, you probably

wanttoavoidanamethatsoundstooordinary.Namesshouldbemeaningfulandsubstantive.

When you have selected a name, take the time to make sure it is nottrademarked by another company. Even if you plan to keep yourspecialtyfoodbusinesssmall, it isagoodideatocheckfortrademarks.Youcando this for freeatwww.uspto.gov.Also,checkpopularsearchengines like Google and Yahoo! to see if the name you have chosenshowsuponasearch.

Indicationsofthescopeofyourbusiness(e.g.,CupertinoCupcakes)Advantages:Anyonelookingundercitylistingswillfindyou.Disadvantages:Yourscopemightchange.Whatifyouwanttobranchouttoothercities?

Acombinationoftheabove(e.g.,Ann’sDessertsofCupertino)Advantagesanddisadvantages:Thewhole is not necessarily the sumofthe parts. Consider carefully the advantages and disadvantages of eachpartofacombinationnametoseewhichapply.

aha!

Stopperiodicallyandwriteouttwolists:a“Prioritiesinmybusinesslife”listandan“Actualtimespent”list.Comparethelists.Areyouspendingthegreaterproportionofyourworkinglifeontheactivitiestowhichyougiveahighrank?Ifnot,maybeit’stimetoreorganize.

Theoutlineaboveisnotanexhaustiveone,butitcontainssomeofthebestideasforcreatinganamethatwillmakeyourbusinessastandoutinthespecialtyfoodworld.

For one of this book’smentors, SusanDesjardinsBurns, the name for hertoffeebusiness,ConfectionatelyYours,camewiththebusinesswhichshetookonfromherhusband’soctogenarianauntwhodecideditwastimetogiveitup

herselfbutwantedthebusinesstocontinue.Businesses often like to select a name that will put them at the top of an

alphabeticallisting,butwiththedemiseofthephonedirectorythatisgettinglessandlessimportant.AAAGourmetFoodsmaypositionyourlistinginfirstplace,but the name is not very informative. Don’t sacrifice content for this primepositionthatmayormaynotbeadvantageousanylonger.

If you buy an existing business andwant to change the name (or have to,accordingtothesalesagreement),youcantakeanelementfromthebusiness’sformernameorevenusethewholename.

RegisteringYourCompanyName

Most states mandate that you register your fictitious company nameofficially toensure that it isunique.This isgenerallydone through thecountyandisknownasfilingaDBA(“doingbusinessas”)statement.Ifthenameyouchose isalreadybeingused,youwillbeasked tochoosesomethingelse.Forthisreason,it’sagoodideatohaveabackupnameortwo.Thereistypicallyanominal($30to$60)costforthisservice.

Agoodname iswellworth theeffortyou’llput into finding it.Withsomethought, you can end up with a name as unique as your business. Use theworksheetinFigure4–1tohelpyoucraftyourbusinessname.

FIGURE4–1:BusinessNameWorksheet

OnaMissionYourmissionstatementshouldbemorethanasentenceortwoaboutwhatyoudo—itshouldserveasaframeworkandreminderofyourspecificgoalsandhelpkeepyouontrackwhilemakingdecisionsdowntheroad.Thosedecisionsmightseemconfusing,butifyoucanlookatyourmissionandputtheminthatcontext,thenyourmissionstatementwillbedoingthejobit’sintendedtodo.

That’s why constructing your mission statement should come from yourheartandsoul.Itshouldreflectwhyyouwantedtostartyourbusinessinthefirstplace,thekeythingyouwanttospendmostofyourtimeon.Itshouldleavenodoubtinanyone’smindwhatkindofbusinessyouare.

Your mission statement should not just serve you and your business butshouldappealtotherangeofcustomertypesyouintendtoserveaswellasanypotential investors in startup or expansion funding. It should get across yourenthusiasmand intent.SeeFigure4–2onpage43foraworksheet tohelpyoudevelopyourmissionstatement.

Hereareacouplemissionstatementsfromspecialtyfoodpurveyors:

DPISpecialtyFoods (http://dpispecialtyfoods.com): “DPI’smission is toprovide all customerswith an extensive variety of specialty foods fromaround the world, including Gourmet, Natural, Organic, Gluten-Free,LocalandEthnicfoods.”Omaha Steaks (www.omahasteaks.com): “We deliver exceptionalexperiencesthatbringpeopletogether.Guaranteed.”

After you have written your mission statement, put it on probation. Askcustomersiftheyfeelitexpresseswhattheywerelookingforwhentheyfoundyou and ifwhat theygotwaswhat themission statement says.Whenyou aresureit’sright,putitonyourwebsiteandinmarketingmaterials.Ifyouhavearetailstore,postitwherecustomerswillseeitandpostitwhereemployeeswillconstantlybeabletoreaditandberemindedofwhyyouaredoingwhatyoudo.

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Havingofficespaceinyourretailshopisveryconvenientandprobablyagoodidea.However,donotgetinvolvedinofficeworkwhileyouaretheonlyoneintheshop.Yourofficeworkwillsufferfromthe(hopefully)regularinterruptions,andcustomersdonotliketowalkintoanunattendedspacewheretheyhavetoseekyououtinthebackroomtohelpthem.Mostwillwalkoutinstead.

ChoosingaBusinessLocationThetypeofspecialtyfoodbusinessyouplantostartaswellasthesizeofyourbusinessareamongthefactorsthatwilldeterminewhereyousetupshop.Your

locationcanbeanywherefromyourhome,inaretailspace,orinacommercialwarehouse-typelocation.

FIGURE4–2:MissionStatementWorksheet

OfficeLocationPointers

The type of specialty food business you are startingwill have a lot ofbearingonyourofficelocation:

If you are opening a retail shop, youwillwant to be sure yourshophassomespaceforasmalloffice.Youcanplanahalfhourbeforeand/orafteropeningtokeepofficeworkup-to-date.Ifyourspecialtyfoodbusinessismoreofawholesaleoperation,carving out an office in your wholesale space is a good idea.Then, assuming you have employees, you can bemaking clientcallsandliningupdeliveries,butifquestionsariseyouarethere.Havingahomeofficespaceislogicalifyouarenottheonewhois doing the day-to-day business of your business. That is, ifothersaredoingthebakingorcookingorbottlingorstaffingtheretail storefront, then you can work remotely and it probablydoesn’tmatter.However,fewstartupbusinesseshavetheluxuryoftheownerbeingthathands-off.

If you’re starting small, a homebased specialty food business may be theideal choice foryou.Thisoptionkeepsoverhead lowand saves travel time toandfromtheoffice.Onepotentialproblemisthatfriendsandfamilymightdropin at all hours because you’re “not reallyworking.” Be firm. Set up businesshoursandsticktothem.

aha!

Considersharingspacewitharelatedbusiness.Forexample,youcouldsetupshopwithanoncompetingtypeofgourmetfood—andifyoueachdoyourowncatering,youcanstilloperateasdistinctbusinesses.Youmightnotonlysavemoneybutalsogainreferrals.Ifyouelecttosharespace,however,makesureyouhaveaclearcontractstatinghowspaceandresponsibilitieswillbeshared.Also,besuretosharespacewithawell-respectedbusiness—yourreputationwillbemixedwiththeirs,goodorbad!

BusinessTypesCongratulations!Youhavenamedyourbusiness,haveyourDBAinhand,andyou are considered the owner of a legitimate business.Now youwill need tomake the decision to operate as one of four business entities: a soleproprietorship, a partnership, a limited liability company (LLC), or acorporation.

SeparatingHomeandBusiness

Ifyouoptforahomebasedbusiness,youneedtoallocateaspacethatisto be used solely for your business. It could be a small area, a desktucked into the corner of the dining room, for instance, but itmust bedevotedtoyourspecialtyfoodbusiness.It isalsowisetohaveseparatephonelinesforyourhomeandforyourbusiness.Chancesareyourmainbusinessphonewillbeacellphoneanyway.However,nothingwillkillyour credibility faster than using your home phone line with itsansweringmachinefeaturingyourthree-year-oldsingingthethemesongfromFrozen.Whilecute,thisisnotprofessional.

Keepinghomeandbusinessasseparateaspossible,especiallywhentheyareinthesamebuilding,willalsohelpwhentaxtimerollsaroundsinceyourbusinessphoneexpenseswillbedeductible.

SoleProprietorSoleproprietoristheeasiesttypeofbusinesstoform.AllyouhavetodoisfileaDBA,asalreadydiscussed,thenopenabusinesscheckingaccountinthatname.Youcanuseyourpersonalcreditcardtopayforbusinessexpenditures,yetyoustillgettaxbenefitslikebusinessexpensedeductions.

While it is easy, there is a downside to the sole proprietorship. You arepersonallyliableforanylosses,bankruptcyclaims,legalactions,andsoon.Thatcanwipeoutbothyourpersonalandbusinessassetsifmajorproblemsarise.

GeneralPartnershipPerhaps you are planning to work with someone else to form your business.Thenyouareformingageneralpartnership.Whilealittlemorecomplicatedtoformthansoleproprietorships,theyareeasierthancorporations.Youdon’thaveto file any documents to make them legal but you do want a crystal clearpartnershipagreementstatingwhateachpartnerisresponsiblefor.

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Neverputaclientonholdtospeakwithanotherclient.Letyourvoicemailpickupanyincomingcallsyoucan’tansweryourself.

LimitedLiabilityCompanyAthird typeofbusinessentity is the limited liabilitycompany,orLLC,whichhas the tax structure of a partnership, yet protects the business owner frompersonalliability.Thisstructureprotectseachpartner’spersonalinterests.

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Tofindoutifyouneedadditionallicensesorpermits,checkthesesources:

SmallBusinessAdministration,www.sba.govSmallBusinessDevelopmentCenter,www.sba.govServiceCorpsofRetiredExecutives,www.score.org

Andalwaystalkwiththemunicipalityinwhichyoudobusiness.

Corporations

The last typeof business arrangement is the corporation. It is established as atotallyseparatelegalentityfromthebusinessowner.Establishingacorporationrequiresfilingarticlesofincorporation,electingofficers,andholdinganannualmeeting.Verysmallbusinessesdonotusuallychoosethisrouteinitiallybecausethecostsareprohibitiveandthecompanymustpaycorporatetaxes.Ontheotherhand,acorporationwillfinditeasiertoobtainfinancing,whichwouldbeusefulifyoudecidedtofranchiseyourbusinessorexpandinabigway.

Althoughtheprocessforcreatingacorporatestructureismorecomplicatedandexpensivethanotherstructures, itdoesofferprotectiontobusinessownersand their assets. It alone is legally responsible for its actionsanddebts.Asanemployee of the corporation, your personal assets are protected in mostsituations,eventhoughyoumayownallormostofthestock.

Ifdecidingonalegalformforyourbusinesskeepsyouupatnight,considerthis:Yourbusinessstructureisnotcarvedinstone.Itcanbechanged.

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Somecitiesprovidepacketswithexplanationsandalltheformsyou’llneedforthevariouslicensesandpermits,soinvestigatethispossibilityatyourtownclerk’soffice.Also,it’sagoodideatoaskmorethanonecityorcountyemployeeaboutthelicensesyouneed,especiallyifyougetinformationthatisconfusingornotwhatyouexpected.

LicensesandPermitsMostcitiesandcountiesrequirebusinessoperatorstoobtainvariouslicensesandpermits to comply with local regulations. For everyday operation of a foodbusiness,youmayneedthefollowing:

Businesslicense:ensuresproperzoningandparkingVendor’spermit(variesfromstatetostate):allowsyoutobuyandresellHealthdepartmentpermit:ifyouhandlefoodLiquor,wine,andbeerlicenses:ifyouyourselfservealcohol

Signpermit:coverssize,location,andsometimesthetypeofsignyoumayuseCountypermits:maybeapplicableifyouarelocatedoutsidecitylimits

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Beawarethatdistinctivetrademarksareprotected.Forexample,youmayneedpermissiontouseanyrelevantbrandnamesonliteratureyoucirculateaboutyourbusiness.

Checklocalregulationstoseewhichoftheabovelicensesandpermitsyou’llneedor if thereareothersdependingonwhatyouplantodoinyourbusiness,likeactuallyhostratherthanjustcaterevents.

ChoosingInsuranceKnowing what kind of insurance to carry and how much to obtain is animportantaspectofgoodriskmanagement.Don’tviewinsuranceasanoption.Itisabsolutelyimperativeforanybusinesstohavetheappropriateinsurance.

As theownerofa specialty foodbusiness,youaremost likely toneed thefollowingtypesofinsurance:

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Ifyouoperateyourbusinessfromyourhome,youmayneedadditionalcoverage.Yourhomeowner’spolicymaybesufficient,butifyouplantostoreoruseexpensivemachinery,suchasacomputer,orifcustomersorclientswillvisityourhomeforbusinesspurposes,youmaywanttopurchaseadditionalcoverage.Setupanappointmentwithyouragenttogooveryouroverallinsurancecoverage.

gooveryouroverallinsurancecoverage.

General liability insurance. This is the one type of insurance youmustcarry.Generalliabilityinsuranceprotectsabusinessagainstaccidentsandinjuriesthatmightoccuratyourofficeorretailsite.Workers’ compensation insurance. If youhave employees, youwill alsowantthistypeofinsurance.Youareliableforinjurytoemployeesatworkcausedbyproblemswithequipmentorworkingconditions.Ineverystate,an employer must insure against potential workers’ comp claims.However, employee coverage and the extent of the employer’s liabilityvaryamongstates.Auto insurance. Cars and trucks are sources of liability. Even if yourbusiness does not own a vehicle, you can be liable for injuries andproperty damage caused by employees operating their own or someoneelse’scarwhileoncompanybusiness.Food-specific insurance.Don’t leaveout this important ingredient!Lookforaninsurancecompanythatknowsthespecificneedsofafoodand/orbeveragemanufacturerorretailer.Bonding. This is pertinent particularly if part of your business includescatering.Youmayneedbondingtoprotectyouifoneofyouremployeesstealsordamagessomethingataneventsite.Vendorsshouldcarry theirownprotection.Checkyourstate’slegalrequirements.

FormsTodobusiness(andprotectyourcompanyasyoudoit),you’llneedavarietyofdocuments. Invoices and purchase orders are standard fare for any business.However,ifyouplantodospecialordersandeventsorcatering,youwillwantspecifickindsofforms.

ProposalsProposalssimplytellclientswhatyouwilldoforthemandatwhatcost.Itisanimportantsellingtoolandmightconsistofanyorallofthefollowingelements:

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We’veallheardit:Apictureisworthathousandwords.Photosinyourproposalpacketcanmakeapowerfulimpactonprospectiveclients.Considerhiringaprofessionalphotographertocapturesomestellarimagesforyou;attheveryleast,investinahigh-qualitydigitalcamera.Eventhoughphonecamerasarenowquitehighquality,don’trelyonimagesfromyourcameratousetomarketyourbusinessinprintadvertisingandbrochures.

Historyofyourcompany.Provideoneifrelevant.Lettersofreference.Kudosfromclientsforwhomyoudonesimilarwork.Write-ups.Acomplimentarynewspaperormagazinearticlefeaturingyourbusiness isoften avaluable tool for sellingyour services toothers.Youmayalsowanttoincludephotographs.Descriptionofservices.Thistellsexactlyhowyouwillachievewhatyourclientisaskingfromyourbusiness.Listing of additional services. If you also will provide floral design,specialty dishware, or some other service, describe those servicescompletely.Doesthedishwarebelongtotheclientafter?Ifitissupposedtocomebacktoyou,howwillitgetthere?Costestimate.Thisaccompaniesanyproposal.Term of validity.Make sure you include in your proposal an expirationdatefortheestimate.Youdon’twanttobeexpectedtofollowthroughonthatproposalfiveyearsfromnowforthelistedpriceforfiveyearsago!

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Quotesfromsatisfiedcustomers,called“testimonials,”aregreattoincludeinmarketingpieces,proposals,andads.Theyaremoreconvincingiftheyincludearealname(orfirstname,lastinitial);justbesuretogetthecustomer’spermission.

suretogetthecustomer’spermission.

Customersmustbeabletovisualizeyourofferingandunderstandthequalityofyourworkwhentheyreadyourproposal.Considerincludinginyourproposalsomephotosofyourproductthatissimilartowhattheclientwants.

AgreementsLotsofspecialtyfoodbusinessesincludeeventcateringintheirlistofofferings.Asigneddocumentdetailingallaspectsoftheexpectationsofyourparticipationisnotonlyhelpfulbutalsoimperativetothelegalhealthofyourbusiness.Areyoutoprovidedishware,utensils,napkins,chafingdishes?Youlikelywanttobetheonesettingyourfooduptobesureitisbeingpresentedasyouintended,soincludethatintheagreement.

InvoicesWhileamainlyretailbusinesssetup likelywon’thandoutmanyinvoices,youwillwant tohaveastandard invoiceonhandevenifyouonlydoahandfuloflargeordersayear.Youcanalsouse invoices to showdonations thatyoucankeep copies of for your tax records. It’s always good to have written moneyrecords.Create a custom invoice on your computer in a “basic forms” folder.Thereisnolongeraneedtohaveinvoicesprintedoutunlessyouwanttobuyapreprintedstackattheofficesupplystoreandhaveacustomstampcreatedthatyoucanusetocustomizetheform.

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Ifyouaregoingtotakethetimetodoawrittenagreementforserviceslikecatering(andyoushould!),besuretocoverthedetails.Forexample,youmightwanttoincludeacheckboxthatgivesyoupermissiontotakephotographsofthefoodyouprepareforaneventandusetheminyourmarketingmaterialsifyoudesire.Mostpeoplewouldbeflattered,butit’salwaysbesttoask.

ReceiptsAgain,youmaynotusea lotof receipts ifyouareacash-basedretail-focusedbusiness,butifyoudothosespecialeventlargeordersorevensmallerordersforindividuals—like other business owners who are purchasing your product forbusiness-related gifts—they will want a receipt to be able to use for taxpurposes.

FoundationChecklist

Completetheseitemsasyougetyourbusinessstarted:

DevelopandwriteabusinessplanCreateapowerfulmissionstatementSelectanameforyourcompanyandapplyforaDBAChoosethebestbusinessstructureforyourcompanyChecklocalzoninglawstoensurethatyouareincomplianceApplyforthelicensesandpermitsyouwillneed

O

CHAPTER5

You’veBeenChopped!:MarketResearch

nceyouhavedeterminedtopursueyourdreaminthespecialtyfoodbusiness,youwillneedtogetahandleonwhereyourbusinesswillfitin. First youwill research the global picture of your specialty typeand then you will want to drill down into your niche in the

marketplaceinyourlocation.Whateveryoudo,researchasmuchasyoucansoyoudon’t,asthepopularfoodieTVshowforewarns,getchopped!

IndustryResearchYouknowyouwant to takeyourwhoopiepie recipe to thenext levelbeyondyour friendsand family tellingyou theyare thebestormostcreativewhoopiepiestheyhaveeverseen.Youcouldcertainlyjuststartmakingthemandsellingthem,andperhapsyouhave.Butifyouwanttomakealivingatyourdreamorwanttocreateawhoopiepieempirethatyoumightbeabletoselldowntheroadwhenyouarereadytomoveon,youneedtostartyourempirewithabitmoreplanning.

Whatyouhavedecidedonforabusinessmodelwilldictatewhatmarketyouneedtoresearch.Figuringoutthebestplacetositeyourretailshopwillrequireverydifferentresearchthanifyouplantostartamailorderbusiness.

TheSpecialtyFoodBusinessYourfirstmarketresearchwillbeaboutthespecialtyfoodbusinessingeneral.This isn’t intendedto tellyouwhetherornotyouwant toenter thebusiness—

thatshiphaslikelyalreadysailed.Butyoudowanttoknowabouttheindustryyouaregetting intoandyouwant to include someof that information inyourbusinessplan.Ifyouuseyourbusinessplantogetfinancing,whichmostsmallbusinesses do, you will want not only to inform them about the state of theindustry,buttoshowyourpotentialinvestorsthatyouareinformed.

TheSpecialtyFoodAssociationFirstoff,join.TheSpecialtyFoodAssociationoffersa“membershipcandidate”categoryfora$100applicationfeeintendedto“helpnewmanufacturersgaintheknowledgeandexperiencetheyneedtogrowinthemarketplace,andtransitiontofullmembership.”Itincludesmentoring,onefree30-minuteconsultationwithSFA’slegalortrademarkadvisor,andotherbenefitsintendedtogetyouoffthegroundtoasuccessfulspecialtyfoodbusiness.

Butevenifyoudon’tjoin,youcanbrowsecertainpartsoftheirwebsiteandglean important information.Articlessuchas“TheStateof theSpecialtyFoodIndustry2015”and“SmallFoodCompaniesGainGroundonBigBrands”cangiveyouvaluableinsightintotheindustryyouareabouttojoin.

StateoftheIndustryAndwhataboutthe“TheStateoftheSpecialtyFoodIndustry2015”?Thearticlesays:

SalesofspecialtyfoodintheU.S.topped$100billionforthefirsttimein2014.Thatsaid,themarket’sgrowthhasslowedslightly.Specialtyfoodstorescaptureda10.6percentshareoftheoverallspecialtyfoodmarket.Thetoptenspecialtyfoodcategorieswere:1)cheese;2)coffee;3)frozenmeats and seafood; 4) chips, pretzels, snacks; 5) bread/baked goods; 6)candy;7)condiments;8)frozenentrees;9)yogurt;10)nuts,seeds,driedfruits,andveggies,inthatorder.The three fastest growing categories were refrigerated pasta, eggs, andrefrigeratedpastaandpizzasauces.

Thereportalsofoundthefollowingemergingtrends:

Local,sustainable,wholegrains,humanefoodproductionSmokedflavors,healthyfood,pickledeverythingMoregluten-free,useofbeets,kale,seaweed,coconut,andothergood-for-youingredientsReturn to simple, clean, and old-fashioned, e.g., real grass butter,fermentedfoods,ancientgrainsSmaller stores, more specialty grass-fed products, home gardening, fargreaterdeliveryoptions

PackagingThefooditselfisn’ttheonlypartofthespecialtyfoodmarketyoutowhichyouwillwanttopayattention.Packagingisahugepartoftheindustry;sometimespackagingalonecanhelplaunchafoodproducttosuccess.Thepackagingcanbeunique,likePhoenixWrappers’stretchwrappingintendedtoallowperishablefood products to breathe. This unique system slices “stretch film during thewrapping process to create gaps in the wrap so that food can ‘breathe,’”eliminating the need for specialty film that has breathable holes in it and isexpensive (www.FoodProductiondaily.com, “Kellogg’s Stretch WrapperProvider Launches Breathable Wrap for Perishable Food,” by Jenny Eagle,9/11/15).

“New packaging can redefine a category,” says Blake Mitchell in “TheIKEAEffect:ThereIsaTotalRespectforDesignThatNowGoesWellBeyondFurniture and Gadgets” (http://foodnavigator-usa.com). He points to IKEA,Target, andApple as setting the bar for other industries to get on boardwithcreativepackagingandattentiontopackagedesign.Pointingtonutbuttersthatstartedmaking theirproduct in squeezepacks that canbeeatenon thego, thedesignactuallycreatedanewcategoryofspecialtyfood.

You don’t have to have a unique product to come up with unusualpackaging. In fact, a common product in unique packaging would be moreattention-getting—like “boxedwine” andnowstarting tomakean appearance,“boxedwater.”Whateveryoudo,however,don’tcreateuniquepackaging thatdoesn’tworkwelloryouwillgettheoppositekindofattentiontothekindyouwant.

Also keep in mind that unique packaging definitely needs to have thepotential for bringing in higher sales since anything that is too original likely

willrequireoriginalproductionequipment.Alsoconsiderhowitwillplayontheshelf—will those carrying your product need a special display rack? Will ittoppleovereasilyifplacedonanormalshelf?Shoulditbehung?

Thebottom line is, thinkaboutyourproductand itspackaging.Whileyouprobably shouldn’t break the bank on packaging, could it be a value-addedenhancementtocallattentiontowhatyouknowisadeliciousandhealthyfood?

PackagingMarketResearchPackagingisafascinatingstudyinitself.Youhavetargetedyourmarketas30-somethings who care about what they put in their bodies. If they care aboutnutrition and GMO-free or organic foods, they also likely care about theenvironment.Howdoyouthinktheywouldfeelaboutlovingyourproductonlyto have it come in the mail shrink-wrapped in a cardboard box inside aStyrofoamcontainerandshrink-wrappedagain?Youwouldlikelylosethemasacustomerafterthefirstpurchaseandtheywouldtelltheirfriendsnottopurchasefromyoueither.

statfact

“Local”and“organic”arethetrendstoday.SpecialtyFoodAssociationreport“TheStateoftheSpecialtyFoodIndustry2015”indicatesthatinthreeyearsthosetrendswillbe“local,”“sustainable,”and“non-GMO.”

Take the Clif Bar Company as an example. They promote a line of “all-naturalandorganicenergyandnutritionfoodanddrinks.”TheirfamousClifBarenergybarscomewrappedinbrownpaperwrapperswithasimpleyetcolorfulrock-climbingillustration.Theirwebsitehasan“impact”buttonthattalksabouttheir attempt to lower their ecological footprint andhelp build healthier,moresustainable communities. This packaging is definitely in keeping with theirtargetmarket’sbeliefsystem.

And speaking of that rock-climbing image, it’s not just the packagingmaterialbutthedesignthatmatters.

RetailMarketResearchProbably the best market research you can do for your retail specialty foodbusiness is boots-on-the-ground research in your own market area. If youhaven’tyetdecidedwhereyouplantosetupshop,youwillwanttodomarketresearch in several different areas to helpmake your decision.Assuming youdon’tplan to locateyour retail foodstoremore than10or20miles fromyourhome,thisshouldbeaneasyenoughtask.

Therearetwoapproachesyouwillwanttotake:

1. Lookatretailstoresofall typesin theareasyouareconsideringlocatingyourshop.

2. Analyzethespecialtyfood-specificshopsintheregion.

funfact

“Specialtyfoodsaredefinedasfoodsorbeveragesofthehighestgrade,style,and/orqualityintheirrespectivecategories.Theirspecialtynaturederivesfromacombinationofsomeorallofthefollowingqualities:uniqueness,origin,processingmethod,design,limitedsupply,unusualapplicationoruse,extraordinarypackaging,orchannelofdistribution/sales.”

—SpecialtyFoodAssociation,“TheStateoftheSpecialtyFoodIndustry”(www.specialtyfood.com)

Bringanotebook.Besure tonotonly takenotesbut to jotdownagenerallistofcategoriesandquestionssothatyouarecomparingandconsideringeachlocationunderthesamemicroscope.

TheResearchInyourresearchoftheoverallretailmarketinyourtargetedarea(orareas,ifyouhavenotdecidedonalocation),lookat:

Whatisthedemographicofthepopulation?Areshoppersinthatarealocaloraretheycominginfromadistance?What types of retail shops are there? Thrift shops, dollar stores, pop-upseasonalstores,smalltake-outrestaurants,andchaindrugstores?Orhigh-end clothing shops, jewelry stores, sit-down dining, and specialty storeslikephotoshopsandchocolatiers?What is the price-point range of themerchandise?Do the stores tend tohavesidewalksaleracksordiscountedsectionsupfront in thestore?Orare the displaywindows done in high-style displays changed on regularbasis,with themarked-down clothing on a rack at the very back of thestore?Do the shoppers come away with merchandise in custom rope-handledshoppingbagsorinusedplasticbagsfromthegrocerystore?Are shoppers actually coming out of the stores having purchasedmerchandise?What kind of staffing do the shops have? Are they mostly one-personshops where the owner is also the cashier and sits behind the countereatingherbaggedlunch?Ordotheshopstendtohavesomeoneatthecashregister,anotherpersonhelpingcustomersonthefloor,andtheowneroutinthebackreadytohelpwithquestionsbutinthemeantimeorderinganddoingbookkeepingandotherback-officetasks?

aha!

Theseasonalstorefrontknownasa“pop-upstore”isbecomingpopular.Openstorefrontsthatarebetweenleasesrentonashort-termbasisaroundHalloween,Christmas,orMother’sDay.Ifyourproductisonethatwouldbepopularduringoneofthesetimeframes,apop-upstoremightbeagreatwaytomakesomeextramoneyandexposeyourproducttoawideraudience.

DeterminingStoreSize

Onemetricusedintheretailindustryistodetermineyoursalespersquarefootof floor space.Typically it is used after the fact to figureout howmuchyourbusinessisbringinginpersquarefoot.Soifyouaverage$1,000perdayoutofa200-square-footstore,youaremaking$50persquarefootperday.

Thiskindofcalculationcanalsohelpyoudeterminehowbigofaspaceyouneed.Ifyouwanttosell$2,000perdayofproduct,youneedtohaveastorebigenoughtoholdtheproduct.Manyfactorscomeintoplayhere,ofcourse.Theyinclude:

The sizeof yourproduct. If youhave small jarsof jam that stackneatlyinto square shelving units built into the walls, you can pack a lot ofproductintoasmallerspacethanifyouaresellingpuffybagsofspecialtypotatochips.Theretailpriceofyourproduct.Ifyourjamsaresellingat$7.50perjar,youwillneedtosell267jarsadayforgrosssalesof$2,000.Ontheotherhand,youwouldneedtosell404bagsof$4.95/bagpotatochipstogettothe$2,000.Yourspacewouldactuallyneedtobelargertoaccommodatethepotatochips!Other products. Perhaps your key product, the one that got you into thespecialtyfoodsbusiness, isn’t theonly thingyousell in thestore. Ifyouhavegourmetnachochips,maybea localpotter can sellnachoplates inyour store.Thiswouldhelpdressupyour store and if you sell themonconsignment you don’t have to put out anymoney on inventory. But itwouldtakeupmorespace...Specialdisplayneeds.Doesyourproducthaveauniquesizeorshapethatrequires special display for potential customers to be able to see theproduct in its best light? If yours is a product that is a great gift item,customerswillwanttoseeexactlywhatthegiftrecipientwillseewhenheorsheopensthepackage.Youmaywantspaceinyourshoptodisplayasampleofthepackageditem.Nonsales floor space. What kind of space do you need that isn’tspecifically selling space? Obviously your cash-out counter is one sucharea, although that can be offsetwith impulse items like a rack ofwinebottlenecklacesorovenmitts for thosenachos.Doyouneedbathroomsaccessibletocustomers?Spaceforstaffbreaks?Anofficeareawithspaceforacomputerforbookkeepingandmarketing?Spaceforpackagingandmailing?Willyoubedoingproductionhereaswell?Thatwillbeahuge

consideration.

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Retailisnotforeveryone.“Itdidn’tevenoccurtome,”saysLisaJohnsonofYummyYammyofrunningaretailstoreaspartofhersalsabusiness.Theideaofsittingaroundwaitingforpeopletocomeintoherstoreandbuyherproductjustdidn’tseemlikeagooduseofhertime,nordidstaffingastoreseemlikeagooduseofresources.Itmaybedifferentforyou,butyoumaywanttotryitoutwithapart-timejobinanexistingstorebeforegoingintoretailyourself.

Alloftheseshouldbetakenintoaccounttodeterminethebestspaceforyourretail store. Figuring them out in advance as much as possible will help youquicklyweedout,andnotbetemptedby,spacesthatjustdon’tmakethecut.

statfact

Pop-upstoresallowyoutotestyourideabeforeyoutakeitbigger,accordingtoanarticlebyAlexandraPowerscalled“ThePowerofthePop-UpBusiness”(www.cnbc.com,8/21/15).Andaccordingtothearticle,consumerslovepop-upstoresaswellfortheuniquenessoftheexperience.LawyerJessicaTuckerlaunchedapop-upfestivalintheU.K.calledUrbanFoodFest—everySaturday15foodtrucksappearwithanewthemedselectionofcocktails,food,andmusicians.

ProductionSpaceWhetheryouaregoingtosetupasaretailspacewithaproductionareainthebackorjustaproductionspaceanduseretailers,distributors,and/ormailorder

throughwhich to sellyourproduct, theproductionareaofyour specialty foodbusinessisperhapsthemostcritical.Themainmarketresearchyouneedtodointhisregardiswhethertheproductionofyourproductwillhaveanyimpactonthemarketandhowyouareperceived.

SpecialDietsAgluten-freeproductmay,forinstance,haveproductionmarketingimplicationsespeciallyifyousellothernon-gluten-freeproducts.Doyouneedtohaveeachmade in different areas? Can you clean instruments, utensils, bakeware, andproduction surfaceswell enough tomake the gluten-free products in the sameareathatproductswithgluteningredientsaremade?Andevenifyoucan,willyourmarketbelieveitissufficientthatyousayyoucleanthesurfaceswell?

Your reliability in the market of gluten-free products or whatever yourspecialty—nut-free, organic foods—may be influenced by this decision. Youdon’twant to set up in too small a space only to find you didn’t address thisproperly.Andcheckoutwhatyourcompetitorsdo;thatwilltellyoualot.

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Specialtyfoodbusinessessaythreeofthebiggestthreatstotheirbusinessesare“deepdiscountingbycompetitors,”“highcostofdistributornetworks,”and“capitalandcash-flowmanagement.”—SpecialtyFoodAssociation,“TheStateoftheSpecialtyFoodIndustry

2015”

Retail/ProductionComboAreyouabletolocateinabuilding/areathatallowsyoutohavebothastorefrontaswellasaproductionarea?Somesegmentsofthespecialtymarket,likecraftbeerandsmallwineries,havemadeitasellingpointtohavetheirproductionnotonly visible but capable of providing an interesting and educational tour forcustomers.Taffyshopsonthebeachoftenhavetheirtaffy-makingequipmentinthewindowforpassersbytowatchthetaffybeingmadeandenticethemtocome

inandmakeapurchase—andtellothersabouthowcooltheprocessis.If production is the part of the process you are focused on and decide to

leavetheretailingtosomeoneelse,don’tbeluredintoaspacewithastorefrontthat doesn’t quite meet your production needs. Again, research how yourcompetitorsdoit.Askaroundifproducersinothercategoriesfindthecomboaworthwhileventure.

MailOrderOften theproduction-focusedfacilityalsousesmail/onlineorderingasaprimeselling vehicle—if this iswhat yourmarket expects, youwillwant to includeshipping preparation as part of your facility. You do not want to be packingthings up to move them somewhere else to get them on their way to thepurchaser.

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Onewaytosavebutstilldoaprofessionalfocusgroupistohireamarketingclassatalocalbusinessschooltoconductoneforyou.Checkwithamarketingprofessoraboutwhenfocusgroupscomeupintheclass.Theschoolmightevenhavearoomwithaone-waymirrordesignedtodofocusgroups.

FocusGroupsDon’ttrytofigureoutallthisforyourself.Ifyoucanaffordacompanytoputtogetherafocusgroupforyou,thatisgreat.Attheveryleast,conductyourownfocusgroupwithfriendsandfriendsoffriendsorevenstrangersthatyousolicitthrough,say,thelocalyogacenterorthemen’sbasketballteamandaskthemtodo an informal focusgroup for your product for pizza and some free product.Ask them the questions you have inmind and give them free rein to tell youwhat comes to their minds as they look at and taste your product. The mostimportant thing is to listen to what they have to say.While the focus groupconsultantswillknowhowtoconductfocusgroupswiththemostvalue,youcan

stillgainalotoutofconductingoneyourself.

WhatMakesYouStandOut?The result of all yourmarket research should ultimately help you answer thequestion: What makes your product/business stand out? What gives you acompetitiveedgeoverthoseyouconsidertobeinyourmarket?

Youdon’thavetogowayoutonalimbtostandoutwithsomewhackylogoorproduct.Whoopiepieswithmeat-flavoredfrostingorthatarepackagedwithasingingelfwillmakeyoustandout,butnotnecessarilyinagoodway.Andnotnecessarilyinawaythatwillmaketheexpensepayforitself.

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Watchwhatthebigkidsdoandthinkabouthowitmayimpactyourbusiness.Forexample,Nestlérecentlyannouncedplanstoremoveartificialflavorsandlowersodiumlevelsinitsfrozenpizzas.AccordingtothemarketresearchfirmMintel,“AnymovethatNestlémakesacrossitshugepizzaportfolioislikelytohaveresidualeffectsforthewholecategory.”(“Nestléslashessaltfromfrozenpizzas,butthere’snoalgaesubstitute...yet”byAlexBeckett,9/4/15)

But you do need to have a product that is somehowdifferent from all therest.YummyYammysalsastandsout,forexample,foritsmainingredientbeingsweet potatoes.Newman’sOwnproducts stand out because the company putsPaul Newman’s face on the labels and has done a great job making it wellknown that the company uses organic ingredients and donates its profits tocharity. When Susan Desjardins Burns took over her husband’s 80-year-oldaunt’s toffee recipe, she updated it making one significant change reflectingcontemporary food choices: she substituted the high fructose corn syrup withagavenectar.

Thesearecompetitiveedges thatmake theconsumerpurchaseoneproductoveranother.

Y

CHAPTER6

TheNecessaryIngredient:Financing

ourfundingneedswillofcoursedependonthetypeoffoodbusinessyou are planning to start. A small specialty jam business that youconductfromyourhomeandsellonlytofriendsbypersonalsalesisgoingtotakealotlessstartupfundingthanabakerythatmakesand

sells specialty whoopie pies to the public and events like weddings andanniversariesoraretailgourmetfoodstoreinanupscalepartofMainStreetthatwill require rent, deposits, utilities, leasehold improvements, special displayracking,andacoupleofemployees,etc.

FirstThingsFirstThe first step is toestimateyourbusinessexpendituresover the startupperiod(forsomethatmaybe longer thanothers,bothbecauseof the typeofbusinessand also personal circumstances) and over the first six months of operation.Once you have your costs put them into the “Startup Expenses Worksheet,”Figure6–1.Ifyouhaven’testimatedthosecostsyet,nowisagoodtimetodoso.

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Forgooddealsonofficefurniturecheckwww.officefurniture2go.com.Theyoffercompetitiveshippingandprices.Therereallyisnoneedto

buynewforyourstartupoffice.The basic startup costs are for expenses youwill incurwhether you sell a

single food item or not—these are “fixed costs” for the most part. Manyspecialty food businesses will need to add a line or more about the cost ofingredients.Ifyouhavearetailoutlet,youwillneedtohavefoodontheshelvesforsale.Ifyoudoonlyeventcatering,youwillatleastneedtoincludethecostsofingredientsforcreatingfoodfortastinguntilyougetadepositforyourfirstevent.Forexample,ifyourspecialtyfoodbusinessisgourmetcupcakesthataredecorated to look like a bouquet of flowers, you will need to create somebouquets to wow customers and you will need to have fresh cupcakes at thereadyforpotentialcustomerstosample.Allofthiscostsmoney.

Don’tForgetLifeThese startup costs need to include themoneyyou require for the business aswell as what you personally need for your own living expenses until yourbusinessmakes a profit. If you are starting your business part timewhile youfinishupacareerinadifferentfield,thiswillimpacthowmuchstartupfundingyouwillneed.

Perhapsyouarerecentlyretiredandhavebeenplanningandsavingforyourstartupfoodiebusinessforadecade.Thiswon’tlessentheamountyouneedforfixedcosts foryourbusinessbut itwillgreatly impacthowmuch fundingyouneedfromoutsidesourcestogetstarted.Ifyousavedenoughtocoveryourownliving expenses while you get your business up and running (good for you!),yourstartupfundingneedswillonlybewhatisdirectlyrelatedtothebusiness.

FIGURE6–1:StartupExpensesWorksheetFindingFinancing

Your best source of financing is you. Not only should you invest your ownresourcesfirst,anyoneyouapproachforfundingwillexpectyouto.Perhapsyouarefortunatetobeabletosellanotherbusinessandusetheproceedstowardyourspecialtyfoodstartup.

Herearepotentialsourcestoaddtoyourstartuppot: Friendsandfamily.Use extreme care when exercising this option. You could very easily sour a

lifelong friendshipormake familygatheringsveryuncomfortable.Even ifyouaregettingfundingfromafamilymemberorfriend,besuretocreateawrittencontractevenifyouwriteityourself,butitwouldn’thurttoenlistanattorney.The contract should stipulate your obligations aswell as the agreement of thetransaction.Isthisaloan?Agift?Isthereadeadlinebywhichthelenderneedsthemoneyback?Will the lender receive interest?Percentageof profits?Spellouteverydealandmakesureyoubothunderstandandagreeonthetransactioncompletely.

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Ifyouchoosetofinanceyourbusinessusingcreditcards,callaroundforbestrates.Often,ifyoucallandspeakwitharepresentativefromyourcreditcardcompany,youcannegotiateabetterratethantheoneadvertised.Credit cards. This is a financing option that should also be used withcaution. Interest on credit cards can become crippling and could easilystealyourprofits.Beespeciallycarefulwithcardswithlowinitialrates—knowexactlywhenthoseratesgoupandmakenoteofwhenyouneedtopaythestartupfinancingbeforetheinitialperiodendsandthehigherratekicksin.Likewisewith0percentcards—oftentheinterest,whenitkicksin,ismuchhigherthanaverage,soifyouaren’tcertainyoucanpaythatdebt off before the interest starts, find another option. Sometimes theinterest even kicks back to the original amount of the loan even if youhavepaidaportionofit.Equity.Homeequityiscertainlyanoptionbutagain,onetobeconsideredcarefully. While it can wisely utilize your investment in your home,remember—you are utilizing your investment in your home. You stillneedtopayinterestontheloanandyouneedtobesuretoleaveenoughequityavailabletoyouforalargeunexpectedhomerepair.Thelastthingyouneedistocompromisewhatisoftenahomeowner’smostsignificantasset.

Venturecapital.Venturecapitalistsareprivatelenders.Theytendtoinvestinhigh-riskbusinesses thathavepotential forhuge returns if successful.Fewspecialtyfoodstartupbusinesseswillbeabletogaintheattentionofventurecapitalists.

CrowdfundingSitestoCheckOut

www.Kickstarter.com:creativeprojectswww.Indiegogo.com:creative,personal,hobbyistwww.Crowdfunder.com:investmentraisingwww.RocketHub.com:creativewithcampaignguidancewww.Appbackr.com:mobileapps

Banks.Yourgoodoldbasicbankwill likelybethemostfruitfulplacetogo forbusiness funding.For this typicallyconservative,more traditionalsourceoffunding,youwillneedathoughtfulanddetailedbusinessplan.Localbankswillbemore interested in financing localbusinesses.Don’tbringyourpie-in-the-sky ideas;save thosefordowntheroadwhenyourfundamentalbusinessisupandrunningandaprovengoodinvestment.Small Business Administration. Contact the SBA (www.sba.gov) forinformation about financing your startup business. They often workthroughlocalbanksandcanhelpyousecurelending.Crowdfunding. Whether crowdfunding is a potential funding source foryourbusinesswilldependonthetypeofspecialtyfoodbusinessyouareplanning.Manycrowdfundingsourcesdobestwithaproductthatyoucanpromisetosendpeople inexchangefor their investment.Seethesidebaraboveforalistofseveralcrowdfundingsitesandexploreafewtofigureouthowotherssetuptheirpitch.

Being wise with your capital needs and heading into financing with athoroughbusinessplanisthebestadviceforanewentrepreneur.

GetYourCreditinShape

Youwillwant toestablish twodifferentcreditprofiles:personal andbusiness.Before you have business credit, youwill have a personal credit profile. Thisshouldbeasrosyasyoucanpossiblymakeit.Akeytohavingagoodpersonalcreditprofile is toget ridofdebt ifyouhave it.ClarkHoward, athiswebsitesubtitled “Money in Your Pocket,” offers five steps for getting out of debt:1. Makeaconsciousdecisiontostopborrowingmoney.

2. Establish a starter Emergency Fund of $1,000. You need something foremergenciesinsteadofusingcreditcards(seenumber1).

3. Create a realistic budget and stick to it. Cut a few things like gymmemberships you pay regularly but rarely utilize, cut dining out in half,makecoffeeathomeinsteadofstoppingatthecafé.

4. Organize your debt. Decide whether to pay off high-interest debt first(called “laddering”) orwhether youwant to tackle debt from the lowestamountowedonupwhichcangiveyouaboosttowardyourgoalasyouseeadebtpaidoff.

5. Throwanyexcesscashatyourdebt.

Come to think of it, these aren’t bad suggestions for business debt, too. Ifyou want to read more about these five steps, go to the website atwww.clarkhoward.com/paying-off-credit-card-debt.

NetworkingNetworkingismorethanabuzzword—itwillhelpyouwithallaspectsofyourbusiness, including funding. In addition to tapping your network as youformulateyourbusiness,worktowardexpandingyournetwork.Attendchamberof commerce functions in yourmarket area, go to conferences, seminars, andtradeshowstoexpandyournetwork,andmostofall,reachouttoyourfriends,former colleagues, and other acquaintances; let them know you are starting abusiness,andaskthemtolettheirfriendsandacquaintancesknow.

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Therearefivethingsanentrepreneurshouldbepreparedtoshowaloanofficer:1. Abusinessplanshowinghowyouwillusethefinancing2. Proofthatyoupayyourobligationswhendue3. Proofthatyouhaveenoughequitytocovertheobligation4. Thatyourteamhasenoughexperiencetoimplementyourplan5. Thatyoursalesprospectsarestrongenoughtorepaytheloan

YourBusinessPlanWecouldhavediscussedbusinessplans inChapter4,sincebusinessplansarepart of the salt-and-pepper basics of any startup. But business plans usuallycome into practical usewhen you are trying to obtain financing, sowe’ll talkaboutcreatingonehereinthemoneychapter.

Yourbusinessplanshould includeabroaddiscussionof thespecialty foodindustry, particularly as it pertains to your specific part of the industry—i.e.,retail, service, events.Also include information about your business structure,your clients, the competition and how you will fit into it, your income, cashflow, and expenses, and other relevant financial information. This is the chiefinstrumentyouwillusetocommunicateyourideastoothers—notonlybankersbut other business people and potential partners. And the business plan willbecomethebasisforanyloanproposal.

statfact

Fifty-twopercentofallsmallbusinessesarehomebased,accordingtoSCORE’sSmallBizStats&Trends(www.score.org/node/148155).A relevantbusinessplanwillhelpyougaugeyourprogress in startingand

building your business. Use it as an operating tool to help you manage yourbusiness.Theplanwillhelpyoucementthelogisticsandgrowthcurveofyournewbusiness.Anddon’tbeafraidtoveerfromyourplanifitmakessense—youneedtohaveaplantobeginwithinordertoveerfromit.

TheComponentsofaSuccessfulBusinessPlanEvery thorough and useful business plan should contain the following sevencomponents: 1. Executive summary. As the name suggests, this sectionsummarizesyourentirebusinessplan.Itincludesdetailsaboutthenatureofyourbusiness,thetypeandscopeofservicesthatyouwillprovide,thelegalformofyourbusiness(coveredinChapter4),andyourvisionandgoalsforthebusiness.

2. Business description. In this section you’ll describe the gourmet andspecialty food business as a whole and your chosen target market. Usespecificshere,hardnumbers,andfacts.Alongwiththosefoundthroughoutthis book, you’ll find more business statistics at websites likewww.census.gov, www.statista.com, and www.dol.gov (Department ofLabor).

3. Marketstrategies.Hereyouwilldescribeexactlyhowyouwillreachouttoandmarket toprospectiveclients.Again,beas specific aspossible.Willyou advertise in the Yellow Pages? Join professional organizations fornetworking? Create a website? Use newsletters as a marketing device?Socialmedia?Includeasmanyofthesedetailsaspossible.Also,taketimein this section towriteabout theways inwhichyourcompany isuniqueand,therefore,betterthanyourcompetitors.

4. Competitive analysis. In this section, focus on likely competitors in yourfield. Discuss how your business will differ from other specialty foodbusinesses in your market area. Also, don’t forget to focus on otherpotentialcompetitors,suchasgourmetsectionsofhigh-endgrocerystoresorrestaurantsprovidinggourmetandspecialtyfoodcateringservices.Whyare your services preferable to those of your competitors? It is essentialthat you clearly formulate the ways in which your company willdifferentiateitselffromcompetitors.Thiswillrequirealittleboots-on-the-groundresearch.

warning

Don’tconsideryourbusinessplanjustadocumentnecessaryfor

Don’tconsideryourbusinessplanjustadocumentnecessaryforobtainingfinancingthatyourarelylookatagain.Abusinessplancanbeastrategicplanforyourbusinessthatshouldbelookedatandupdatedwithsomeregularity.5. Designanddevelopmentplan.This isanopportunity todiscusshowyou

will develop markets for your business and develop an ever-broadeningclient base. Set specific goals. Perhaps you plan to cater to 12 eventsduringyourfirstyearofbusinessandtogrowthatnumberto50eventsperyearbyyourfifthyearinthespecialtyfoodbusiness.Ormaybeyouplanto eventually host classes at your retail site or rent your commercialkitchenspaceouttootherspecialtyfoodbusinesses.

6. Operationsandmanagement plan.Howwill you runyour business on aday-todaybasis?Will thisbeapart-orfull-timecareerforyou?Willyouhire employees?Consider a typical day in your business and describe ithereandhowyouwillfacilitatethisoperation.

7. Financial factors.This is the section inwhich to focusonyour financialexpectations. Even if you are opening the business as a very part-timeoccupation—forinstance,onlycreatingproductduringthesummerfresh-fruit growing season—you will need to forecast your financial future.Considerwhere youwould like to be, financially,with your business inoneyearandinfiveyears,andincludethatinformationhere.

BuyingEquipmentandInventoryWe’llcoverspecificfood-relatedequipmentinotherpartsofthisbook,butthereare some basic office equipment needs for any small business, whatever theindustry. There are some must-haves and there are some it-would-be-nice-to-havesforyourbusinesstooperateefficientlyandeffectively.

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Remembertoaddapercentageofyourfixedcoststothefeeyouchargeforyourproductsorcateringservices!Thisishowyoupaythebills.

foryourproductsorcateringservices!Thisishowyoupaythebills.EssentialEquipmentWhatever the locationofyour food-makingoperation (seeChapter7 fora fulldiscussiononlocation),youneedtocarveoutsomeoffice-typespace.Itdoesn’tneed to be a lot of space but it needs to be enough to enable you to becomfortabledoingthingslikeinvoicing,ordering,andfinancialplanning.Ifyoudon’tlikedoingthosethingstobeginwith,youdefinitelywon’twanttodotheminaplacethatisuncomfortable,cramped,ordisorganized.

Basic office equipment includes: Desk. An office desk should be largeenough for you to spread out and look at several things at once, whether it’snumerousspreadsheetsoralaptopandspreadsheet,orcatalogsandyourlaptopandthespreadsheetthattellsyouhowmuchyoubudgetedtospendonwhateveryouareordering.

Phone. Cell phones have often replaced the need for a landline phone.However, some people still prefer to have a landline for their businesscontactlinewheremessagescanbeleft.Thenyourcellphonecanbeusedfortimeswhenyouareawayfromyouroffice.Ifyoudodecidetohavealandlineinstalledinyouroffice,besureithasabuilt-invoicemailfunction(almost standard these days).Youprobably alsowant a cordless option,dependingonthesizeofyourofficespace.Other furniture. At least one file cabinet will help you keep organized.Youcanaddcabinetsasyouneedthem,butatsomepointyouwillonlywanttokeepfilesinyourofficethatareactiveorrelativelynew;youcanputtherestinstorageboxesinaclosetorotherstoragearea.Althoughyoulikelywon’tspendalotoftimeatyourdeskinthefoodbusiness,itisstilla good idea to have a comfortable, ergonomic chair. If youmay have avisitor in your office—a salesperson, potential client, or potentialemployee—makesuretohaveacoupleofsidechairs.Alotofgreatofficefurniturecanbefoundatsurplussales.Computer.Adecentcomputerthatiseithernewornomorethanayearoldwill allow you to save money doing some of your marketing andadvertisingmaterialsyourself.Alaptoporevenatabletmaybesufficient.Onceagain,however,makesureyougetakeyboardandanyaccessoriesthatwillhelpmakeitergonomicandcomfortableforyoutouse.See“TheBestComputer”onpage72formorespecificsoncomputerpurchasing.

Internet access. Not only will you need internet service from yourtelecommunications provider and a modem to access the internet, awirelessrouterishighlyrecommended.Theyareinexpensive(intherangeof$100),eliminatetheneedforacordfromyourcomputertothemodem,andallowanytypeofcomputertotapintothewirelessservicewithinitsrange.Ifyouroffice is ina largeretailspaceoryourfoodprepareaandthe area is large, youmay alsowant to consider a booster to allowyoustrongwirelessaccessinthefullarea.Orsimplybudgetforatech-savvyconsultanttodothisallforyou!Printer. If you plan to do some of your marketing and advertisingmaterials yourself, a good printer is essential. The equipment itself isrelatively inexpensive—these days you can buy a printer that produceshigh-qualityprinting aswell as scans, copies, and faxes for under$150.However, the ink cartridges are where you will spend themoney. Tworoundsofblackandcolor ink replacement cartridges, andyouwill havealreadyspentthesameasthecostoftheprinteritself.Whileyouareatit,makesuretogetafastprintspeedof15to20blackpagesperminute.Camera.Phonecamerasaresuchhighqualitythesedaysthatyoumaynotfindtheneedtohavemorethanthat.Andthatisespeciallytrueifyouplantohireaphotographer to takeshotsofyour finishedworkformarketingandadvertisingpurposes.Thatsaid,abasicdigitalSLRwithacoupleofdifferent lenssizescanbehad forunder$500andseems toalwaysbeaworthwhileinvestment.Software. The basicMicrosoftOffice suite ofWord, Excel, PowerPoint,andAccesstypicallyprovidesallyouwilleverneedintherangeofwordprocessing, spreadsheetproduction,marketingandpresentationsoftware.The possibilities are endless for using these software tools these days,from a stripped-down version for your iPad like DocstoGo that costsaround $15, to several hundred dollars for a full suite for your personaldesktoporformultiplecomputers.Don’tforgettosignupforsomekindofantivirussoftware;freemalwareisavailable,orforunder$100peryearyoucangetasubscriptiontoNortonAntiVirusorotherprotection,whichisessentialintoday’selectronicworld.

tip

Brandrecognitionisthenameofthegameinbusiness.Itistypicallyworththecosttohaveagraphicdesignfirmdesignalogoforyou.Theywillmakeyourlogomemorable,professional,andunique.Clipartcanlooktackyandmayshowupinanotherfood-relatedbusiness’smaterials.Whenyouhaveyourlogo,besuretouseitineverythingaboutyourbusiness,frombusinesscardstowebsitetofoodlabels.UseFigure 6–2 on page 71 as a shopping guide for equipping your office

withsupplies.Youprobablyalreadyhavesomeoftheseandsomeyoumaynotwant to use—for example, fax machines are slowly fading out of use withscannersbeingpartofeven thesimplestprinters,but somebusinessesstillusefaxessoyoumayfinditisapurchaseyouneedtomake.

FIGURE6–2:OfficeSuppliesChecklistAfteryou’vedoneyourshopping(notbuying,justshopping!),fillinthepurchasepricenexttoeachitem,addupyourcosts,andyou’llhaveaheadstartonestimatingyourstartupcosts.Ofcourse,thisisnotacompletelistofsuppliesthatyoumayneed,sotailorittowhatyouthinkyouwilluse.

TheBestComputer

Thesedays you are almost able to get awaywith havingnothingmorethan a tablet computer to run a business. A tablet can perhaps handleenough basic software, email, and internet searches to allow you tooperateyourbusinessefficientlyandeffectively.Theyareportableandinexpensive—spendalittlemoreandyoudon’tevenneedwifi—satelliteconnectionwillallowyoutouseitalmostanywhere,anytime.

A laptop is the next best thing.Laptops are powerful and can be quitesmall.Theycanusemorecomplicatedsoftware.Andtheyarenolongerconsiderably more expensive than desktop computers to get similarstorageandspeed.

Desktop computers have come a long way as well. No longer thecomputer of choice, desktops have had to adapt to the portable worldwhereuserscangeta lotoutof theirsmartphones,whichhavebecomeminitablets.Desktop computers, or at least theirmonitors, are going inthe opposite direction—instead ofmore compact,monitors seem to begettinglargerandlarger.Ifyouaregoingtohaveyourcomputertiedtoyourdesk,youmightaswellhavesomething that ishighlyvisibleandcangiveyoulotsofspacetocreateon.ComputersliketheHPEnvyhasa23” touchscreen that functions likea tabletandhas theCPUhousedwithin themonitor so it is sleek,without cords everywhere, but unlikemost tablets, hasUSB ports for thumb drives and other accessories. Italsohasamovablearmattachedtoitsscreenwhichmeansyoucanmovethe monitor for the most comfortable position for you, includingstanding.

ComputersliketheEnvyaregreatifyourbusinessrequiresyoutodoalotofdesignworkwhereyoumaybesittingatyourdeskalotorifyouplantodoalotofyourback-officetaskssuchasbookkeepingandsupplyorderingyourself.

Do your research online, then utilize the personnel of places like BestBuy, Staples, or local computer businesses to help you decide whichchoice is best for you. Your computer is not likely to be your largestexpenditure,butitcouldbetheitemyoupurchasethatyouusethemost

everyday.

PurchasinganExistingBusiness

Perhapsyouarethinkingaboutstartingyourownspecialtyfoodbusinessby purchasing one that already exists.Maybe you have patronized thisbusinessmanytimes,havealwaysbeenattractedtoit,andfeellikeyoucoulddoitbetter,takeittothenextlevel.Thisisthewaymanybusinessowners get into business. But you likely need to be prepared to jumprightinprettyquickly.

Here are a few things to think about when purchasing an existingbusiness: Youwilldefinitelywant tosetasidefundingfor legalhelpfortheduediligencethatisimportantinresearchinganexistingbusiness.

Makeamarketingplanfortheturnoverofthebusinesssothatyoucan be sure to retain existing customers. Will customers jumpship because the existing owner is so popular and equatedwiththe business? Or will prior customers come back because theyhavebeendissatisfiedbutarewillingtotryoutthebusinessundernewmanagement?If the current owner is popular and an asset to the business, besure to build in a transition period where the owner continueswiththebusinessforacertainamountoftime.

Another way to purchase an existing business, or more preciselypurchase into an existing business, is to buy a franchise. Look on“franchiseopportunities.com”under“GourmetandSpecialtyFranchises”andother franchisesaleswebsites tosee ifsomethingfitswhatyouareinterested in. Pizza, frozen yogurt, and barbecue are a few commonlyfranchised specialty foods as well as a few better-known shops likeEdibleArrangementsandColdStoneCreamery.

Stepintothefranchiseworldwithyoureyeswideopen.Whileitcanbeagreatway to enter the specialty foodsmarket, it also can be expensiveandrestrictive.Plantohavealawyerlookoverafranchisecontractand

tellyouexactlywhatyouarecommittingto.InventoryInventory fora foodbusinesswill alsovarywidelydependingon thebusinessyou plan to start. Again, we will discuss food-specific inventory later in thisbook.Butat thisstageyouwillwanttothinkthroughyournonperishablesandhardgoodsrequiredtostartupandgetyourbusinessestablished.

Youwillneedbowlsanddishesandmeasuringtoolsandstoragecontainers,etc.Butwillyouneeddisplaywareforyourfinishedproduct—eitherthosethatarereadyforsamplinginyourshowroomorthefooditemsyoutaketoanevent?Ifyouaresellingfooditemsinagiftbasket,youwillneedlotsofinventorytocreatethefinalbaskets—fromthebasketitselftothestuffermaterial,torollsofcellophaneforcovering,toribbonandevenscissorstocuttheribbon.

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Don’tbuyhugeamountsofinventoryofthingslikegiftwraporbasketsunless,forexample,youcangetaridiculouslygooddealonlargequantitiesofaclassicbasket.Colorsanddesignsgoinandoutofstyle.Youdon’twanttobestuckwithyearsofinventoryonsomethingthatyouusedonlyaportionof,onlytohaveitgetdustyandold-looking,nottomentiontakinguppreciousspace.

W

CHAPTER7

HomeIsWheretheStoveIs:Location

hether your specialty food business operates out of your homeonlysellingtoyourpersonalfriends,hasaretailshopasaminorcomponentofthebusiness,providesretailoutletswithproduct,oris a direct-to-consumer national mail order operation will, of

course,haveamajorimpactonwhattypeoflocationyouneedtosetupshopin.Thischapterwilltakeeachoneintoconsideration.

CottageFoodIndustryLet’sstartwiththesmallestofpossiblespecialtyfoodsetups—foodproducedinthe home, known as the “cottage food industry.”While this may be small inregardtothesizeofeachindividualbusiness,itisbynomeanssmallinoverallsizewithin the food industry.TheHarvardFoodLawandPolicyClinic statesthat“thepastfewyearshaveseenamarkedincreaseintheamountoflocalandsmall-scale food production in theUnitedStates” (“CottageFoodLaws in theUnitedStates,”August2013).Accompanyingthisincrease“hascomeapushtoallow individuals to produce and sell nonpotentially hazardous foods [bakedgoods, jams, jellies, e.g.] made in their home kitchens, outside of expensivepermittingandlicensingprocedures....thereforereducingthebarrierstoentryfor small-scale producers while recognizing the low-risk nature of theseproducts.”

Bydefinition,acottagebusinessissetupinthehome.Andwhilethereisnorestrictionthatyouhaveacommercialkitcheninwhichyoumakeyourproduct,itdoesnotmean therearenot rules tofollow.Andit typicallymeans that it isdifficult to sell your product across state lines since even states that permitcottagefoodbusinesseshavedifferingregulations.

aha!

Eventhoughyouoperateyourspecialtyfoodbusinessfromyourhome,youshouldstillsetyourbusinessupasalegalentity,carryinsuranceonthebusiness,andkeepyourfinancialsforyourbusinessseparatefromyourpersonalfinancials.

—“10TipsforStartingaHome-BasedFoodBusiness”byJenniferGoforthGregory,forTheNews&Observer

Howyouproceedfromthecottagebusinessdefinitionisuptoyouandthelaws in your state. You do not need a commercial kitchen (although the nextsectionoutlineswhatisentailedandhowoneofourspecialtyfoodmentorsdidcreateacommercialkitcheninherhome)andtypicallyyoudonotevenhavetohaveyourhomekitcheninspected.However,thatdoesnotmeanthatyoudon’twanttoconsiderthethingsthatwillbeimportanttoyouandthesuccessofyourbusinesssuchas:

Is your kitchen set up in some efficientway conducive to creating foodproductsforsale?Are other family members okay with your plans for a food businessoperatedoutofyourhome?Isyourfamily’sscheduleconducivetoyourusingthefamilykitchenforafoodbusiness?Areyour spouse and childrenoff towork and school allday making the 9 A.M. to 2 P.M. time period a great time to do thecookingforyourbusiness?Is thereaplace inyourhomeenvironment to store the suppliesyouwillneedtocreateyourfoodproduct?Don’tforgetit’snotjustfooditemsyouwill need, but youmay need food containers, boxes, oversized cookingvessels,extrautensils,etc.Doesyourhomehaveaplacethatcanbesetupexclusivelyfortheofficeworkofthebusiness,evenifthatisjustadeskinthecornerofthediningroomthatnoonewilldisturb?

DoesUPS,FedEx,andothercarriersknowhowtogettoyourhouse?Canyouget things shipped toyou in a timelymanner?Doesyour areahaveovernight priority or even Saturday delivery available? This might bemoreimportantthanyourealize!

tip

Ifyouwantgoodadviceonequipment,gotothewebsiteofAmerica’sTestKitchen.Thereyouwillfindequipmentreviews.AndyoucanfindoutwhereinyourregionATK’sTVshowisonorwatchitonthewebsite.Thesefolksputcookingutensils,appliances,andallkindsofcookwaretothetest—everythingfrombenchscraperstocookiepressestocolanders.

—www.americastestkitchen.com

SuppliesforYourHomebasedFoodBusinessFirstandforemost,ifyouaregoingtobeseriousaboutyourfoodenterprise,youshoulduseseparatesupplies,utensils,andcookwareforyourbusiness thanforyour family cooking. You perhaps won’t want two microwave ovens or twobakingovens,butacupboardsetasideforotheritemsisagoodidea.

Buyashighqualityasyoucanafford.Youcanalways tradeupwhenyoustarttobringinsomeincome—that’swhatismeantbyusingtheincomeinyourfirstcoupleyearstoreinvestinthebusiness.

Don’tjustthinkabouttheequipmentyouneedbutalsothinkaboutwhatcanmake youmore efficient. Sure, you can get bywith a handmixer for quite awhilebutwhatelsecouldyoubedoingifyouweren’tstandingthereholdingthemixer,butinsteadhadaKitchenAidcountertopmixer?

Whatyouwillneeddependsalotonwhatyouareplanningtomakeforyourspecialtyfood.Somebasicsinclude:

MixingbowlsMeasuringcups

MeasuringspoonsSpatulasLargespoonsAsetofknivesAknifesharpenerEggseparatorSpreadingknivesPastrycutterFrostingbagandtipsPrepbowls(thoselittlePyrexbowlsthatyoucanmeasurethingsoutaheadoftimeandjustdumpinwhenthetimeisright)CoriancuttingboardsofdifferentsizesBakingpans(differentsizesaswellasglassandmetal)CookiesheetsofvaryingsizesMuffintins,miniandtraditionalsizedcupsCoolingracksFryingpans(severalsizes)MicrowaveovenMixerwithvarietyofattachmentsFoodprocessorGrinderGraters

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Ifyouareplanningtostartacottagefoodbusiness,readthebrochure“CottageFoodLawsintheUnitedStates”byHarvardFoodLawandPolicyClinicinitsentiretyathttp://blogs.law.harvard.edu.Whileallstatesaredifferentandyouneedtoresearchthelawsinyourindividualstate,thisbrochurewillgiveyouabroadoverviewofpotentiallawsand

theirpurpose.

The list could go on much longer, but much of what you will need willdepend onwhat kind of food you plan tomake. Jams and jellieswill requiredifferent preparation tools than baked goods like whoopie pies or specialtycakes.Somefoodswillrequirefryingpansandstovetopware,otherswillrequirebakingpansandeggbeaters.

TheCommercialKitchenThe dreaded “commercial kitchen” does not have to be dreaded at all. If youwant todoanythingmore thanasimplefoodbusinessselling toyourpersonalfriends, youwill need to embrace the idea that the kitchenyouoperate out ofneedstobeofagradethatwouldattheveryleastpassinspectionbyalicensingbodyinyourstate.InWashingtonState,forexample,whereourmentorSusanDesjardinsBurnsandherConfectionatelyYourstoffeebusinessislocated,“nofoodservicecanbeapproved inahomekitchen,unless thereare twoseparatekitchens.Acommercialkitchenmustbe totallyseparate fromthekitchenusedbythepeoplewholivethere.”

Susantriedfirstrentingcommercialkitchenspacebutgotfrustratedwiththelack of attention to cleanliness and detail fromother renters of the space. Shedecidedifshewasgoingtomakethetoffeeoperationasuccess,shewasgoingto need her own commercial kitchen. Susan went about carefully researchingeverything she needed to know and keeping in touch with the food safetyauthorities who would be inspecting and giving the kitchen the stamp ofapproval.She tooknochances thatherkitchenwouldnotbeapproved—ifshehadaquestion,shedidn’tguesstheanswer,sheasked.Andnowhergaragehasbeentransformedintoacommercialkitchenastepawayfromhome.

warning

Manystatesthatallowforcottagefoodbusinessesstillrequirethatcertainregulationsarefollowedsuchasthatitistheactualsellerwhoisproducingthefoodandthatlabelsindicatethatthefoodwasnot

producingthefoodandthatlabelsindicatethatthefoodwasnotprocessedinacommercialkitchensubjecttohealthdepartmentinspections.Somestateshavelimitsongrossannualsales.

HomesteadFoodOperations

Prior to June 2012, home food manufacturing in New Hampshirerequiredahomestead license. In June2012, the state signed legislationchangingthelicensingrequirementsforhomefoodoperations.Now,youdonotneedahomesteadfoodlicenseif:

You sell nonpotentially hazardous (whichmostlymeans cookedproductsbutevensomeof thosearenot legal tomakeathome)onlyfromyourownresidenceYoudonotexceedgrossannualsalesof$20,000

Still required, however, is proper labeling that includes the name,address,andphoneofyouroperation,ingredientsindescendingorderofpredominancebyweight,anymajorfoodallergen,aproductcodewhichidentifies batch number, and the phrase “This product is exempt fromNew Hampshire licensing and inspection” in at least 10-point font.(source: NH Department of Health and Human Services,www.dhhs.state.nh.us)

You can see that even with more lenient regulations such as thehomesteadlicenseinNewHampshire,it isstill importanttocheckwithyourlicensinghealthdepartmentandmakesureyouaredoingeverythingabsolutelylegallyforyourfoodbusiness.

Themainfocusofacommercialkitchenisthecreationofsafefoodproducts—and who wouldn’t want to guarantee their customers as safe a product aspossible?Thinkstainlesssteel—countertops,appliances—thatdon’tharborfoodcontaminants and ishighly cleanable.Other considerations aregetting runningwateranddishwasherwatertoahighenoughtemperaturetokillanybacteria.

A commercial kitchen is not cheap but it also doesn’t have to be cost-prohibitive. Burns’ garage renovation commercial kitchen came in at around

$24,000.Obviouslyitisnottherightmoveforaverysmalloperationthatneverplans to get bigger—it’s going to take a lot of cupcakes to break even on a$24,000 investment.However, in an example likeConfectionatelyYours, youcanalsocountinthepotentialaddedvaluetoyourhome.

statfact

AccordingtotheHarvardFoodLawandPolicyClinic,allbuteightstates(CT,HI,ID,KS,NJ,ND,OK,WV)andtheDistrictofColumbiaallow“cottagefoodoperations.”However,keepinmindthatthereisnoconsistencyamongeachofthe42statesthatdopermitcottagefoodoperationssoyouneedtocheckcarefullywiththelawsinthestateinwhichyousetupshop.Somestatescreatedefinitionsofsuchtermsas“foodestablishment”thatallowforlocallawstoapplytocottagefoodbusinesses.

Thesearesomekeythingstothinkaboutbeforedecidingtouseyourhomeasyourbaseofoperations.Agoodthingtodoisvisualizeabusydayinthelifeof your business from start to finish and think through everything that mightcomeup in that day.Also, talkwith a coupleof peoplewhohavebeen there,donethat.Askforthegoodandthebadstories.Thendecideifyourhomehas,orcanhave,alltherightstufffromwhichtooperate.

funfact

TheHispanicmarketcontinuestobeagrowingforce.Accordingtothearticle“FortheHispanicMarket,theFutureIsNow”intheSeptember8,2015,onlineeditionofFoodBusinessNews(www.foodbusinessnews.net),inthedecadebetween2000and2010theU.S.Hispanicpopulationgrewby43percent,ispredictedtogrowby

167percentbetween2010and2050,andcurrentlyaccountsfor17percentoftheU.S.population.

Ofcourse,theideaofazerocommutecanbeveryappealingandcanaddtotheprofityoucanmakeonyourbusiness.On theotherhand,azerocommutemeansyoucanfindyourself inyourhome24hoursaday.Youmightwant tomakesuretoschedulemixingitupalittle.Dependingonhowmuchproductyouplan tosell,youcouldsetaside twodaysaweek tomakeproduct, twodaysaweektobringittowhereveryouplantosellit,andonehalfdayaweekdoingyourbookkeepingandsuppliesordering.

Onethingaboutworkingfromyourhomeonyourownsmallbusinessisthebeautyofflexibility.Whileyouneedtobeseriousaboutyourbusinesstomakeit successful, don’t trap yourself into not enjoying the flexibility this setupshouldaffordyou.

TheRetailShopAspecialtyfoodbusinessthatisfocusedonsellingatretailwillmeanthatfromtheoutsetyouwillbelookingforthebestlocationandtypeofphysicalspacefora retail operation.Retail is a very special business typewhere you have a setbaseofoperationsandtheexpectationisthatyourcustomerswillfindyou,visityourshop,andbuyyourproducts.

funfact

Nomatterwhereyousetupshop,ifyouarehangingyourtoqueonsustainability,recyclability,andfairtradeyouneedtobeawareofthetrendsandplacesinyourbusinesswherethismatters.Eventhebigcompaniespayattentiontothesetrends—Nestléannouncedthatbeginningin2016,“cocoausedintheformulationofitsKitKatbrandedbarswillbesustainablysourced”accordingto“NestléShiftingKitKatBrandtoSustainablySourcedCocoa”inFoodBusinessNews’onlinemagazine,September8,2015.

Areyouahigh-endspecialtyfoodbusiness?Locateinanareawithspecialtyboutiques—MainStreet downtownor an upscale shoppingmall.More day-to-day food like bread or cupcakes? You can still produce a topnotch, upscaleproductbutanindividualcupcakeorloafofbreadisstillaccessiblypricedsoabusylocationalongamainthoroughfaremightworkfine.

OutsideYourstorefrontwillbethefirstimpressionyourcustomergetsofyourbusiness—unlesstheyfoundyouontheinternet,inwhichcaseyourwebsitewillbetheirfirst impression.Ofcourse, ifyouenticedthemwithafabulouswebsite that isprofessional and classy, your store had better live up to their expectations. Acustomercoulddrivetoyourlocationexcitedbywhattheysawonyourwebsiteonlytobeturnedawayfromeverenteringyourdoorbecausetheviewfromthestreet is rundown, dirty, sloppy, or just simply notwhat theywere expecting.Branding your business includes keeping with a particular style from yourcomputerpresencetoyourphysicalpresenceaswellasthelookofyourproductlabeling. For example, if you decide on a country primitive style for yourproductlabels, itwouldbeinconsistent tohaveyourphysicalstoreshowcaseacontemporary,artsylook.

Landscape in front of your store—even if that just means a couple ofwhiskeybarrelswithflowersinthem—butifyoudo,makesurethelandscapingiskeptneatandtheplantsarewatered.Deadplantsinbrokenwoodbarrelswithtrashlitteringthemareasignofhowtherestofyourbusinessisrun.

Aleasedsitemeansyouneedtomakesurethelandlordkeepsupwithfixingbrokenstairs,crackedconcrete,anddifficultdoorknobs.Ifyouchoosetobuyorevenifyoulease,makesurethewindowsarealwaysclean(awindowcleaningservice is typically worth the money). If you are open, make sure the“open/closed”signisturnedtherightway.Theseallmayseemlikesmallthings,butturningcustomersoffbeforetheyevergetachancetosampleyourexquisitewhoopiepiesisnotawaytomakeabusinessthrive.

InsideOnce you get them in the door, you need to once againwow themwith yourappearance.Foodbusinesseshaveanextraspecialneedtoappearsqueakyclean.

Make sure displays are fresh—so don’t create display areas so huge that it isexpensive,timeconsuming,andtakesalotofproducttokeepthemappetizing.

warning

Ifyourretailfoodbusinessincludestake-homemealsandyoucookaromaticfoodsforpreparedmeals,youdonotwanttolocateyourbusinessnexttoafancydressshop.Youwillsoonhaveadisgruntledneighborwhoisunhappythattheirhautecouturesmellslikeyourhautecuisine.Ifthefancydressshopmovesinnexttoyou,well,theyprobablyshouldhavedonealittlemorehomework!

Be sure to leave room to browse around and for customers to not feelcrowded,which justencourages themto leavequickly. Ifyouareaone-,oratmost, two-person shop, many times (hopefully) you will be tied up withcustomers either in front of you or on the phone (more on that in aminute).Makesurethereisenoughondisplaytobrowsetokeepacustomeroccupiedforafewminuteswhileyoufinishupwithyourcustomer.

You’llwanttodecideonalookbeforeyoustartoutfittingthepublicareaofyour retail shop. Ifyouwantavintage feel,use someantique tablesand thriftshop doilies for display. If contemporary is your style, you can use modernfurnishingswithboldcolorsasbackdrops.Maybeyouwould likea theme—oreventochangethemeswiththeseasons.Besttousebasicfurnishingsthatwon’tgiveoffonestyleoranotherbutwillletyouusedecorationstocreatethelook.

Whateveryoudecide,keeptheshopclean,dustanddirtfree,smellingfresh,andlookingtidy.Noonewantstobuyfoodinastorethatseemsdirtyorsmellsbad.

SpecialDisplayNeedsSome retail items do need specialty displays to show them off at their best.Greeting cards, for instance, are best displayed in racks that are designed forgreetingcards.Theseracksarespeciallymadetotakeupthesmallestamountof

spacetodisplaythecards.Youmaythinkyoucandisplaycardsinbaskets,andyoucertainlycan.Butastheyaretakeninandoutofthebaskettolookatthem,yourisktheirgettingbentedges,whichmakesthenextcustomernotaslikelytopurchase thecard.Specialdisplay rackscanendupbeingworth theextracostnotonlybecausetheyshowofftheitematitsbestbutbecausetheyoftendisplaymoreoftheiteminasmallerspace,leavingroomforotherproduct.

warning

Youcan’tgetawayfrompolitics,Congress,andlegislation,eveninthespecialtyfoodbusiness.FoodBusinessNewsreportsintheirSeptember8,2015,issuethatfoodsafetyprogramsarethreateningtobefundedbyuserfees,considerablyincreasingfoodbusinesses’fees,ratherthanthroughappropriatedfunds.

save

Youdon’thavetopurchasenewequipment—oftenyoucangetahigherlevelofequipmentordisplayspacebypurchasingused.Shopsgooutofbusinessallthetime.Youcancapitalizeontheirneedtoselltheirequipment,orcheckoutstatesurplusoutletsand,ofcourse,onlinelistingsfordeals.Justmakesuretobuywhatyouneedandnotjustwhathappenstobeoutthereatagoodprice.It’snotagooddealifitdoesn’tsuityourpurpose.

Andspeakingofcustomers, it iscritical tobeabletojugglemorethanonecustomeratatime.Soifyouareinthemidstofworkingwithacustomeronanorderofwhoopiepiesfortheirweddingandanotherpotentialcustomerwalksinthedoor,atleastacknowledgethenewcustomer.Onceapersoninyourshophas

beenpersonallyengaged,itismoreuncomfortableforthemtowalkout.Andifyouaregoing tobeawhilewithyourweddingwhoopiepie customer, excuseyourself for amoment and go talkwith the new customer—perhaps they justwantedtograbacouplewhoopiepiestobringhomeforatreatortheywantedtopickupabrochureortheywantedtoknowifyoushipacrossthecountry.Youmay be able to quickly answer their question and get back to your weddingcustomerandkeepbothcustomerssatisfied.

Phone conversations are similar. Priority should go to the personwho hastakenthetimetowalkinyourdoor.Ifbusinessover thephoneisasignificantpartofyourbusiness,youneed to invest in thepersonnelso thatsomeonecandealexclusivelywithin-personcustomerswhilesomeoneelsefocusesonphoneorders.Onceagain, ifyouare theone-personshop,acknowledgeyourwalk-incustomer, excuse yourself from the phone for a minute to see if there issomethingyoucandoforthewalk-incustomertogetthemontheirway,orgetthephonecustomer’snumberandcall thembackafter retailhours soyoucangivethemyourundividedattentionandgivethewalk-incustomerstheattentiontheydeserve.

aha!

Ifyouareopeningaspecialtyfoodbusinessinthebakerycategory,youmaybesurprisedtofindyourselfsuddenlyinterestedinwheatfuturesandbakeryingredientindexes.FoodBusinessNewswillkeepyouuptodate,eitherintheirprintmagazineoronlineeditionatwww.foodbusinessnews.net.

BackOfficeThebackofficeareaofagourmet food retail shopmay includeaplacewherefoodisactuallyproducedforsaleontheretailfloor.Thismeansgivingcarefulconsideration toanyspaceyou lookat forapotential retail space. If thespaceseemsabsolutelyperfect for theretailoperationyouenvision,perhapsyoucanthink throughwhether there is away tohave theproduction space somewhereelse. If you are doing large-scale production, thatmaybe a necessity.A large

warehouse-stylesetupforproductionmayhaveagreatretailspaceopportunitybut is rarely inanarea that isconducive toa retailmarket.Viceversa,agoodretailspacerarelyhasanarealargeenoughforlarge-scaleproduction.Butthenyoumightgetlucky;youneverknowunlessyoulookandaskaround.

Back office functions also include the space to do the unavoidablepaperwork of any business. You might be able to get away with a hybridoperationwhereyouhaveyourretailspace,andyourdeskworkisdonefromacornerofthelivingroomathome.

TheRetailProviderPerhapsyouare totally intocreatingyouruniquewhoopiepiesbutyoudonotwant tobeburdenedwitha retail space tosell themfrom.Youarrangewitharetail shop in each of the surrounding five towns to provide them with freshproduct daily. And you are selling direct to consumers for special events,weddings,anniversaryparties,andotherprivatefunctions.

This isagreatscenariowhereyouget tofocuson thepartyou love—foodproduction.Inthiscase,youwouldneedtofindalocationwhereproductionofthefoodisthefocusofthespace.Itmightmeanacommercialkitchenisalreadysetup,or thatyouneedtobeable torenovateanexistingkitchentomakeitacommercially licensed kitchen, or create one from scratch (see section oncommercialkitchensearlierinthischapter).Unlessyouarebuyingthespace—which can be a great way to build business assets—be sure to negotiateleaseholdimprovements(see“TheLease”onpage87formoretips)tocreatethespaceyourequiretobesuccessful(andtobeabletopaytherent!).

statfact

TheU.S.FoodandDrugAdministrationFoodCodeisamodelcodeandreferencedocumentintendedforusebystateandlocalgovernmentsregardingfoodsafetylaws.Thisisnotlawandstatesarenotrequiredtoadoptthecodebutmanydo.

StagingSpaceInanoperationlikethis,whereproductionoftheproductisthefocus,youwillstillneed tohavestorage space for supplies forbothmaking thewhoopiepiesandforpackagingthemforshipmenttoyourretailoutlets.Andyourspacewillneedtoincludeaclean,openspacefortheactualpackagingandarrangingintoshipmentlots.

GettingProducttoMarketPerhapsyouhave fiveoutlets—one inyourown townandone ineachof foursurrounding towns—that will regularly carry yourwhoopie pies. The contractwitheachisthatyouwillmakedeliveriestothemtwiceaweekonspecificdays.Yourpersonalvehiclemaybeperfectforthis—aminivanoroneofthosesquarecargo-like vehicles like a Kia Soul or Honda Element. Just don’t use yourpersonalvehiclethatyourtwogoldenretrievers thrasharoundinonyourdailytrips towalk themon thebeach.Thiswouldmake avehicle a very legitimatepartofyourstartupfinancing.

tip

BakingBusiness.comonlinemagazinesharedtipsonhowtoidentifythetrendsthatareheretostayforawhile.Inaninterviewforthearticle“ExpoEast2015:IdentifyingtheNextBigThing,”EricPierce,directorofstrategyforNewHopeNaturalMedia,pointstosomethinghecalls“consumptionoccasions.”Howmanyconsumersandopportunitiesforconsumptioncomprisetheproductdemand?

MailOrderWhile some foods—delicate pastries, for example—are not conducive to themailordermarket,manyspecialty foodbusinessesstartoutwitha retailoutletand add mail order to their business offerings. Winnipesaukee Chocolates inWolfeboro,NewHampshire,doesshippingbutstatesonitswebsitethattheydo

not ship their chocolatesduringwarmweathermonthswhere the temperaturesare consistently in excess of 75 degrees (specifically June to mid-September)becausetheyhavenotsettheirbusinessupwiththeextrapackagingneedsthatwarmweather shippingwould require.Although a puddle of chocolatewouldprobably taste just fine, it would not represent the beautiful presentation thatWinnipesaukeeChocolateshasworkedsohardtocreate.

You may want to open a specialty food business that is exclusively mailorder.Thatisacompletelylegitimateandpotentiallylucrativeapproachtoyourbusiness.Butwhatdoesthatmeanasfaraslocation?Itprobablymeansyoucansetupyourbusinessjustaboutanywhere.Buttherearesomeconsiderations.

tip

Likeanyindustry,thefoodindustryhasitsownterms.Forinstance,“potentiallyhazardousfood”typicallyisdeterminedbytheacidityofthefoodandwhetherthefoodislikelytodevelopbacteriaorviruses.High-acidfoodsliketomatoesandcertaincookeditemshavealowpotentialforbeinghazardouswhilemeats,seafood,anddairyhavehighpotentialtobehazardous.

ShippingServiceIfyouplantobecompletelymailorder,youwillwanttobelocatedinaplacethatisaccessibleforthekindofcourier/shippingserviceyouneedtobeabletocometoyourbusinesssite.Itwouldn’t taketoomanytimesstandinginlineattheUSPSor other courier shipping locations for you to realize that your timecouldbebetterspentiftheshippercametoyou.

Dependingonyoursize,youmayneedtopickalocationthathasaloadingdock. Ifyouare shippingoutpallet-sizedshipmentseachday, theshipperwillwanttobackuptoyourloadingdock.

tip

Whenchoosingacarrierforfragileproduct,besuretochooseonethathasexperienceshippingfragileitems.Youmightcheckaroundwithotherpurveyorsofyourtypeofproducttoseewhotheyuseandwhattheirexperienceshavebeen.

SpecialConsiderationsIfyouhaveaproduct that requiresrefrigeration, thiswillhave implicationsonboththeshipperthatyoucanuseandtheareathatyouholdyourpackagesuntiltheshipperarrives.Thatareamayneedtobeattheveryleastcooledorperhapsevenrefrigerated.Youmayevenwanttolocateawalk-incoolerneartheloadingdockwhereproductisstoredwhileawaitingtheshipper.

Fragile itemsmayalso require specialneeds.Thismightbe in the formofpackaging.Attheveryleast,youwillneedapackagethatindicatesitisfragileandwhatkindof specialhandling it needs—donot tip, alwayscarrywith thissideup,etc.Itmayevenrequireyoutogosofarasorderingspecialpackaginginsertssuchascircularcardboardloopsthatholdcupcakesorminicheesecakesupright.

tip

Put“customer”intheforefrontofyourmindwhenthinkingaboutaretailspace.Ifyoursisahigh-endproduct,wheredothosecustomerstypicallyshop?Whatkindofparkingdoyouneedtomakeyourlocationconvenienttothatcustomerbaseyouwishtodraw?

TheLease

Unless you are setting up in your existing home, chances are youwilllease a retail or production space rather than purchase a building—at

least at the beginning. There are a few important things to rememberwhennegotiatingaleasecontract:

Be realistic about the time frame of the lease. The SBArecommends that small businesses negotiate one-or two-yearleaseswiththeoptiontorenew.Whateverthatfirstleaseagreementsayswillbethestartingpointforyearly leasenegotiationsfromhereonoutfor therestof thelifeof the lease.Don’t start at the topamountyoucanpossiblyaffordsinceyoucanbecertainthatyourleasewillonlygoup,notdown.Make sure it is clearly spelled out who is responsible foreverything,suchasleaseholdimprovements,whichlightfixtures(e.g.,exteriorlightsmaybeformorethanjustyourspacesotheleaseholdershouldprobablycoverthose),theplumbing,etc.TheSBA says be sure to look for hidden fees and that CAMs(CommonAreaMaintenance)arecoveredbylandlords.Oneofthebenefitsofleasingoverowningisthatwhensomethinggoeswrong, you can call the leaseholder. Not only should youmake sure that person is accessible or has a property managerwhoisaccessible,but theSBArecommendsthatyoumakesurethatthelandlordandnotthetenantisactuallyresponsibleforthemaintenancesinceitisnotthesameaswithresidentialleases.Alwaysspendthemoneytohavealawyerlookoversomethingasimportantasalong-termlease.

DistributorsPerhapsyouareplanning tocreateyourspecialty foodandship itout tootherdistributors that take it to the retailmarket that they service.Youcancreate asetupsimilartoamailordercenterwiththedifferencebeingthatyourshipmentswill be a lot larger thanyour individualmail orderpackages.Youwill needalargerspacethataccommodatesawarehouse-typesetup.Whileyoushouldheedtheadviceofthisbook’smentorsandstartsmall, lookatthespaceyouchoosewithaneye to the future. Is thereanychanceyourbusinesscouldgrowwhilestayingrightwhereitis?Ordoyougointoyourinitialspacefullyawarethatit

islikelyyouwillneedtomoveinordertoexpand?

tip

Ifatallpossible,leaseaspacethatisabitlargerthanwhatyouthinkyoucurrentlyneed.Fewbusinessownersstartoutwithnoplansforgrowth.Thefirstfewyearsofyourbusinessventureyouwilllikelybegrowingexponentiallywhilecustomersfindyouandthewordgetsout—youdon’twanttobespendingyourstartupyearsmovingfromplacetoplacetoaccommodateeverygrowthspurt.

FoodLabelsThe Food and Drug Administration controls food labeling under the FederalFood, Drug, and Cosmetic Act and its amendments. According to the FDA’swebsite, food labeling is required for most prepared foods, such as breads,cereals,cannedandfrozenfoods,snacks,desserts,drinks,etc. It isyour job tokeep up with labeling requirements and find out what is necessary for yourproduct.TheFDA states that uniform compliance to food labeling regulationsthat were issued in 2015 and 2016 is by January 1, 2018. Bookmark theirwebsiteatwww.fda.gov/Food/default.htmandcheckthesiteatleastquarterlytofind out if any new regulations will impact the specialty food category yourbusinessfallsunder.

A

CHAPTER8

AllThingsDigital

lthough Facebook and other social media platforms are constantlyofferingnewandcreativeways to reachout toconstituents, there isno substitute yet for the good “old-fashioned” website. A well-thought-outwebsitewithadesignthatreflectsyourbusinessstyleisa

must.Here are some basic things to keep in mind about a website for your

business:

Websites give you the ability to change content quickly and cheaply,making it easy to keep information up-to-date and showcase the latestitemsyouhavetooffer.Printingabrochuredoesnotaffordyouthateaseof change—to keep costs down, brochures need to be printed in highnumbers, meaning you may still have hundreds left when you want tochangesomethingon it.Youwillneed todecidewhether topay tohaveyourwebsitedesignerchangecontentorlearnhowtodoityourself.Customers can readily get information, ormore information, about yourbusinessjustbylookingatyourwebsite.Inthefoodindustry, thismightmeanweedingout a lotofphonecalls from thosewhoquicklydiscoveryou are not for them, saving you time to focus on production or thecustomersactuallyinyourstoreinsteadoftalkingonthephone.You can track the results of your marketing efforts more easily withwebsite“hits,”questions,andfollow-throughsalesyougetfromyoursite.Youareopen24/7/365.

MobileWebsites

Mobile-device-friendly websites have been around awhile. With the use ofsmartphones forwebsearchingcontinuing to increaseand thecloserweget tothewrist-wornsmartphonebeingincommonuse,theworldisonthevergeofayetanotherparadigmshiftinthewayweusecomputers.Creatingawebsitethatismoreeasilyviewedonthesesmallerdevicescanbeasmartmove.

Many people still choose to download the entire website no matter whatdevice they are using, so if you don’t want to spend the money on having aseparate site created, it’s not the end of the world. However, themore easilyusedyourwebsiteis,themoreitwillbeused.

SettingUpaWebsiteIfyouareadeptatcomputersoftwareandwanttodesignyourownwebsite,youmightbeperfectlysuitedtocreatingyourownsite,especiallyifit’sgoingtobean information-only site that won’t need the complications of interactivefeatures.

However, no matter who designs your website, you need to be sure it isprofessional looking. Just like when you are meeting a potential customer inperson, you need your website to express your business’s style and culture.Checkoutwebsites of foodbusiness inyour samecategory and takenotesonwhat they offer that you think is amust andwhat is not so pertinent to yourbusinessorcustomers.

Ifyoudon’tfeellikeyoucancreatetherightwebsite,don’thesitatetohireaprofessionalwebdesigncompany.Thecost isnotnecessarilyoutofreach,butbesuretohireacompanywiththeabilitytodowhatyouwantittodo.Youwillalso incurmonthly charges to have it “hosted”—someonewith a large serverkeepseverythingcomingandgoing.Hostingfeescanrangefromaslittleas$30amonthtoseveralhundred,dependingonthecomplexityofyourwebbusiness.

Usuallyincludedinthehostingfeeisacertainamountofmonthlychanges.However,itishighlyrecommendedthatyounotonlylearntomakechangestoyourwebsiteyourselfbutalsothatyourcontractallowsforyoutodothat.Thisiscritical,evenifitrequiressendingastaffpersontoaclasstolearnHTMLorwhatever language your website operates with. Internet users today expectwebsites to be dynamic. Most food businesses change up their productsregularly.Ifyouhaveastorefront,yourhoursmaychangeseasonally,youmayconstantlyberunningnewevents,oryoumaywant toshowcasepublicityyouare receiving, so keeping your website up-to-date with all this changing

informationisamust.

DesignBeforeyouhireadesigner,lookatlotsofotherwebsitesandgivethedesignerideasonwhatyoulikeanddon’tlike.Yourdesignerwilllikelyprovideyouwithafewoptionsthatyoucanchoosefrom,eitherintheirentiretyorpluckingbitsandpiecesfromeach.

Findwebdesignersby searchingonlineornoticingwhodesigned the sitesyoulike.Thedesignerdoesn’thavetobelocaltodesignyoursite—everythingcanbedone,well,online!

Youcanalsobuy“template”webdesigns—youfill thedetails intoabasicdesign. There are many template companies to choose from, such asweebly.com, web.com, wordpress.org, or baskweb.com, which includes ashopping cart system. You don’t have to be a computer programmingwiz astheyaredesignedtobeputtogetherbyanyonewithbasiccomputerskills.Somewirelessnetworksoffer theability tocreateawebsite through them.GoDaddyand other domain hosting sites also have templates, although theymay cost amodestfeetouse.

tip

Usingatemplatedoesn’tmeanyouneedtoorshouldcreateacookiecutterwebsite—creativeandchangingcontentwillmakeyoursitestandonitsown.

Butifyourbusinessisalittlecomplex,paythepriceforhavingonedesignedby a professional. Perhaps your business is not complex now, butwhoknowswhatthefutureholds.Ifyouhaveplanstoexpand,youwillwantawebsitethatcaneasilyexpandwithyou.

The design of your site should be simple yet comprehensive. By the timepeoplehavespentafewminutesonyourwebsite,theyshouldhaveaprettygoodsense ofwhat you offer—andwhether your business is the right one for their

needs.If your business has amail order component, youwill need to have your

designerfigureoutthebestshoppingcartplatformandcash-outsystemforyourtype of consumer. Shoppers expect to be able to do the whole shoppingexperience,souptonuts,online.

WebsiteMust-HavesAsyoucreateyourwebsite,theseare“must-haves”:

Homepage“ContactUs”page“AboutUs”pageTestimonialsfromcustomers.Userealnames(onlywithpermission),notinitialsafterthequotes,ifpossible.Photos (make sure you have permission from not only the photographerbutfromanyrecognizablepeople)Yourbusiness’slogoandaddress.Ifyourbusinessisaretaillocation,youraddress should appear on all of the pages of yourwebsite—don’tmakepeopledigforthebasicinformationtheywant/needortofigureoutwhosewebsitetheyareonandwhereyouare.

warning

Thereisnoquickerwaytoundermineyourcredibilitythantomaintainasloppywebsite.Besurethatwordsarenotmisspelled.Misspelledwordsreflectcarelessnessandalackofprofessionalism.It’sworthspendingafewbuckstopaysomeonetoproofreadyoursitebeforegoinglive.Andkeepitup-to-date.Outdatedinformationmakesyoulooklikeyouareoutofbusiness.

TheHomepage

Viewerswillfirstcometoyour“homepage”(alsocalleda“landingpage”ifthisis where a search will land viewers) where you will introduce them to yourbusinessandtemptthemtospendsometimeonyoursitebrowsingotherpages—and ultimately be enticed enough to pick up the phone and place an order,visit your retail location, orwhatever it is you hope to inspire them to do byvisitingyourwebsite.

You should include a short “OurStory” section either right on your homepage or in a drop down menu. This is chance for people to feel like theyunderstandyourbusiness, can relate toyou,and thereforewant todobusinesswith you—but don’t go into such detail that you lose them right at thehomepage!

Becatchybutavoidbeingtooclever.Thewebcustomershouldopentoyoursite and immediately know they got what they are looking for. Be sure yournameandcontactinformationisrightthere(youwouldbesurprisedbywebsitesthat don’t have the business name on every page, including the home page,leavingviewerswonderingwhosesitetheyareon!).Besureanypicturesareofthehighestqualitytoreflectthequalityofyourgoods.

Youdon’tneedanddon’twanttoshoweverythingyoudorightatthestart.First off, the “landing page” that the viewer comes tomight take too long todownload,whichwillbefrustratingandcausetheviewertomoveontothenextthingbeforeyouareabletosnaghimintolookingmoreintoyourbusiness.Keepthehomepagesimplebutinformative.

Include amenu of items along one edge of your homepage—top or eitherside—withheadings that theviewercanclickon toget to that sectionofyoursite. Think of it like the signs you see overhead in the grocery store or thepharmacy—directpeopletothesectionstheyareinterestedin.Thepersonwhocametoyoursiteprobablyhasonespecificinterest—cateringmenus,yourretailschedule,whatyournextbatchoffreshjamisgoingtobe—anddoesn’twanttohave tovieweverythingyouareup to.Make it easy for thewebsitevisitor tofindwhatisparticularlyrelevanttothem.Herearesomewaystodothat.

tip

Updatethelookofyourwebsiteeverycoupleofyears,perhaps,butdon’tchangeitsooftenthatrepeatviewersaren’tsureiftheygottoyoursite

changeitsooftenthatrepeatviewersaren’tsureiftheygottoyoursiteornot.Andwhenyoudoplantoupdate,plantoprovidesometeasersacouplemonthsinadvancesoyourregularcustomersandviewersknowtoexpectadifferentlook.

DrillingDownEachtimetheviewerclicksabuttononyourwebsitetheygetfurtherintoyoursite. This can be accomplished in twoways—one iswith a “pop-upwindow”where,when they clickon a category, thenew sectionpopsupover themainpageandwhen theyare finishedbrowsingandclose itout, theyendupat thepagetheystartedfrom.Theother“drills”themfurtherandfurtherintoyoursite.Drillingdownlikethisisacommonwaythatwebsitesaresetupbutitcangetfrustratingiftheusercan’teasilygetbacktoapointwheretheysawsomethingtheywantedtolookatfurther.Onewaytohelpthisistoalwayshavea“home”link/buttononeverypage—alltheyhavetodoisclick“home”togetthembackto the beginning and find theirway forward again from there. It’s like havingDorothy’srubyredslippersonyoursiteatall times—unlikeforpoorDorothy,makesureit’sclearhoweasyitistogethomewithouthavingtodealwithflyingmonkeysandsleep-inducingpoppiesbeforegettingthere.

warning

Whenwritingthetextforyourwebsite,becarefulnottouse“businessspeak.”Termslike“POS”and“Deliverables”arenotmeaningfultothegeneralpublicwhoislookingatyourwebsite.

TheRestoftheSiteYourhomepageisoneofthemostimportantpartsofyourwebsite.Ifyoudon’tcaptureyourvisitorsat thehomepage, theyareunlikely togoanyfurther thanthat.Butifyourhomepagedoeswhatitneedstodo,viewerslandingtherewillbeintriguedenoughbyyourphotosandyourtexttomovetotheotherareasofyoursite.

If yours is a relatively complicated specialty food business, you want abuttonforeachareaofyourbusiness.Forexample,StonewallKitchens’websitehas buttons along the top that include “Specialty Foods,” “Tableware,”“Recipes,”and“BarnSale,”amongothers.Theyalsohavealistofbuttonsdownthe side that expand upon those buttons and include things like “CookingSchool”and“CorporateGifts.”Thisallowstheviewertoreallyhomeinonthatpartofthebusinessthatshewenttothesitefortobeginwith.Nowhopefullyshewill be intrigued enough to click on other things (like the yummy picture of“tropicalfruitjam”),butifnot,youhaven’tirritatedtheviewerhavingtodigforthepertinentinformation.

tip

Alwaysincludeyourbusiness’sname,address,andphonenumberoneverypageofyourwebsite.Oncecustomershavedrilledafewpagesdownintoyoursite,theydon’twanttohavetobacktrackallthewaybacktoyourhomepagejusttogetyourcontactinformation.

Mostwebsiteswill have their overarching category buttons running acrossthetop,sincetheywillallappearwhenyouopenthesiteandwon’trunoffthebottomofthepage.Ifyouonlyhaveafewcategories,thenthatmightnotbeanissue.Whatever you do, be sure it is designed asmuch for ease of use as forlooks.

ContactingYoufromaWebsiteTherewasatimewhenwebsitesweremainlymarketingandinformationpieces—peoplecametothesitetoviewwhatyoudoandoffer,thencalledtotalkwithyoudirectly.Thatisstillanimportantroleforawebsite.However,withtheeaseof use of today’s technology, keep in mind that people are often browsingwebsitesat11:00atnightfromthemobilephonewhileonthecommutertrain—theycan’tcallyouandspeaktoyouthen!Iftheyhaveanimpulsetocontactyouabout placing an order, it should be possible to do that directly from your

website.Forsimplecontact,besuretohaveanemailbutton.Ifyouhaveemployees

butdecidetohaveonlyoneemailaddress,besuretohaveamechanisminplacetocommunicatetootheremployeesemailthatisdirectedtowardtheirfunctionwithinthebusiness.

warning

Fewthingswillmakeavisitorclickawayfromawebsitethanfindingoutdatedinformation.Keepanythingthatistimesensitivecurrentandregularlychangeanythingthatmakesyoursiteappeardated,suchasareferencetoaneventlongpast.

UpdatingAgoodtooltomakeitcleartoviewersthatthisisanactivewebsiteistohavesomething on the site that requires a date—an archive of press releases, acopyrightdatethatchangesatleastannually,oralinktoyourblogwithcurrententriesaresomewaysthatvisitorslandingonyoursiteseethatitiscurrent.

Nothing deters a viewer faster than going to a list of events that have allalreadyhappened—ifyouhavealonglistofevents,it’sfinetokeeptheoldonesontoshowviewerswhattheymissed.Besuretherearealwaysupcomingeventslisted,evenifit’slabeled“datetobedetermined.”Haveatleastsomethingthatwill showviewers that the site is being updated. If not, theywill suspect thateverythingonthesitemightbeold.

MarketingYourWebsiteOnceyouhavecreatedyourwebsite,don’tkeepitasecret!Whileyourwebsitemaybe incyberspace,besureyourwebaddress isoneveryprintedpieceyoucreate for your business—letterhead, business cards, print advertisements,newsletters (print and enewsletters), radio ads—everything that has to dowithyour business should announce your web address. Put the address in your

answeringmachinemessage.Make sure it is on the door of your storefront ifyouhaveonesoanyonewalkingbywhoeitherdoesn’thavetimetocomeinorwandersbyduringyouroffhoursknowstheycanfindyouontheinternet.

All of this is especially important if your web address is considerablydifferentfromyourbusinessname—whichisnotrecommended,butsometimescan’tbeavoided,asintheinstancethatanotherorbusinesshasalreadytakenawebdomainnamesimilar,oreventhesame,asyourname.

YourWebsiteURLYourwebsitehastohaveauniqueaddress,calledaURLor“domainname,”thatwillbeusedontheserveritresideson.Usingthenameofyourbusinessisyourbestchoice;ifanotherbusinessisalreadyusingthenameyou’vechosenforyourbusiness, pick the next closest name; sometimes just adding the town yourbusiness is in is sufficient—greatcupcakesboston.com will immediately tellsearchersthattheyhavefoundyouifsomeonealreadyhasgreatcupcakes.com.

GetPeopleClicking

There’snopointtohavingawebsiteifyoudon’tdowhatyoucantogetpeopletoclickonit.Herearesometipsforattractingcustomerstoyourwebsite:

Simply tell all your friends and family and ask them to tell alltheirfriendsandfamily.Dotheappropriatesearchengineregistration(somewebserviceswilldothisforyou).MakesureeveryprintedandonlinepieceyousendtoanyonehasyourwebsiteURLlistedprominently.Suggestvisitorsbookmarkyoursite.Tradewebadvertisingwithotherwebsites.Createcontestswithgiveawaysthatdrivepeopletoyoursite.Change your website content regularly to keep people comingbacktoseewhat’snew.

Joinonlinediscussiongroups.Ifyoudopublicspeaking,alwaysmentionyoursite.Provide an “expert” column to newspapers and make sure tomentionyourwebsite.Connect your website to social media links (see Chapter 12 onsocialmediaforotherideas).

Thesearejustafewofalonglistofideasforgettingpeopletocometoyourwebsiteinthefirstplace,keepcomingback,andtoencouragethemto tell everyone they know. Click around to websites in businessessimilar to yours or in any category that interests you, seewhat catchesyoureye,andgetothercreativeideastodrivepeopletoyoursite.

Domainnamesmustberegisteredforaminimumoftwoyears,afterwhichyou can renew them. The cost to register a name for two years is quitereasonable, typically under $100 per name. You will likely register with thesuffix.combutyoucanalsoregister.netandothers(andevenmoresuffixesarebeingcreated)evenifyoudon’tplantousethemsoasimilarbusinessesdoesn’tsnatchitup.Thereareseveralcompaniesthathandleregistration;GoDaddyandDomain.comaretwowell-knownones.

tip

Itcan’tbeemphasizedenoughhowusefulitistospendtimelookingatotherbusinesses’websites,particularlyinyourcategory,beforeyoudesignyourown—whetheryoudoityourselforhireadesigner.Keepachecklistofwhatyoulikeanddon’tlikeaboutthesewebsitesandincorporatethesefindingsinyourdesignplans.Choosecolors,typefaces,andotherstylisticelementsthatyoufeelworkonotherwebsites.

Keep’EmInterested

Onceyougetvisitorscheckingoutyoursite,therearesomewaystokeepthemthereaslongaspossible.Thelongertheyarethere,themorelikelytheyaretolook at everything you have to offer and find something they would like topurchase—ortelltheirfriendswhoarereadyforafoodpurchase.

Ethical(andLegal)Concerns

Abriefword on copyright, fair use, and intellectual property concernswhenitcomestoyourwebsite.

It is not okay to use other people’s writing, articles, blurbs, photos,and/ormusiconyourwebsitewithoutpermission. Justbecause it isontheirwebsiteandincyberspaceandyouarenotprintingorsellingtheirwork does not make it okay for you to use it for free. If there issomething you really want to use, that you think is perfect for yourwebsite andwhat you are trying to get across, by allmeans attempt togainpermissiontouseit.Butifyoucan’tfigureoutwhoownsitorcan’tmake contact with the owner/creator, find something else, createsomething yourself, or hire someone to create something that youwillownandcanusehoweveryouwouldlike.

Besuretheyknowimmediatelywhosewebsitetheyhavelandedon.Makeiteasy for them to contact you by having a “contact us” button that makes itsimpleforthemtosendyouamessage.

Keepyourwebsitefunandchanging.Docontests,puzzles,orwhateveryoucanforfuninteraction,butalwaysconnectittoyourbusiness.

save

Checkouthttp://sitebuilder.com,www.web.com,orwww.weebly.comforinexpensivewebdesignsolutions.Cheaporevenfree,thesecompaniesoffertemplatesforwebsitedesign,freedomainnames,andawebhostsite.Weebly,forinstance,offersabasictemplateforfree;more

complex,customizedsitescostafee.Thesesitesaregoodforstartuppurposesuntilyouhavesomeincomeandbusinesssuccesstohaveasitedesignedtoexactlymeetyourneeds.

ChoosingaWebHostYoumust select a service to host yourwebsite.Examplesofwell-knownwebhosts includeDreamHost,GoDaddy,andHostGator,but therearemany,manysmallerhostsavailable.

Beforechoosingawebhost,askthesequestions:

Howoftendoesthesitegodown?Howlongdoesittaketofixthesitewhenitgoesdown?Whatisitscustomersupportsystem?Howmanyincominglinesdoestheserverhave?Whatistheserver’sexperiencewithhigh-trafficsites?Howbigistheserver?

Thepriceofwebfamestartsaslowas$14.95permonth.Someofthehostswillalsoallowyoutoregisteryourdomainatthesametime.

N

CHAPTER9

Chef,Sous-Chef,andKitchenHelp:Employees

omatterhowsmallyourspecialtyfoodbusinessstartsout,youmayfinda timewhenyouneedtohirehelp.Perhaps it is just temporaryemployees to helpwith specific projects—maybe a corporation hasaskedyou toprovideyourproduct foracompanywideeventoryou

decidetohaveaboothatthelargeconventioninthenearbycitytosellwhoopiepies toattendees—andyousimplyneedsomeshort-term,part-timehelp togetsucha largeordermadeand ready. Ifyouplan to start biggerorhavea retailstorefront,youwilllikelywantmorepermanentemployeeswhethertheyareparttimeorfulltime.

Choosing employees—whether temporary or permanent—can be a dealmaker,orbreaker,foryourgrowingcompany.Youneedareliableteamaroundyou.

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Whenhiringemployees,considerthetypesofbenefitsyouwillbeabletooffer.Theseareanimportantincentivewhenchoosingemployees,asyouwilltendtofieldabetterapplicantpoolifyouofferbenefits,whetherthatmeanspaidvacation,sickdays,personaldays,flexibleworkschedules,tripstoprofessionalconferences,company-fundedprofessionaltraining,andhealthinsurance,forinstance.Onewaytodothatistojoinanassociation,likethelocalchamberofcommerce,thatmightprovidecertainbenefitsformemberemployeesatgrouprates.

certainbenefitsformemberemployeesatgrouprates.

WhotoHireSomeone, whether yourself, a permanent staff member, or a temporaryemployee,willbeneededtofilleachofthefollowingroles: Officemanager.Oversees and coordinates employees and may also handle administrative,clerical,andoffice-supplyduties.

Salesstaff.Sellsfromaretailsiteoronthephoneandpossiblynetworkstogainadditionalbusiness.Directorofmarketing.Takes chargeof advertisingandpromotion;oftenthepersoninchargeofmarketingalsohandlespublicrelationsandgettingtimelypublicitytothemedia.Bookkeeper. Tracks all business expenses, and may also prepare taxreturns;ifyouhireanaccountanttodosomeofthehigher-leveltasks,youmaybeabletodothebookkeepingyourself.Chef.Thisisthechieffoodie—probablyyousincefoodisprobablywhatattractedyoutothebusinesstobeginwith.Sous-chef. This is the chef’s assistant—the second-in-command that thechef entrusts with the implementation of the actual preparation. Forexample,perhapsthechefcreatestherecipeforthebatterofthewhoopiepiecakesandthefilling;thesous-chefmightberesponsibleforbakingthecakes, making the filling, and putting the two together. Final taste andpresentation are likely under chef’s approval. Sous-chefs aremost oftenemployedbylargerestaurantsandhotels,butifyourbusinesscanaffordit,youmayfindhavingasous-chef-typepositionveryhelpful,especiallyifyou,thebusinessowner,arethechef.

BeUpfront

Whenyoudecideit’s timetohireemployees,writeaclearanddetailedjobdescriptionthatoutlinesobjectives.Usebulletedpointstotargettheposition’s responsibilities, the working conditions, and the position’s

relationships to other jobs. Also clearly delineate the ideal candidate’sskill set. This is critical because when you interview prospectivecandidates these will act as a type of checklist. It is tempting to hireemployees who you immediately like, but do not necessarily have thestrongestskills.Trynottoletemotiontakeoverwhenhiringemployees.Ofcourse, it is important thatyouandyouremployees’working stylesmesh.Justremembertoensuretheyarealsoqualifiedcandidates.Kitchen help. This depends greatly on the size of your operation. If youhave a large specialty food business that operates out of its owncommercial kitchen and needs to fill significant orders on a daily basis,kitchen help from dishwasher to restocking personmay be necessary tokeepupwithproduction.Youdonotwanttopaythesalaryofasous-cheforcheftohavethatpersonwashthedishes.

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Writeyourownjobdescription.Thiswillhelpyouwritethejobdescriptionsforthoseyouneedtohiretodothethingsthataren’tinyourownjobdescription.

Notethattheabovelistisaboutroles,nottitles.Thereisconsiderablevarietyintitlesgiventoemployees,butwhetheryouuseinformaltitlesormoreformalones, the tasksare thesame.Alsodon’t feel likeyouabsolutelyneedtohireaseparate employee for each of these duties. It is more likely that you end upfulfillingallormostofthesedutiesyourself.

ReachingOuttoCandidatesOnceyouhavedeterminedthetypeofpositionsyouneedtofill,youwillneedtoadvertisetheseopenpositions.Don’tskimponthisstep.Castyournetaswidelyaspossibletogarnerthebestemployees.

AdvertisingConsiderplacinganadvertisementinyourlocalandregionalnewspapers.Ifthejob you are filling is a more senior-level position, then also consideradvertisements in larger newspapers as well as trade journals. These nationalads,though,willbemuchmoreexpensive,soplanonplacingnationaladsonlywhenthepositionwarrants.Nationalsearcheswilllikelyattractcandidateswhowillneedtorelocatesotheirsalaryexpectationsmayalsobehigherinordertowarrantamove.

Employmentadsaretypicallyplacedintheclassifiedsection.Callyourlocalpaper and ask for an advertising representativewhocanwalkyou through theoptions.Youmaychooseasimplethree-linead,orselectasplashier,largeradwithaborderhelpingtodrawreaders’attention.Bespecificaboutyourneeds:hours, responsibilities, pay range, benefits, and qualities the applicant mustpossess (e.g., previous food experience). Finally, make sure no words aremisspelled in this ad. Sounds simple, but, too often, classified adsmake theirwayintoprintfilledwithtypos.Thiswillmakeyoulooklessthanprofessional.Runaspellcheckandmakesureeverythingisintip-topspellingshape.Hereareadditional venues in which to advertise your job availability: Onlinenewspaperadvertising.Checkwith the advertising representative at your localpaper to see if the newspaper offers an online option.Most newspapers offerpackages, includingprintonly,onlineonly,orboth typesofadvertising. If thenewspaperoffersanonlineoption,planonplacinganonlineaswellasaprintversionofyouradvertisement.

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Althoughitmightbetemptingtotakeupyourmother’soffertohelpstaffyourgrowingbusiness,thesearrangementstoooftenendinmisunderstandings,withmom,perhaps,feelingunderappreciated.Ifyoudochoosetoworkwithfriendsorfamily,itisbestifyoutreatthisasaprofessionalarrangementandpaythemasyouwouldotheremployees.

Online job sites. Online employment advertising on sites such as

www.Craigslist.org and www.Monster.com is booming with more andmorefoodbusinessesturningtoittofindemployees.However,youreallyarepulling inanationalaudiencewhetheryouintendtoornot—makeitclearinyouradwherethejobislocatedtoweedoutfar-flungcandidateswhowill likely not bemoving 1,500miles to take the job you have toofferpaying$14perhour.Collegesanduniversities.Collegesanduniversitiesoftenhave theirownnewspapersaswellaswebsitesonwhichyoucanpostyourjobopenings.Thisisanexcellentsourceforfindingablecandidates,especiallyforlessseniorpositions.Word-of-mouth. Word-of-mouth is often invaluable in finding keyemployees. Let your vendors know that you are looking for employees.Callculinaryschoolsinthenearestcityandletupcominggraduatesknowthatyouhaveanopportunityforthemtostartgettingtheexperiencetheyneed.

SuccessionPlanning

Youhaveworkedsohardtobuildyourbusiness.It’sstillsmallbutitissuccessfulandprovidesyouwithagoodincome.Orperhapsitisn’tstillsmall but has grown into a business that not only provides youwith agoodincomebutprovidesotherswithemployment.

Youwon’t stay in thisbusiness forever.Hopefullyyouwill livea longlife and perhaps it will be the thoughts of retirement that make youdecidetocallitquits—alargenumberofsmallbusinessesarestartedlatein people’s lives so this is a very realistic scenario. Or you decide tomove on to something else. And of course, there is the possibility—however small—that you may have a fatal accident that removes yousuddenlyfromyourbusiness.

Inthelattercaseyoumaythink,WhatdoIcarewhathappenswithmybusiness if Iamsimplyno longeraround?Butwesuspectyoudocare.That’swhysuccessionplanningisimportantnomatterwhattheultimatereasonyouarenolongerholdingthereins.

WilliamVanderbloemen,inanarticleforbusiness.comtitled“FromOneLeadertoAnother:SuccessionPlanningTipsThatBuildBetterBusinessLeaders,”offersthefollowingcoupleofthingstothinkabout:1. Admitthat every leader is an interim leader. Some day your businesswill begonealtogetheroryouwillbegonefromit.

2. Writedownaplanthatstateswhatthingsyoudoinyourbusinessright now that only you can do—name people who can take onthesethingsandthentalkwiththemaboutit.

Vanderbloemenclaimsthateachyearhereviewshimselfbyaskingoneoverriding question: Was I able to make myself less essential to theoperationandgrowthofourcompanythisyear?Howeveryoudecidetogoaboutaddressingyournotbeingatthehelmofyourcompanyforever,atleastmakesomeplans.

InterviewingAsyoubeginhearingfromprospectiveapplicants,youwillwanttoreadthroughtheir resumes and create a point system, perhaps from 1 to 10, giving 1s tounqualifiedcandidatesand10s to topcandidates. Ifyouwroteanaccurate jobdescription, you shouldn’t have many 1s. Nor should you have many 10s—dreamcandidatesarerare.Asyousurveytheresumes,useyourratingsystemtodecidewhichapplicantstointerview.

InterviewingStrategiesPlanoninterviewingfiveto tenapplicantsformoreseniorpositions,fewerforless senior openings. When an applicant arrives for an interview, have hercompleteanapplicationform.TheseareavailableatlocalbusinesssupplystoressuchasStaples.You’llwanttoaskallcandidatesthesameseriesofquestions,ensuringafairprocess.Forhelpinformulatingthesequestions,checkwww.job-interview.net. This site offers tips and advice about job interviewing andappropriatequestions.

Takenotesduringinterviewssoyoucanreviewyournoteslaterandwinnowthesecandidates to twofinalists.Ask these twofora second interview.Again,ensure fairness by asking both candidates the same series of questions. Takenotes so you can access responses of both candidates after the interviews andmakeafinalselection.

After the second interview, you will need to write an offer letter to thewinning candidate, laying out your proposal, completewith pay structure andbenefits.Onceyouand theapplicanthave signed the letter,you should let theother finalist know that the position is filled.Wait until thewinning applicanthas formally accepted before letting the losing candidate know the bad news.Toomany times, the winning candidate has to decline the offer. Perhaps shereceivedanotherofferanddecidestotakethat.Youwillwanttobeabletoturntoyoursecondcandidate.

Beas respectfulofyourcandidatesasyouwouldexpect them tobeof theprocess.Alwayskeepallcandidatesapprisedofyourtimeframeforhiringandletthemknowwhentoexpectnews.Alwaysfollowthrough,includingmakingthetoughcalls,lettingcandidatesknowwhentheyaren’tselected.It’sjustpartofdoingbusiness.

PayThere aremanyvariables to considerwhenpayingyour staff. For instance, inmoreurbanareasof thecountry,pay tends tobehigher.Compensation isalsobasedontheemployee’sexperiencelevelandamountofresponsibility.Medianwageforacheforheadcook,accordingtotheU.S.BureauofLaborStatisticsasof May 2014, is $45,390. An inexperienced worker with only moderateresponsibilitymakesanywherefrom$22,460to$27,720.Ifyouhiretemporaryhelp,hourlywagesrunaround$10perhour.

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Ifalocalcollegeoffersculinarycourses,part-timeemployeesandinternsshouldbeeasytofind.Contacttheheadofthedepartmentandaskabouttheirinternshipprogramorwhetheryoucanhelptocreateone.

TrainingBeagoodboss and take the time to adequately trainyournewhires andgive

themthebenefitofthedoubtforgettingquicklyuptospeed.Whentheyarrivefortheirfirstdayofwork,findawaytoletemployeesknowthatyouhavebeenthinkingabout themandhowtomakethisagoodexperienceforboththenewemployee and the business. Show them how you like things done, where thethingsarethattheyneedtoperformthejobtheywerehiredtodo,andthebasicsofyouroperation.You’dbeamazedathowmanyemployersshowtheemployeetotheirstation(desk,dishwasher,counter,whateverthecasemaybe)andleavethem to find the bathrooms or the break room on their own. There is simplynothingmorefrustratingforanewemployeethanbeinglefttoflounder.Planonprovidingeachemployeewithadetailed jobdescription,delineatinghisorherresponsibilities.Clarityandopen linesofcommunicationarekey factorswhendealingwithemployees.

LettingEmployeesGoUnfortunately,ifyourbusinessisopenforanylengthoftimeyouwilllikelyfindthatatsomepointyouwillhavetoletanemployeegoforsomereason.

SeasonalWorkersThis isperhaps the simplestofall employeedismissal.Youhired themwithaspecific timeframe and you let them go when that time frame ends. If yourbusiness, for example, is particularly busy for the Christmas season youmayadvertise tohire seasonalemployeeswhostart inearlyNovember togetup tospeed on your products and your business by the famous “Black Friday”shoppingday.Whenyouhire thesepart-time,seasonalemployeesyoumake itclearthataftertheholiday—orthefirstoftheyearifalotofgiftcertificatesmaygetcashedin—theiremploymentends.Cutanddry,youbothknowthatthisisashort-termgig.

LayoffsIf your business is facing financial difficulties, letting go of employees is animportantstep.Whileyoudon’twanttoharmyourbusinessbynotbeingabletomakeorsellyourproductbecausethereisnoonetodoit,youalsodon’twanttoharmyourbusinessbyretainingoneofthelargestbusinessexpensesthereis—employees.

Layoffsaredifficultbutthereareafewthingstokeepinmind: Employeesaretypicallyquiteawaretherearefinancialissueswiththebusiness.

Layoffstypicallyallowforanemployeetocollectunemployment.Layoffsmeanthatyoucanprovideagoodreferenceforanemployee,thatyouarenotlettingthemgoforlackofperformance.Layoffs can be temporary—but don’t mislead employees into thinkingthey will definitely get their jobs back. And vice versa, don’t expectemployees to bewaiting in thewings for you to rehire them; they havetheirownneedsandwillfindanotherjobifpossible.Sometimesalayoffcanendifabigcontractcomesthrough,butcontractsfallthroughallthetime,sodon’tmakeanypromisesevenifacontractisbeingnegotiated.

TerminationforReasonTerminating an employee for poor performance, for not doingwhat he or shewas hired for, for something egregious such as suspected (or proven)embezzlement,stealingproperty,etc.,iswhereyourretentionofalawyercomesinhandy.Donotdothesekindsof terminationswithoutfirstconsultingwithalawyerabouthowtohandlethesituation.

Thenprepareyourselftodooneoftheunpleasanttasksofbeingabusinessowner.Nolo.com recommends the following: Hold the terminationmeetingsomewhere private where the employee is comfortable unless you fear theemployeemaybecomeviolent.

Prepare for the meeting by having a final paycheck, severance pay ifapplicable,andterminationletter.Includedateofterminationandalistofthings you have done to help the employee meet performanceexpectations.Start the meeting by informing the employee you are terminatingemployment. Don’t add insult to injury by beating around the bush,exchangingpleasantries,etc.Explainyourdecisionbriefly.Don’tgo intoextensivedetail,whichriskssounding apologetic or like you might be convinced to change yourdecision.Anticipatequestions aheadof time andhave answers—what should I doaboutmyappointmentslaterthisweek?DoIleaveimmediately?Allthese

thingsshouldhaveanswers.Unlesstheterminationisforpotentiallycriminalactivitysuchassuspectedembezzlement, end the meeting as positively as possible given thesituation. Be sure the employee knowswho to contact if he or she hasfurtherquestions.

Talkwithyourlawyerinadvanceaboutthekeythingsthatyoushouldavoidsayingortalkingabouttohelpavoidapotential lawsuit.Youneverknowhowan employee is going to react, but you don’twant to say something thatmaycomebacktoyouincourt.

Unless you stay small and a one-person shop forever, unfortunately,terminatingemployeesisacostofdoingbusiness,soyoucan’thideyourheadinthesandaboutthistopic.Bepreparedtobeprofessionalatalltimes,eveninthistypeofsituation.

VendorsBesides employees, at the heart of a successful business is a team of reliablevendors.Itcan’tbeoverstated:Yourbusinesscanbebadlymarredbyevenonebadvendor,ifyoucan’tfillanorderbecauseyoursupplierdoesn’tcomethroughfor you. You must do your due diligence when it comes to finding top-ratevendors.

aha!

Wheneveryouintroduceanewproductormakeachangetoanexistingproduct—making,forexample,fall“pumpkinflavored”whoopiepies—letyourstaffbethefirsttastetesters!Whenyouhavetherecipedown,havealittlecelebrationwiththefinishedproduct.Leteveryonejoininbeingproudoftheproduct.

Mostofyourvendorswillbefood-related.Thismeanspickingsupplierswhohavereliableproducts,especiallywhenitcomestoperishables.

Don’tjustletyourfingersdothewalking(orsliding,inthecaseofsearchingonyourtabletinsteadofintheYellowPages...)whenitcomestofindingthebest vendors. Research the vendors on your A-list, recording the followinginformation: Vendorname,address,contactinformation AreaofservicePrices Leadtimesrequired Paymentpolicy Refundpolicy Discountsoffered Specialty items/servicesMostvendorswillbewilling toshareclientnameswith you so you can call andget testimonials that their product is top-notchandtheirdeliveryisreliable.

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Ifcateringeventsispartofyourspecialtyfoodbusiness,considerjoiningtheNationalAssociationforCateringandEvents.

ProfessionalHelpYouwill,attimes,needtohireprofessionals,somejustforconsultations,othersonaregularbasis.Althoughtheseservicessometimesarrivewitharathersteepprice tag, it is absolutely money well spent. These professionals will help toensurethesuccessofyourspecialtyfoodbusiness.

Professionalconsultantswithwhomanysmallbusinessmayworkinclude:Accountant. A good accountant will be your single most important outsideadvisor and will have the greatest impact on the success or failure of yourbusiness. You will have to decide if your volume warrants a full-timebookkeeper,anoutsideaccountingservice,ormerelyayear-endaccountingandtax-preparation service. Even the smallest unincorporated businesses employoutside public accountants to prepare their financial statements. Accountantstypicallycharge$75to$150perhour.Besureyoukeepyourday-to-daybooksingoodorder,whichwillcutdownon theamountof timeyouneed topayanaccountant.

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Ifyouplanondoingmostofyourbookkeepingandarelookingprimarilyfortaxhelp,considerhiringanenrolledagentratherthananaccountant.TheycanbefoundintheYellowPagesorthroughtheNationalAssociationofEnrolledAgents(www.naea.org).

Attorney. Finding the right lawyer early is critical. Although you hopenever toneedanattorney inanemergencyor innegativecircumstances,therearemanyotherreasonstohavealawyeronyourlistofprofessionalsbeforeyouhavelegaldifficulties.Liningoneupthatyoucantrustandarecomfortablewithcanbeveryhelpfulwhenthingscropup.Youmayneedyour lawyer to help ensure that your business is in compliance withlicensingand insurance regulations.A lawyer canalso checkdocumentsbeforeyousignthemandhelpyoudraftdocumentslikevendorandclientagreements—youmayhaveboilerplateagreementsbuthopefullyyouwillgetlarger,complicatedcontractsthatwillgosmootherwithanattorneytobrowse them. And, of course, an attorney will help resolve any legalproblems that may arise. Attorney’s fees range from $100 to $500 perhour.

ChoosingaLawyer

Considerthesefactorswhenchoosinganattorney:

Will the attorney meet with you in person for an initialconsultation—ratherthanaphoneconsultation?What is the attorney’s background and experience? Specialty?Lengthoftimeinpractice?Does the attorney have other retailers or food businesses asclients?Willthelawyerorparalegalsperformthebulkofthework?Isthereachargefortheinitialconsultation?

Whatisthechargeforroutinelegalwork?Willtheattorneyworkonacontingencybasis?Istheattorney’swebsiteprofessionalandappealingtoyou?Always check with your state bar association as well(www.abanet.org).

Business consultant. You may consider hiring a professional to analyzeyourbusinessplanandcheckyourideasforfeasibility.Agoodconsultantcankeepyoufrommakingcostlymistakes.Andit’salwaysgoodtohaveadifferentbutknowledgeableperspective.Banker.Therightbankercanbeatremendousassettoanysmallbusinessstartup.Ifyouhaveafinancialcrunch—sayagapbetweenhavingtopayforsuppliestodoalargecontractandgettingadeposit—abankerwhohasagoodrelationshipwithyoumay“float”youtherequiredfunds.Insurancebroker.Anotherprofessionalyouwillrelyonisyourinsurancebroker. Get one who will work with you. If you buy several types ofinsurance from the same company, you should receive amore attractivedealonthepackage.

Remember,investigatewellandgivecarefulthoughttohiringthosewhowillwork with you. The time you invest in choosing your employees and otherprofessionals will pay off in the end as you create a solid, smoothly runningteamforyourbusiness.

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CHAPTER10

Don’tCooktheBooks:Accounting

ven if you are famous for saying “I’mnot goodwith finances,” as asmall-business owner, you need to at least know the basic dos anddon’tsformanagingyourbusiness’sfinances.Inthischapteryouwillfind suggestions for maintaining good cash flow, how to arrive at

accurate pricing for your products and services, and how to figure the break-evenpointforyourspecialtyfoodsbusinessaswellasafewsimpletaxtips.

FinancialStatementsHow youmanage your financial assets may determine whether your businesssucceedsorfails.Yourcapitalisnotmerelyacollectionofmoneyandproperty,butapowerfulbusinesstooldeservingyourcarefulattention.Becausegoingintobusinessforyourselfissuchariskyproposition,it’shelpfulifyourcapitalyieldsahigherrateofreturnthananordinaryinvestmentwould.Makingcapitalworkforyourequirescarefulmanagementofyourbusiness,especiallyofyourcurrentandfutureassets.

Financialmanagementisanareamanysmall-businessownersneglect.Theyget socaughtup in theday-to-day runningof theirbusinesses that they fail totakeagoodlookatwheretheirmoneygoes.

It all starts with keeping good records in order to generate the financialstatementsthattellyouexactlywhereyoustandandwhatyouneedtodonext.The key financial statements you need to understand and use regularly are:Profitandlossstatement (alsocalledtheP&Lor the incomestatement).Thisstatement illustrates how much your company is making or losing over adesignated period—monthly, quarterly, or annually—by subtracting expensesfromyourrevenuetoarriveatanetresult,whichiseitheraprofitoraloss.

Balancesheet.Abalancesheet isa tableshowingyourassets, liabilities,and capital at a specific point. A balance sheet is typically generatedmonthly,quarterly,orannuallywhenthebooksareclosed.

KeepAbreastofTrends

All business owners need to keep on top of trends in their field, andspecialty food isnodifferent.Fromgoinggreen (organic food sources,packaging, etc.) to trends toward unusual and interesting ethnic foods,youcandosomeofyourresearchstandinginfrontofthelocalmagazinerack.

Checkoutwhichmagazinesectionsarelargestandwhichmagazinesarethickest—the thicker themagazine, themore advertisers, whichmeansthe higher the circulation of themagazine,whichmeansmore readers,whichmeansmorepeopleinterestedinthat topic.Browseheadlinesforwhatthosemagazinesarewritingabout.Cash-flow statement. This summarizes the operating, investing, andfinancing activities of your business as they relate to the inflow andoutflow of cash. As with the profit and loss statement, a cash-flowstatement is prepared to reflect a specific accounting period, such asmonthly,quarterly,orannually.

You will need to review these reports regularly, at least monthly, so youalwaysknowwhereyoustandfinanciallyandcanquicklymovetocorrectminordifficultiesbeforetheybecomemajorfinancialproblems.

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Checkoutlocalcommunitycolleges,recreationdepartments,andothersourcesofnoncreditclasseswhereyoucanoftenfindafinancialclass

sourcesofnoncreditclasseswhereyoucanoftenfindafinancialclassspecificallyaimedatthosethinkingaboutstartingasmallbusiness.Thisisagreatwaytolearnaboutfinancialreportsandhaveaninstructortowhomyoucandirectspecificquestions.Andyougettomeetotherpeopleinyoursameshoeswhomaybecomepartofyourtrustedcircleofsmall-businessfriends.

PayingVendorsAlthoughitmightseemeasytoorganizecashflowasastartupsincetheremightbeverylittleinitially,youmayactuallygetsocaughtupintheotheraspectsofyourdailyroutinethatyouforgettosendaninvoiceorremindacustomerthatapayment is overdue. You might want to consider online invoicing tools likeFreshBooks,orQuickBooks,whichallowyoutosetupautomaticremindersandacknowledgments. Even after your startup is built out and you are generatingrevenues,thesetoolswillscaleupwithyouandcontinuetokeepyourbusinessorganized.Manyoffermorefeatures thatyoucanaddlaterontohandle largervolumesandprojectssoyouneverlosethatefficiencythathelpedyoufromthestart.

Keepingenoughmoney flowing intoabusiness is auniversal concern,butthe problem can be thornier in some types of specialty food businesses. Forinstance,ifyouarecreatinglargeordersforwhichyouneedtopurchasesuppliesandpayemployeeswellinadvanceofevergettingpaid,youwillwanttomakesuretorequireadepositthatallowsyoutopurchasewhatyouneedandtosetupaccountswithvendorswithtermsthatallowyoutopayafteryouhavereceivedpayment from your customer. A couple of other tips to alleviate cash-flowconcerns include: 1. Start with plenty of cash reserves. Make sure that theamountyouestimatedinforyourstartuptimeperiodisrealistic.

2. Chargeenoughforyourproductsandservices.Makeacarefulassessmentofwhat you need to charge to turn a healthy profit.Otherwise, youwillendupfinanciallyfrustrated.Inretail,youcanalwaysloweryourpricesifyoufindaparticularproductisn’tselling.Rememberthatcontrollingcostsiseasier thantryingtopredictwhatyourrevenuewillbe.Onceyoulookfor additionalways to savemoney, you’ll find them.That said, don’t be“pennywiseandpoundfoolish”andenduphavingyourexpensecuttingcostyoumoreindirectly.

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Wheneverpossible,savemoneybybarteringserviceswithotherbusinessowners.Perhapsyoucouldprovidefooditemsforameetinginexchangeforbrochureprintingservicesorthecreationofsignage.

PricingYourProductsThegoalinpricingaproductistosufficientlycoveroverheadexpenses(lights,heat, etc.) and cost of production (employee costs as well as materials) andgenerateanacceptableprofit.TheVermontSpecialtyFoodsManual(publishedonwww.vtspecialtyfoodbusiness.com)saysyouneedtotakeallofthefollowingintoaccountwhenpricingyour specialty foodproducts: Directcosts.Theseare the cost of things tied directly to the production of your product such asingredients,packaging,andwagesforproductionworkers.

Guaranteedsales.Thisactually refers toproduct thatyouwholesale thatdoes not sell but is returned by the retailer (i.e., the retailer’s sales areguaranteedortheyreturnunsoldproduct).Overhead costs.Anythingyouneed to spend tobe inbusiness that isn’tdirectlytiedtothecostofproducingyourproduct.Profitneeds.Whatkindofprofit(youcanworkwithpercentagesbutthedollar amount of your profit tells youhowmuch actualmoneyyouwillhavetopayfortheseotherthings)doesittaketokeepyouinbusiness?Distribution.Even ifyoudistributeyourself, it takes time,gas,wearandtearonavehicle,andperhapsleaseorpurchaseofavehicle.Ifyouuseadistributor,youneedtopricetheirmarginintoyourproductmarkup.Populationserved.Theincomelevelofthepopulationintheareainwhichyousetupbusiness(forlocalretail)willingreatpartdeterminehowmuchyou can charge for your products. If youwant to chargemore than thelocaleconomywillbear,youneedtoeithersetupshopsomewhereelseorfocusonmailorderwhereyoucanreach thedemographic towhomyouwish to sell nomatterwhere you are physically.You could still have aretailshopconnectedtoyourmailorderbusiness;youcouldchargelower

prices in your shop to meet the market and call it your “factory outletstore.”Experienceandreputation.Youdoneedtogainsomereputationinorderto charge top prices or you need testimonials from trusted, well-knownpeopleinordertocomeoutoftheboxchargingthehighesttierofprices.Price of similar specialty food products currently on store shelves. Youcan under or overprice your product compared to other similar productsbut you had better back up your reasoning. If you price higher, yourproductbetterbethatmuchbetter!Ifyoupricelower,yourproductlikelywill still need tobeconsideredcomparable to thehigher-pricedproduct.Find cheaper ways to package, print labels, distribute—cut corners inanythingbutthefooditself!

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Eventhesmallestexpensesaddup.Supplyingdoughnutsandcoffeeatmorningmeetingswithyourstaffisgreatformoraleandhelpstokeepyourteamhappy,butbesuretoincludea“doughnutallowance”whenyoucalculateexpenses!

GiftCertificatesOnewaytohelpwithcashflowistosellgiftcertificates.Peoplelovetobuygiftcertificatesforgiftsifyousellseveraldifferentproducts—giftcertificatesallowthegiftrecipienttopurchasewhattheylikefromyourofferings.Orifyousellperishable foods, thegift recipientcanpurchasewhen theywant the itemsandnothavetoeatthemwhengiven.

Youcanalsooffergiftcertificatesatdiscountedprices($100giftcertificatefor $75, e.g.,) orwith a bonus (buy a $100 gift certificate and get a free $25certificate)especiallyduringtheoffseason.

Giftcertificatesareabit likemoney in thebankbecauseoftenpeoplewaitmonthsbeforecashingthemin.

MarkupIndustrymarkupsvarywidely, rangingfrom100percentandup.Markupratesdependmostly on overhead costs, but the health of the economy also affectsthem. In troubledeconomic times,markups (and thereforeprofitmargins)willbelower.AccordingtoJoseMariaPertusa(www.quora.com/What-are-common-gross-margins-or-just-retail-markup-for-a-high-end-food-store), “Brick-and-mortar gourmet food retailers operate at a 30 to 70 percent gross margin.”Higher-value items,he says,have lowermarginswhile lower-value items tendtowardthehighermargins.

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Anadditionalwaytobeefupyourcashflowoncontract/cateringtypeworkistoconsiderrequiringclientstopayyourbillinthreeinstallmentsratherthantwo.Thefirstisthedeposit,thesecondisaprogresspayment,andthethirdisdueatthetimeofdelivery.Notethatifyoudothis,youwillstillprobablywanttohaveclientspayaninitialdepositofcloseto50percent.

MaintainingCashFlowAlong with opening your business with adequate cash reserves, requiringdeposits, and charging appropriately for your services, there are several otherwaysofensuringgoodcashflowforyourbusiness: Payyourcompany’sbillsontime,butdonotpayearly.Keepyourmoneyinthebankaslongaspossible.Thesingleexceptiontothisruleappliesifyouhavenegotiatedvendordiscountsforearlypayment.Organizefilesbybillsduein10days,20days,30days,etc.Chooseaday,sayMonday,andpaythebillsduein10days.Thenmovethebillsduein20daystothebillsduein10daysfolder,thebillsduein30daystotheduein20daysfolder,etc.Ifyoupayonline,youcouldevenchange“10days”to“due in twodays”butdon’tcut it tooclose just incaseyougetdistractedanddon’tgettoyourbillsthatday.Don’tpayearlybutalsoavoidanylatefees.

Make sure your invoices are clear, accurate, and timely.When you docontract work, send invoices promptly. The difficulty of collecting anaccount increases in direct proportion to its age. Better yet, have theremainderofthebill(minusdeposit)duewhenyoudeliverthegoods.Youhandainvoice,yougetacheckandmarktheinvoicepaid.Alwaysitemizeinvoicessoclientsknowexactlywhattheyarepayingfor.Keepinventoryandsuppliestoaminimum.Carryingexcessinventorycanseriouslyimpactcashflow.Therearefewthingsinthisdayandagethatcan’tbehadonalmostajust-in-timebasis.

Break-EvenPointWehavecautionedyoutomakesureyouhaveasubstantialamountofoperatingcapital, enough to last until you reach the break-even point. First you need tofigureoutyourmonthlycosts thatyouwill incurnomatterwhathappenswiththe restof thebusiness.That is,youneed toheatyour retail shopandpay thepersonwhorunsyourcashregisternomatterwhetheryouproduceasinglepieceoffudgeorsellasinglejarofsalsa.Sofirst,youneedto:LossLeader

Almost every business has one or two items that are huge sellers butwhoseprofitmarginisveryloworevennonexistent.Youdon’twantanyofyourproductstolosemoney.Butifyoumakegiantwhoopiepieswithhigh-quality ingredients that are time consuming to carefully produce,youmay find that this iswhat brings customers to your door butwhatyou really makemoney on is that 90 percent of your customers can’tresist buying six other higher-profit items when they come in for thatwhoopie pie fix. So your loss leadermaybe a great revenuegeneratoreven though it doesn’t make much of a profit itself, but its biggestcontributionisluringincustomerswhobuyotherthingswhiletheyareinthestore.Determine your monthly fixed costs. Fixed costs are those that do notchange,nomatterhowmuchproductyouproduce(e.g.,rent,utilities).Determine your variable costs.Variable costs are the costsofproducingyourvariousproducts,withvaryingquantities.Estimate sales. Estimating sales is difficult before you have ever evenopened your doors but it can be done.Youwillwant to determine how

manypeoplemightcome throughyourdoors inagiven timeperiodandtheaverageamounteachofthosecustomersmightspend.

Determiningtherightmargintomakeanappropriateprofitonallsaleswillbethekeytohowmuchyouneedtobringininordertobreakeven.

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Althoughyoushouldstriveforanaccurateestimate,youmayfindthatyourfinaltotaldiffersfromtheinitialestimate.Forthisreason,youshouldmakeitcleartoyourclientsthatyourestimateisjustthat—anestimate.Makesurethatthisfactisstatedclearlyinyourcontract.Ensuringthatyoudonotexceedyourestimatebyanunreasonableamountisanimportantpartofyourresponsibilitytoyourclient.

TaxesManagingyour finances includes keeping a careful eye onyour tax liabilities.Theseinclude: Salestaxes.Salestaxesareleviedbymanycitiesandstatesatvarying rates. Most provide specific exemptions for certain classes ofmerchandise or particular groups of customers. Service businesses are oftenexempt altogether. Contact your state and/or local revenue offices forinformationon the lawinyourareasoyoucanadaptyourbookkeeping to theappropriaterequirements.

Personalincometaxes.Ifyouareasoleproprietororpartner,youwillnotreceive a salary like an employee. Therefore, no income tax will bewithheldfromthemoneyyoutakeoutofyourbusinessforpersonaluse.Instead, you must estimate your personal tax liability and pay it inquarterlyinstallments.Corporate income taxes. If your business is organized as a corporation,youmustpaytaxesonallprofits.

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Youmustkeeprecordstodetermineyourtaxliabilities.Regardlessofthetypeofbookkeepingsystemyouuse,yourrecordsmustbepermanent,accurate,andcomplete,andtheymustclearlyestablishincome,deductions,credits,employeeinformation,andanythingelsespecifiedbyfederal,state,andlocalregulations.Youmustkeepcompleteandseparaterecordsforeachbusiness.Inadditiontopayingyourowntaxes,asabusinessownerandemployeryou

willberesponsibleforcollectingemployeestateandfederaltaxesandremittingthem to the proper agencies. If you are a sole proprietor and plan to hire anemployee, call the IRS at (800) TAX-FORM or access the information atwww.irs.gov.AskforacopyofFormSS–4.Alsocallyourstatetaxagency.

Donotmess aroundwith taxes. If youdon’twant to get familiarwith thelaws(andmaybeevenifyoudo),hireanaccountantwhowilltakecareofyourtaxissuesandletyouknowwhatyouneedtodowhen.

Youmayhire some individuals as independent contractors if, for instance,you cater the occasional event. According to the IRS definition, independentcontractors are individuals who perform services for more than one firm,determinehow thework is tobedone, use their own tools, hire andpay theirownemployees,andworkforafeeratherthanasalary.Ifyouhireindependentcontractors, you have to file an annual information return (Form 1099–Miscellaneous)toreportpaymentstotaling$600ormoremadetoanyindividualinthecourseoftradeorbusinessduringthecalendaryear.Ifyoudonotfilethisform, you will be subject to penalties. Be sure your records list the name,address,andSocialSecuritynumberofeveryindependentcontractoryouhired,alongwithpertinentdatesandtheamountspaidtoeachperson.Everypaymentshouldbesupportedbyaninvoicefromthecontractor.BewarnedalsothatiftheIRSfeelsaworkerwhomyoutreatedasacontractorshouldhavebeentreatedasanemployee,youwillbeliableforpayrolltaxesthatshouldhavebeenwithheldandpaid,pluspenaltiesandinterest.

TaxPlanning

Goodtaxplanningnotonlyminimizesyourtaxes,italsoprovidesmoremoney for your business. As an entrepreneur, you should view taxsavings as a potential source of working capital. There are a fewimportant rules to follow in your tax planning: Don’t incur anadditionalexpensesolelyforthesakeofgettinganextradeduction.Thisstrategyisnotcosteffective.

Immediately deferring taxes allows you to use your moneyinterest-free before paying it to the government. Interest ratesmayjustifydeferringtaxes, thoughdoingsomaycostyoumoretaxesinalateryear.If possible, claim income in themost advantageous year. If, asyoubeginyourbusiness,youareemployedbysomeoneelseandexpect to receive a year-end bonus or other additionalcompensation, you may want to defer receipt until theforthcomingyear,especiallyifyouwillbeinalowertaxbracketatthattime(e.g.,perhapsquittingyourjobtodevotefulltimetoyourbusiness).

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Allwithheldincometaxistreatedasifspreadequallyoverthecalendaryear,evenwhenadisproportionatelylargeamountiswithheldinDecember.Ifyouarerequiredtomakeestimatedtaxpayments,youshouldpayspecialattentiontoothertechniquesthatmaybebeneficial,especiallyifyourincomeisirregularorseasonal.Checkwithyouraccountant.

DeductingExpenses

Most small-business owners have some standard deductions they can claim tohelpoffsettaxes: Homeoffice.Youcandeductforallnormalofficeexpensesplusinterest,taxes,insurance,anddepreciationontheportionofyourhomethatyou use exclusively for business. To deduct, however, you must satisfy thefollowingfourusagecriteria:exclusiveuse (thespace isnotusedforanythingelse), regular use (occasional use doesn’t qualify), business use (you mustconduct business in that space), and administrative use (you must handleadministrative tasks at that location). Be aware that the IRS has traditionallyauditedahighpercentageoftaxpayerswithhomeoffices.

Computers.Ahomecomputerusedexclusively forbusinessmayqualifyforappropriatebusinessdeductionsorcredits.Automobiles.Depending onwhichmethod you use, youmay deduct formileage or for mileage plus depreciation, garage rent, insurance, andrepairs,amongotherexpenses.Travel.Youmust stayovernight onbusiness to claimdeductionson air,bus, or auto fares, hotel bills, and incidentals like dry cleaning andgratuities.Entertainment.Youcandeduct50percentofyourexpenses,butyoumustmaintain records of the following: amount of expenditure; date ofexpenditure; name, address and typeof entertainment; occupationof theperson entertained; reason for entertainment; and the nature of thebusiness discussion that took place (general goodwill is not accepted bythe IRS). Rules for deductions change frequently. You can also lookonlineatwww.irs.govfortaxupdates.Conferences and seminars. The cost of the actual seminar is deductible,but deductions are no longer permitted for many of the expenses (e.g.,food, lodging) incurred in connectionwith a conference, convention, orseminar.Duesandsubscriptions.Youmaydeduct theseas longas theypertaintoyourfieldofbusiness.

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Makesureyoudonotmakeamistakeaboutwhatistax-deductible.Penaltyratesarehigh.Checkwithyouraccountanttobesureyourdeductionsarelegitimate.AnIRSauditisnotonlyinconvenient,itcouldbecostly.With proper management of your company’s financial resources, you can

greatly increase the probability that your business will succeed. Hiring theservices of a competent bookkeeper to keep the day-to-day expenses well-recorded and an accountant to dealwith the annual tax submissions is a greatwaytokeeponthegoodsideoftheIRSandavoidnastysurprises.

F

CHAPTER11

When“ToMarket”MeansSomethingElse

ood business owners know a lot about the market—going to market,farmers’markets, that sort of thing.But if youwant your business tosucceed,youhavetoaddadifferentkindofmarkettoyourvocabulary.

WhyMarketing?Asyoudevelopyourbusiness, it is important tomarket inorder togrowyourclient base. Some successful business owners rely solely on word-of-mouthpromotion—nothing can compare to a referral from a previous client. Othersmaintain informative websites or offer their client base a weekly emailnewsletter. As your company grows, you will determine which model worksbest.Thepaceatwhichyouwould likeyourcompany togrowwilldeterminethis,inpart.

Inthischapterwe’llprovidesuggestionstoguideyouthroughtheprocessofdevelopingyourstrategyandhelpyouevaluatetheadvertisingmediacommonlyused in thespecialty foods industry.We’llalso lookatseveralotherwaysyoucanpromoteyourselfandyournewbusiness, includingtheall-importantsocialmedia,whichweexploreindetailinChapter12.

ASWOTAnalysis

Before you begin advertising andmarketing in earnest, develop a roadmapofyourmarketingplans.ThisplanshouldincludeaSWOTanalysis.SWOTstandsfor:

Strengths.Itisalwaysusefultofocusonthisquestion:Whatarethe unique and particular strengths of your business? How dothesestrengthssetyouapartfromthecompetition?Weaknesses. Be honest—even if it hurts! What areas of yourbusiness are weak? Sometimes to even seeweaknesses in yourbusiness you need to study similar businesses and compare.Developstrategiestocombattheseweaknesses.Opportunities.As the name implies, these are things thatmightbenefityourcompany,noworinthefuture.Forinstance,perhapsanewretailcenterisopeninginyourareathatisgoingtofocusonlocallyownedsmallbusinesses.Thisisanopportunityforyoutogrowyourbusiness.Threats.List anything thatmightharmyourbusiness.Perhapsabigchain retailer isgoing to startmaking the sameproductyoumake(notnearlyaswell,ofcourse,butstill)oranewspecialtyfood business is opening across town and also going to startofferingcookingclasses.

Byfocusingonthesefourareasandwritingaboutthem,youwillhelptofocusyourmarketingefforts.

NetworkingtoBusinessSuccessNetworkingwillbeatthetopofyourlistintermsofdevelopingastrongclientbase—at chamber of commerce events, RotaryClub, honorary dinners.Whileyoucan’tspendallofyour timetrottingaroundtoeveryfunctionwithina50-mileradiusofyourbusiness,networkingisessentialifyouwanttodevelopnewbusiness.

Networking can help your business inmanyways, but basically, if peoplehavemetyouandknowwhatservicesyouoffer,theymayreferbusinesstoyouoruseyourservicethemselves.

TheInsandOutsofAdvertisingPrint advertising covers a broad range, from an inexpensive advertisement inyour localweeklynewspaper to an ad in a glossynational publication costing

tens of thousands of dollars.LincolnOliveOil Shop ownerRobBaker talkedabout the unique “Deal of theweek” the Lincoln,Nebraska, daily paper doesthatheparticipatesin.Theysell$50giftcardstohisshopfor$25,thepapergetsthe money, and the shop gets dollar-for-dollar advertising credit plus newcustomersandcustomerscashingingiftcardsandspendingmorethanthecardisworth.Robfindsitarealwin-win.

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“Don’tstartcuttingcornersjusttotrytogetyourproductintogrocerystores,”advisesWinnipesaukeeChocolatesownersJonathanandSallyWalpole.

Eventodayintheonlineera,mostbusinessesagreethatanadintheYellowPages makes good business sense. A line advertisement, simply listing yourbusinessname,isoftenprovidedfreeofchargewhenyouconnectyourphone(ifyouhavea land line).Youcanalsoopt foradisplayadvertisement.Thesearethebigger,borderedadsintheYellowPages.Thereisachargeforthese.Ifyoudochoosealargeradspace,besuretoincludeyourlogo.

Regionalmagazines can be useful if you do corporate gifts or service forweddings.Thesemagazinescanbegearedtotopicsrelatedtoyourservice(e.g.,gourmetfood,floraldesign)oraimedatreadersinacertainregion.Anadinaregional magazine might be a good tool for reaching upscale consumers. Aregionalbusinessmagazineadwouldreachprospectivecorporateclients.

Advertising in national publications can be cost-prohibitive but it also canhavebig rewards ifyoucanget theattentionofcustomerswhomightorder inlargequantities.Butbesureyourbusiness ispreparedfor thekindofbusinessthatmightbegeneratedfromanadvertisingvehiclewithnationalreach.

TheSmallbutMightyBusinessCardDon’tunderestimatethepowerofthissmallbutmightymarketingtool.Eveninthecomputerage,asuccinct,professional,printedbusinesscardisstillcritical.

Consider it a diminutive brochure, especially if you opt for a trifold businesscard.Manybusinessesoptforthistypeofformatbecausemoreinformationcanbe included than on a traditional business card, while the card remains smallenoughtobetuckedinsideawalletorpurse.

Include thenameofyourbusiness, contact information (email, phone, fax,and website address, for instance), your name, specialization, your logo, andsometestimonialsfrompastclients.Alwayscheckwithclientsbeforeusingtheirtestimonials and ask for permission to use both their first and last names.Testimonials signedby JohnD.or JaneS. just don’t have the same impact asthosesignedwithafullname.

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Asyoudevelopstrategiesforadvertisingandmarketingyourcompany,rememberthatyourcompanylogomustappearoneverymarketingpiece—fromyourtrifoldbusinesscardtothehomepageofyourwebsite.Thishelpsprospectiveclientsrememberyouandyourcorporateimage.Ifyouhaven’thadalogodesignedyet,nowisthetime!

Alwayscarrybusinesscards.Youmightstandbehindsomeoneinthegrocerystore,strikeupaconversation,anddiscoverthatsheisstartingtoplananeventthatyourpersonalizedwhoopiepiesmightbe theperfectdessert for.This is akeyopportunitytopassalongyourbusinesscard.

Youcanbuyblankbusiness cards andprint your own if youhave a high-quality printer. But business supply stores print business cards relativelyinexpensively.Choosethebeststock(paper)youcanafford.Likewise,ifyouareable toprint inmore thanonecolor, thendoso.Formanyclients, thiswillbetheirfirstimpressionofyouandyourbusiness.Makesureithasaprofessionalimpact!

InformationBrochuresThefirstquestiontoaskis,doyouneedabrochure?Theyarenotverycostly,

butyoucertainlydon’twant to spendmoneyonsomethingyoudonothaveause for. It is very discouraging to go through the time andmoney it takes tocreate and print a brochure, and then find yourself throwing amajority of theprintrunawayacoupleyearsdowntheroadwhenyoufinallyconcludethatyoudidn’tneedabrochureafterall.

Thedecisionwillbedifferentforeachtypeofbusiness.Doyouhavearetaillocationinatouristareathatavisitor’scenterserviceswitharackofbrochurestoenticevisitorstoyourplaceofbusiness?Thatmightbeagreatreasontohaveabrochure—tohelpdrivecustomerstoyourbusinessinsteadofhopingtheyjuststumbleonit.

Doyouhave thekindof specialty foodbusiness that thewedding industrymightbe interested in?Would itmake sense to leavebrochureswithweddingplannersorrentalbusinessesorothersintheweddingindustry?

Like your business card, a well-designed, professional brochure can helpcement your business’s image. Prospective clientswillmake judgments aboutyour company based on your brochure, somake sure that it is conceived andproducedatthehighestlevelpossible.

aha!

Thinkabitoutoftheboxwhenitcomestomarketingandadvertising.RobBakerofLincolnOliveOilShopneverimaginedthathewouldabandonradio,minimizeTVads,andputallhismarketingeffortsintonewspaperadvertisinggiventhegeneralstateofthenewspaperindustry.

To achieve this, plan on hiring a freelance graphic designer to help youdevelop this marketing tool. Trifold brochures are popular and allow you toinclude important information about your business. Photos of your productsshould be of the highest quality both in composition and sharpness.Youmayalsowanttoincludeaphotoofyourself.Becausethismarketingpieceismakinga critical first impressiononprospective clients, considerhiring aprofessionalphotographer tohelpyouobtainfirst-ratephotos—heorshewillknowhowtostyle things, what colors make things stand out. Even if you pay the

photographersothatyouownthephotos,alwaysbesuretocreditanyonewhodoescreativeworkonthepieceitself.

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Ifyoudecidetotrydirectmail,don’ttrytousearentedmailinglistmorethanonce.Theselistsare“seeded”withcontrolnamessothelistsellerwillknowifyouusethelistmorethanonce.Also,makesureyouacquireyourmailinglistfromabusinessinarelatedindustry.Thisstrategywillhelptargetthosepotentialclientsmostlikelytouseyourservices.Analyzethedirectmailingsyoureceive.Whatworks,andwhatdoesn’t?

Maximizeyourchancesofsuccessbymakingsureyourcompanybrochurematches the typeofbusinessyouhave.Allmaterials should lookprofessional,butifyouaremarketingtoabudget-consciousgroup,atoo-glamorousbrochurecan send the wrong message—and send potential budget-conscious clientsrunningintheoppositedirection.

Aword about online DIY design-and-print services like Vistaprint.Whiletheseservicescanbeveryhelpfulandareoften inexpensive, talk toyour localprinteraboutgivingyouequallycompetitivepricingtogetyourbusiness.Unlessyouhavebackgroundinprintdesignandwanttospendyourtimeonprintdesignworkinsteadofmakingandsellinggourmetfoods,letdesignersandprintersdowhattheydobestandyoudowhatyouwentintobusinessfortobeginwith.

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Providethevendorwithabrochurerack(availableatStaplesandotherofficesupplystores)soyourbrochuresdon’tendupinamessystackonthefloorsomewhere—notprofessional!

DirectMailYoumaychoosetodistributeyourbrochureviadirectmail.Ifyoudoso,makesure that yourmailing list iswell chosen. Consider rentingmailing lists fromassociations towhichyoubelong if that’sapplicable toyourbusiness.Mailinglistrentalcanbeexpensivebutifyouchoosetherightlists,youwillgetagreatreturnonyour investment.And thosenewcustomerscanbecomepartofyourmailinglist.

Rental mailing lists are usually seeded with names of “spies” who willreceiveyourmailingand1)makesureitiswhatyousaidyouweregoingtomailorwithintheparametersofwhattheyallowtobemailedtotheirlistand2)thatyouareusingthelistthatonetimeonly.Apersonyoumailtowhocomesintoyourstoreorordersfromyouonlinebecomesyourcustomer.Butifoneofthe“spies”getsyournextmailingeventhoughtheydidnotpurchasefromyouandyoudidnotrenttheirlistagain,youwill likelybeinbreachofthemailinglistrentalcontract.

NewslettersNewsletters,ifwritteninalivelyandentertainingfashion,areusefulmarketingtools.Mailyournewslettertoprospective,current,andpreviousclients,focusingonwhat isnew inyourbusiness.Perhapsyouhaveexpandedyour servicesorare offering a specially priced package. Keep the articles pithy and useful.Bulletedpointsarehelpful toyourclientasarebreak-outboxes.Yourclients’timeisatapremium,sokeepthearticlesbrief.

Youmaylikelychoosetosendyournewsletterviaemail,aninexpensiveandeffectivealternativetotheslower“snailmail,”althoughmanyorganizationsarestillusingtheold-fashionedprintnewslettersoitmuststillbesuccessful.

We’lldiscussenewsletterslaterinthischapter.

PressReleasesSendingpressreleasesisafantasticandinexpensivemethodbywhichtoboostyourbusiness.Send releaseswhenyouhavebusinessnews to report—perhapsyouhave changed locations, released a new foodproduct, or have someotherevent that isnewsworthy.Newspaperandmagazineeditorsneed this so-called

news“hook,”sodon’tsendpressreleaseswithoutnewscontent.Editorswon’trunthese.

Apressreleaseshouldinclude:

Release date. Unless your release shouldn’t be printed right away (inwhich case it should have an “embargoed” release date clearly stated),write“ForImmediateRelease”atthetop.Contactname.Includeyourname,email,andphonenumber.Headline.Editorsmaychangeyourheadline,butgivethemanideaoftherelease content with a to-the-point, accurate, but somewhat tantalizingheadline.Dateline. This is the city from which the release originates. So if yourbusiness is in Des Moines, then you should write “DES MOINES” inuppercase type. It should be placed as the firstword of type before thepressreleasetextbegins.Text.Thisisyournews.Makeitinterestingtotheeditorsohewillrunit!

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Ifyouhaveahigh-quality,stunningphototoaccompanyyourpressrelease,allthebetter.Althoughthenewspapermayrewriteit,besuretoincludeacaption,nameanypeopleinthephoto(withtheirpermission),andgivecredittothephotographeror,ifit’syourown,markit“courtesyof”andyourbusinessname.

Mostmagazinesandnewspapersprefer thatpressreleasesbesubmittedviaemail so staff does not have to spend time typing in releases sent via regularmail.

Although the editor may not choose to run all your releases, it is stillworthwhiletoemailthemoffperiodically.Onereasonforthisisthattheeditormayturntoyouwhensheneedsanewssourceforastoryonspecialtyfood.Or,shemaychoosetouseoneofyourreleasesastheframeworkforafeaturestory,whichisalargernewspaperarticle.

ThePowerofCustomerServiceAny business owner—or customer, for that matter—knows the one essentialingredient inrunningasuccessfulbusiness:customerservice.Youcanbehardworkinganddedicated,constructaflawlessbusinessplan,andhaveabottomlesssourceoffinancing,butifyoudon’tkeepcustomerssatisfiedandcomingback,yourbusinesswillneversucceednomatterwhatbusinessyouare in.Gourmetfoodisnodifferent.

Oneofthebestwaystokeepcustomerscomingbackistobeconstantlyonthelookoutfornewideasandforwaysto improvetheproductandtheserviceyouprovide.Towardthatgoal,considerthefollowing:

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Don’timmediatelydismissacustomer’screativeideaaswackyornotdoable.Thoroughlyinvestigateallideas—notonlywillyourcustomerbeimpressedthatyoutookherseriously,butshewillalsobemoreunderstandingifyouhavetotellherit’snotafeasibleideaifyoucanbackyourdecisionupwithsomeconcreteevidencefromyourresearch.

Investinanhour(ormore)withanindustryconsultant.Accumulate a group of testers that you can try new products on beforedeciding to bring them to market. Include the whole soup-to-nutsexperience;thatis,ifyournewwhoopiepieswillhaveuniquepackaging,presentthemtoyourfocusgroupinthatpackaging.Constantly visit other gourmet food retailers or browse catalogs andwebsitestoseewhatothersaredoing.Aretheyprovidingfreeshipping?Isthe retailer in the next town using an iPad and the Square point-of-salesystem?Andhowarethosethingsimpactingcustomerservice?Attend as many arts-related functions as possible (e.g., arts exhibits,theatricalperformances)togatherideas.Jointradeorganizations(seelistoforganizationsinappendix).Subscribetoatleastoneprofessionalnewsletterorjournal.

RetainingCustomersthroughTop-NotchCustomerServiceYouaresuretogainloyalcustomersifyouarewillingtodothefollowing:

“Gotothewall”forclients.Youneedto“makeitright”atallcosts.Thiscould involve anything from handling last-minute emergencies to awillingness to “throw in” something extra for free, simply because thecustomer’sexperiencewithyourproductorservicewouldbeincompletewithoutit.Offer customers something they can’t get elsewhere. Specialty foodbusinesseshaveaninnate“original”aspectoftheworktheydo.Moreandmore,customerswant“different”and“unusual.”Makecustomers feel valued. Ifyougetahugeorder fromacustomerorareregularlyusedbyonecustomerforanongoingservice,considerdoingsomething special for them—a discount coupon on other things theypurchase from you, throwing in a box full of a new product you justbroughttomarket.Orgivethemagiftcertificatetosomeotheraspectofyour business such as cooking classes. Besides giving gifts, however,thereareotherwaystomakesurecustomersknowtheyareappreciated.Asimplenotewithapersonalmessagetoconveythanks,congratulations,orbirthdaywishescanmeanalot,ascanaphonecall.Thinklessintermsofservicesandmoreintermsofproblemsolving.Workwith customers on budget restrictions or special timing or how to getproductstotheminanothercityorwhatever.

GivingBacktoYourCommunityBesides providing excellent customer service, earning (and keeping) thegoodwill of clients and the community is important. Volunteering yourcompany’s help in planning charitable events or donating to your customers’favoritecharitieswillwinyoumanyfriendsinthecommunity.

TheWin-WinofCharityWork

The main impetus for your donations or volunteer work should bebecauseyoubelieveinthecauseyouaresupportingandwanttodonateinsomeway.However,volunteeringanddonatingforacharitablecausecanhavebusiness payoffs in the long run. If youdonate someof yourspecialty food items to a charitable event, make sure at the very leastthereisasignbesideyourfoodstationwithyournameonit.Betterstillis if you can leave business cards and/or brochures so that anyoneattendingtheeventwholikesyourfoodknowswheretheycanfindyou.

Whileyoumaythinkwhenyoufirststartupthatyoucan’taffordtogiveaway to charitable causes, if you limit your donations and chooseactivities that give your business exposure to themaximumnumber ofpeople who also support that cause, you will have spent a lot less onsome good marketing than other avenues would provide for the samedollaramount.

Supportingcharitableactivitiesthatgiveyourbusinessexposureisoftenreferredtoas“causemarketing”—havingyourbusinessnameassociatedwithacharitablecause.

BuildingYourImageYourimage—thewayyourcompanyanditsservicesareviewedbythepublic—is very important. Some, therefore, will direct much of their advertising andpromotion dollars toward building a good company image. You will have todecidehowmuchyou can afford to spend to establish, improve, andmaintainyourimage.Increasedrevenuesmaybeabletocompensateforthisexpenditure.

Most important by far, however, is what your product says about yourbusiness. The quality of the specialty food items you produce is the mostpowerfulshaperofyourcompany’simageandreputation.

Don’tforgetthatsmalldetailsalsoreflectonyouandyourcompany.

TraditionalMediawithaDigitalTwistSocial media and electronic delivery of traditional media is taking on newdimensions all the time. From LinkedIn to Facebook, enewsletters to eblasts,

tweets toblogs, InstagramtoSnapchatandeverything inbetween,nobusinesscan afford to ignore social media marketing and communications. However,beforeyoudive in, it isalso important to think throughall theoptions,decidewhichworkbestforyourbusinessandyourschedule,andtiethemalltogetherto back up each other’s message wherever possible. In other words, youshouldn’tjust“do”socialmediabecauseyouaresupposedtointoday’sworld—youshouldpickthethingsthatworkforyourbusinessandpostthingsthatholdmeaning.

Much of traditional media—newsletters, for example—are still usedprominently in thebusinessworld.However, theyarenow typicallygenerateddigitally and transmitted electronically rather than in print on paper by post.Sometimes, depending on your typical customer base and their computerexpertise,companiesoffertheirmaterialsbothwaysandletthecustomerdecidewhether to get their news, ads, brochures, or whatever—in print orelectronically.

EnewslettersAnenewsletter isperhaps themostbasicway tocommunicatewithclients—itincorporates a standard format that most people are comfortable with (thenewsletter)andintegratesitwiththedigitalformatthatispartofmostpeople’severyday life (email). Newsletters that are sent via email are a great way forbusinesses tokeep in touchwith theircustomers.Anemailnewsletter is likealittleremindertoyourcustomersthatyouarethereandwaitingtofulfilltheirortheirfriends’, families’,andassociates’needs.Doitonaregularbasis,keepitshort, and offer something like tips, coupons, recipes, or information on newproducts in each issue and your subscriberswill look forward to your e-newspoppingupintheiralreadyovercrowdedemailbox.

Netiquette

Email, like any customer interaction, requires good etiquette. The lastthingyouwanttodoisoffendacustomer.Herearesomeguidelines:

Neverusealluppercaseletters;it isconsideredtheequivalentofshouting.

Spell-check your emails. Just because email is quick, it doesn’thave to be sloppy. Not as much of a problem when you areemailingwithfriendsandfamily,butnotprofessionalwhenyouareengagingpotentialclients.Also,checkthatthe“autocorrect”functionhasn’t“corrected”youremailtobeinaccurate.Beenticingbutalsogiveanaccuratesenseofwhatyouremailisaboutinthesubjectline.Createasignatureforyouremailsothateveryemailyoucomposeautomatically includes your business name, address, phonenumber,andemailaddresssotherecipientcanquicklyseehowtocontactyou.Keepyourmessages short and to thepoint. Ifyouare including“articles” in your enewsletter, provide a capsule version of thearticle and a link toyourwebsitewhere a longerversionof thearticleisavailable.Forthoseinterested,youalsogetachancetogetthemtoyourwebsite.

Therearetwokeythingstokeepinmindaboutanenewsletter:

1. Creating a newsletter is time consuming. Just because enewsletters arecheaper to send (no printing, no mailing costs) doesn’t mean you don’tneedtospendtimepullingthenewslettercontenttogether.Thinkcarefullyaboutwhetheranewsletteratallisrightforyourbusinessandwhetherthetimeittakestopullittogetherwillbringyouareturnofequalvalue.

2. You need to solicit subscribers. Sending enewsletters out unsolicited isconsidered“spam”;spammingisnotonlyillegalbutitcreatesillwillwithyour potential customers. But once you create a useful, readable,information-packednewsletterthatmightevencontainacouponorspecialor even a giveaway, people will readily subscribe. Post it on yourFacebookpageandotherplacesthatmightgainwiderattentionandmoresubscribers.

tip

Keepanarchiveofyournewsreleasesonyourwebsite—it’seasytodoandisagreatwayforthecasualbrowsertocheckyouout.

PressReleasesvs.EventListingsPress releases, also called “news releases,” should be just that—news. If youhaveapieceofnews tosend to themedia,byallmeansdo it.Anewhire,anexpansionofyourbusinessintoanewmarketsegment,relocation,andaccoladesforyouoryourbusinessareallnewsitemsaboutyourbusiness.Newssourceslovetogetpressreleasesviaemail;attachmentsareusuallyfinebutyoushouldcheckwitheachpublicationyouplantosendtoandsubmitaccordingly.

Eventlistingsarenotnewsandshouldbedirectedtothecalendaroreventssection.Manyonlineeventcalendarscanbeupdatedwellinadvance.

E

CHAPTER12

SocialMedia

newslettersaregreatcommunicationsvehicles,buttheplacewhererealcreativity is takingplace is in theworldofwhat isactivelyknownas“socialmedia.”Socialmediaoutletspresentafantasticopportunityforallsmall-businessownerstomeetandengagewithtargetedaudiences

full of thousands of potential customers.The cost of entry into thismarketingchannelisoftenonlyyourtime—however,don’tunderestimatethecostofyourtime! If used correctly, participating in social media will help your businessgrowthroughpowerfulword-of-mouthcampaigns.Butbeware.Itcansuckalotoftimeoutofyourday.

Togetstarted,thereareafewthingsyoushouldsetuprightaway:

tip

“Twitterdrivescustomerserviceinthedigitalage.”—HarvardBusinessReviewonline“YourCompanyShouldBeHelping

CustomersonSocial”byMaherMasri,etal.,7/15/15

Facebook page. Like anything that has been around for a few years,people’suseofFacebook is changingandFacebook itselfkeepsmakingslight changes. Facebook keeps trying to engagemore business uses, sopay attention to those and determine if they work for you. Some foodbusinesses that make lunches, dinner-to-go, and bakery items post theirchangingmenueverydayonFacebook,allowingfollowerstoplantostop

byontheirwayhometopickupaready-mademeal.Twitter.Twitterhasamoreinstant,funfeeltoit.Whileyoudon’thavetobea stand-upcomedianandpostentertaining tweets, lightheartedand tothe point (inherent in its 140-character limitation) is the name of theTwittergame.Pinterest.DefinitelystartaPinterestaccountandpostgorgeouspicturesofyourbeautifulfooditems.Getfriendstostarttofollowyou,andsomeoftheir friendswill start to followyou. Post enough interesting things andPinterestusersyoudon’tknowatallwillstarttofollowyou.YouTube channel. This is probably most useful to food businesses thatoffercookingclassesorifyouwanttoshowhowyoumakeyourproductssounique.

Thesesocialmediaaccountswillbecomeusefultoolsforyoutointeractwithyouraudience.

Hereareeighttipsonusingsocialmediatoyouradvantage:

1. Beforeyoustartanysocialmediaoutreach,defineyourtargetaudiences.Howoldarethey?Dothepeopleinyouraudiencetendtobemorefemalethanmale?Whatgroups,organizations,or associationsare they likely tojoin?Are they foodies?Or justpeoplewho like to eathealthyoruniquefoods?Thinkaboutthekindofpeopleyoumarkettoandwanttouseyourbusiness—thenhangoutwiththemviasocialmediaoutlets.

2. Once your target audiences are defined, locate them online. SearchFacebook, YouTube, Twitter, and Pinterest for groups, organizations,channels,ordiscussionsthatwouldcontainthepeopleyouarelookingtomeet.

3. Use social media search and organizational tools to help you find youraudiences. Some sites like Facebook and YouTube have great, built-insearch functions that will help you find your audience. To find youraudienceonTwitter,tryusingexternalsiteslikewww.Twibes.com.

4. Onceyou’vefoundyouraudienceonthesesites,jointheirgroupsandlistssothatyoucanfollowtheongoingconversation.Donotjumprightinwithasalespitch!Listeninstead.Learntheetiquetteandmajorplayers.Spendsometimejustfollowingalong.

5. Afteryou’refamiliarwiththeetiquetteandpeopleinvolved,jumpintotheconversationwhenandwhereappropriate.Donothidewhoyouareorthe

company you represent.Become a regular voice in the conversation andofferyourfriendlyexpertisetoothers.Invitepeoplebacktoyourwebsiteandsocialmediaaccountstoseewhatitisyoudoandoffer.

funfact

“Peopleunder35spendalmostfourhoursperdayonsocialmedia...thevolumeoftweetstargetedatbrands...hasgrown2.5timesinthepasttwoyears.ThepercentageofpeoplewhohaveusedTwitterforcustomerserviceleaptnearly70percentbetween2013and2014.”—HarvardBusinessReviewonline“YourCompanyShouldBeHelping

CustomersonSocial”byMaherMasri,etal.,7/15/15

6. Onceyou’rearegularvoiceintheconversation,don’tbeshyaboutdoinga littlepromotion.Contests,giveaways,andrafflescanbegreat tools foraudienceinteractionandpromotionofyourproducts.Peoplewilllovethechancetoplayinyourcontestandwillinvitefriendstojoininthefun.

7. As your audience grows, stay creative. Invent newways to engage youraudience and encourage them to invite their friends. Continue to avoidhard sales pitches. People do not forward commercials to their friends.Theyforwardvalue.

8. Finally,donottrytodoeverythingeverywhere.Sometimesitseemstherewillsoonbeasmanysocialmediaplatformsastherearewebsites.Totrytomaintain a presence on all of them is unsustainable. Focus on the toptwoor three thathaveproven to contain the largestnumberofpeople inyourtargetaudience.

aha!

ManagementtoolslikeSocialOomphcanscheduleupdatesandgetengagementstatstohelpkeepupwithyoursocialmediaandestimateits

engagementstatstohelpkeepupwithyoursocialmediaandestimateitsimpact.

Remember, social media provides you with the opportunity to meet youraudience—not sell to your audience. People do not join these social medianetworkstofindmarketers.Theyjoinandparticipateforfriendlyinteractionandthevalue that it adds to their day.Provide that friendly interaction, andwatchyouraudiencegrow!

BlogsBlogs,ashortenedversionof“weblog,”aretypicallypersonalandshort,diary-like entries that touch on a specific topic. Perhaps youwent to an event tradeshowandfoundoutaboutagreatnewtechniqueyouaregoingtotryinthenextproductyouintroduce.Ormaybeyouwenttoaseminaronwhippingcreamandwanttosharewhatyoulearned.

Like websites, there are templates, mostly free, available to make thebloggingprocesssimple—yousignup,createyourblog,writeyourentries,andthetemplatesetsupanarchiveforyou.Tumblr,WordPress,andBloggerareafewmorepopularblogplatforms.Somewebsitetemplateservices,likeWeebly,offerbloggingasanoptionwithyourwebsite.

You don’t have to be a bestselling writer to write your own blog. But ifwritingreallyisn’tevenadistantstrongsuitforyou,considerhiringawritertohelpyouwith it.Createadraft inWord,email it toyourwritingprofessional,andheorshecanmakeitzing—andprobablyeditthegrammarandproofreadit,also.It’sworththesmallfeethatanhourortwoaweek(orhoweveroftenyoudoyourblog)willcost.Youpayanaccountanttocheckyournumbers,whynotpayawritertocheckthatyousoundjustrighttoyourtargetmarket?

Try to include both pictures and perhaps links to sites with furtherinformationinyourblog.Again,useit toengagepotentialcustomersbutdon’tuse itasastrongselling tool.This isyourchance tobepersonalwithexistingandpotentialclients.Givethemsomegoodinformation,andeveniftheydon’tbecomeimmediatecustomers,theymayuseyoutocatertheireventortheymayrememberyoukindlyandtelltheirfriendswhoarelookingforaspecialtyfoodsourcetocheckoutyourblog.

EntertheBlogosphere

Blogsareessentiallyonlinejournalsorbriefnewsletters,sometimeswithmore than one author. You may find blogs useful for networking,brainstorming, and simply commiserating with other food businessprofessionals. Check out The Nibble online specialty food magazine’sblog(http://blog.thenibble.com)foranexample.

Andlikewebsites,noonewillknowyouevenhaveablogunlessyoutelltheworld.Besuretousephrasesinyourblogandmarkkeywordtagsthathelpyourblog appearwhen people search thatword or phrase. For example, if you arewritingabout thatwhippedcreamseminar,besure touse thephrase“whippedcream”severaltimesinthebodyoftheblogormakesuretolistthetopicsinthe“tags”function.

You can link your blog to your Facebook andLinkedIn pages aswell, soyourfriendsandacquaintanceson thosesiteswillknowwhenyou’vepostedanew blog entry. It can appear with some initial teaser copy, enticing them toclickonthelink.

tip

Facebookitselfhasa“facebookforbusiness”pageatwww.facebook.com/businessthatwalksyouthroughthestepsforsettingupapageforyourbusiness,includingwhatispermissibleandwhatisnot.

FacebookFacebook started as a way to communicate with your network of friends.However,notonlyhavepeoplealwaysused it topromote theirbusinessesbutFacebook itself has been offering ways to make the social media platformbusiness-friendly. And friends “like” websites that they want to support. Sodefinitely create a Facebook page for your business but use it sparingly for

directlypromotingyourproduct.

statfact

“Someretailershavebeenabletoincreasesalesconversions10to15percentbytailoringtheirsocialmediacontentbasedoncustomers’previouspurchases,accordingtoMcKinseyResearch.”—HarvardBusinessReviewonline“YourCompanyShouldBeHelping

CustomersonSocial”byMaherMasri,etal.,7/15/15

A HubSpot blog (http://blog.hubspot.com) puts it best: “As a business onFacebook,youwanttocompelnotrepelcustomers.”Theyshowagreatgraphicthathighlightsthingstodoandnotdo.Onekeypieceofadviceistofollowthe80/20rule—inthiscase,80percentofyourpostsshouldbesocial,andonly20percentpertain toyourbusiness/products.Do respond to customer interactionswithin 24 hours. And, like with all social media, keep your posts short.Suggested frequency of posting is once to four times aweek. This should gowithoutsaying,butdonotwritefakecommentsforyourposts.

PostingstoyourFacebookwallmight includesomefuntidbitsyoulearnedaboutanewtypeofmustardortheregionfromwhichitcomes,orsomeblooperpackagingexperimentyoudid.

Checkout thepagesofother food-relatedbusinessesandseehow theyareusingFacebooktotheiradvantage.

LinkedInLinkedIn is thought of as the Facebook of the business world. The generaladviceistomakeyourLinkedInpagemoreformalthanaFacebookpagemightbe. This iswhere peoplemight go to see your resume, client list, a “serious”pictureofyou(i.e.,aformalheadshot,notthepictureofyourcatsleepingacrossyourhead).

LinkedInisalmostdefinitelygoingtobethemorelikelyplaceyourbusiness

is exposed to the corporate world if, for instance, your products includesomethingthatcouldbeusedforcorporategifts.However,noonecanseemorethan the most basic information about you without your approval of a“connection”withthem.

TwitterATwitteraccountforyourbusinessmaybebestusedasanextensionofablog.You can send quick messages of up to 140 characters, a “tweet,” to yoursubscribers. “Found the greatest fair trade coffee to use in next batch ofmacaroons—check theMacaroonManiawebsite for details!” or “Stop by thestoreWednesday evening six to eight for tastings of our latest chocolate barspairedwithredwinesfromWineBar.123FrontStreet”mightbemessagesthatpromoteyourservicewhilealsoofferingbenefittothereader.

Photo-SharingPlatformsFood is great for photo-focusedmedia.The following areuseful platforms forsharing images of your great products especiallywhen they are being used inreal-lifewaysandnotjustpartofaphotoshoot!

PinterestWhile there are loads of photo-sharing social media platforms from Flickr toImgur to Tumblr and probably some being created as you read this, Pinterestseemstohavelandedasthemostusefulofthemall,especiallyforthingsthatareparticularlyvisualandcanbewellcapturedinaclose-upphoto.

WhenyousignupwithPinterest,youcanstartapinboardthemedbyflavor(think “spicy” or “lemon”), food (yams, beef). Friends sign on to followyourpins.Ifyouarelookingforanidea(holidaywhoopiepies,forexample)youcansearchthetopiconPinterestandscrollthroughphotosgatheringideas.

InstagramSelf-definedas“afast,beautifulandfunwaytoshareyourlifewithyourfriendsandfamily,”Instagramisanimage-drivenversionofFacebook(nowownedby

Facebook).Snapapictureandpost it toyour socialnetworkplatforms.Akeyfeature is that you can play with the appearance of the photo with filters.Instagrammightbeagoodwaytoshareimagesofyourworkorideasthatyoufind.

tip

Twitter—where“tweets”canonlybe140charactersorfewer—isamorecasualandpersonalmediaoutletlikeablogandisreferredtoasa“microblog.”Youcanpostanimagewithyourtweet.

SnapchatSnapchat isanother image-drivensocialmediaplatform.Thebasic idea is thatyousnapapicture,addacaption,andsendittoafriend—anditdisappearsinafewsecondsaftertheyopenit.

More social media outlets are coming down the pike every week. Theimportant thing to keep in mind is to use the ones that work best for yourbusiness. Don’t let themwork against you—like attaching a “hashtags” to animagebutthehashtagisalreadytakensowhensomeonesearchesittheycomeup with someone else’s images. Definitely don’t feel like you have to beinvolvedinallofthem.Andespeciallydon’toverwhelmyourselfsothatyouarespendingmoretimekeepingupwithsocialmediatweetsandpoststhanyouarein developing new business! You’re in business to make and/or sell gourmetfood,nottocreatesocialmediaposts.

J

AppendixSpecialtyFoodResources

ustasyoucanneverhavetoomanycookingutensilsfromwhichtochoose,youcanalsoneverhavetoomanyresources.Therefore,wepresentforyourconsiderationthefollowingresourcesforyoutocheckinto,checkout,andharnessthosethatseemusefultoyouasyoupreparetomakeyourmarkin

the specialty food industry.While these resourceswillgetyoustartedonyourresearch, they are by nomeans the only sources out there.Wehave done ourresearch, but events, websites, and businesses in the ever-changing specialtyfoodmarketmove, change, fold, and expand.Aswehave repeatedly stressed,youneedtodoyourhomework—buthere’sajumpstartasyougetoutandstartinvestigating.

BooksCreatingaThrivingBusiness:HowtoBuildanImmenselyProfitable

Businessin7EasyStepsbyGeorgeHorrigan(NewYork:MorganJames,2013)TheDailyEntrepreneur:33SuccessHabitsforSmallBusinessOwners,Freelancers,andAspiring9-to-5EscapeArtists,S.J.ScottandRebeccaLivermore(Irvine,CA:EntrepreneurPress,2014)DirectoryofConvenienceStores,finditatwww.retailbuyers.net

EasyGluten-freeNutritionAdviceandRecipes,AcademyofNutritionandDietetics,TriciaThompson,MS,RD,andMarlisaBrown,MS,RD,CDE,CDN(Chicago:AcademyofNutritionandDietetics,2011)FromKitchentoMarket,StephenF.Hall(Chicago:KaplanBusiness,2000)

MarketingGuidebook:Theguidebookofthesupermarketindustrylistsover

1,300retailerchainsandwholesalersintheU.S.andCanadaalongwith1,500specialtydistributorsandbrokers.Informationtohelpsellproductstosupermarkets.Finditatwww.retailbuyers.net.

StartYourOwnBusiness,SixthEdition:TheOnlyStartupBookYou’llEverNeed,TheStaffofEntrepreneurMedia(Irvine,CA:EntrepreneurPress,2015)StartYourOwnFoodTruckBusiness,SecondEdition,TheStaffofEntrepreneurMedia,Inc.andRichMintzer(Irvine,CA:EntrepreneurPress,2015)StartYourOwnMicrobrewery,Distillery,orCidery,TheStaffofEntrepreneurMedia,Inc.andCorieBrown(Irvine,CA:EntrepreneurPress,2015)Conferences

AllergyandFreeFromShow(www.allergyshow.co.uk).SpecialtyshowintheU.K.specificallypromotingdietaryconcernsforthosewhoneedtolive“freefrom”ingredientslikeeggs,dairy,nuts,gluten,etc.OriginatinginLondon,theshowisexpandingtoLiverpool,Germany,andScotland.

AtlantaFoodserviceExpo(www.atlantafoodserviceexpo.com).AttheGeorgiaWorldCongressCenterannuallyinthefall,bringingtogetherallsectorsoftherestaurant,foodservice,andhospitalityindustriesshowcasingthelatestproducts,technologies,andservices.

FreeFromFoodExpo(http://freefromfoodexpo.com).AEuropeanfreefromtradeeventwithdistributors,manufacturers,importersandexporters,andinformationonpackagingandprocesstechnology.

FoodIngredients(Fi)(India,Asia,SouthAmerica…),FiGlobal(www.figlobal.com).AseriesofexhibitionsinAsia,Europe,LatinAmerica,andtheMiddleEastforlearningaboutfoodingredientsfromallovertheworld.

PreparedFoods’NewProductsConference(www.preparedfoods.com).Thepremierfoodandbeverageeventforgainingvaluableinsightintoglobalnewproductintroductions,culinaryadvances,andemergingconsumertrends;the2015conferencewasinPalmBeach,Florida.

RetailWeekTech&Ecomm(https://techecomm.retail-week.com).IntheU.K.,anannualeventcreatedtobringtogetherthebestmindsacrossdisciplinesincurrentretailchangesandchallenges.

UnitedFreshProduceEvent(www.unitedfresh.org).InChicago,annualconferenceofthefreshproducesegmentwithexhibitsandeducation

sessionsonbusinessmanagement,producemarketing,supplychainlogistics;heldinconjunctionwiththeFoodMarketingInstituteandtheInternationalFloricultureExpo.

ConsultantsMintel(www.mintel.com).OfficesinLondon,NewYork,SaoPaulo,Shanghai,

Singapore,Belfast,Munich,Chicago,Sydney,Tokyo,Mumbai,KualaLumpur,andToronto.

MagazinesAnyofthesemagazines’websitescanbesearchedonlinebythemagazinename.Mostsiteshavegreatinformationandmanyoffertheabilitytolookthroughthecurrentmagazineinadigitaleditionfromtheirsite.

BakingBusiness—www.bakingbusiness.com

Cakes&Sugarcraft—www.cakesandsugarcraft.com

CookingLight—www.cookinglight.com/magazine

CookingWild—www.cookingwildmagazine.com

Cook’sCountry—www.cookscountry.com

Cook’sIllustrated—www.cooksillustrated.com

DiabeticLiving—www.diabeticlivingonline.com

FarmandTable—http://farmandtablenm.com

FoodandWine—www.foodandwine.com

FoodBusinessNews—www.foodbusinessnews.net

FoodNetworkMagazine—www.foodnetwork.com/magazine.html

TheGourmetRetailer—www.gourmetretailer.com

Saveur—www.saveur.com

TasteofHome—www.tasteofhome.com

OrganizationsAmericanAssociationofCandyTechnologists,711W.WaterStreet,P.O.Box

266,Princeton,WI54968,(920)295-6969,www.aactcandy.org

AmericanBakersAssociation,1300IStreetN.W.,Suite700West,Washington,DC20005,(202)789-0300,www.americanbakers.org

AmericanCheeseSociety,304WestLibertyStreet,Suite201,Louisville,KY40202,(502)583-3783,www.cheesesociety.org

AmericanCulinaryFederation,180CenterPlaceWay,St.Augustine,FL32095,(904)824-4468,www.acfchefs.org

AmericanInstituteofBaking,P.O.Box3999,Manhattan,KS66505,(800)633-5137,www.aibonline.org

AmericanPieCouncil,P.O.Box368,LakeForest,IL60045,www.piecouncil.org

AmericanSocietyofBrewingChemists,3340PilotKnobRoad,St.Paul,MN55121,(651)454-7250,www.asbcnet.org

AssociationforDressingsandSauces,1100JohnsonFerryRoad,Suite300,Atlanta,GA30342,(404)252-3663,www.dressings-sauces.org

CulinaryInstituteofAmerica,1946CampusDrive,HydePark,NH12538,(845)452-9600,www.ciachef.edu

FoodProcessingSuppliersAssociation,1451DolleyMadisonBoulevard,Suite101,McLean,VA22101,(703)761-2600,www.fpsa.org

FDACenterforFoodSafetyandAppliedNutrition(CFSAN),5100PaintBranchParkway,CollegePark,MD20740,(888)723-3366,www.fda.gov/aboutfda/centersoffices/officeoffoods/cfsan/

GroceryManufacturersAssociation,1350IStreet,Suite300,Washington,DC20005,(202)639-5900,www.gmaonline.org

InstituteofFoodScienceTechnology,5CambridgeCourt,210ShepherdsBushRoad,London,W67NJ,UK,44(0)2076036316,www.ifst.org

InstituteofFoodTechnologists,525W.VanBuren,Ste.1000,Chicago,IL60607,(312)782-8424,www.ift.org

NationalHoneyBoard,11409BusinessParkCircle,Suite210,Firestone,CO80504,(303)776-2337,www.nhb.org

OrganicTradeAssociation,28VernonStreet,Suite413,Brattleboro,VT05301,(802)275-3800,www.ota.com

SnackFoodAssociation,1600WilsonBlvd.,Suite650,Arlington,VA22209,(703)836-4500,www.sfa.org

SpecialtyFoodAssociation,(646)878-0301,www.specialtyfood.com

SpecialtyFoodsGroup,6DublinLane,Owensboro,KY42301,(800)627-1902,www.specialtyfoodsgroup.com

PackagingBagsandBows(www.bagsandbowsonline.com/retail-packaging/home)—Retail

packagingCrownCork(www.crowncork.com)—Brand-buildingpackaging

EncoreInternational(http://encoreintl.com)—Creativecustompackaging

FirstImpressionsPackaging(http://firstimpressionspackaging.com)—Boxes,bags,giftboxes,tissue,andeco-friendlypackagingJennDavid(http://jenndavid.com)—Logos,packaging,printcollateral,websites

PacificBag(http://pacificbag.com)—Coffeebagsandstockandcustompackagingforpetfood,tea,andspecialtyfoodULINE(www.uline.com)—Shippingsuppliesandpackaging

Glossary

A.Q.:“Asquoted”—oftenusedonmenuitemsthataremarketpriced

Backofthehouse:Restaurantphrasereferringtothekitchen,dishwashing,andprep areas aswell as the employeesBlog:Anonline journal or newsletter,usuallywithmorethanoneauthor

Bond:Aninsurancecontractusedbyservicecompaniesasaguaranteethattheyhave the necessary ability and financial backing to meet their obligationsBoomers:Peoplebornbetween1946and1964

Break-evenpoint:Thepoint atwhichyour companyneithermakesnor losesmoney Brix scale: A measurement for the density or gravity of sugaryliquids

Candythermometer:Formeasuringthe temperatureofboilingsugarsoroils,goesupto400degreesF

Caterer:Acompanyretained toprovide food(andusuallybeverages, too) foraneventChafingdish:Avarietyofportablecookingcontainerusedtoeitherheatorcookfoodwithadirectheatsource;typicallycomprisingapansetontop of a pan of water so that the heat source is not directly on the pancontaining the food Chat room: On the internet, an electronic gatheringplace for people who share special interests, where they brainstorm andexchange ideas and informationContingency plan: A written plan that isprepared in advance to address possible emergencies Contractor: Anindividual or a company under contract to provide goods or servicesCopyright:A formof protectionused to safeguardoriginal literaryworks,performing arts, sound recordings, and visual artsCorporate planner:Anindividualwhoplansmeetingsforcompanies

Corporation:Aseparatelegalentitydistinctfromitsowners

Cuisine:AFrenchtermusedtodescribeaspecificstyleofcookingoracertaincountry’sfoodingeneral,suchas“Indiancuisine”

Culinary:Relatingtothekitchenorcooking

Decant:To transfer liquid fromonevessel toanother, for instance to separatewinefromanysedimentDemographics:Theprimarycharacteristicsofyourtarget audience, such as age, gender, ethnic background, income level,educationlevel,andhomeownershipDoingbusinessas(DBA):Areferencetoyour legal designationonceyouhave selected abusinessnamedifferentfromyourownandregistereditwiththelocalorstategovernmentDomainname:Theaddressofaninternetnetwork

Dutchoven:Alarge,cast-ironkettlewithatight-fittinglidusedforbraisingorstewingEnophile:Aconnoisseurorloverofwines

Epicure:Onewhoappreciatesfinefoodanddrink

Essence:Strongaromaticliquidscreatedbydistillationorinfusion

Extrusion: In cooking, food extrusion is the processwheremixed ingredientsarepressedthroughanopeningandcutintospecificsizes.

Fancy food:Anothername for“specialty food,”which isdefinedas foodandbeverages that are made in small batches with high-quality ingredientsFinger bowl: Small bowl of warm water typically scented with lemon towash fingers after eating shellfish or food eaten with hands Flexitarian:“Semi-vegetarianism” where one follows a diet that is mainly plant-basedwith the occasional consumptionofmeat productsFondue:Traditionally adishofmeltedcheeseservedcommunallyusinglong-stemmedforkstodipinbreads, now also includes other types of melted dipping sauces such aschocolateFree-from:Thecurrent terminology for the food segment that is“free from” certain ingredients or processes. Examples are milk producedfromcowsthathavenotbeentreatedwithgrowthhormones,meatsthathavenot had dyes added to them, and gluten-free or dairy-free products. Some“free-from” consumers are following a diet because ofmedical conditions,othersarejustdoingitbecausetheyfeelitishealthier.

Functionalfoods:FoodsthatareconsideredtohaveapotentiallypositivehealthimpactandgobeyondfundamentalnutritionGardemanger:Frenchtermforthekitchenprofessional inchargeofcold foods, salads,andhorsd’oeuvresGluten:Aproteinfoundinwheatandothergrains.Thosewithceliacdisease

areallergictoit.Othershavebeendiscoveredtohaveasensitivitytoglutenwhichhasgivenrisetothegluten-freetrend.

GMO: Stands for “genetically modified organism,” a controversial geneticengineering technique that, among other things, artificially selects for adesirable factor, like disease resistance or fast-growing or rot-resistantGourmet:Finefoodanddrink

High-touch:A term referring to events that require ahighdegreeof care andhandlingHomepage:Thegatewaytoyourinternetwebsite

Indemnification: A legal termmeaning one party agrees to protect the otherpartyfromliabilityordamagesrelatedtoaneventInfusion:Thesteepingofsomethinginaliquid

Invoice: A document that indicates costs for goods or services owed by oneindividualorcompanytoanotherIrradiation:Amethodofsterilizingfoodusinggammarays

Liability: The legal responsibility for an act, especially as pertaining toinsurance risksLimited liability corporation (LLC):A business structurecombining the tax structureof apartnership,yetprotecting theowner frompersonalliabilityLogo:Asymbolusedtoidentifyorbrandabusiness

Margin: Profit expressed as a percentageof the retail sellingprice (Margin=Profit/Retail Price). If a piece of candy sells for one dollar and it costs 50centstomakeit,meaningyoumakea50-centprofitsellingitforadollar,themarginis50percent.

Markup: The amount added to the cost of goods or services to produce thedesiredprofitMatcha:Powderedgreentea

Microblogging:Acombinationofbloggingandinstantmessaging,whereveryshort messages are sent to update subscribers about themicroblog’s topic.Twitteristhemostwell-knownmicroblogvehicle,limitingthemicrobloggerto140-charactermessages.

Millennials:Thosebornfromtheearly1980stotheearly2000s

Nutraceuticals:Afoodhavingmedicinalbenefit

Newsletter: A marketing piece that offers short, newsy pieces about yourbusiness.Newslettersmaybesentthroughregularmailoremail.

Partnership:Abusinessownedequallybytwoormorepersons

Pâtissier:Thekitchenstaffmemberwhopreparesdesserts,pastries,icecreams,etc.

Pescetarian:Onewhofollowsapredominatelyvegetariandietbutdoeseatfish

Proposal: A document outliningwhat a businesswill do for a client and thepriceatwhichitwillbedoneRelationaldatabase:AsetofdatastructuredsothatinformationcanbeaccessedacrossdifferentdatabasesRotisseur:Thekitchenstaffmemberwhoroasts,broils,orfriesfoods

Saucier: The kitchen staff member who prepares sauces, stocks, and perhapsdoes thepoachingofmeats, fish,orpoultrySite:The location foraneventSoleproprietor:Businessstructuredescriptionofacompanyownedbyoneperson Specialty food: According to the Specialty Food Association(www.specialtyfood.com),specialtyfoodisdefinedas“foodsorbeveragesofthe highest grade, style, and/or quality in their respective categories. Theirspecialtynaturederivesfromacombinationofsomeorallof thefollowingqualities: uniqueness, origin, processing method, design, limited supply,unusual application or use, extraordinary packaging, or channel ofdistribution/sales.”

Supplier: The individual or company that sells goods or services to anothercompany;termoftenusedsynonymouslywith“vendor”

Target market: The section of the market, or group of people, to whom acompany hopes to sell its product Telemarketing: Using the phone togeneratenewsalesorleads

Toque:Thetraditionalchef’shat

Vendor:Mostofthetimeinthespecialtyfoodbusiness,“vendor”willrefertocompaniesyouworkwith that supplyyouwith ingredients and supplies. Ifyou cater events, “vendor” could refer to a company you hire to provide acertain aspect of the event catering—such as a florist for flowers for thebuffet table or confectioner who makes the cake if baking is not yourspecialty.

Vendor agreement: A legal contract between food business professional andvendorVenue:Asiteforanevent

Website:Agroupofrelateddocumentspostedontheinternet,usuallyaccessed

throughahomepage

Index

Aaccountants,100,108,118accounting,112–120

break-evenpoint,116–117cashflow,57,113–117coursesin,113deductibleexpenses,23,45,119–120financialstatements,108,112–113installmentpayments,116invoicing,49,113–114,116pricing,114–115smallexpenses,115taxes,23,45,117–120

advertising,31,123,125.Seealsomarketingstrategiesagreements,49alcohollicenses,47.Seealsolicensesandpermitsalcoholsales,16antivirussoftware,70assetprotection,46attorneys,106–107,108–109audienceengagement,97–98,135–136autoinsurance,47.Seealsoinsuranceautomobileexpenses,120

B

bakedgoods,23,84

balancesheets,112.Seealsofinancialstatementsbanks,65,109barteringservices,114beerandwinelicenses,47.Seealsolicensesandpermitsbenefits,employee,100.Seealsohiringemployeesbeverages,15blogs,136–137bonding,48bookkeepers,100.Seealsoaccountantsbotanicalsinbeverages,15brandrecognition,70branding,81–82break-evenpoint,116–117brochures,124–126Burns,SusanDesjardins,24,28–29,78–79businesscards,124businessconsultants,109businesslicenses,46.Seealsolicensesandpermitsbusinessplans,33,66–68businessstructures,7,44–46

Ccameras,70cancerdiets,14capitalandcash-flowmanagement,57cashflow,57,113–117cashflowstatements,113.Seealsofinancialstatementscatering,108cellphones,69charitywork,129.Seealsocommunityinvolvementcheesemarket,global,3chefs,100commercialkitchens,78–80communityinvolvement,22,129compensation,employee,104–105.Seealsohiringemployees

competition,57,58competitiveanalysis,67–68competitiveedge,59–60computers,69,72,120ConfectionatelyYours,28–29,78–80conferenceandseminarexpenses,120consultants,108–109consumptionoccasions,85contactinformation,94–95,131content,94conversion,137copyright,97corporatetaxes,46,118.Seealsotaxescorporations,46.Seealsobusinessstructurescottagefoodindustries,76–81.Seealsohomebasedbusinessescountypermits,47.Seealsolicensesandpermitscreditcardsasfinancingsource,64.Seealsofinancingcreditprofiles,65–66crowdfunding,65.Seealsofinancingcustomerengagement,97–98,135–136customerloyalty,128–129customerservice,83–84,127–129

DDBA(doingbusinessas),40,45deadlines,23debt,65–66deductibleexpenses,23,45,119–120.Seealsotaxesdelegating,21–22DepartmentofAgriculture(USDA),17designanddevelopmentplans,68design-and-printservices,126dieticians,15differentiation,59–60digitalmedia,130

directcosts,114directmail,125,126.Seealsomarketingstrategiesdisplayspace,56displayware,74distribution,10–11,88,114distributornetworks,57DIYdesign-and-printservices,126doingbusinessas(DBA),40,45domainnames,96–97.Seealsonamingyourbusinessdonatingunsoldgoods,23DPISpecialtyFoods,42dues,120

Eecommerceregulations,6.Seealsoregulationsedibleinsectmarket,2–3email,131emergencyfunds,66employees,hiring.Seehiringemployeesemploymentads,102–103.Seealsohiringemployeesenewsletters,126,130–132engagement,97–98,135–136enrolledagents,108entertainmentexpenses,120environmentalimpactofpackaging,58EPAregulations,4.Seealsoregulationsequipmentandsupplies,68–73,77–78,83equityasfinancingsource,64.Seealsofinancingestimatedtaxpayments,119.Seealsotaxesestimates,117eventlistings,132executivesummaries,67existingbusinesses,purchasing,40,73

F

F

Facebook,134,137–138factorymodel,25fairuse,97familyandfriendsasfinancingsources,64.Seealsofinancingfamilymembersasemployees,102.SeealsohiringemployeesFDA(FoodandDrugAdministration),17,85,88femalebusinessowners,22,23financialmanagement.Seeaccountingfinancialmanagementcourses,113financialstatements,108,112–113financing,61–74

bankloans,65,66,109businessplansand,66–68creditprofilesand,65–66forexistingbusinesspurchases,73fixedcostsand,62–63,68,117networkingforfinding,66sourcesof,5,64–65startupcostsand,6–7,32,61–63,69–74

five-yearplans,33fixedcosts,62–63,68,117floorspace,55–56focusgroups,59FoodandDrugAdministration(FDA),17,85,88FoodCode,85foodlabels,88foodsafety,16–17,83,85.SeealsoregulationsFoodSafetyandInspectionService,17foodsamples,10,12foodservicelicenses,5.Seealsolicensesandpermitsfoodspecificinsurance,48.Seealsoinsurancefoodtrucks,12–14fragileproducts,86–87franchises,73fruitstandmodel,25funding.Seefinancing

furniture,62,69

Ggeneralliabilityinsurance,47.Seealsoinsurancegeneralpartnerships,45.Seealsobusinessstructuresgiftcertificates,31,115Gilliard,Judy,34givingback,129gluten-freeproductproduction,57goodwill,129.Seealsocommunityinvolvementguaranteedsales,114

H

hazardousfood,86healthcarecosts,4healthdepartmentpermits,46.Seealsolicensesandpermitshealthrelatedcookingspecialties,4,14–15,57high-acidfoods,86hiringconsultants,108–109hiringemployees,99–109

determiningstaffingneeds,100–101employeebenefitsand,100familymembersasemployees,102independentcontractorsvs.,118–119internsandpart-timeemployees,105interviewingcandidates,101,104jobdescriptionsand,101payingemployees,104–105payrolltaxes,118recruiting,101–103seasonalworkers,105selectingcandidates,101,104terminatingemployees,106–107

trainingemployees,105homeequityasfinancingsource,64.Seealsofinancinghomeoffices,44,119–120homebasedbusinesses,5–6,44,45,47–48,67,76–81homeowner’sinsurance,47.Seealsoinsurancehomepages,92–94.Seealsowebsiteshomesteadlicenses,79.SeealsolicensesandpermitsHorrigan,George,25hostingservices,91,98.Seealsowebsites

Iimage,130incomestatements,112.Seealsofinancialstatementsincometaxes,118,119.Seealsotaxesincorporating,46.Seealsobusinessstructuresindependentcontractors,118–119industrialcateringvehicles(ICV),13industryresearch,52–53.SeealsospecialtyfoodindustryInstagram,139installmentpayments,116insurance,47–48,109insurancebrokers,109intellectualproperty,97interiorspace,44,45,55–58,77,82–84internetaccess,69–70internsandpart-timeemployees,105interviewingcandidates,101,104.Seealsohiringemployeesinventory,23,68,73–74,116invoicing,49,113–114,116

J

jobads,102–103.Seealsohiringemployeesjobdescriptions,101,104,105.Seealsohiringemployees

Johnson,Lisa,24,31–32JudyalaCarte,34

KKitchenDebauchery,29–30kitchenhelp,100–101kitchens,5,7,10,12,14,28,76–80,84–85

L

labeling,88landingpages,92–93laptops,72lawyers,106–107,108–109layoffs,106leadership,21leasingcommercialkitchens,10,12,14,79leasingspace,82,87–88legalstructures,7,44–46liabilityinsurance,47.Seealsoinsurancelicensesandpermits,5–6,46–47,79.Seealsoregulationslimitedliabilitycompanies(LLC),45–46.SeealsobusinessstructuresLincolnOliveOilShop,30–31LinkedIn,138liquorlicenses,47.Seealsolicensesandpermitsliquorsales,16LLC(limitedliabilitycompanies),45–46.Seealsobusinessstructuresloans,5,65,66,109localproducts,58locatingyourbusiness,75–88

distributionbusinesses,88factorstoconsider,30,42–44,75–76foodtruckbusinesses,14homebasedbusinesses,76–81

leasingspace,82,87–88mailorderbusinesses,85–88neighboringbusinessesand,82production-onlybusinesses,8,84–85researchinglocations,54–56retailshops,6,54–56,81–84,87

logos,70,124lossleaders,117

Mmagazineads,123mailorderbusinesses,2,58,85–88,92,114–115mailinglists,125,126marketresearch,51–60markettrends,22,58,81,85,112marketingdirectors,100marketingmaterials,49,124–127,132.Seealsowebsitesmarketingstrategies

advertising,31,123,125audienceengagementin,97–98,135–136brochures,124–126businesscards,124customerserviceand,127–129describedinbusinessplans,67directmail,125,126ecommerceregulationsand,6goodwillas,129importanceof,121–122logosand,124networkingas,123newsletters,126photosinmarketingmaterials,49pressreleases,127,132printadvertising,31forproduction-onlybusinesses,10

socialmediamarketing,130,133–139targetingmarkets,134–135forwebsites,95–96

markup,115–116membershipdues,120Microloanprogram,5missionstatements,42–43mobilefoodpreparationvehicles(MFPV),13mobilephones,69mobilewebsites,90.Seealsowebsitesmotivatingstaff,21

Nnamingyourbusiness,38–41.SeealsodomainnamesNestlé,59,81netiquette,131networking,66,123NewHampshireregulations,5,15–16,79.Seealsoregulationsnewsreleases,127,132newsletters,126newspaperads,31,123,125non-salesfloorspace,56

O

offerletters,104officeequipmentandsupplies,68–73officemanagementsoftware,70officemanagers,100officespace,44,45,77,84OmahaSteaks,42onlineordering,58onlineretailingvs.physicalstore,6operationsandmanagementplans,68

opportunities,122organicproducts,58OSHAcompliance,4overheadcosts,114

Ppackaging,10–11,53–54,87P&L(profitandlossstatements),112.Seealsofinancialstatementspartnerships,7,45–46.Seealsobusinessstructurespayingemployees,104–105.Seealsohiringemployeespayrolltaxes,118–119.Seealsotaxesperishables,23,53,86–87,115permitsandlicenses,5–6,46–47,79.Seealsoregulationspersonalchefs,14–15personalincometaxes,118,119.Seealsotaxespetfoodbusiness,6PhoenixWrappers’stretchwrapping,53phones,69photosharingplatforms,138–139photos,48,49physicalstorevs.onlineretailing,6Pinterest,134,138pop-upstores,20,56,57pressreleases,127,132pricing,114–115printadvertising,31,123,125.Seealsomarketingstrategiesprinters,70printingservices,126prioritizing,40productdisplayspace,56productionspace,57–58,84production-onlybusinesses,5,7–8,10–11,84–85,87production/retailcombos,57–58profitandlossstatements(P&L),112.Seealsofinancialstatementsprofitneeds,114

proposals,48–49

Rreceipts,49–50recordkeeping,49,118recruiting,101–103.Seealsohiringemployeesregistereddieticians(R.D.),15registeringyourbusinessname,40regulations,5–6,7,10,12,15–17,76,79–80,88.Seealsofoodsafety;licenses

andpermitsretailbusinesses

advantagesof,25businessstructuresfor,7,44–46customerservicein,83–84,127–129displayneedsof,83financing,6–7interiorspacefor,44,82–84leasingspacefor,87locationsfor,6,55–57,81,82,87officespacein,44,84phonevs.walk-incustomersin,83–84physicalstorevs.onlineretailing,6pop-upstores,20,56,57productionspacein,57,84regulationsgoverning,7,15–16starting,6–7,11storesizedetermination,56–57storefronts,81–82waitingforcustomersin,24

retailproviders,84–85.Seealsoproduction-onlybusinessesretail/productioncombos,57–58Rob,Baker,30–31

S

salesestimations,117salesstaff,100salestaxes,118.Seealsotaxessamples,10,12SBA(SmallBusinessAdministration),3,5,65SCORE(ServiceCorpsofRetiredExecutives),4seasonalworkers,105selectingcandidates,101,104.SeealsohiringemployeesServiceCorpsofRetiredExecutives(SCORE),4shipping,77,86–87signpermits,47.Seealsolicensesandpermitssmallbusiness,2–3,8,21–22,25SmallBusinessAdministration(SBA),3,5,65Snapchat,139socialmediamarketing,130,133–139.SeealsomarketingstrategiesSocialOomph,135software,70soleproprietors,45.Seealsobusinessstructuressous-chefs,100–101spamming,131specialdisplayneeds,83specialorderbusinesses,12,23specialtydiets,14–15,57SpecialtyFoodAssociation,52specialtyfoodindustry

consumerstatisticsin,17industryresearch,52optionsin,1–2,4–8,12–15,22,58pitfallsinchoosingabusinessin,24professionalassociationin,52regulationsin,5–6,7,10,12,15–17,76,79–80,88revenuesin,15startingabusinessin,6–7,19–25,34–35,50stateof,53threatstobusinessesin,57

staffing.Seehiringemployeesstagingspace,85

standingout,59–60startingaspecialtyfoodbusiness,6–7,19–25,34–35,50startupcosts,6–7,32,61–63,69–74storagespace,77storesizedetermination,55–56storefronts,81–82storingandshippingperishableproducts,86strengths,122stretchwrapping,53subscriptions,120successionplanning,103suppliesandequipment,68–73,77–78,83sustainableproducts,58SWOTanalysis,122

Ttablets,72targetmarkets,8–9,58,80,134–135taxdeductions,23,45,119–120taxplanning,119taxes,23,45,117–120technology,38telephones,69templatewebdesigns,91terminatingemployees,106–107.Seealsohiringemployeestestimonials,49threats,122trademarks,39,47traditionalmedia,130trafficgeneration,96trainingemployees,105.Seealsohiringemployeestravelexpenses,120trends,22,58,81,85,112Twitter,134,135,138,139

U

U

uniquepackaging,53–54unsoldgoods,23URLs,96–97U.S.DepartmentofAgriculture(USDA),17U.S.FoodandDrugAdministration(FDA),17,85,88usedequipment,83userfees,83

V

VanGelder,Joni,29–30variablecosts,117vehicleexpenses,120vendorpermits,46.Seealsolicensesandpermitsvendors,107–108,113–114venturecapital,64visitorretention,97–98

Wwages,employee,104–105.SeealsohiringemployeesWalpole,Jonathan,24,32–34Walpole,Sally,24,32–34weaknesses,122webdesigners,91–92websiteURLs,96–97websites,89–98.Seealsomarketingstrategies

accuracyin,92attractingtrafficto,96benefitsof,89contactinformationin,94–95contentfor,94designing,90–92,97,98

domainnamesfor,96–97drillingdownin,93–94ethicalandlegalconcerns,97hostingservicesfor,91,98mail-orderfeatureson,92marketing,95–96menusin,94mobilesites,90must-havesfor,92–94pop-upwindowsin,93retainingvisitorsto,97–98updating,91,92,95

wholesalebusinesses,44WinnipesaukeeChocolate,24,32–34,84–85womenbusinessowners,22,23workers’compensationinsurance,47.Seealsoinsurancewrite-offs,23,45,119–120

YYellowPagesadvertising,123YouTube,134YummyYammy,31–32

WONYOURMARK...

hydidyoupickupthisbook?Perhapsyouknowyouwanttobeanentrepreneurandtakechargeofyourownlife.You’vealreadygotagreatideaforabusinessyou’resurewillbeahit.Orperhapsyou think,somewhere in thebackofyourmind, thatmaybeyou

mightliketostartyourownbusinessbutyou’renotsurewhatventuretostart,whatentrepreneurshipisreallylike,andwhetherit’sforyou.

Whicheverofthesecategoriesyoufallinto,you’vecometotherightplace.InPart1,“Think,”we’llshowyouwhatitmeanstobeanentrepreneur.Useourpersonalgoalsandobjectivesworksheettodecideifentrepreneurshipisrightforyou.Don’thaveabusiness idea,ornotsure ifyour ideawill fly?You’ll learnthesecretstospottingtrendsbeforetheyhappenandforcomingupwithdozensof surefire business ideas. We’ll also discuss various ways of going intobusiness,includingpart-andfull-timeentrepreneurship.Finally,we’llshowyouthe different options for startup, such as starting from scratch, purchasing anexistingbusiness,orbuyingintoafranchiseorbusinessopportunitysystem.

Planningiskeytoeverythrivingbusiness.InPart2,“Plan,”you’lllearnjustwhatyouneedtodotolaythegroundworkforsuccess.Findouthowtopinpointyour target market, plus dozens of ways to do market research—from hiringexperts to money-saving do-it-yourself tips. Since the name you choose canmakeorbreakyourbusiness,weshareplentyoftechniquesforcomingupwiththeperfectmoniker—onethatwillattractcustomerstoyourcompanyindroves.Anddon’tforgetthenuts-and-boltsnecessitieslikechoosingalegalstructure—corporation, partnership, sole proprietorship andmore. You’ll discover all theinformation you need to guide you through these often confusing steps tostartup.

A business plan is your roadmap to success, guiding the growth of yourbusinessateverystagealongtheway.We’llshowyouhowtocraftabusinessplanthatputsyouonthefasttrack.Finally,findoutwhyyouneedprofessionaladvisorstohelpyouthroughyourstartup,andlearnhowtoselectanaccountantandanattorneywhocanhelpyoumakemoney—withoutcostingyouabundle.

Speakingofmoney,everyentrepreneurknows thatadequatestartupcapital

isessential tosuccess.But justwheredoyoufind thatcrucialcash? InPart3,“Fund,”wegiveyoutheinsidescoopongettingthemoneyyouneed.Discoverdozens of sources of capital.We showyou secrets to financing your businessyourself,howto tap into themostcommonsourceofstartupfinancing(familyand friends), plus places you may never have thought of to look for money.We’llalsointroduceyoutotheideaofturningtothecrowdforfunding.

Do you stand a chance of getting venture capital or attracting privateinvestors?You’llfindoutinthissection.Andifyou’relookingforaloan,looknofurtherforthesecretstofindingtherightbank.Weexplainwhatbankerslookforwhenevaluatingaloanapplication—andhowtomakesureyoursmakesthegrade.SeekingmoneyfromUncleSam?You’lllearnallthedetailsaboutdozensofloanprogramsfromthegovernment,includingspecialassistanceforwomenandminorityentrepreneurs.Whateveryourneeds,you’resuretofindafinancingsourcethat’srightforyou.

Astheysay,“there’snotimelikethepresent,”sograbacupofcoffee,getcomfortable,andlet’sstartcreatingyourbusiness!

PART1

THINK

CHAPTER1 IntroductionCHAPTER2 TakingthePlungeGetReadytoBeanEntrepreneurCHAPTER3 GoodIdea!HowToGetanIdeaforYourBusinessCHAPTER4 GoodTimingShouldYouLaunchYourBusinessPartorFullTime?

CHAPTER5 BuildItorBuyIt?StartingaBusinessvs.BuyingOne

W

CHAPTER1

Introduction

ith thepurchaseof thisbook,you’ve takenyourfirststepon theroadtoentrepreneurship.It’snotasteptobetakenlightly,whichiswhybuyingthisbookmaybethesmartestthingyou’lleverdoforyourbusiness.

Start YourOwnBusiness can have amajor impact on your life.WemeetpeopleallthetimewhotellushowthisbookorEntrepreneurmagazinechangedtheir lives—and few are sorry they took the leap into business ownership.Whetherornottheyhavesucceeded,almostnooneregretsthejourney.

StartYourOwnBusinessisdesignedasaroadmaptohelpyouplanacourseforyourown journey tobusinessownership.We’rehere to showyou thebestroutes to take,helpyouavoid thepotholesandroadclosures,andnavigate thecurvesanddetours.

Somewilltellyouthatthejourneyyou’reabouttotakeisahazardousone—butnotwithusatyourside!StartYourOwnBusinesspreparesyoueverystepoftheway.We’reheretoinstructandencourageyou,toshowyounewwaystodothingsandremindyouof the triedand true.Youwouldn’tgoonanadventurewithout the proper gear. Think of Start Your Own Business as part of yourentrepreneurshipgearkit.Refertoiteverystepoftheway,startingwithhowtoget an idea for a business to finally opening the doors to your new venture.Along theway,we provide lots of forms,worksheets, and checklists you canactuallyuseinyourbusinesstomakesureyou’reontherighttrack.

Since business ideas, trends, and strategies constantly change,we strive tokeepStartYourOwnBusinessup-to-date.For thesixthedition,we’veupdatedand revised (or expanded) every chapter and added a lot of newones, too. Infact,Part7,“Engage,”isupdatedwithnewsectionsonsocialmediacampaignsandonbuildinganincrediblewebpresencethatwillgetyourideanoticed.

We start by showing you how to get visitors to your website, keep themthere, andmake sure they return formore.Next,wemoveon to socialmediamarketing and networking. If you haven’t jumped on the social mediabandwagonyet,yourbusinesscan’taffordtobeleftbehind.Weshowyouhowtousesocialtoolstonetworkwithpotentialcustomers,andconnectandengagewithyouraudience,becauseintoday’smarketinglandscape,that’showbrandsarebuilt.

Wealsohaveaddedchapterson runningyourbusinessvirtually,using thelatest smartphone and tablet and computer technology to connect seamlessly,andonfundingoptionsthatwereneverbeforeavailable,suchascrowdfundingplatforms.

Manybusinessresourcesandtipboxes(seeexamplesonthenextpage)arealsoallupdatedforthesixthedition.

Finally, there’s an appendix that’s chock full of resources with contactinformation.We listbusinessassociations, federalagencies,books,magazines,and other publications in areas ranging from advertising and marketing toaccounting and taxes. We even provide internet resources and equipmentmanufacturers.

aha!

Hereyouwillfindhelpfulinformationorideasyoumaynothavethoughtofbefore.

tip

Thisboxgivesyouideasonhowtodosomethingbetterormoreefficiently,orsimplyhowtoworksmarter.

warning

Heedthewarningsinthisboxtoavoidcommonmistakesandpitfalls.

e-fyi

Thisboxpointsyoutothetreasuresoftheinternetformoreinformation.

save

Lookforthisboxtoprovidevaluabletipsonwaysyoucansavemoneyduringstartup.

Startingyourownbusinessisn’tasfrighteningorriskyassomewouldhaveyou believe.But it’s a journey that shouldn’t be taken alone—and that’swhyyouboughtStartYourOwnBusiness.We’regladyou’vechosenustotakethisexciting journeywith you—you’ll be a smarter traveler for it.Let the journeybegin.

B

CHAPTER2

TakingthePlungeGetReadytoBeanEntrepreneur

eforetheygetstarted,somepeopleworryiftheyhavewhatittakestobe an entrepreneur. If this is you, stopworrying.We firmly believeanyonewiththedesireandtheinitiativecanbeanentrepreneur.Andsinceyoupurchasedthisbook,it’slikelyyouhaveboththedesireand

theinitiative.But just because you canbe an entrepreneur doesn’tmean that now is the

right time to take the plunge. This chapter will help you determine if you’rereadyforentrepreneurshiprightnoworifyoushouldholdoffforabit.

TheEntrepreneurialPersonalityEvery year, hundreds of thousands of people start their own businesses. Butwhile most succeed (yes, that’s the truth!), many do fail. Why? One of thecommoncausesofstartupfailureislackofpreparation.

warning

Ifyouhaveafamily,makesuretheyunderstandtheemotionalandfinancialsacrificesbusinesssuccessrequires.Whenyourfamilydoesn’tsupportyourbusiness—ifthey’realwayssaying,“Can’tyouleavethataloneandcometodinner?”—it’sgoingtobetoughtomakeyour

aloneandcometodinner?”—it’sgoingtobetoughtomakeyourbusinesswork.Ifyourfamilyisn’treadyforyoutobecomeanentrepreneur,thismaynotbetherighttimetodoit.

People come to the entrepreneurial path from different directions.Increasingly,somestartfreshoutofcollegeorafterastintathomeraisingtheirkidsorsimplybecause the ideaofactuallyretiringisabhorrent to them.Most,though,come toentrepreneurship straightoutof thework force.Andmanyofthemdabbleintheirwould-bebusinessbeforetheytaketheplungecompletely,testingideasontheside,whilemaintainingadayjob.Quittingafull-timejobtostartabusiness isn’tsomething tobe taken lightly.Youshouldbesurenowistherighttimetogetstarted.First,youneedtoaskyourselfsomequestions:DoIhave enoughmoney? If you have a family, are they ready for this? Is there aneedforaproductorservicelikemine?Parts1,2,and3ofthisbookwillhelpyouanswerthosequestions.

FullSteamAheadMany successful entrepreneurs say a senseof urgency thatmade starting theirbusinesses not just a desire but a necessity was their driving force. Oneentrepreneur’sadvice:“You’llknowthetimeisrightwhenyoucanhonestlysay‘I’llputmyhouse,jewelry,andotherpersonalcollateralonthelinetoattainthestartup money I need for the long-term rewards I deserve.’” We’re notrecommending you put up your home (thoughmore than a few entrepreneursstarted that way). But that willingness to risk everything likely means you’rereadytostartnow.

Whatmotivatespotentialentrepreneurs tostopdaydreamingaboutbusinessownership and actually do something about it?Whilemany people think onesingleincident—suchasgettingfiredorbeingpassedoverforapromotion—istheimpetusforbecomingyourownboss,mostexpertsagreeit’susuallyaseriesoffrustrationsthatleadstoentrepreneurship.

Afundamentaldesiretocontroltheirowndestiniesranksveryhighonmostentrepreneurs’listsofreasonsforstartingtheirownbusinesses.Thisneedissostrong that entrepreneurs will risk family, future, and careers to be their ownboss.Unable to feel trulyfulfilledworkingforsomeoneelse, these individualscannot be happy following someone else’s plan or taking orders from a boss.They’reoftenconvincedthattheyhaveabetterway,oranideathatwouldreally

revolutionize their industry—or at least their little corner of it—and workingwithinacorporatestructureissimplystiflingthatimprovement.

Butopportunitycomesinmanyguises.Itmightbewhenpotentialcustomersstartcallingyou,orperhapsabusinessinyourareaisfailingandyouknowyoucan make it work. Or maybe you feel as if you’re underemployed (workingbelow your potential salary or your skill level) or not putting your skills andtalents to their best use.Perhaps there’s a need for the product or service youwant to provide. Or you’ve simply figured out a better or a new way to dosomething.

e-fyi

Needinspiration?CheckoutTed.com/talksforinspirationaltalksonalmostanytopic,alladviceandmessagesyoucanusetoempoweryourselftolivethelifeyoudesire.Whilethesite’ssubjectmattercoverseverythingfromfitnesstoraisingkids,itstargetaudienceisanybodywithanentrepreneurialspirit.Speakersofallkinds—includingmanyentrepreneurs—offernewideas,inspiringthoughts,andpowerfulmotivation.

RealityCheckOnce you’ve made the decision to break away, there are several things youshoulddobeforetakingthenextstep.Conductingthoroughmarketresearchisamust.Makesureyouhaveenoughcash—notonlyforthebusiness,buttosustainyour life—and discuss the decision with your family. (You’ll find out moreaboutallthesestepsinParts1,2,and3ofthisbook.)

Remember, the rewardsof small-businessownershiparenot instantaneous.Youmust be determined, patient, persistent, andwilling tomake sacrifices toensurethoserewardseventuallydocome.

You’ll need to prepare for the responsibilities that come with businessownership.Whenthingsgowrong,thebuckstopswithyou.Youwon’thavetheluxuryofgoinghomeat5o’clockwhilethebossstaysallnighttofixachaoticsituation. Someonewhose only desire is to get rich quick probablywon’t last

longowninghisorherownbusiness.Throughsurveysandresearch,weknowthatsuccessfulentrepreneursshare

some common personality traits, the most important of which is confidence.Theypossessconfidencenotonly in themselvesbutalso in theirability toselltheir ideas, set up a business, and trust their intuition along the way. Smallbusiness is fiercely competitive, and it’s the business ownerswith confidencewhosurvive.

YourStrengthsandWeaknessesIt’s rare that one person possesses all the qualities needed to be successful inbusiness. Everyone has strong suits and weak points. What’s important is tounderstandyourstrengthsandweaknesses.Todothis,youneedtoevaluatethemajor achievements in your personal and professional life and the skills youusedtoaccomplishthem.Thefollowingstepscanhelp:

1. Createapersonalresume.Composearesumethat listsyourprofessionalandpersonalexperiencesaswellasyourexpertise.Foreachjob,describethedutiesyouwereresponsibleforandthedegreeofyoursuccess.Includeprofessionalskills,educationalbackground,hobbies,andaccomplishmentsthatrequiredexpertiseorspecialknowledge.Whencomplete, this resumewillgiveyouabetter ideaof thekindof

businessthatbestsuitsyourinterestsandexperience.2. Analyzeyourpersonalattributes.Areyoufriendlyandself-motivated?Are

youahardworker?Doyouhavecommonsense?Areyouwell-organized?Evaluatingyourpersonalattributesrevealsyourlikesanddislikesaswellas strengths andweaknesses. If you don’t feel comfortable around otherpeople,thenabusinessthatrequiresalotofcustomerinteractionmightnotbe right for you. Or youmaywant to hire a “people person” to handlecustomerservice.

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Therearemorethan8,000groupswithnearly2.4millionmembersworldwidededicatedtoentrepreneursonMeetup.comatentrepreneur.meetup.com.Findonethatsuitsyouandyoucan“meetup”withindividualsorforentrepreneurialevents,networking,support,andevensocializing.

>>FromtheHorse’sMouthOne of the bestways to determine if now is the best time to start abusinessistomeetwithotherentrepreneursandseewhattheydoandhowtheydoit.Lookingattheirlifeandtalkingaboutentrepreneurshipcanhelpyoufigureoutifyou’reready.

Oftenwhenyoutalktosomeonewho’sdoneit,they’lltellyouallthenegative things about owning a business, like the time they had towork a 24-hour day orwhen the powerwent out right as theyweretrying tomeet ahugedeadline.But thoseare the thingsyouneed tohearaboutbeforeyougetstarted.

Inadditiontomeetingwithsuccessfulentrepreneurs,youmightwanttotalktoafewwhoweren’tsosuccessful.Findoutwhatwentwrongwiththeirventuressoyoucanavoidtheseproblems.

Manypotentialbusinessownersfinditusefultoattendentrepreneurialseminars or classes. You can often find such courses at communitycolleges, continuing education programs near you, or online. Othersseekassistancefromconsultingfirms thatspecialize inhelpingsmallbusinesses get off the ground. There are associations andorganizations, both private and public (like SCORE or the SmallBusiness Development Centers) that are eager to assist you. Don’thesitatetoaskforassistance.Thesepeoplewanttohelpyousucceed.

3. Analyze your professional attributes. Small-business owners wear manydifferent hats, but that doesn’tmean you have to be a jack-of-all-trades.Justbeawareoftheareaswhereyou’recompetentandtheareaswhereyou

needhelp,suchassales,marketing,advertising,andadministration.Nexttoeach function, recordyourcompetency level—excellent,good, fair,orpoor.

GofortheGoalInadditiontoevaluatingyourstrengthsandweaknesses,it’simportanttodefineyourbusinessgoals.Forsomepeople, thegoal is thefreedomtodowhat theywant when they want, without anyone telling them otherwise. For others, thegoalisfinancialsecurity.

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Onceyouunderstandyourstrengthsandweaknesses,therearethreewaystodealwiththem:Youcaneitherimproveintheareaswhereyouareweak(bytakingaclassinbookkeeping,forexample),hireanemployeetohandletheseaspectsofthebusiness(forinstance,hiringabookkeeper),oroutsourcethetasks(suchascontractinganoutsidecompanytodoyourbookkeeping).Outsourcingsmalltasksandone-offassignmentstoexpertsatreasonablerateshasbecomemuchsimplerwithformalwork-for-hirefreelancerwebsiteslikeOdesk.com.

Settinggoalsisanintegralpartofchoosingthebusinessthat’srightforyou.Afterall,ifyourbusinessdoesn’tmeetyourpersonalgoals,youprobablywon’tbehappywakingup eachmorning and trying tomake thebusiness a success.Sooneror later,you’llstopputtingforththeeffortneededtomaketheconceptwork.Whensettinggoals,aimforthefollowingqualities:

Specificity.Youhaveabetterchanceofachievingagoalifitisspecific.“Raisingcapital”isn’taspecificgoal;“raising$10,000byJuly1”is.Optimism.Bepositivewhenyou set your goals. “Being able to pay thebills” isn’t exactly an inspirational goal. “Achieving financial security”

phrasesyourgoalinamorepositivemanner,thusfiringupyourenergytoattainit.Realism. Ifyousetagoal toearn$100,000amonthwhenyou’veneverearnedthatmuchinayear,thatgoalisunrealistic.Beginwithsmallsteps,such as increasing yourmonthly incomeby 25 percent.Once your firstgoalismet,youcanreachforlargerones.Shortandlongterm.Short-termgoalsareattainableinaperiodofweeksto a year. Long-term goals can be for five, ten, or even 20 years; theyshould be substantially greater than short-term goals but should still berealistic.

Thereareseveralfactorstoconsiderwhensettinggoals:

Income. Many entrepreneurs go into business to achieve financialsecurity.Considerhowmuchmoneyyouwanttomakeduringyourfirstyearofoperationandeachyearthereafter,uptofiveyears.Lifestyle.Thisincludesareassuchastravel,hoursofwork,investmentofpersonal assets, and geographic location. Are you willing to travelextensivelyortomove?Howmanyhoursareyouwillingtowork?Whichassetsareyouwillingtorisk?Typeofwork.Whensettinggoalsfortypeofwork,youneedtodeterminewhetheryoulikeworkingoutdoors, inanoffice,withcomputers,onthephone,withlotsofpeople,withchildren,andsoon.Egogratification. Face it:Manypeoplego intobusiness to satisfy theiregos.Owningabusinesscanbeveryego-gratifying,especiallyifyou’reinabusinessthat’sconsideredglamorousorexciting.Youneedtodecidehowimportantegogratificationistoyouandwhatbusinessbestfillsthatneed.

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TheOnlineWomen’sBusinessCenterhasalottoofferwomen—andmen,too—fromansweringquestionsaboutfinancingbusinessesorbecominganinternationalcompanytofindingamentor.Checkitoutat

www.onlinewbc.gov,whichispartofsba.gov.

Themostimportantruleofself-evaluationandgoal-settingishonesty.Goinginto businesswith your eyeswide open about your strengths andweaknesses,your likesanddislikes,andyourultimategoals letsyouconfront thedecisionsyou’llfacewithgreaterconfidenceandagreaterchanceofsuccess.

Figure2.1.PersonalGoalsandObjectivesWorksheet

ThisisanexcerptfromStartYourOwnBusiness,6thEdition.The Staff of EntrepreneurMedia Inc., Start Your OwnBusiness, © 2015, byEntrepreneur Media, Inc. All rights reserved. Reproduced with permission ofEntrepreneurMedia,Inc.