A Coach for Specialty Food Entrepreneurs

You know you’re onto something great: everyone loves your recipe; no one else is selling anything like it. You’re sure to be a success, right?

Wrong.

The hard truth of the specialty food industry is that no matter how delicious or innovative your product is, you need more than quality goods to be viable in this competitive business. Unfortunately, being a great chef is not the same as being a great entrepreneur.

At CookItHere, we’ve come across a resource that can help fledgling food businesses get the footing they need to be successful. From writing a business plan to pricing your product, Deb Mazzaferro can help you develop the foundations of solid enterprise.

That sounded a lot like a commercial, but this is not a paid endorsement. We’re just excited to find such a perfect match for our audience. Deb Mazzaferro, known as “Coach Maz,” is a 30-year veteran of the specialty food industry who specializes in coaching food entrepreneurs. You can read about her and the services she offers at her website, www.coachmaz.com.

The following reprint (used by permission) is a taste of Coach Maz’s perspective on starting a food business—good information to get you thinking about the viability of your business.

Tough Love from Deb Mazzaferro

Do you believe these myths?

The biggest myth in small business and the real story…………..

Over the past 12 years, the most common entrepreneurial misconception I’ve encountered as a business coach and specialty food consultant is ….

Build it and they will come!

Nearly every specialty food company seems to believe THAT if you provide an outstanding product, the consumer will FIND it and BUY it and CONSUME it in massive quantities. Or at least enough so that Kraft foods will buy your business for many times the money you have invested.

Sorry! It doesn’t happen that way.

So, tens or hundreds of thousands of dollars are spent developinga homemade productinto a commercially viable one, finding a co-packer, tweaking it with a food tech and packaging it in unique and beautiful ways without any upfront marketing strategy. (In my cynical view, this is actually what is meant by “small businesses provide most of the jobs in this country”….as consumers of goods and services other small businesses provide).

Little thought normally goes into “what does the consumer want or need?” and “How am I going to sell it?”

The assumption is that once it’s made, the retailer will be so enamored that price won’t matter and logistics will solve themselves. The consumer will find this unadvertised, high-priced delicacy amongst the 1,000s of products on the shelves and be creative enough to figure out how to use it….at every opportunity.

Again and again I see quality products made, brought to market, sold… but little or no money made on the entire effort.And so what I see repeated over and over is a fine product gets made which has very little margin. Once it’s presented to the marketplace, retailbuyers may have complimentary things to say about product quality, but want pricing, promotions and placement considerations. Frustrated by two years of product development only to be turned down by key retailers and distributors, owners think the system is broken.

So what is the truth?

Everything hinges on price! If the price doesn’t resonate with the consumer, it just won’t sell. Retailers know what their customers want and may reject the product outright. If there isn’t enough margin built into the pricing structure for a distributor discount, broker commission, promotions, marketing and profit……then why do it??

What is the reality?

The product gets made. “Everyone” loves it. The price is too high. Inventory needs to be sold, so margins are compromised to get to the right price point or to pay for the unaccounted for sales and marketing expenses.

What is the solution?

Determine what the consumer wants or needs UPFRONT. Find a niche. Research a target audience. Find an opening in a growing category where you provide a unique selling proposition. What sets you apart? Why would your target audience buy yours over another brand….perhaps one they already love?

1.       Create your product from the retail price backwards to the cost of goods you’ll need to obtain in order to be profitable after all expenses.

2.       Next is a business plan the outlines all the nuanced expenses unique to your niche….and then add 30-50% to that as a buffer.

3.       Work within the system; understand who you’ll need to partner with and how much each layer will cost. You are not going to change the system! Learn the lingo, ask questions, go to work for a specialty food company, get a coach!

4.       Set a dollar amount you are willing to invest….and lose. Most entrepreneurs get in and then find they spend half their time managing cash flow, raising money, securing lines of credit or putting in more of their own money than they ever expected. Once in, they feel the big break is right around the corner and they have a hard time throwing in the towel. After 3-5 years of losing money, they want to sell the business but have little chance of recouping their investment much less making a profit. However, if you are thinking of starting a specialty food business, buying an existing one and taking it to the next level is an ideal way to jump in and create immediate value by increasing revenue rather than starting a new company from scratch.

I know buying and running an existing business doesn’t celebrate your Grandmother’s cookie recipe, but……is it about that or having a thriving business?

You decide!

Renting a Kitchen: A First-Timer’s Guide

If you’re a food entrepreneur, and you’ve never rented a kitchen before, the process can seem daunting. First, there’s the matter of finding a commercial kitchen to rent, and then hoping it’s available when you need it. We’ve observed the difficulty in that process first-hand; that’s why CookItHere.com was born. Hopefully, you’ve found this blog in conjunction with the main site, where you can search for a kitchen to rent. CookItHere.com lists commercial kitchens for rent by location, and we’re working to add photos, reviews and availability to each profile to make finding a kitchen near you even easier.

When selecting a kitchen, do some research to be sure that you’ll have everything you need. You’ll want to tour the kitchen before you decide; nothing beats a visit to assess cleanliness, quality and space efficiency. Here are a few basic questions to consider before you make your choice:

  • Is it certified by the local health department? Is the certification current?
  • What are the rates? Some facilities rent hourly; others have longer minimums.
  • What equipment is available?
  • What storage options—refrigerator, freezers, pantries—are available, and what are the rules and rates pertaining specifically to storage?
  • How much security deposit is required, and what is the process for getting it returned to you?
  • What unique features does it have? If you’re doing classes, you’ll need viewing space, or tasting/ dining space. Some kitchens even have larders you can access (for a fee) for on-hand ingredients.
  • General amenities: if you’re planning to spend any significant time at the kitchen, check out parking and restroom facilities in advance.

Before you can use a commercial kitchen, you’ll have to fill out an application and submit certain documents to the proprietor. Here is a list of commonly required documents:

  • Proof of liability insurance. There’s no getting around it; any commercial kitchen worth its salt will require that you have liability insurance. Amounts vary, but most we’ve seen require coverage of at least $1,000,000  with the kitchen named as additional insured.
  • Food handler’s certificate. This varies by location and by your business, but most local governments will require some kind of certification for any commercial food operation.
  • Business license. It is possible to rent a commercial kitchen for non-commercial use—ask the kitchen operator about individual policies—but many require that you have a business license.
  • Classes and/or orientations. Again, depending on the location, you may be required to attend a health department class or pass an inspection or test before you can use a commercial kitchen. Other kitchens have their own orientation programs that you must complete before you can get cooking.

Once you’re up and running, let us know how you like the kitchen you selected. Cookithere.com allows you to post reviews. And if you find a kitchen that’s not on our site, be sure to let us know—we’ll add it.

Cook it at Home? A look at Cottage Food Laws

This year, many states have enacted or expanded cottage food laws. While the specific provisions of these laws vary from state to state, the idea behind cottage food laws is to recognize that the costs associated with commercial kitchens can be prohibitive to very small food businesses (cottage food operators), and to allow these businesses to prepare certain foods in home kitchens.

This is great news for food startups, nonprofit fundraisers, and even home cooks who make extra money by selling food. Before cottage food laws, even bake sales could be considered illegal; any food produced for sale to the public had to be produced in a commercial kitchen. For little guys — farm stands, peddlers and fledgling businesses — the volume just doesn’t support the cost of commercial production, so cottage food laws are critical.

However, cottage food laws have limitations. All states specify that only non-potentially hazardous foods can be produced in home kitchens. That is, foods that have a low risk of developing bacteria– i.e. baked goods without fillings, condiments, dry snack foods, and the like — are permitted, but less stable foods, like meats, must still be produced in a commercial kitchen.

Different states define “cottage food operator” in different ways. Some place a cap on how much revenue you can earn. In Michigan, for example, that limit is $20,000. Once your annual revenue exceeds $20,000, you’re no longer a cottage operator. Other states, like New York, don’t limit how much you can sell, but where you can sell it — farmers markets and temporary boutiques are okay, restaurants and retail venues are out.

In addition, many states still require a permit for cottage food production. Depending on where and to whom you sell your product, you may be required to pay a permit fee, take a class or pass a home inspection before a permit is granted. Permits are obtained from your local health department.

Labeling rules apply, too. In California, food produced in a home kitchen must be clearly labeled as such. Mississippi requires that cottage food operators use this less-than-enticing label: “Made in a cottage food operation that is not subject to Mississippi’s food safety regulations.”

For specific rules in your area, visit the web site for the department of public health in your state. California has easy-to-follow guides to their new cottage food laws at http://www.cdph.ca.gov/.  For a great comprehensive overview of cottage food laws by state, as well as updates on states where advocates are working towards making them happen, visit http://www.cottagefoods.org/.

Social Media Tips for Food Entrepreneurs

You know you’re supposed to use social media to promote your business. Maybe you’ve set up a Facebook page. Maybe you even tweet. Or maybe the thought of juggling posts, tweets, and pins makes your head spin, and you’d rather just get back to the kitchen.

You’re not alone. Social media can be overwhelming. So many sites: Facebook, Twitter, Pinterest, Instagram, YouTube…for a small business owner, it’s a lot to keep up with. But if you use social media properly, you can take advantage of this powerful (and essentially free) tool to get your message out.

Here are some basics to help you make the most of social media.

Be consistent. If you have to start small–say one post on one site per week–that’s fine. Just stick to it. Many beginners launch with a flurry of activity and then fizzle out.  The idea is to become a familiar contributor to the online community, and that familiarity comes through consistent actions: posts, tweets, uploads, etc. Once you’ve got that weekly post down pat, you can add another platform. (See “Work Smart” below.)

Be interesting and customer-centric. This is probably the most important principle of social media. Imagine a TV channel that only played commercials–no one would watch it. Likewise, if all your tweets are promotional, no one will want to follow you. You’ve got to deliver some real content in between the commercials. Imagine what your customer wants. If you’re a wedding caterer, share links to articles that brides might find helpful. If you’re developing a line of healthy snacks, post health and fitness tips. Educate, inform, entertain–give people a reason to follow you. If they like what you’re giving them, they’ll share it with their networks, and that’s where you start to see growth. Promotional posts are fine, just be sure they’re sandwiched between customer-focused content.

Remember, it’s a community. Get involved. Follow leaders in your field. Join online groups that mirror those you’d join in real life. For example, if your specialty is gluten-free cooking, join Celiac-awareness groups. If you want to cater for local businesses, find the Facebook page for the local chamber of commerce.  Not only will you make new connections, but you’ll find content that you can share, quote or retweet to keep your own pages interesting. Just be sure to give credit or link back to the source. If you’re not sure, ask permission before you share it.

Work smart. Use a program like HootSuite to manage multiple platforms. HootSuite allows you to post to all your accounts simultaneously. In other words, you can tweet it, post it or update it all at once. Or, you can select specific accounts for each message.

Get help. If you can afford it, engage a social media expert to manage your program for you.  If that’s too pricey, consider paying someone just to set up the accounts and show you how each platform works. Sometimes getting started is the hardest part.