Ginger S. Myers Marketing Specialist University of Maryland Extension Director, Maryland Rural Enterprise Development Center gsmyers@umd.edu www.extension.umd.edu/Agmarketing www.extension.umd.edu/MREDC
Dir irec ector o of the M e Maryland R Rural E Enterpris ise D Development Cen enter Extension M Mark rketi ting S Specialist, C , College o of Agricul ultur ure & & Natur ural Reso sources, es, U Univer ersi sity o of Maryla land Exten ensi sion. Over 30 30 year ars of experience ce i in production a agricu culture, a agri- busi siness a and c consu sulting t to this p is posit sitio ion. Currently w works w with a agricul ultur tural e entr trepreneurs, d , develops n new mark rkets and n network rking o opportun tunities, w , works w with n new a and begin inning f farmer ers, s, a and a assists w s with b business d ess devel elopmen ent and business p plann nning ng. Oper erates a a grass ss-based l liv ives estock farm w wit ith h husband.
Their specialty nature derives from some or all of the following characteristics: their originality, authenticity, ethnic or cultural origin, specific processing, ingredients, limited supply, distinctive use, extraordinary packaging or specific channel of distribution or sale. By virtue of their differentiation in their categories, such products maintain a high perceived value and often command a premium price.
Starting a specialty food processing business, like any start-up business, takes careful planning. You will need to devote time to market research, phone calls, letters, office visits, and a lot of decision-making before you turn out your first jar of jelly or can of organic vegetable soup. Months or even upwards to a year is not an unreasonable amount of time to expect to spend in preparation for opening your business. .
Anyone with a new product or service must know his “target audience,” and more importantly, why they would be willing to purchase his product. What is your customer profile? What is their age, sex, income, buying habits, where do they live, how much do they spend on related items, where do they shop, even what do they read? This is market research.
If you want to make a food product for retail sales, with very few exceptions, you will not be able to make it in your home. This means that you will either have to build your own facility and buy equipment, rent existing facilities and equipment, or contract with an existing food processor to “co-pack” your product for you.
There may be zoning ordinances or land use restrictions that affect what kinds of businesses you can operate on your property. You will need to seek out training on basic food safety and sanitation procedures that ensure a safe food product. Your product will also need to comply with the Food Regulation Standards developed by the Food and Drug Administration (FDA).
A key characteristic of many small or on-farm specialty food processing activities is that they are “income patching,” where the processing activity is one of several sources of income rather than the processor’s sole source of support. How much time and financial resources can you commit to this new enterprise? How much will and customers pay for your product?
Successful businesses start small. With limited funds you may need to look at investing ingenuity first, labor second, and money third. Stephen Hall in From Kitchen to Market suggests, “Depending on your approach, you can expect to incur minimum start-up costs of approximately $35,000 to $100,000 or more for each year for the first three to five years.” (Hall p. xiv). Consider how you will develop your product and markets, work out production procedures, and learn the peculiarities of the industry before building permanent facilities, hiring labor, or quitting your day job.
You Have a Marketable Product Developed the prototype and tested it out on people . Collected feedback and incorporated changes. Determined market form: shelf-life, fresh, frozen, etc. Determined batch size and worked with Process Authority to obtain an approved, scaled-up recipe. Determined cost of production
Business Planning Write a business plan that serves as your business roadmap. Consider liability insurance. Determine your form of business: sole proprietorship, corporation, partnership, LLC, subchapter(s) corporation. Register your business with the state. Get assistance from business resources, Extension, SBDCs and local economic development organizations.
Labels Decide on product name and what storage information must be on your label-refrigerate, refrigerate after opening, etc. Invest as much in your label as possible. It is the first thing customers will see. Make small batch of test labels and then consider any changes for larger printing run. If you plan to make health claims on your label you must have nutritional analysis done to be FDA compliant. Decide whether or not to invest in a bar code. www.uc- council.org
Production and Marketing Decide where you will produce your product: commercial kitchen, co-packer, on-farm. Acquire training and licenses to produce your product in your county and state. Find storage space for ingredients, packaging, and final product. Write a Marketing Plan that addresses product pricing, marketing outlets, and distribution strategies. Establish a production schedule.
• Developed the prototype and tested it out on people . Collected feedback and incorporated changes. • Determined market form: shelf-life, fresh, frozen, etc. You Have a • Determined batch size and worked with Process Authority to obtain an approved, scaled-up recipe. Marketable • Determined cost of production Product • Write a business plan that serves as your business roadmap. • Consider liability insurance. • Determine your form of business: sole proprietorship, corporation, partnership, LLC, subchapter(s) corporation. Business • Register your business with the state. Planning • Get assistance from business resources, Extension, SBDCs and local economic development organizations. • Decide on product name and what storage information must be on your label-refrigerate, refrigerate after opening, etc. • Invest as much in your label as possible. It is the first thing customers will see. • Make small batch of test labels and then consider any changes for larger printing run. • If you plan to make health claims on your label you must have nutritional analysis done to be FDA compliant. Labels • Decide whether or not to invest in a bar code. www.uc-council.org • Decide where you will produce your product: commercial kitchen, co-packer, on-farm. • Acquire training and licenses to produce your product in your county and state. • Find storage space for ingredients, packaging, and final product. • Write a Marketing Plan that addresses product pricing, marketing outlets, and distribution strategies. Production and • Establish a production schedule. Marketing Adapted from: The Northeast Center for Food Entrepreneur ship at the New York State Food Venture Center, Cornell Univer sity, http://www.nys aes. cornell. ed u/ ne c fe/
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