You make a fabulous salsa/chocolate chip cookie/chicken pot pie. Everyone tells you that you should market that product. Go into business, they say. You could make your fortune!
It’s not that easy, says Diane Holtaway, associate director for business development at the Rutgers Food Innovation Center. Starting any business is complicated, but there are special concerns to starting a food related business. To assist would-be food entrepreneurs in the early stages of planning their businesses, the Rutgers Food Innovation Center holds a business basics seminar for food entrepreneurs on Tuesday, October 17, at 1 p.m. at the Rutgers EcoComplex, 1200 Florence-Columbus Road, Bordentown. Cost: $25. For reservations and more information call 609-499-3600.
The seminar focuses on the basics of operating a small scale food business of any type, from selling food to the public, perhaps as a bakery or a restaurant, to manufacturing food to sell through grocery stores, gift shops, and other outlets. Speakers include Holtaway and other staff members, Julie Elmer, associate director of food technology, and Christopher Shyers, business development specialist.
The seminar introduces would-be entrepreneurs to “everything they need to think about before starting a food business,” says Holtaway, as well as the services offered by the Food Innovation Center.
Government regulations regarding food safety can seem complex, and not following the rules can put a company out of business. One of the first issues a food business must deal with is finding a certified kitchen to produce the product.
“If the business is going to sell directly to the consumer, there is one set of rules. If it is selling to a wholesale market, there is a whole other set,” says Holtaway. For a retail business the kitchen the food is produced in must be certified, usually just by the county in which the kitchen is located. If the company plans to sell wholesale state regulations must be met.
Liz Duckman, owner of Nutty Ducky’s Brittles in Edison, attended a seminar at the center in 2005 and learned that her original dream of making her candies in her kitchen could not become a reality. Duckman left corporate America a few years ago “with a package,” and then went about trying to decide on a new career. With more time available she began making nut brittle candies and giving them away as gifts.
“Everyone told me it was so good I should sell it, and stupidly I listened to them,” she says jokingly. In her first plan she envisioned herself cooking up her candies in her own kitchen, packaging them herself, and marketing them. After meeting with the Food Innovation Center staff she knew that she couldn’t run a business that way. “It’s against the law to make food you are going to sell at home. You can’t even store it at home,” she says. “You need a lawful kitchen or a co-packer.” A co-packer, she explains, is a manufacturer who specializes in making food products.
While the kitchen may be one of the biggest obstacles for a food business, there are any number of other things the would-be food entrepreneur should know, says Holtaway. Just as for any other type of start-up, the first step is a good business plan.
Differentiate your product. It is particularly important for a food start-up to differentiate itself because there is so much competition, says Holtaway. In fact, 90 percent of food start-ups fail. “Whether you are selling house cleaning services or making truffles, you have to know what makes you different from any other company.”
Figure on feeding the multitudes. “Your friends may think that you make the greatest salsa in the world, but when you go to manufacture in large quantities the recipe is going to be different,” says Holtaway.
Find your funding. Food entrepreneurs have to have money to develop and produce labels and packaging, design a marketing campaign, rent time in a kitchen, pay a a co-packer, and ship the product to market — all before seeing a dime back on their investment.
Investigate price points. If the product isn’t priced right, it won’t sell. A food business must be sure the product can be manufactured at a price people will pay.
Keep up with trends. Knowing the trends in the food industry is one of the most important things for a food start-up. “To come up with a winning idea you have to do your homework,” says Holtaway. “Marketing to a 12-year-old girl is different than marketing to a 45-year-old mom.”
Some of the current trends in the market include ease and convenience of use. “Easy to prepare or no preparation” is a very important trend in the current market, she says. Customization is another trend. Targeting a specific market segment, rather than banking on general appeal, will make a product easier to sell.
Yogurt is one of the best current examples of market customization. There is the traditional yogurt with the fruit on the bottom, blended yogurt, yogurt for children, yogurt aimed at athletes, yogurt drinks, yogurt specifically for women, and reduced calorie yogurt. “Each product addresses itself to a specific consumer group,” says Holtaway.
There is one factor that cuts across all groups, though. Says Holtaway: “It has to taste great.”
Holtaway joined the Food Innovation Center when it opened in 2001. She sees her work there as an extension of her lifelong love of food and cooking. “I’ve always had a passion for food,” she says. “When I was very young I remember standing in the kitchen with my mom and grandmother and learning to cook.” She received a bachelor’s degree in food and nutrition from Rutgers University and then went on to get a master’s degree in business from New York University.
She has worked as a food editor for Ladies Home Journal and for two large food corporations, Unilever and Campbell’s. “At the Food Innovation Center I’m doing for small companies the same types of things I used to do for multi-million dollar brands,” she says.
The five-year old center can help its clients “do everything a large company can do except manufacture,” says Holtaway. “We have a team that can assist with all areas of the food industry, a technical staff, marketing, production, even an international expert.
The center is going to add manufacturing to its menu of services soon. The architectural plans for a food manufacturing incubator are currently in the final stages. When the incubator is built companies will be able to use the facility to manufacture small quantities of products.
The food and agricultural industry is second only to pharmaceuticals in New Jersey, says Holtaway. The center has assisted about 600 clients since opening in 2001.
Without the advice from the staff at the center Duckman isn’t sure her brittle candies would have made it from concept to production. After attending a seminar last June she was able to begin production in January, 2006. She says she has invested about $45,000 in the business, and while she has yet to see a profit, her candies are now available in stores in 10 states and she is now talking to potential buyers in Puerto Rico, Oklahoma, Arizona, Michigan, and Wisconsin.
Says the brand-new candy entrepreneur, “Without the knowledge and resources of the center, I wouldn’t be here.”