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Food entrepreneurship startup guide

Discussion in 'Product Creation, Inventing, Importing, Sourcing' started by Scot, Aug 2, 2017.

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  1. pds
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    pds Bronze Contributor Read The Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Healthy, limited ingredients, transparency are becoming the norm. It is almost getting to the point where this is expected of products.

    As I mentioned above, I think it's better to start with the market you're trying to serve and fill a need. This could be a specific diet, allergen limitation, etc. The food and beverage market is getting super fragmented with good reason. This means more opportunities for entrepreneurs like us to tap into.
     
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  2. G-Man
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    The opposite of that story would be Krave Jerky. They saw a need for a mass market jerky product that wasn't complete garbage. They saw that the trend in mass market snack foods was to add non-traditional flavors to snack products. End result: Sold the company to Hershey for a ton of money. Another good one to google is Sahale growing to get acquired by Smucker's.

    Some people also just have a superior product and create their own trend that everyone else tries to copy later. There's a fast company article on the founder of Chobani that everyone interested in food should read.
     
  3. Scot
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    Awesome feedback @G-Man, thanks for answering those questions.

    Me personally, I'm focusing on creating/growing a whole category vs a specific item.
     
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  4. Camilo Ardiles
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    One question I was wondering while I was sleeping ( it might be a silly one) which are the common mistakes one can make when launching a food product? and also how do you minimize costs until the launch of it? I would not like to over spend before I do the launching.
     
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  5. Scot
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    This is definitely a @G-Man question for sure.

    I'm still pre-launch but I'll share some of my mistakes thus far.

    Choosing the right copacker can make of break you. My copacker has a great facility, reputation, and R&D. But, they suck at communication and have delayed my launch almost 2 months. Carefully vett your copacker and find one close to you if possible so you can drop in in person.

    Some other things I can think of that can lead to mis-steps in launch. Do your research. Know what your market is and who will buy it. Don't be afraid to hustle your ass off at a farmers market if you need to.

    Quality control is another mistake you can make. A lot can change to the products taste and consistency between your home cooking recipe and the final product that rolls off the conveyor. Make sure you're involved every step to ensure everything is correct. Product sourcing goes into this as well, which includes pricing. Keep in mind, if you're starting off with a GF, non-GMO, with some Cambodian super fruit, it's going to EXPENSIVE to make and your margins will suck.

    I'm kind of minimum viable producting my first product. I know my consumers are health conscious but I know what they want more is products in this space. While I'd love to have soy free and certified GF, it's too expensive now. Once I validate and get sales, I can always formulate a "healthier" option later.
     
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  6. Scot
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    That's definitely the way I'm approaching this, is starting at the customer and solving their needs. But that may not work with every product category.

    I need to get that book, it's been on my list forever.
     
  7. G-Man
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    There are literally a million mistakes you can and will make - just like anything else. Those mistakes are part of what will give your business value when you go to sell. Food (fortunately or unfortunately) also has a lot of barriers that aren't there with other businesses (e-commerce)
    I'm sure I'll think of others later, but here's some things we've run into in the last month or so. We're launching a new product line, so it's actually a timely question.

    Product:
    • Ingredients - If you use a copacker in one state, make sure your ingredients meet labeling requirements in all states. The benchmark state is CA. We design all our products to be CA law compliant for two reasons: One, the laws in CA will be the laws everywhere in 5 years. Two, CA is a country sized market unto itself. You don't want to exclude yourself from it. You also likely won't get picked up by a national retailer if they can't sell the product in their CA stores.
    • Ingredients 2 - Make sure all of your components and ingredients are easily sourced if you're trying to create a mass market product. If you're going for ultra-premium at a high margin, this may not apply. Example: Our product has seasoning. The seasoning contains an ingredient that the manufacturer only buys for us. This means an extra 8 weeks in lead time. If possible design the product around components/ingredients that everyone in your supply chain keeps in their normal inventory for all their customers.
    • Be straight forward with your vendors about your capital constraints - We have an overbox we're making for this product, but we don't even have a customer for the product yet, so it doesn't make sense to pay $300/color for 6 color plates for 3 different skus. Our box guy will use digital printing and an inferior board that gets us to 90% of the quality we want, and the unit cost is only slightly higher than the higher run box that would require us to pay for plates up front.
    • Learn about how your components are made - No one will be as interested in finding inexpensive creative solutions as you. If you need boxes, learn how boxes are made. Learn what kinds of boxes are out there. Go look at what's on the shelf and how it's packed. I spent an afternoon in a film plant learning how film for snack product packaging is made. Because of that, we were able to move a bunch of things around and find a way to make the film with a 10k up-front investment instead of the 30k everyone was telling us it would cost.
    It's a learning process. The key is being ultra curious about how everything that goes into your product is made.

    There's also a gazillion things to do with marketing, pricing and down channel stuff that's way too much to condense. If you run into specific issues when you're preparing for launch, put them here and someone will probably be able to help.
     
  8. Scot
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    Uh... what? Damn.. I didn't even realize different states had different laws. Are we talking labels here or ingredients?
     
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  9. G-Man
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    It's really how you label ingredients. The way I phrased that was probably a little misleading. So, you can sell a product with a prop 65 ingredient in CA, but you have to put the Prop 65 warning on it, which is basically like the "This shit will give you cancer" warning they put on packs of cigarettes. For obvious reasons, it's best to just avoid those ingredients.

    I wouldn't imagine this would effect your product @Scot as I'm sure the nature of the diet it's for means the label is pretty clean. You should still check for prop 65 compliance just to make sure though. I'd also google the ingredients to make sure there's no weird EU regs, either. You're going to have demand for that product in Europe too once you take it to market.
     
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  10. Scot
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    Awesome, thanks I'll look into Prop 65. I can't imagine any of my ingredients are scary, but I'll double check.
     
  11. Camilo Ardiles
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    Amazing thank you I will definitely come back to this post or another thread related to food. I already told some people about the idea and they think is a good one, I am now contacting others in my country who have done it in the past and see all the legal regulations/steps you have to make before lauching a food product.
     
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  12. Scot
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    Look forward to seeing your progress thread.
     
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  14. pds
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    Thanks @G-Man @MidwestLandlord. I wasn't aware of that. Fortunately, I'm going the good-for-you specialty food route made with all-natural ingredients so that shouldn't be an issue.
     
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  15. Scot
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    Made it to the end of the list and found one ingredient in my product. Damn, gotta list unleaded gasoline as a carcinogen....

    Just kidding. Thankfully nothing in my product is on this list. But damn that's a long list.
     
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