Starting a Food Business: A Simple Guide
Have a food truck idea stuck in your head? Wish a certain cuisine or dish was available in your area? Do friends tell you to open up your own restaurant?... What’s stopping you from making your culinary dream a reality?
Our team at Sous Chef wants to help you become a food entrepreneur — no business plan necessary. We believe all aspiring food business owners should focus on these 4 topics to jumpstart their success.
1. Cook & test: figure out what customers want
Before anything else, cook!
Photo by NordWood Themes on Unsplash
It’s easy to get distracted by the endless to-do list to officially create and maintain a business—there’s registering the business, purchasing insurance, applying for licenses, bookkeeping, accounting, building a website, running social media, renting commercial space, finding suppliers, hiring staff, and more. However, all of that time and effort won’t matter if in the end no one wants to buy your product over and over again.
Find out if you have something to offer that customers come back to you for. Fortunately, this is relatively easy to do with food. You can make and distribute your product to a few friends and family to start, or hop on social media to try and gain an initial customer base, but either way, test it out! Experiment with your potential offerings and see which of your ideas will create loyal customers.
Let’s say you, like so many others during COVID-19, have been honing your sourdough bread-making skills, and now you’re thinking about opening up your own bread bakery to help feed your community, have a side hustle, or pay your bills. You’d start off with making a few of your favorite loaves and maybe hand deliver them to a few local friends who may have previously expressed interest in your homemade breads in exchange for constructive feedback. Eventually you can create a simple menu to distribute to your followers and take pre-orders.
This is a critical step in the process to answer the following:
What are customers saying about your product(s)?
Why would customers buy from you instead of your competitors?
How much are they willing to pay for your product(s)?
What would it take to make them repeat customers?
As your business grows, make sure to stay focused on the fundamentals: your customers and your product(s). Try to become an irreplaceable part of your customers’ lives so they keep coming back for more, and even tell their friends about your product(s).
2. Keep your receipts: forecast your sales and expenses
Even if numbers aren’t normally your thing, you still have to ensure that your business will make money. Luckily, you should have all you need to determine if your potential sales are higher than your expected costs (i.e. potential profitability).
First, document the cost of your ingredients. You can easily do this in Sous Chef’s Ingredient section:
Next, build your recipes to understand the ingredient and labor cost of each item you’re selling. You can also do this in Sous Chef’s recipe manager, and more, like scaling up the recipe, adjusting the gross margin, and understanding how much you can earn and how much it will cost in ingredient and labor costs. In other words, you’ll have a very basic sales and expense forecast.
Once you enter your ingredients and recipes, see if it makes sense from a business standpoint:
How much do you need to sell to make an acceptable living?
Does the price make sense?
Do you need to find cheaper ingredients?
At this point you can create a basic profit and loss statement (aka P&L statement); don’t worry there’s a template included at the end.
Stay as lean as possible at all times in terms of your expenditures. Just because you’re seeing some traction today, doesn’t mean it will continue at the current rate. Prematurely investing in “nice-to-haves” for your business (such as new equipment or larger space) that will eat up valuable cash flow that you should be preserving until those purchases are justified by predictable future sales.
3. Sanity check: prepare for what may come
Image on motivering by Inhus Anderson.
Nothing ever goes 100% according to plan, and this is especially true within the food and entrepreneurship realms. You should be mentally and emotionally prepared for things to not go as expected. You may regularly question whether or not you can make this work financially or if this business or product even makes sense, and sometimes the answer will be “no,” but that doesn’t mean you should give up altogether. Take each and every opportunity to learn and adapt.
Much like how you taste a dish throughout the cooking process and add an extra dash of salt here or sprinkle of sugar there, running a food business requires preparation and constant adjustment. This is a totally normal part of the process, and also what often makes it fun.
Then why plan at all?
Building a successful business isn’t something you can easily do on the fly. Before meal service at a restaurant, you’d likely check that you have all your ingredients prepped and set up at your station so that you can reduce as many uncertainties as possible before the unpredictable dinner rush begins. Similarly, you’d want to bring that same energy to the world of entrepreneurship—prepare as much as you can, but please understand that some level of agility and flexibility will be necessary to handle all the curveballs that come with running a business.
4. The business canvas: a lightweight business plan
While there are a lot of elements to consider when starting any business, we are strong believers that the traditional 30+ page business plan is a bit much to tackle especially at first. However, you still need to think critically about the different pieces within the successful business operations puzzle (like supplies, partners, key activities, etc), which can all be addressed using the much simpler “business canvas.”
There are many “business canvas” resources and templates available online that help to visualize the various elements of your prospective business, and we offer an easily printable single page version in the starter kit below. Your business canvas can then act as the foundation for a potential business plan later down the line, if needed.
Image on edrawsoft.com
Ready to stop dreaming and start doing?
Chefs and entrepreneurs are constantly challenged to do more with less, and our mission at Sous Chef is to empower food entrepreneurs to do that and more! Sous Chef is a central repository for all your recipes, customers, orders, and so much more. We can help you start your business on the right foot by offering features that enable mindful business growth and facilitate efficient kitchen operations — just as you would expect from a Sous Chef.
The starter kit
We’ve assembled a starter kit based on this blog post to help you get started, including:
Photo by Jennifer Bonauer on Unsplash
Formatted spreadsheet to track all customers
1-pager menu template to share with interested people (read more)
90-day free access to Sous Chef (usually 15-days) to enter ingredients, recipes, and track orders
Recommended payment solutions
P&L forecast spreadsheet to model out your business (read more)
Business Canvas template (read more)
Starting a business is doable as long as you focus on your customers and your products first, and hopefully this starter kit helps make that even easier. We also offer a free 30min consultation to answer any questions on this process.
Enter your name and email below for free access to the starter kit and check the box if you’d also like to schedule a free consultation with our team.
Get the starter kit
Creating your menu
One of the first things to do is create a menu to share with your customers. Check out The 9 Simple Steps to Create Your Menu.