How to Start an Online Food Business Step by Step in 2021
are you a foodie or an aspiring restaurant owner with a fresh new idea well today we're going to learn how to start an online food business from idea all the way to launch and we've even pulled together a step-by-step beginner's guide so if this is just an idea for you at this point this video is going to be all that you need to get started stay tuned because we have some insider tips to give you every chance for success welcome back i'm your host michelle valli and if you are new i am very glad to have you here so leroy shopify is a channel that is dedicated to helping start and grow your online business so if you're a small business owner and you have big plans make sure that you're subscribed in every new business there are definitely hard lessons to be learned but the food industry though is in a league of its own there's lots of information there's lots of misinformation and there are legal consequences so if you're selling jewelry from home for example your product probably is not going to make someone sick but with food safety is always going to be a major concern the onus is on you to stick to the rules and be obsessive about quality all that scary stuff aside let me tell you why running a food business brings great opportunity so first of all it can be lucrative food will never not be a necessity secondly it can become very rewarding watching people enjoy your product will make all that hard work worth it in the end and lastly it's stimulating there is tons of room for creativity in this industry so if your business idea is too good not to pursue and you're ready to take on this challenge then me and kaylee are here to help you succeed and sell online kaylie is the owner of nona vegan she sells vegan italian sauces her business was founded as a tribute to her mom and her mom would actually say this is how italians get facials as they were stood over the steam of pasta now before we hop into it i just want to say that every country and every region is going to differ in terms of food laws so make sure that you are consulting with a lawyer and your local government all right without further ado let's hop into it in many cases you can find your niche through your passions or your hobbies kaylee says after my mother passed away i longed for the special times that we shared in the kitchen so i began to make her sauces myself cooking has this way of bringing back memories of loved ones certain flavors aromas and sensations have the power to send you right back to treasured moments kaylie's niche is vegan italian sauces but what's your niche okay first let's define what a niche is so niche is when you cater to a distinct segment of people tastes or ideologies you could choose to center your business around a specific cuisine or a specific food category you could look at selling a specific type of cooking maybe it's about a specific ingredient for you or maybe it's about selling to a specific type of person right there's lots of ways that you can take your direction of niche do competitive research do research to test out if there is a market for this product if it is a saturated market ask yourself how can my business be different so make sure that you're looking at your direct competitors and your indirect competitors also consider if there is a product that can be easily shipped and sold online and remember if your competition is doing well your odds for success are actually higher here are some key things to look at as you're doing your competitive research so first of all you're going to want to determine which regions you'll be able to serve second can your business fill a gap there's got to be a market gap which your business can fill in those regions and then third you're going to want to refine your offerings to exceed the regional competition so how do we do this here's what you're going to want to do start by compiling a list of competitors indicate whether they're direct or indirect next you're going to want to analyze their operations their menus their marketing and promotional materials and hot tip make sure that you also analyze their customer reviews that's going to help you find their weaknesses and make it your strength known a vegan certainly fills a gap because italian sauces sometimes have those milks and creams so kaylie's product really stands out from the competition because she has those unique ingredients food trends if you don't yet have a product idea make sure that you're looking at current food trends for some inspiration actually foodandwine.com predicts that the at-home restaurant experience as well as mushrooms are going to be one of 2021's hottest trends they definitely have one of those right so far but in any case make sure that you're backing all these up with research right look at search volume look at google trends and then check out what the competition is doing we asked kaylee how she did trend research to ensure that her products were a hit i am my own target demographic as a vegan for over 17 years gluten free for health reasons and a big time foodie i navigate the world of taste buds first industry trade shows are a great place to spot upcoming food trends in my industry most of the trends start in california so i keep an eye out there food business ideas all right let's spit fire a few business ideas just to give you some direction okay so you could do gourmet you could do artisanal you could serve dietary restrictions like gluten-free or nut-free maybe you want to think about social or environmental directions so you could try natural ingredients or even fair trade and you can even target ethical or religious markets like vegan vegetarian maybe kosher or halal so hopefully those have given you a few ideas just to get you started but as far as specific ideas you could do canned and pickled products you could try dried herbs think about baked goods or you can even do ingredient kits and if the actual creating maybe isn't your thing you can try curated resale all of these ideas that we just talked about are great because they are low investment and they require minimal equipment they also don't have much shipping challenges or legal restrictions sourcing ingredients food lawyer glenn for jameson stresses the importance of doing your homework when you're sourcing your ingredients trace the supply chain he says so that your packaging claims match what's inside and you're working with trustworthy companies we asked haley how familiar she was with her supply chain and she also had some tips on how you could become even more familiar with your own supply chain kaylee says i started the company on my own so i created the supply chain from the ground up i am still intimately involved with the supply chain though many things are now delegated and subcontracted out i do think the old adage of a ceo knowing each role within their business is important at the same time bringing in experts and delegating are essential parts of running a successful business developing a relationship with your supplier is going to improve the trust and it's going to make them feel more invested in your business so if you plan to produce a product that's going to be labeled as organic for example make sure that your raw ingredient supplier has those proper certifications before making claims on your packaging quick tip when you're sourcing ingredients so when you're just starting out you're going to obviously want to be producing in small batches so make sure that you're being as cost effective as possible by shopping for ingredients at consumer warehouse clubs like costco or sam's club you're also going to want to make sure that you're making connections so in certain industries finding suppliers might rely on word of mouth or personal connections so start building that foundation start building that network right away if you have a ton of ingredients or maybe direct relationships it just seems like a lot and maybe just a little daunting right now what you can do is you can look for a distributor or a broker who works directly with farmers as you're launching your business you definitely are going to have several avenues for your production so here are some ways that you can start selling you can start selling your food from home so some food items can actually be legally produced and sold right from your domestic kitchen but make sure that you are looking into regulations surrounding your chosen product for example in the us the fda requires that you register your home-based business as a facility if you need a bigger operation try shared commercial kitchens many facilities offer shared or co-op kitchen spaces that you can rent out either hourly or monthly just depends on your production needs now the benefits are reduced costs for one and the facilities are already registered as commercial spaces so that you don't have to deal with as much paperwork there are several region specific directories for shared kitchen spaces so you can check out culinary incubator that is if you are in the us you can check out ketchup that is for all my uk people and then if you're in australia check out book to cook you can set up your own commercial facility now this might not be the best option for new or budding entrepreneurs but maybe it can be a future goal most small businesses are not going to take the step until they're just bursting at the seams and they know that they have enough business to support it another option to look at is working with an existing manufacturer this option is great for a hands-off entrepreneur who's just more interested in the business side than the production it's a really great option for industry newbies too as a manufacturer should already be versed in the food and safety regulations so find a food manufacturer via a manufacturing directory and you can check out something like makers row to make that connection packaging branding and labeling ecommerce is pretty challenging when it comes to food because people can't taste your product through their screen right so that's why branding is especially important package design photography your website and the wording that you use it needs to help consumers imagine how your products might taste before you taste the product it's got to be something that attracts you right so quick tip because packaging is extremely critical in this industry you're going to want to consider hiring a graphic designer aside from the visual appeal of your packaging each country is going to have its own labeling requirements that might include best before dates nutritional information or allergen warnings if you plan to sell outside of your country especially to retailers make sure that you're checking the country's rules around labeling as well i will link food labeling and packaging requirements and information in the description box below how much does it cost to start an online food business now because of the different models that we've already talked about the cost to start a food business can vary wildly if you were to open a restaurant or a physical food store your upfront cost would be upward of 200 000 small batch producers who have home-based businesses have far less overhead so without leases or staffing costs you could realistically start with just a few hundred dollars to cover ingredients your website marketing costs and your packaging you can always expand into the commercial spaces later as your business grows and actually you may even be able to claim some of your housing and utility costs at tax time if your living space doubles as your business space so if it's not possible to run your business from home consider the monthly cost of a commercial facility as you're calculating your startup costs production facilities can be expensive but many co-ops and incubators offer shared kitchens to entrepreneurs for a fraction of what you'd be spending in a dedicated space in hamilton ontario the kitchen collective offers memberships for as low as 200 per month or 16 per hour how to price food products so ultimately there's no one magical pricing formula that's going to work for everyone but you need to know your costs and just keep adjusting your profit margins until you're getting it right to make your life a little easier i'll leave a link in the description box to a pricing calculator spreadsheet for you guys but one strategy is to forgo profit at first just to get your product in front of as many customers as possible otherwise if you do believe in the value of your product make sure that you are pricing it accordingly so try to compete on something that is actually unique that way you won't have to compete on price because eventually it is really just a race to the bottom kaylee lets us in on a few tips on how to price your products number one don't count on future price cuts when pricing i made this mistake multiple times i know it's tempting to think once i can order 100 units of x my price will go down so i'll just build out my pricing with that price break well that may be true keep in mind that most commodities continue to rise in price and will often offset that price break price for where you're at right now to ensure you aren't losing money you can always lower your price if need be number two price is if you've reached your ideal future distribution model if you always want to go direct to consumer then that's fine if you ever want to wholesale to other distributors or stores make sure you build your pricing out to include distributor margins broker margins and retailer margins when you do sell direct to consumer you can provide discounts and or keep the extra margin number three work your pricing both top down considering what you want the end use to spend what the market can bear what your competitors are doing and bottom up getting a fulsome look at your cogs and costs and building a comfortable margin for yourself based on industry standards number four cold call successful folks in your industry to get an idea of what industry standard is for margins and markups how can covet affect your business covet has stirred up some new challenges in people's lives getting groceries prepared meals and affordability have been challenging for most of us if not all of us so if your business is able to solve one of these problems then you're going to have a better chance at success cost and availability are certainly challenges people are experiencing so it can be worthwhile looking into these so if covetous taught us anything it's that your business definitely needs to have an online presence there has been a shift from eating out to ordering in and this has created a surge in demand for things that can be easily and quickly ordered online also it's worth noting that starting a home-based food business is a lot easier in this climate especially if you choose to produce foods that are considered non-hazardous and don't need refrigeration this will allow you to leverage that online advantage and expand to different regional markets the fine print food and the law if you do your homework get proper licenses and meticulously track everything with your batches then the likelihood of you getting into any legal trouble is going to be low if you do get into trouble though the consequences can be severe as a food producer you're exposed to both civil liability and regulatory liability according to food lawyer glenford jameson the government can throw you in jail take all your products and destroy them and then shut you down or give you a big fine he says so to be on the safe side please do consult a lawyer with experience in the food industry it's going to be expensive at first yes but you might be thanking your lucky stars later down the line when you avoid even more costly consequences so here are some tips learn how to properly handle and store food to avoid getting people sick trace the supply chain ask questions of your suppliers and get referrals work with a lab to test your products labs can help identify and trace elements that may be known to cause allergic reactions keep thorough records track everything coming in and everything going out of your facility make friends with a food inspector they are there to identify any issues and set you up for success they offer you free advice so take it and finally get liability insurance be sure that you are covered in case anyone does get sick kaylie certainly does her due diligence she recommends to ensure you have adequate liability insurance and necessary licenses for your industry doing things the right way from the start will save challenges down the road ethics and transparency beyond legality bad decisions around ethics and transparency can ruin a brand the best businesses are going to ask themselves ethical questions about their suppliers how they treat their employees and how they impact the environment this earns trust respect and business from customers and your community shipping and delivery it's not a surprise that shipping food has its own set of challenges especially when it's being shipped abroad so check out the meat inspection act canada agricultural products act and fish inspection act just to make sure that your food is okay to be exported consider as well the potential risks on your product in its destination country technically speaking once products are in the shipping stream they do become the problem of the purchaser but that's pretty poor customer service right that's obviously not great for business so rule of thumb is to understand the rules of your shipping destination if this seems like a lot you may want to consider working with a fulfillment service if you do a lot of business across the border kaylee tells us about her challenges with shipping her products and she tells us about how she bypasses these issues she says i wish i hadn't started a refrigerated food company we need to ensure we ship with ice packs and cooler boxes for our products if i could do it all again i'd do a tea or spice company love that honesty order pickup and local delivery if you're selling an item that simply cannot be shipped by post maybe it's like fluffy cupcakes then you're going to want to consider alternatives that still allow you to sell online you can formulate a line of products that you know for sure will ship well like cupcake flavored cookies instead otherwise you can get local customers to order ahead online and pick it up so good news in response to covid we have actually put together a full guide to help you set up your delivery methods so i will leave that in the description box for you guys building a website in this era more and more people are searching online for food deliveries and products that they need this means you need to set up a virtual version of your business with a welcoming informative website and social media pages if you're looking to start an online food business which i know you are then shopify makes selling online easy fast and scalable you can get started with a free 14-day trial no credit card required and this is gonna give you a full two weeks to build a beautiful ecommerce store so that you can start making your sales right away i will leave a link in the description box for you guys to get started with your free trial the look and the feel of your website is going to be very important in helping influence a customer to buy a food product that they haven't tasted first so you can opt to diy your photo shoots or you can hire a professional who has experience with properly styling and lighting food shoot product packaging and close-up details of the product to show texture and true to life color but also experiment with lifestyle photography that suggests serving and pairing ideas now we have an entire video dedicated to shooting product at home with just your phone so make sure that you're checking that out right up here even if your website isn't supplying the bulk of your sales it's important to nurture it as a tool to connect with customers and tell your story remember the internet never sleeps and an online store is going to allow you to sell your products 24 hours a day this will allow you to increase your audience and open up your customer base and online presence with positive customer reviews will allow new potential customers to build trust in your company and your product retail and wholesale you can grow your business through retail partnerships you can expedite your success by getting retailers to be a part of your business and inviting them to care about your mission so for example your partnerships can be more familial where you're working with them to do menu pairings so i'll make sure to link some directories in the description box to help you guys find some retail partners offline marketing though your business plan may have no room for a physical retail strategy it is still very important to take your product to the streets and to the mouths of your potential customers so generate buzz by locally participating in farmers markets you can also try running a pop-up or you can partner with restaurants or other complimentary brands to host a tasting event why not host a private dinner party for influencers or maybe periodically invite customers into your process like a brewery tour for example you can also participate in food and beverage expos as things start to open up marketing your business is a deep topic a lot of your success especially in the food industry is going to rely on this so if you're interested in learning more register using the link below to gain access to a free 30-minute webinar and that will help you level up your marketing by changing the way that you think about your store's marketing funnel learn how to go from first day to first sale in this free training course i'll leave that link in the description box for you guys if you like this video make sure you're giving it a big thumbs up that helps our channel and our community grow now starting a food business is truly a complex topic so if you have any questions that have been left unanswered make sure that you're dropping those in the comment section and we'll create another video to help you on your journey thank you guys so much for watching i'm your host michelle bally and i will catch you in the next one [Music] bye [Music] you
2021-06-17 03:53
