Deciding to start a food business isn’t something to be taken lightly. You commit thousands of hours to learning, testing, number crunching, and eating (my favorite part). It takes over your dining room, basement, and garage.
In summary: starting a food business is your life.
It’s been my life since I was 15 years old. I started selling cookies, moved to energy bars, and now I sell super-premium mustard. While some of my businesses were more like hobbies, I learned a lot from one to the next.
And one things always stayed true:
I had a business plan for every food business.
I know, I know. When you read “business plan” you probably threw your computer across the room. I get it. Business plans are dead weight. They sit on your desk (or deep in the corner of a filing cabinet). Some say they’re useless. While others swear by them.
I’m somewhere in the middle.
- My plan for Adams’ Cookie House? On the back of a napkin.
- My plan for Eddie’s Energy Bars? Over 100 pages
- My plan for Green Mountain Mustard? Just over 5 pages.
And I’ve read a slew of food business plans over the past few years – all varying lengths. Basically, it depends. If you’re looking for a bank loan you need a solid business plan. If you’re just selling at farmer’s markets you need a napkin plan.
Regardless of length, the meat of all business plans can be boiled down into 10 main questions you need to answer. I’ll mention all 10 here. Then, below is a food business plan template free for you to download.
Before I get started, there are two main reasons you need some kind of business plan:
1. It gives you a plan – without a plan, you’re going to flounder because there’s “so much to do”. Plans give you focus every day to bring your vision to life.
2. It helps with investment – if you don’t have the money to get started, investors not only want to eat a tasty food product, but they want to know you have a plan for world domination.
These are two BIG reasons to sit down and write a plan – if you’re starting out or you’ve been in business for a while. Business plans a great way to get your thoughts down on paper.
Now, what goes in a business plan? Luckily, that’s the next section of this post!
10 Things to Include in Your Food Business Plan
1. Company Details & Structure
This includes company name, address, phone number structure (S-corp, LLC, Sole proprietorship, etc), as well as how your company is split up among it’s founders. This is important because it makes it easier for people to contact you. Plus, company structure shows the government how you’re setup as an entity – and if and when investors can get involved.
2. Product Mix (present and future)
What products are you going to sell? Is it one product line with four skus? Three product lines with 5 skus? Or just a single product? Are all of them going to be in production or are you going to introduce new products over the next few years? Product mix is as much about strategy as it is about operations. It’s integral to the success of your company. Pro tip: when you’re starting out less is definitely more.
3. Food Product Pricing
Right after product comes pricing. How are you going to make money? Are your margins healthy (here’s How to Price Your Food Product)? If you don’t sell to a distributor do you have enough margin to account for one later on? While pricing can be increased and decreased, it’s best to start with profitable pricing in place.
4. Sales & Distribution Strategy
How do you get your product to the people? Do you just do farmer’s markets? Do you ship to retailers? How do you ship? Or, all you all online? Without a distribution strategy, you don’t have a business (but you do have a TON of finished goods in inventory). In my experience, it’s best to write down your distribution plan. I first started out doing all the deliveries myself. As we grew, I brought on one distributor. Now we have five distributors. And I sell online. And I direct-ship to retailers. I do it all. But, it’s been a distribution plan put into place over the past few years.
5. Competition
Hate to tell you, but you don’t make the only non-gmo salad dressing on store shelves. You have competition. What are their prices? How many skus do they have? What’s their distribution like? And how are you going to be different? Your product may be cheaper or it may be free of preservatives, but that may not be enough to go up against the grocery behemoths on the shelves today. Be honest about who is out there. Get your footing and press on. Focus on your company – not your competition.
6. Basic Financial Projections
Numbers don’t lie. I’ve been told that all my life – and it’s true in the food business. No matter how delicious your cream cheese roll is, you have to be able to sell it for a price people are willing to purchase it for. This means calculating healthy margins, determining your break even point (the number of units or sales dollars you need to sell to cover your expenses). And if you – or someone else – puts money on the table, they’re going to want to see how they get it back. Basic financial projections include: income statement, break even point, three years of sales projections, and a balance sheet (a list of the company’s assets and liabilities at a certain point in time).
7. Team
Starting a solo food business is hard. I wrote about it here. It can be done, but successful food businesses are built with teams — of 3 people to be exact. Someone to operate, someone to sell, and someone to run the numbers. It’s the company trifecta. If you want to build your business, find the people to help you. Include bios, past experience, and why they are part of the team to bring your food product to the masses.
8. Operations
If your food business was a car, it would be an 18-wheeler because there are so many moving parts to your company. You need to find a place to buy ingredients, find a kitchen space, get product produced, ship and fulfill orders, and manage the back-office. How will this all happen? Write it down – and be specific.
9. Customer Analysis
Who buys your product? You can find this out by test marketing your food product. Or, you can take a wild guess. I’d personally trust the data you collect by talking to people. Do they have families? Are they wealthy? Do they follow certain diets? Where do they live? Are they educated? Where do they buy groceries? By answering some of these questions, you begin to learn about your customers. It influences how you market to them and the channels you use. Plus, it helps you develop new products and expand your product line.
10. Marketing Plan
Speaking of getting in front of your customers, you need a marketing plan. As one of my favorite food company founders has said “it’s easy to get on the shelf. The hard part is getting off the shelf.” He’s right. You need a plan to move your products off the shelf and into your customer’s homes.
Once you’ve answered these 10 questions, you have a basic business plan to send to friends and family. But, there’s more. You can go beyond the basics and make a great presentation for the reader’s of your plan. Let’s explore 5 of them below.
How to Make Your Food Business Plan Rock Solid
1. Create a pitch deck
Reading through a business plan is boring. There are no pictures and it’s typically long paragraphs. Make it interesting by building a Power Point presentation. This makes it much more exciting for investors – and easier to send along, too! Want to see some great pitch decks? Check out Pitch Envy (mostly tech companies, though).
2. Have an appendix
If you find yourself drowning in market research, graphs, and pictures of your product, think about creating an appendix. This puts the need-to-know information at the forefront and supports what you’re trying to build in the back.
3. Re-read and edit it
There’s nothing worse than a spelling error in your business plan. If you’re not the best proofreader, send it to a friend to read over. Edit out what you don’t need (including unnecessary paragraphs, words, and sections).
4. Pair it with an elevator pitch
Pitch decks and business plans go hand-in-hand with an elevator pitch. It’s a quick 30-second pitch of your company – including business, product, distribution, and growth plan – to get investors interested. Elevator pitches are perfect for networking events, too, when you’re trying to answer the question “Now, what do you do?”
5. Find a business partner
I mentioned having a great team above — it’s important. Why? Because you get things done quickly – and you’re held accountable. And the most important person to partner with is your business partner. Find someone who compliments your weaknesses and brings TONS to the table. A business partners also strengthens your chance to secure funding for your food business venture.
After these five sections are completed, your business plan will be so well done you won’t banish it to the filing cabinet. This is a plan you could bring to the bank to see if they’d lend you initial funding – or to friends and family to get you started.
Conclusion
Business plans don’t have to be long. Just include the relevant information, skip the fluff, and remember this:
Your plan will change.
The second I finished my business plans, my company went in a different direction. But, you adjust. The true mark of any entrepreneur is their ability to change and think on their feet. Small business owners are perfect examples.
The more you have on paper, the better direction you have. When you have a plan, stick to it. If you blow your projections out the of water, go with it. If your product hits the market three months late, simply focus on selling it.
Your business plan is there to guide you when you don’t see a path. It’s there to remind you why you’re doing what you’re doing. And it’s there to serve as a piece of evidence to hold you accountable in pursuing your dreams.
Don’t spend time on the details. Get out there and make it happen. Start your food business, get the truck up and running, and land your first catering client.
You have a plan now. Download your template below to get started! Let’s go!
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