INTRODUCTION
Do you like food or want to open a restaurant and have a new idea? Well, today we’re going to learn how to start an online food business from idea to launch. We’ve even put together a step-by-step beginner’s guide, so if this is just an idea for you right now, this video is all you’ll need to get started. Stay tuned, because we’re going to give you some insider tips that will help you do well. (music with a fast beat) I’m Michelle Bali, and I’m your host. And if you just joined, I’m glad to have you. So Learn with Shopify is a channel that helps you start an online business and grow it.
So, if you own a small business and have big plans, make sure you’re signed up. There are always hard lessons to learn when starting a new business, but the food industry is in a league of its own. There is a lot of information, a lot of wrong information, and there are legal consequences for spreading false information. So, if you sell jewellery from home, for example, your product probably won’t make someone sick. But when it comes to food, safety will always be a big deal. It’s up to you to follow the rules and care a lot about quality. Let’s put all that scary stuff aside and talk about why running a food business is a great way to make money. First of all, it can make money. Food will always be a must-have. Second, it can lead to a lot of good things. All your hard work will be worth it in the end when you see people enjoying what you made. And lastly, it’s stimulating. In this field, there is a lot of room for creativity.
So, if you have a great business idea and are ready to take on this challenge, Kailey and I are here to help you succeed and sell online. The owner of NONA Vegan is Kailey. She sells Italian sauces that are vegan. Her business was started as a tribute to her mom. When they were standing over steaming pasta, her mom would say, “This is how Italians get facials.” Now, before we start, I just want to say that food laws will be different in every country and every region. So make sure you talk to a lawyer and the government in your area. Okay, let’s get started without further ado.
FINDING YOUR NICHE
Most of the time, your passions or hobbies can help you find your niche. Kailey says, “When my mother died, I missed the special times we had in the kitchen together. So I started making her sauces on my own. Cooking has a way of making you think of your loved ones. Certain tastes, smells, and sensations can take you right back to special times.” Kailey’s specialty is making vegan Italian sausages. What’s your specialty? First, let’s talk about what a niche is.
So, a niche is when you focus on a specific group of people, their tastes, or their ideas. You could build your business around a certain type of food or a certain type of food. You might want to sell a certain kind of food. Maybe it has to do with a certain ingredient or a certain type of customer for you, right? There are many ways to go in the direction of your niche. Find out about your competitors. Find out if there is a market for this product by doing some research. If the market is already full, ask yourself, “How can my business stand out?” So make sure you’re looking at both your direct and indirect competitors. Also think about whether or not you have a product that can easily be shipped and sold online. And keep in mind that if your competitors are doing well, your chances of doing well are actually higher. Here are some important things to keep an eye on as you look into your competitors. So the first thing you need to do is figure out which areas you can serve. Second, does your company fill a need? There has to be a need in those places that your business can fill. And then, third, you’ll want to improve your products to be better than the competition in the area.
So, what do we do? Here is what you will want to do. First, make a list of your competitors. Tell us if they are direct or indirect. Next, you’ll want to look at how they run their business, their menus, their advertising and marketing materials, and their best tip. Make sure you also look at what other customers have said about them. That will help you find their weak spots and use them to your advantage. NONA Vegan definitely fills a need, since some Italian sauces have milks and creams, and Kailey’s product really stands out because it has these unusual ingredients. Food trends. If you don’t have a product idea yet, look at what’s popular in the food world to get some ideas.
In fact, foodandwine.com says that both eating at home like you’re at a restaurant and eating mushrooms are going to be big in 2021. So far, they definitely have one of those, right? But make sure you back up all of these with research, right? Look at the number of searches and Google Trends, and then see what your competitors are doing. We asked Kailey what she did to find out what was popular so that her products would sell well. I am my own ideal customer. As a vegan for more than 17 years, a big foodie, and someone who doesn’t eat gluten for health reasons, I navigate the world through my taste buds first. You can find out about new food trends at industry trade shows. Most trends in my field start in California, so I keep an eye on that state. Ideas for food businesses. Okay, let’s come up with a few business ideas to point you in the right direction. Okay, so you could do gourmet, you could do artisinal. You could make food for people who can’t eat gluten or nuts. You might want to think about how you can help people or the environment.
So, you could use natural ingredients or even fair trade, and you could also go after ethical or religious markets like vegan, vegetarian, or even Kosher or Halal. So, hopefully, you now have a few ideas to get you going. But as for specific ideas, you could do canned and pickled goods, dried herbs, baked goods, or even ingredient kits. You could also try curated resale if making things isn’t your thing. All of the ideas we just talked about are great because they don’t cost much and don’t need much in the way of tools. They also don’t have many problems with shipping or with the law. Getting the food.
SOURCING INGREDIENTS
Glenford Jameson, a food lawyer, says it’s important to do your research when you’re looking for ingredients. “Follow the chain of supply,” he says. So that what you say on the package matches what’s inside and you work with companies you can trust. We asked Kailey how well she knew her supply chain, and she gave us some tips for learning more about your own supply chain. Kailey says, “I started the business by myself, so I had to build the supply chain from scratch. I’m still very involved in the supply chain, even though a lot of tasks are now given to other people or done by subcontractors. I do think it’s important for a CEO to know what each person in their business does. Bringing in experts and giving tasks to other people are also important parts of running a successful business.” Getting to know your supplier will increase your trust in them and make them feel more invested in your business.
So, if you want to make a product that will be labelled as organic, for example, make sure that your raw ingredient supplier has the right certifications before making claims on your packaging. When you’re looking for ingredients, here’s a quick tip. So, when you’re just getting started, you’ll want to make things in small batches. So make sure you get the most for your money by buying your ingredients at warehouse clubs like Costco or Sam’s Club. You’ll also want to make sure you’re getting in touch with people. So, in some industries, word of mouth or personal connections might be the best way to find suppliers. So start right away to build that foundation and that network. If you have a lot of ingredients or direct relationships and it seems like a lot and maybe a little scary right now, you can look for a distributor or broker who works directly with farmers.
PRODUCTION AVENUES
When you start your business, you will definitely have more than one way to make money. So, here are a few ways to start selling. From home, you can start selling your food. Some food items can be made and sold legally right from your home kitchen, but make sure you check the rules for your product. For example, in the US, the FDA requires you to register your home-based business as a facility. Try shared commercial kitchens if you need to do more. Many places have shared or co-op kitchens that you can rent by the hour or by the month, depending on how much food you need to make. Now, the benefits are lower costs and the facilities are already registered as commercial spaces, so you don’t have to deal with as much paperwork.
There are different directories for shared kitchen spaces for different parts of the world. If you are in the US, you can check out culinary incubator. If you are in the UK, you can check out Kitchup. Check out Book to Cook if you’re in Australia. You can open your own place of business. Now, this might not be the best choice for new or soon-to-be business owners, but it could be a goal for the future. Most small businesses won’t take this step until they’re completely full and know they have enough business to support it. You could also work with a manufacturer that already makes something similar. This option is great for a hands-off entrepreneur who is more interested in the business side than the production side. It’s also a great choice for people who are new to the industry, since manufacturers should already know the rules about food and safety. So, use a manufacturing directory to find a food manufacturer. For example, you could look at Maker’s Row. Packaging, branding, and labelling.
PACKAGING, BRANDING
When it comes to food, it’s hard to sell things online because people can’t taste them through their screens, right? Because of this, branding is very important. The way your packages look, the pictures you use, your website, and the way you talk about your products should help people imagine how they might taste. Before you try a product, there has to be something about it that makes you want to try it, right? So, here’s a quick tip: packaging is very important in this business, so you might want to think about hiring a graphic designer. In addition to the way your packaging looks, each country will have its own labelling rules. This could include things like best-before dates, nutrition facts, or warnings about allergens. If you want to sell outside of your country, especially to retailers, you should also look into the country’s labelling rules. In the box below, I’ll put a link to a page with information and rules about food labelling and packaging. How much does it cost to open a food business online?
HOW MUCH WILL IT COST TO GET STARTED?
Now, because there are so many different ways to start a food business, the costs can be all over the place. If you wanted to open a restaurant or food store, you would have to pay more than $200,000 up front. Small-batch producers who work from home have a lot less overhead costs. So, if you didn’t have to pay for rent or employees, you could probably start with a few hundred dollars to pay for ingredients, your website, marketing costs, and packaging. As your business grows, you can always move into commercial spaces. If your home also serves as your business space, you may even be able to claim some of your housing and utility costs on your taxes.
So, if you can’t run your business from home, add the cost of renting a commercial space each month to your startup costs. Production facilities can be expensive, but many co-ops and incubators offer shared kitchens to entrepreneurs for a fraction of the cost of a dedicated space. The Kitchen Collective in Hamilton, Ontario, lets people join for as little as $200 per month or $16 per hour.
How to set prices for food.
So, in the end, there isn’t a magic formula for pricing that will work for everyone. Instead, you need to know your costs and keep changing your profit margins until you get it right. I’ll leave a link to a pricing calculator spreadsheet in the description box to make your lives easier, but one strategy is to give up profit at first to get your product in front of as many people as possible. If you don’t think your product is worth that much, make sure you price it right if you do.
So try to compete in a way that is really different. So, you won’t have to compete on price, which is just a race to the bottom in the long run. Kailey gives us some advice on how to price your goods. First, don’t count on price drops in the future when setting prices. I made this mistake multiple times. I know it’s tempting to think, “Once I order 100 units of x, the price will go down, so I’ll just build my prices around that price break.” Even if that’s true, keep in mind that the prices of most goods keep going up, which often makes up for the price drop. Price based on where you are now to make sure you’re not losing money. If you need to, you can always drop your price. Number two, set your prices as if you’ve already reached your ideal model for future sales. If you always want to sell straight to the customer, that’s fine. If you ever want to sell in bulk to other distributors or stores, make sure your prices include margins for the distributor, the broker, and the store. When you sell straight to the consumer, you can offer discounts or keep the extra profit. Third, work on your prices from the top down and the bottom up. From the top down, think about how much you want the end user to spend, how much the market can bear, and what your competitors are doing. From the bottom up, look at your COGS and COS and make sure you have a comfortable margin based on industry standards. Number four, call successful people in your field to find out what margins and markups are typical in your field.
What effect will COVID have on your business?
COVID has given people some new problems to deal with. Most of us, if not all of us, have had trouble getting groceries, ready-made meals, and cheap food. So, if your business can solve one of these problems, you’re more likely to be successful. People do have problems with cost and availability, so it might be a good idea to look into these. So, if COVID has taught us anything, it’s that your business needs to be online. People are now less likely to eat out and more likely to order in. This has led to a rise in demand for things that can be quickly and easily ordered online. Also, it’s important to note that starting a food business from home is a lot easier now, especially if you make foods that aren’t dangerous and don’t need to be kept cold. This will let you take advantage of your online advantage and move into new markets. Food, the law, and the small print.
THE LAW AND FOOD
If you do your research, get the right licences, and carefully keep track of everything with your batches, it will be hard for you to get in trouble with the law. But if you do get in trouble, the results can be very bad. As a food producer, you could be sued by a private party or fined by the government. Glenford Jameson, a lawyer for the food industry, says, “The government can throw you in jail, take all your products, and destroy them. Then they can shut you down or fine you a lot.” So, to be safe, you should talk to a lawyer who has worked in the food industry. Yes, it will be expensive at first, but you might thank your lucky stars later if you can avoid even more expensive problems.
Here are some suggestions. Learn how to handle and store food the right way so you don’t make people sick. Track down the chain of supply. Ask your suppliers questions and get recommendations. Use a lab to check out your products. Labs can help find and trace elements that may be known to cause allergic reactions. Keep good records and keep track of everything that comes in and goes out of your building. Make friends with the person who checks the food. They are there to find any problems and get you ready to do well. They are giving you advice for free, so use it. Lastly, buy liability insurance. Make sure you have insurance in case someone gets sick. Kailey does everything she should. She says you should make sure you have enough liability insurance and the licences you need for your business. If you do things the right way from the start, you won’t have to deal with problems later on.
ETHICS AND TRANSPARENCY
Ethics and being honest. In addition to breaking the law, bad decisions about ethics and honesty can destroy a brand. The best businesses will ask themselves ethical questions about their suppliers, how they treat their employees, and how they affect the environment. Customers and people in your community will trust, respect, and buy from you because of this. Getting things to people.
SHIPPING AND DELIVERY
It shouldn’t come as a surprise that shipping food has its own set of problems, especially when it’s going overseas. Check the Meat Inspection Act, the Canada Agricultural Products Act, and the Fish Inspection Act to make sure that your food can be exported. Think about the risks that your product might face in the country where it will be sold. Technically, once products are in the shipping process, they are the buyer’s responsibility. But that doesn’t seem like very good customer service, does it? That can’t be good for business, right?
So, a good rule of thumb is to know the rules of the place you are shipping to. If this seems like a lot, and you do a lot of business across the border, you might want to work with a fulfilment service. Kailey tells us about how hard it is for her to ship her products and how she gets around these problems. She says, “I wish I hadn’t started a company that sells cold food. We need to make sure that our goods are shipped in cooler boxes with ice packs. If I could do it all over again, I’d start a company that sells tea or spices.” Love how honest you are. You can order local pickup and delivery.
ORDER PICK UP AND LOCAL DELIVERY
If you’re selling something that can’t be sent through the mail, like fluffy cupcakes, you might want to think of other ways to still sell online. You can make a line of products that you know will sell well, like cookies that taste like cupcakes. If not, you can have local customers order online ahead of time and pick up their food.
So, good news! In response to COVID, we have put together a full guide to help you set up your delivery methods. So I’ll leave that in the description box for you guys. Putting together a site. In this day and age, more and more people look for food deliveries and other things they need online. This means you need to set up a virtual version of your business with a friendly, informative website and social media pages. If you want to start a food business online, which I know you do, Shopify makes it easy, fast, and scalable to sell online. You can start with a free 14-day trial that doesn’t require a credit card. This will give you two weeks to build a beautiful online store so you can start selling right away. I’ll put a link to your free trial in the description box so you can get started. How your website looks and feels will be very important in getting a customer to buy a food product they haven’t tried yet.
So you can choose to do your own photoshoots or hire a professional who knows how to style and light food the right way. You can use the shoe packaging and close-ups of the product to show texture and true colours, but you can also try out lifestyle photography. That gives ideas for what to serve and how to pair it. Now, we have a whole video about how to take pictures of products at home with just your phone, so make sure you watch that right up here. Even if most of your sales aren’t coming from your website, it’s still important to keep it up to date as a way to connect with customers and tell your story. Remember that the internet never sleeps, so if you have an online store, you can sell your products at any time. This will help you get more people to listen to you and give you more customers. And a strong online presence with positive reviews from customers will help new potential customers trust your business and product. Wholesale and retail.
WHOLESALE AND RETAIL
You can grow your business by working with other stores. 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 like families in which you work with them to pair dishes. So I’ll make sure to put links to some directories in the description box to help you find some retail partners. Offline marketing. Even if you don’t have room in your business plan for a physical retail strategy, it’s still important to get your product out into the world and into the mouths of potential customers. So, you can create buzz by going to farmer’s markets in your area, running a pop-up shop, or hosting a tasting event with restaurants or other brands that go well with yours. Why not throw a private dinner party for people who have a lot of influence or invite customers to see how you do things? For example, you could give them a tour of your brewery. As things start to get better, you can also go to food and drink expos. Getting your business out there is a deep subject. This is going to be very important to your success, especially if you work in the food business.
So, if you want to learn more, sign up using the link below to get access to a free 30-minute webinar. This will help you level up your marketing by changing the way you think about your store’s marketing funnel. This free training course will teach you how to go from the first day to the first sale. I’ll leave that link for you guys in the description box. If you liked this video, make sure to give it a big thumbs up. This helps our community and channel grow. Now, starting a food business is a very complicated thing to talk about. So, if you still have questions, leave them in the comments, and we’ll make another video to help you on your way.
