The Staff of Entrepreneur Media Inc. explain how you can launch a profitable specialty food business, with information on the hottest trends, insight from practicing specialty food business owners, and how you can differentiate your business. In this edited excerpt, the authors talk to several specialty food entrepreneurs who offer advice for startups.
There's no better way to learn the ins and outs of starting any small business than to speak with business owners who've done it -- either successfully or not. In fact, sometimes those who haven't been successful are the ones you can learn from the most! The following three specialty food businesses are still in operation.
Confectionately Yours Toffee
Susan Desjardins Burns’ husband’s aunt developed a toffee recipe in the 1970s in the Seattle area and sold it wholesale as well as at her candy store. In her 80s, she was still making the toffee, which had become popular. But while the toffee was up to its usual standard, the 80-year-old candy maker started to let business-related things like licenses lapse. When Aunt Lila was ready to give up the business, she offered to let Susan and her husband take the recipe and continue the family tradition.
When it became clear that Susan would be the toffee maker, she began to get her arms around the business. A nurse by training, Susan wasn't a baker or a chef. Aunt Lila taught her everything. “I changed only one thing about the recipe,” Susan says. “I use agave nectar instead of high fructose corn syrup.”
That was in 2005. Five years passed, and the toffee was making a profit. Up to that point, Susan had been renting space in a commercial kitchen, which meant it was a shared space. “I found that hard,” she says. So she used her five years of savings and built her own commercial kitchen in a garage at her home.
In Washington State, the Department of Agriculture regulates wholesalers. Susan contacted them to look at her space before she spent the $24,000 it took to build the commercial kitchen. The representatives gave her some advice on how to do it. The kitchen was designed to be sealed from the garage and with its own entrance.
She filed her paperwork and design to the state. “There were fees, but I didn’t feel they were excessive,” she says. Susan feels this upfront interaction with the regulators prior to building seemed to make the process work better. Some of the regulations are a little vague and she was able to get clarifications—for instance, whether a floor drain was needed, which would require some excavation. Her plan was approved in record time, she built her kitchen, and she's very pleased with that decision. “I know what's going on in my kitchen,” Susan says.
Confectionately Yours has no other employees besides Susan. “It is too much expense and I feel you lose quality,” she says. Her college-aged daughter created the company website. The only printed materials she has are business cards. Her main marketing is doing demos at each one of her retail outlets four times per year. This helps her remain on their minds in a competitive market where stores are trying new stuff all the time.
Yummy Yammy Salsa
Yummy Yammy of Vermont was born of owner Lisa Johnson’s desire to get the nutritious so-called “super food” sweet potato into her two young daughters’ diets more frequently and easily. U.S.-grown sweet potato salsa (with no tomato!) was her solution, and, as they say, the rest is history.
Lisa is convinced that once people try her salsa, they'll be repeat customers and they'll tell all their friends. To that end, while the thought of having a retail store never crossed her mind, she's often out doing demos in the stores that carry Yummy Yammy. If you're going to go to all the effort to do demos, Lisa says you should make a point of telling people to spread the word. She also created the Yum-bassador program which gives you free shipping on your first Yummy Yammy order on Amazon.com. From there, she's convinced you'll be Yummy Yammy’s best advocate and spread that all-important word-of-mouth advertising. Lisa also does other unique things like giving jars as prizes to trailrunners, a good target market for her healthy product.
Like many specialty food startups, Yummy Yammy started in Lisa’s kitchen. Now she has a co-packer who bottles and labels, and she goes to every production run.
“It's taken me five years to find my target market,” Lisa says. When you figure out who your target market is, she says, “figure out where they are, where their conversations are taking place, and join those conversations.”
Like many startup food business owners, Lisa makes one point loud and clear: It takes a lot more money than you think to get a business like this off the ground and to the point of feeling like it is a success.
“I thought five to ten thousand dollars,” she says, “to get started, reinvest, and grow. I really believed that.” She learned that you have to realize it either takes a lot of money or a long time to get beyond the startup phase. “Either plan to set aside a lot of money or find an investor right away. And don’t forget, not only is it very expensive to get into the specialty food market, but you don’t get paid right away; you have to make your product in advance and store it with an average of 90 days for the money on your sales [from wholesaling] to come in. In the meantime, there are a ton of expenses—things like promotions, demonstrations, and giving discounts.” And if you’ve invented a new food, like Yummy Yammy, it especially takes time. “It takes a lot to be the first,” Lisa says.
Jonathan and Sally Walpole of Wolfeboro, New Hampshire, started their chocolate business ten years ago, but it unofficially started way before that. Jonathan’s courtship of Sally included a special Valentine’s Day box of chocolates that he had learned to make himself. She married him, of course, and he's been making chocolate ever since.
They moved to the Walpole family homestead and built a commercial kitchen on the property. There they make the chocolate bars that grace many retail countertops around the region. The home production center works out great. “We can take breaks when we want,” Sally says. “It really suits our lifestyle.
“The first year,” Sally says, “we researched the kind of bars we wanted to make.” They chose a thick bar because it allowed for layers of chocolate with inclusions of nuts and berries that actually could be tasted in their entirety with each bite. They blend the chocolate to complement the flavors of the bars. Each chocolate base is a little different. It makes it a little more complicated, but it's just the kind of detail that puts the “specialty” in specialty food!
Just a year after starting the business, the Walpoles opened a retail storefront in downtown Wolfeboro, a resort town with a large summer tourist influx. They thought the tourist aspect would make the store worth it, but they found, on a day-to-day basis, people wanted to buy the more inexpensive candy bar with a local label to give as vacation gifts. And, ironically, local folks tended to look at the chocolate bars as tourist purchases. They began to feel like the retail store just wasn't making enough money, and took up too much time and tied them down, making it more difficult to visit children and grandchildren. The Walpoles recently decided to close the retail shop -- again, a business decision based on lifestyle choices -- letting other retailers sell the bars while they once again focus exclusively on production. Wholesale orders make up 80 percent of their business along with large orders for special events and mail order.
They have lots of advice for those thinking about starting a specialty food business, especially important before you even make or sell that first product. “Sit down with a business consultant and do a five-year plan,” says Sally. “The first year -- or even three to four years -- you aren’t going to make any money at it, or if you do, it will go back into the business. How will you deal with that? Think carefully before you get started. Make sure you think about how you really want to live your life and that your business fits into that quality of life. You want to have a living, but you also want to have a life!”