If food is your passion, it may seem like a no-brainer to start your own food manufacturing business. However, unlike Diane Keaton’s displaced ad executive in “Baby Boom,” there are specific guidelines you must follow in order to legally start and maintain your own food manufacturing business.
How to Start a Food Manufacturing Business
Here are some critical things to know before starting your food manufacturing business.
1. Find a facility.
There are only a handful of states that allow you to manufacture food in your home, and there are a number of restrictions on the types of foods you can manufacture. In this instance, it is probably best to find an existing food manufacturing facility. This will lower startup costs, as the facility should already have a majority of the equipment you need, and it should already be in an area that was previously zoned for food manufacturing.
2. Know what you’re producing.
In addition to understanding the end product you’ll be selling, you must have a detailed list of preparation steps and ingredients for everything you’re planning to make. This is also important for selling your food, as the Food and Drug Administration (FDA) requires that all food is labeled and meets food labeling requirements.
3. Develop your business plan.
As with any business, understanding your product, your market and your audience will be the keys to success.
4. Obtain the necessary licenses and permits.
Begin your search online at sites like License123 to determine the exact licenses you’ll need. The most common for food manufacturing are:
- Tax exemption to buy food wholesale: This allows you to purchase your ingredients at a discounted rate and will help in keeping overhead costs low.
- Food Safety Permit: Generally, this is obtained from your state or local government.
- Health Inspection: Your local health board will need to inspect your facility and clear it of any health safety concerns before you can begin to manufacture food there. Most of these inspections are regulated at the state level.
- Food Facility Registration: This is an FDA requirement for any business that manufactures, stores, handles or packs food for consumption by humans or animals in the United States. You may also need a warehouse operator’s license or licensure for anyone in your warehouse that operates specific types of machinery, like forklifts.
- Specific Food Handling Licenses: Some types of food are more heavily regulated by the FDA than others, and these require specific licenses if you’re planning to use them in your business. Foods such as eggs, meat and poultry will require additional certifications.
- Specific Packaging Licenses: Additionally, depending on how you package your food, there may be additional licenses you’ll need. For example, the FDA requires anyone[np1] who cans food to have a specific canning-facility license.
In addition to these food-specific licenses, you’ll also need general licenses, including a business license (generally at the local and/or state level); and DBA registration (generally at the local level).
5. Know your distribution model.
Now that you’re ready to manufacture your food, how will you distribute it? Are there any concerns regarding spoilage to take into account? Examine some of the best ways to ship food, whether it’s working with your local post office, UPS, FedEx or some other method. These details should be included in your business plan.
6. Fund your business.
Look into all types of funding options for your business, including small business loans and grants, loans from financial institutions, crowdfunding, etc. What’s the best way for you to generate the capital you’ll need to start your business? How much do you need in startup costs, and when do you project the business will become profitable enough to sustain itself? These are all details you should consider when developing your budget.
Starting a food manufacturing business can be a little daunting due to the additional regulations put into place by food safety organizations. However, it can easily become a rewarding career that allows you to flex your culinary muscles while generating income.