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cooking cost of going professional? (from home cooking to sales)

B

brad

I use to cook my own hot sauces and other foods, and have been thinking of starting a business around it.

But how much would it cost to go professional? I understand there are lots of individual differences in costs when starting a business, but does anyone have an idea of how much the typical basic food-sale permissions/controls and necessary equipment would cost?

Would it be possible to start a small-scale hot-sauce business with only a few thousands in investment, or would it cost a lot more?
My idea is to finance the startup by having a ordinary part-time job at the same time, and then later go full-time with the hot sauce business if it works out as planned.
 
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brad said:
I use to cook my own hot sauces and other foods, and have been thinking of starting a business around it.

But how much would it cost to go professional? I understand there are lots of individual differences in costs when starting a business, but does anyone have an idea of how much the typical basic food-sale permissions/controls and necessary equipment would cost?

Would it be possible to start a small-scale hot-sauce business with only a few thousands in investment, or would it cost a lot more?
My idea is to finance the startup by having a ordinary part-time job at the same time, and then later go full-time with the hot sauce business if it works out as planned.
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Brad, as has been said many times here before (please look at the previous threads), the few thousand you are going to invest will pay for your product and personal liability insurance and a small percentage of your legal costs. I would strongly advise you do a bit more research, considering your questions, before diving into the pond. It's not as easy as just throwing it on store shelves and hoping for the best. Are you making it at home?...If so, is it legal in to do so in your state? Do you have commercial facilities available, as it is probably not legal to make at home. Do you have legal council, who knows about the food industry? Are you familiar with FDA protocol? If you can't answer any of these questions, hold on to your recipe, get the answers, and then you may be ready to delve into the food industry with your own product. May sound harsh, but it's better than someone getting sick on something you made at home, and they take your house, legally.
 
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Thanks for the answers and link to more info!

I'm genuinly suprised about the legal costs, I hadn't even thought about such much at all, are they really mandatory or could I skip them and hope for the best? :lol:

Since I don't own any professional kitchen, and can't afford one right away, I was hoping to maybe be able to use some local restaurants or producers kitchen when they aren't using it. For a small 'rent'.

I guess I really must go and read up a lot about the whole running a business thing. Sounds like it might cost quite a bit more than I was hoping would be enough for a small-scale startup.
 
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LLC's are fine, and cost a LOT less than incorporating, not to mention the tax benefits. However, NONE of the production of a product should take place within the walls of your home. It is overly easy to pierce the corporate veil of an LLC, and grab your personal assets as there is no distinction between your personal assets and the company's assets. Just a helpful hint.
 
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So it wouldn't be possible to start a small-scale business without any money but instead use a credit-card for short term credit until you start getting a profit?

Even 10K sounds a lot to me, you'd need to sell quite a lot of sauces to make a profit.

What alternatives are there that costs less to start-up? Maybe I should start selling someone elses sauces? Like a franschise, but in a smaller scale and for provision one bottle at a time.

I'd like to be able to introduce my own line or products later, if it's not possible right away.
 
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brad said:
So it wouldn't be possible to start a small-scale business without any money but instead use a credit-card for short term credit until you start getting a profit?

Even 10K sounds a lot to me, you'd need to sell quite a lot of sauces to make a profit.

What alternatives are there that costs less to start-up? Maybe I should start selling someone elses sauces? Like a franschise, but in a smaller scale and for provision one bottle at a time.

I'd like to be able to introduce my own line or products later, if it's not possible right away.
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Brad,
you can do that but you will be still spending that kind of money, and yes..you will need to sell a lot of sauces to make it back...gotta love this business. Plus you are allowed to show a loss for your business for 5 years...i know its a long time but thats the reality of making sauces (until you make the big time)and thats why we still have our regular job.....:lol:
 
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brad said:
So it wouldn't be possible to start a small-scale business without any money but instead use a credit-card for short term credit until you start getting a profit?

Even 10K sounds a lot to me, you'd need to sell quite a lot of sauces to make a profit.

What alternatives are there that costs less to start-up? Maybe I should start selling someone elses sauces? Like a franschise, but in a smaller scale and for provision one bottle at a time.

I'd like to be able to introduce my own line or products later, if it's not possible right away.
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Brad, I don't think you're comprehending the whole reality picture here. It's not like you are starting up a business selling paper clips, you are entering the food industry. You seem to want to get rich tomorrow for a couple hundred bucks. It's not going to happen. The fact you are even considering putting all the liabilities on a credit card is just plain scary. What research have you done in regards to this endeavor?
 
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I thought about the credit card thing too, but quickly tossed that idea.

What I'm doing is talking with restaurant owners, and people that are in the hot sauce biz (like DEFCON) and looking at the reality of the whole situation vs. what I am actually able to do.

Since I have no operating capital whatsoever, I'm going to have to save a good chunk of money to get started. I'm using a lot of my spare time doing research on the web, too. Speaking of the web, you'd have to consider having a website. Word of mouth only gets you so far.

I have to think about the costs of having peppers shipped to me year round since my garden won't even handle the small production I already do just for friends and family.

Then there's the FDA. I'm not even going to get into that whole mess. Unfortunately, you have to comply with their regulations. Don't even think about trying to bypass that.

It's funy how something that's so much fun to do in the kitchen of your house gets all tangled up in red tape when you want to go pro.
 
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This is a timely discussion, as I've been looking into various small food biz ideas recently, not just sauces. I talked to various bbq and restaurant owners and caterers locally and they say the same things said here-get a lawyer who knows the local/regional food business. Almost all of them have co-packers for their restaurant's salad dressing, bbq sauce, hot sauce, etc. for many practical reasons:uniformity of product, experienced quality control, less legal liability, etc. There seems to be much more involved than I considered, so I'm taking my time to make sure I cover all the bases. This time next year (harvest), I'll be prepared to put my products together in a way that's sensible for me. Heck, I could see turning into a local small-batch sauce bottler, as most co-packers around here have a 150 gal. minimum per recipe-that's 3,840 5oz bottles to sell! I know some who would want only maybe a few hundred at a time, sooo,anyway....
brookthecook
 
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I'm glad to see you've done your homework. Jumping into these kinds of endeavors can be quite costly. I NEVER expected to be in the food industry, and in some cases we learned our lesson with large expenditures that we weren't aware of. The idea of starting a business, with no working capital, and placing the whole thing on a credit card is fine if you are planning on going Chapter 7 or 11 in the near future. There are many rules and regulations tht must be abided by, and the tolerance for error is quite small and costly (FDA), for obvious reasons. Don't get me wrong, we are having a ball right now, but it wasn't all happiness and light getting here. I guess we are a bit lucky, having been able to actually turn a profit within 2 years, but I don't think our experience is the norm across the industry. I wish everyone luck if you are thinking of delving into an endeavor like this, just make sure the ice is thick enough, as the consequences can be ice cold.
 
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DEFCON Creator said:
I'm glad to see you've done your homework. Jumping into these kinds of endeavors can be quite costly. I NEVER expected to be in the food industry, and in some cases we learned our lesson with large expenditures that we weren't aware of. The idea of starting a business, with no working capital, and placing the whole thing on a credit card is fine if you are planning on going Chapter 7 or 11 in the near future. There are many rules and regulations tht must be abided by, and the tolerance for error is quite small and costly (FDA), for obvious reasons. Don't get me wrong, we are having a ball right now, but it wasn't all happiness and light getting here. I guess we are a bit lucky, having been able to actually turn a profit within 2 years, but I don't think our experience is the norm across the industry. I wish everyone luck if you are thinking of delving into an endeavor like this, just make sure the ice is thick enough, as the consequences can be ice cold.
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This is about the third post where you have hinted at the story of the Defcon early years. Any chance you can tell us the details. I think there are several of us who are planning on entering the biz and we could really benefit from you expertise.
 
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I NEVER expected to be in the food industry, and in some cases we learned our lesson with large expenditures that we weren't aware of.
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While I did envision (some time back) part-time catering and limited local sales of sauces, condiments, spice combos, etc., I didn't see all the aspects of the packaging and canning processes in commercial food production. With help from local sources and contributers here, I'm gaining an ability to 'ferret out' what I need to know more efficiently and build better potential business models. Thanks to all, great info here!
 
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darthcarl said:
This is about the third post where you have hinted at the story of the Defcon early years. Any chance you can tell us the details. I think there are several of us who are planning on entering the biz and we could really benefit from you expertise.
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Not a problem. I had been making wing sauce for about 15 years before I even considered selling it. It was all trial and error, and I would make up a batch every Superbowl. The early batches tasted like crap, but over years of tweaking with a great test market (drunk idiots watching football) I finally came up with something good. For years I would make the Superbowl batch, but as the years progressed, friends would ask me to make them a batch of wing sauce for an upcoming party they were having, not a problem. It wasn't until sitting down with a good friend of mine, that he told me I should sell it. I laughed at first, but he reminded me how many people have said they love the stuff over the years. After running it past the wife (my personal CFO), she agreed.

We had NO idea about ANYTHING in the food industry, which was kind of scary. We really didn't have anyone to bounce ideas or questions off of either. I did many late hour of research on-line and came up with a few questions answered, but there were an infinite more that I didn't ask, not knowing what to ask. We just started making the stuff in a friends commercial kitchen once a week, and bottling it according to what I read was the proper procedure. We then learned we HAD to have legal council. Well, all the jokes you hear about lawyers, well, they are true, we met a scum-sucking leetch that initially told us he was familiar with the food industry...Yeah, and I have some lovely beach front property in Las Vegas to sell you. Well, after about $15000 in legal fees, we found council that actually had a beating heart, and wasn't just another legal soul-sucker.

Sales by this point were ok, I was mainly just hawking my wares at local drinking establishments giving samples out to just about everyone. Sales began to grow, and myself and my wife both having regular 9-5 jobs, we were now in the commercial kitchen 5 days a week. Needless to say, we needed someone else to make this stuff. I found Kato on this very forum who turned us onto our present co-packer, which has been nothing but awesome. A co-packer takes an amazing amount of weight off of you when it comes to FDA rules & regulations, as the product comes sealed and everything is to code. Mind you, our first batch arrived from him, a 7 foot tall pallet with about 2000 bottles, a little more than we thought we could handle, thank God we had won the 2006 Scovies, so we were finally on the map, and were doing the Fiery Foods show in a couple months. Since then, things have been wonderful. I've met a tone of great people in this industry, and look forward to meeting many more. We started this venture for sh*ts and giggles, and have actually transformed an idea into reality, feels kind of good.

Mind you, there were many little kinks we found along the way, too many to list here, but I wouldn't suggest anyone enter this industry blind like we did, DO YOUR HOMEWORK, ASK QUESTIONS ON FORUMS, etc. We kind of lucked out in a way winning a pretty big award our first time out, but don't rely on luck, it'll bite you. Also, me and the wife have NO plans to quit our day jobs, even though it would be great to tour the country with wing sauce. The food industry in general is fickle, and there is always someone out there lurking, so make sure you get trademarks for everything. It's a little expensive, but it gives you peace of mind. DO NOT make products at home, unless you are in one of the small enclaves in the USA that allows it...It's the quickest way to lose everything you own, even if you are an LLC or Incorporated. If you make it at home, there is no distinction between your personal property (your home) and the business, and the corporate veil can get pierced as easy as a balloon with a pin. Look into local universities, some of them will actually help you locate a commercial kitchen for your production, and the cost is small. Look for free advertising EVERYWHERE. Advertising is expensive, but there are TONS of free ways to get your name out, be creative.

I hope this helps a little, sorry for the length. If you guys have any more questions, and I can answer them, I will.
 
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