artwork Friends, Family and Co-Workers say I should start a Business

SavinaRed

SavinaRed

So I've been playing with hot sauce now for over a year and have come to the point where people are saying I should start a business. Co- workers reorder my sauce all the time and I'm charging them $5.00 for a 5oz woozy. I work at a car dealership and all the detailers who are Hispanic are my biggest fans and buy it from me all the time. Coming up with a name is not an easy thing as I've been thinking about this for sometime now. I have a couple ideas that I'm bouncing off a few people but nothing permanent yet.
 
A quick story that happened a couple of days ago was a local restaurant owner who has a very successful business was at our dealership purchasing a truck and I asked him if he and his wife would critique my hot sauce and they gladly obliged. He said he would buy it from me and sell it at his business as he said it was really tasty and had the right heat level. Its primarily a hab sauce and its the main ingredient. I've had a couple other similar experiences like the one above. 
 
I know a local restaurant chain and grocery chain in my area where they would carry my sauce.
 
So any tips from you guys/gals in the business would be appreciated. Thanks !
 
Sort by date Sort by votes
The first thing you need to do is finalize your sauce.  Then send it out to strangers to critique. You may find their critique is vastly different from your friends and family.  A restaurant and a grocery store does not a business make, so I would also look at the potential of your local market.  Are there farmer's markets, a large number or grocers, festivals, etc.  If this is just a hobby and you are making it yourself then this is probably not a big deal.  If you are going w/ a co-packer you may have more than you can sell in a small market. Another thing to consider is your free time.  Do you have any now?  Do you want see see your wife and kids more than a couple times a month (slight exageration), if so maybe dip your toe in the water w/ the hobby route.  But even then you will need all the proper licensing and headaches associated w/ making it yourself.
 
Ken
 
Upvote 0 Downvote
There's several threads in this very section of exactly what you are asking.  Here's a couple to get you started.
 
http://thehotpepper.com/topic/44695-been-there-done-that-or-one-day-i-dream-of-starting-my-own-fiery-foods-business/
http://thehotpepper.com/topic/48717-looking-to-start-my-own-hot-sauce-company/
 
Also look for topics started by Gemini Crow or Sam&Oliver who have both recently gotten their businesses going.  Lots of people do, but you have to do it in the right order.
 
 
First things to ask your self are-
Do you know anything about running a business in general?  If not, take some night classes at the community college.
Do you know anything about running a food business?  if not, get to reading everythign you can, there's a ton of inforrmation on here about co-packer, insurance, labels, etc and elsewhere on the web.
 
 
In addition to what PepperDaddy said (which are all excellent comments), since you said people are paying you for bottles of sauce, you are techincally "in business" illegally selling an unlicensed food product.  If you get caught, you can be in some serious trouble.  In addition to being illegal, there is the potential that someone could get sick from something you made.
 
I'd encourage you to immediately stop selling the sauce.   
 
As PepperDaddy said, you need feedback from unbiased people, like the folks here on THP.  Many new sauce makers have given away samples for the expectation of people sending back a questionairre or emailing feedback.  I know it's expensive, and you are giving away product.  It's kind of a grey area, but, personally, I don't have a problem with someone asking for a couple bucks to cover shipping if you cannot afford to mail out 20-30 samples for free. 
 
Read-Read-Read----
 
Good Luck and Have Fun!
salsalady
 
Upvote 0 Downvote
salsalady said:
There's several threads in this very section of exactly what you are asking.  Here's a couple to get you started.
 
http://thehotpepper.com/topic/44695-been-there-done-that-or-one-day-i-dream-of-starting-my-own-fiery-foods-business/
http://thehotpepper.com/topic/48717-looking-to-start-my-own-hot-sauce-company/
 
Also look for topics started by Gemini Crow or Sam&Oliver who have both recently gotten their businesses going.  Lots of people do, but you have to do it in the right order.
 
 
First things to ask your self are-
Do you know anything about running a business in general?  If not, take some night classes at the community college.
Do you know anything about running a food business?  if not, get to reading everythign you can, there's a ton of inforrmation on here about co-packer, insurance, labels, etc and elsewhere on the web.
 
 
In addition to what PepperDaddy said (which are all excellent comments), since you said people are paying you for bottles of sauce, you are techincally "in business" illegally selling an unlicensed food product.  If you get caught, you can be in some serious trouble.  In addition to being illegal, there is the potential that someone could get sick from something you made.
 
I'd encourage you to immediately stop selling the sauce.   
 
As PepperDaddy said, you need feedback from unbiased people, like the folks here on THP.  Many new sauce makers have given away samples for the expectation of people sending back a questionairre or emailing feedback.  I know it's expensive, and you are giving away product.  It's kind of a grey area, but, personally, I don't have a problem with someone asking for a couple bucks to cover shipping if you cannot afford to mail out 20-30 samples for free. 
 
Read-Read-Read----
 
Good Luck and Have Fun!
salsalady
Click to expand...
ok thank you for that salsa lady. I will give it out and no longer sell it. 
 
Upvote 0 Downvote
SavinaRed said:
ok thank you for that salsa lady. I will give it out and no longer sell it. 
Click to expand...
 
SR - 
 
I've been thinking of the same thing for the last two years now.  Currently I'm approaching it like Ken detailed above, getting all my ducks in a row and readying everything to start farmer's markets this spring/summer.  Some simple legwork that you can do in a short amount of time to get 'legit':
 
1. Get an FEIN number - can be done in less than 20 mins.  You will use it to start your business.
 
2. Go to your county municipal site and fill out forms for a business license.  (local chambers of commerce can be very helpful)
 
3. Take the two above to a bank and open a commercial account.
 
4. Use the three above to obtain insurance.  Several threads here on the subject, in fact plenty of great 'how to start my hot stuff' info around here!
 
Once you have these things THEN you're ok to sell the sauces again*.  I'm still fumbling my way through these things but this will get you started.  Other things to consider:  You'll need a commercially licensed food safe spot to make your sauce.  The guy with the restaurant might be of help there - can you work in his kitchen after hours to produce the sauce?  Plenty of other options, but you'll have to track them down.  Co Packers - large runs, loss of quality control, but really frees up your time to market and sell your sauce.  
 
edit:  *you'll likely need inspection of space and/or approval on recipes from local health department to be fully ok
 
More than anything else SR - do not allow yourself to get bogged down with 'what ifs' and unknowns.  You love hot sauce.  You're pretty good at making it.  Stay the course.
 
And send me an address via PM - we can trade hot sauces for critiques and share in the journey.   :D
 
Upvote 0 Downvote
I think a lot of us are in a similar situation. For years now, I've handed out cases worth of hot sauce to friends, neighbors, co-workers between fall and Christmas. It generally gets great reviews (but are they just being nice?) and many have said I should go for it. My close neighbors also get lots of fresh salsa because I can eat only so much! In return, I am gifted with lots of home brew and other treats. I have followed all the advice here (thanks salslady) in making it very safe and tasty. However, it seems very difficult to make it a viable business unless you can put in tremendous hours. For now, I'm happy to keep it as a hobby, and establish a friendly barter system . . . but you never know . . . ;)
 
Upvote 0 Downvote
Can attest to LD: Also, don't bank an ANYONE saying "Dude, get that produced I'll totally buy a pallet/case/truck" of it for my restaurant.  Guaranteed they are nowhere to be found once you put up.
 
Be ready to spend a TON on product R&D.  But keep track of it all.  Get an accountant.  Keep receipts for everything:
 
Shipping
purchases
training tools (books, websites, etc)
cooking products to be used for r&d
products purchased for r&d
rental / utility fees associated with r&d
bottles
broken bottles
expired ingredients
expired samples
shipping costs
storage costs
transportation costs
consultation IRT product/business
business fees (registration, etc)
Location fees (farmers markets, etc)
Location equipment (tents, chairs, etc)
Cleaning Equipment
Cleaning Supplies
Office Supplies
Website fees
ISP fees (if applicable)
Taxes
 
etc, etc, etc.  Get yourself a nice big accordion binder/envelope and throw every single receipt in.  Let your accountant sort it out.  Give them the receipts that pile up every other week or once a month.  Don't be that guy to show up with a shoe box with 1000 tiny receipts on filing day.  With small/ambiguous receipts put a postit note on it with what it was for, or mark the line item on the receipts.
 
I just threw out $1320 worth of r&d glass and product that expired.  Was painful to do but after 12 months, and 74 recipes, I can't really keep all that lying around.  I've narrowed it down to my top 10, including dry spices.  I'm now focusing on production.
 
Get your poop in a pile before you set out.  You shouldn't rush it to market, no matter who says it's "the best ever."  Free samples for everyone, and save room for humble pie.
 
Upvote 0 Downvote
SmokenFire said:
 
SR - 
 
I've been thinking of the same thing for the last two years now.  Currently I'm approaching it like Ken detailed above, getting all my ducks in a row and readying everything to start farmer's markets this spring/summer.  Some simple legwork that you can do in a short amount of time to get 'legit':
 
1. Get an FEIN number - can be done in less than 20 mins.  You will use it to start your business.
 
2. Go to your county municipal site and fill out forms for a business license.  (local chambers of commerce can be very helpful)
 
3. Take the two above to a bank and open a commercial account.
 
4. Use the three above to obtain insurance.  Several threads here on the subject, in fact plenty of great 'how to start my hot stuff' info around here!
salsalady EDIT-
5. contact your local health authority and find out who is responsible for inspecting and authorizing the product.  Might depend on where and who you sell to, or where your processing place is.  Lots of commercial kitchen around if you think outside the restaurant.  Churches, masonic nlidges, community center, private schools after hours, fire hall, Your inspector may require the sauce get tested and approved by a Process Authority 9lots of threads about that here also...)
 
 
Once you have THOSE things THEN you're ok to sell the sauces again*.  I'm still fumbling my way through these things but this will get you started.  Other things to consider:  You'll need a commercially licensed food safe spot to make your sauce.  The guy with the restaurant might be of help there - can you work in his kitchen after hours to produce the sauce?  Plenty of other options, but you'll have to track them down.  Co Packers - large runs, loss of quality control, but really frees up your time to market and sell your sauce.  
 
edit:  *you'll likely need inspection of space and/or approval on recipes from local health department to be fully ok
 
More than anything else SR - do not allow yourself to get bogged down with 'what ifs' and unknowns.  You love hot sauce.  You're pretty good at making it.  Stay the course.
 
And send me an address via PM - we can trade hot sauces for critiques and share in the journey.   :D
Click to expand...
 
It's a challenge, but anything worth doing usually does have it's challenges.  Get your sauce out for feedback, take it, tweak it, do it again....(you can do this while working through the other steps above for the business side of things).
 
Also, be cautious of sending the sauce to reviewers for them to publish a review before you are ready to sell it.  Many (like our own JayT) will do a review and give you private feedback, but there have been some occasions where a reviewer gave an unlicensed sauce maker "stellar" reviews and promoted the product....I won't go any further with that other than to say when the sauce maker was arrested for non-food related charges, dead rats and dead cats were found in the house and on the kitchen counters.  (EDIT- I'm NOT suggesting your kitchen has rats in it!!!!!)
 
Anyway, why I bring that up is if you start getting reviews posted before you are ready to sell, it'll be hard to turn down the requests to "buy it now, I don't care if it's legal".  If your sauce is worth selling to customers, it's worth doing it right and your customers are worth doing it right for.
 
There are a TON of very knowledgible foodies on here that will giveyou  plenty of very good information..and if you run out of people willing to give you feedback...just let me know!  My FB Friends list is 90% sauce/chile/food related people!  :lol:
 
Keep us posted!
SL
 
Upvote 0 Downvote
Does Cali have any cottage laws in place ? Given the history of that State I imagine they may be stricter than the State of Ohio.
 
Thankfully Ohio's cottage laws are flexible enough for my dry rubs and spices to where some of these issues mentioned isn't so much a concern but i am limited to only selling within my States border including shipping, which is why I don't offer anything here, food related,  on this or any other site. I do have a jelly that will be a large hurdle as far as expanding beyond Ohio's State lines but I'm content at the moment but I am getting my ducks in a row for that.

Is something you have looked in to before going fulltilt so you can get your feet wet a little and make a more informed decision on your future plans ?
Whatever you decide.....Enjoy the ride !
 
Ohioheat, Ed G
 
Upvote 0 Downvote
Lucky Dog Hot Sauce said:
One thing to consider about friends, family, and coworkers: It's not their money. It's not their risk. It's not their life. It's very easy to tell somebody they should start a business It's quite another to do it for yourself.
Click to expand...
+1000000000000000000000000
 
Upvote 0 Downvote
ditto the +++++ about "not their money"  etc....
 
 
 
OhioHeat, most states have the cottage industry laws or Pickle Bill.  That allows low risk foods like jam, jelly, candy, fruit pies (not cream pies), pickles, baked goods, cookies, etc to be made at home and sold at things like farmers markets.  Each state is a little different in their regs.  As far as I know, hot sauce is not allowed under the cottage industry rules in any state.  Dry Rubs seem to be a Yes/No depending on the state. 
 
One other resource to track down is Shared Use, Incubator, or Community Kitchens.  Often times these are run by a parent organization that is non-profit for the purpose of helping new businesses.  Also!  Contact your local city or county health district.  Even if they aren't the authority that would be your final inspector, they know the ropes and they can often time refer you to a community kitchen that would be open to a part time renter. 
 
Upvote 0 Downvote
NO! It's All Good!  I was applauding your use of the proper term for 'hot sauce in a bottle'.....ie...-"shelf stable hot packed acidified products".
 
That's the proper name and folks looking to get into the industry need to learn that kind of stuff and know what it is. 
 
Upvote 0 Downvote
One recommendation I haven't seen yet is talk to a lawyer in your state that is familiar with your state's food code. Although it will involve shelling out some cash, it may prevent you from making some costly mistakes. A lawyer can also help you with the proper business form (likely an LLC) to shield your personal assets from liability claims.
 
Upvote 0 Downvote
midwestchilehead said:
One recommendation I haven't seen yet is talk to a lawyer in your state that is familiar with your state's food code. Although it will involve shelling out some cash, it may prevent you from making some costly mistakes. A lawyer can also help you with the proper business form (likely an LLC) to shield your personal assets from liability claims.
Click to expand...
Most of the time as a sole proprietor forming an LLC does very little to protect your personal assets.

Works more effectively in partnerships as I understand.

In CA it's $800 a year - my attorney referred to it as "an ego thing" "looks good on a business card". Those were the only benefits he could see in this state.

That said, I'm no lawyer and I know the price and possibly effectiveness differs from state to state.

You can always change it later & a sole proprietorship costs nothing and will help to file the DBA, and buy wholesale ingredients for prototyping while considering whether you're going to start a company and what type.
:cheers:
 
Upvote 0 Downvote
In my last two states (Oregon and Idaho), an a sole prop LLC is $100/year and can be done online via the secretary of state website. You then can get a EIN (also known as a Federal Tax Identification Number), which is helpful opening a business bank account, getting insurance in the business name, etc. The LLC name can also be different than the Dba name if you wish. A sole member LLC also goes on your personal taxes (Schedule C), so there's no need to file separate taxes.

...as always, check with people knowledgeable in your state.
 
Upvote 0 Downvote
Washington is about $200 to get an LLC registered with the state.  An LLC is only relevant to business in your state.  The IRS doesn't care if you are an LLC or a Sole Proprietor, both busniess structures file taxes as a Sole Proprietor using your personal Social Security number.
 
You don't need a federal EIN (Employer Identification Number) unless you have employees and are filing quarterly reports for employees.  If you don't have employees, don't get a federal EIN. 
 
You may want to talk to a lawyer about basic business issues if/when you get to the point of looking at an LLC, but (present company excepted) most lawyers don't know squat about food businesses.  I'd suggest finding a local Small Business Resource Center in your area.  They can get you through 95% of getting a business started.  They have SCORE volunteers (retired business people) that can help you work up a business plan for free.  Use your food safety inspector to figure out what you need for licensing and facility requirements, storage of product, etc.  Do not ask a lawyer, they most likely won't know and you'll be paying their time to learn what you can learn on your own from the same sources they would get the information from.     
 
Upvote 0 Downvote
You must log in or register to reply here.
Back
Top