From hobby to side job

Daliente

Daliente

Hi all!

I'm looking for some advice in selling hot sauce. I've got the recipe down, sweet labels, a loyal fan base, and a grocery store offering to carry it. All I need to do now is get into a professional kitchen and start making it en masse.

My question lies in the legal/health code aspects of the business. I went on the FDA website so I'm familiar with the label requirements, but I don't even know where to start with what permissions I need to sell it. Do I need insurance in case someone gets sick? Any advice from someone who's pulled it off would be a big help.

Thanks in advance,

Jimi
 
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You don't need insurance but you risk being sued for millions and being personally responsible. Your LLC or Inc. will keep some of those assets separate, but still, you could lose your business. Also you won't be picked up by a distributor without insurance.
 
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There are several threads on this topic with a huge amount of info so be sure to search the site just in case we miss some points!!!


Yes like THP said you should have Insurance (both liability and produce liability), definately find yourself a commercial kitchen to rent out or find a Co-paker with a good rep. File for your LLC, S Corp, Inc which ever you decide. Check with FDA, USDA, your state Agriculture Dept and your county health dept to make sure you meet all of their requiremenys.
 
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Insurance and lawyer fees seem to be a big problem for many start-ups, and also finding a good commercial kitchen or co-packer. You'll also need to find an approved place to store your sauces since they're usually not allowed to be made or stored at your home
 
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Thanks guys. I found a post and an article that were pretty useful. Looks like before I can even get started I need to:

1. Incorporate my company
2. Find an attorney and draw up a non-disclosure agreement to protect the recipe
3. Find a copacker in my area (Brooklyn shouldn't be too hard) and find out their capabilities, rates per shift, etc.
4. Determine how much it will cost to insure my company and my product
5. Add up all these costs and work up a business plan

It looks like before I even step foot into a kitchen there's not only a bunch of homework to do, but also a decent chunk of cash to outlay.

Then once I've gotten that far I still run into the challenge of rescaling the recipe to ensure consistency, securing a dependable and cost effective source for the materials, and other expenses related to the production. Then I'll have to send the sauce to a company to analyze the sample and determine the nutritional info and update the label. Throw in a couple local licenses (yet to reveal themselves) and then I should be good to go.

Wow this seems a little daunting but not impossible. Fortunately getting into a few stores (possibly even a chain) and developing the marketing plan will be the easiest parts for me.

Does that seem like a pretty fair assessment of what I need to do? Am I missing any big points?
 
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I think it was all that stuff and so much more that dissolved all hopes of my friend and I selling sauce and salsa. But I give credit to those who stick it out and do it.
 
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You can probably start out selling at farmer's markets with less costs and government restrictions. It appears A lot of the strict laws are becoming more leniant lately since more and more people want to buy locally and past restrictions were making it tough for everyone but the big guys.
 
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Yeah my friend and I were thinking about selling it out of his aunts small town shop. But then you have to worry about if someone gets sick or wants to sue and all that so we decided to make stuff for ourselves. :D
 
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Yeah this all sounds pretty challenging but I want to see how far I can take this. Sometimes you gotta make your own luck, ya know? I've got my office hooked on the stuff and it's a small phenomenon among my friends, so I want to get it legit as soon as I can. My biggest worry is that by the time I spend all that money to get started I'd have to sell a boatload to break even. So thanks to all of you for your insights, this will be a sauce for the people!
 
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Daliente said:
Anyone work with a copacker before? That sounds like it could be the breaking point where most people stop.
Click to expand...

I am a copacker for sauces mainly such as hot sauce. Feel free to pm if you like.

We started out like you all, with our own product line and eventually grew to copacker as our main business.
 
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The #1 thing you need is PATIENCE, and LOTS of it. Nothing will happen overnight. If you are bottling your sauce yourself then you do NOT need to put the nutritional fact sheet on your bottle. The FDA allows for a waiver for small companies. I'm not sure what the exact number is, but I do know if you employee less then 10 people then you do not even have to apply for the waiver. This will save you lots of money.

Now...if you are bottling this yourself, you will soon realize that bottling the sauce can be a pain in the ass. I'm not sure what method you are using now, but when I started I was using a ladle and a funnel. With this method, it took me almost 2 hours to cook and bottle 2 cases, sometimes longer.

I've since, found and bought a small gravity/suction fed bottling system from www.handyfiller.com. This lil guys saves so much time. I now cook 10 cases at a time, and it takes me only 15 mins to bottle it. The filler cost roughly $400 and Bob is awesome to work with. I was his test case for "chunky" hot sauce.

I made my own pot using a stock pot and ball valve used for brewing beer. I also installed a thermometer so I wouldn't have to keep removing the lid while the sauce was cooking. You can buy such a pot for $300, but if you're handy with basic tools you can make your own for half the price.

You do need to register with the FDA but all of your inspections will be conducted by the State or County.

Most importantly...have FUN!!! If this starts to feel like "work" then you will loose creativity and maybe take shortcuts which will effect your final product. Your loyal customers will be able to tell.

Best of luck to you.
 
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Thanks CajunHeat! I'm exactly where you were about that 2 cases in 2 hours part. The part that's killing me is all of the sterilizing, I feel like it's 2 parts cleaning per 1 part making sauce.

You've got me thinking that I don't need to go straight to a copacker. I could probably start small in a kitchen (like at a grocery store) and do the bottling there so long as everything's up to code, right? Sounds like an easier way to start small and work out the issues before being committed to larger runs. It's not like I'm trying to make thousands of cases of the stuff (yet).
 
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Daliente said:
Thanks CajunHeat! I'm exactly where you were about that 2 cases in 2 hours part. The part that's killing me is all of the sterilizing, I feel like it's 2 parts cleaning per 1 part making sauce.

You've got me thinking that I don't need to go straight to a copacker. I could probably start small in a kitchen (like at a grocery store) and do the bottling there so long as everything's up to code, right? Sounds like an easier way to start small and work out the issues before being committed to larger runs. It's not like I'm trying to make thousands of cases of the stuff (yet).
Click to expand...

A lot of people have to fine that perfect number where it's more worth there time to just sell there product then to spend all that time in the kitchen making it. Then agian, some people are more happy selling 10 bottles a week for life then some who want to progress.
 
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