artwork Looking to Start my Own Hot Sauce Company

V

Valdal

Hello World I have just found this forum last night and decided to make a account and get into the world of hot peppers and hot sauces. I come from a family of business people and have been wanting to start my own food based business for a while now.
 
I am located in Ontario,Canada so do not know the many laws or legal troubles with starting a hot sauce company. I am doing this for the love of food and am still in the early stages of getting all the information I need to start a business plan.
 
So I came here to ask people I have no knowledge of how to start a hot sauce company or where to even start. I was thinking of finding a small office space to start off making small batches then as profits come in get a warehouse big enough to pump out the volume.
 
Does anybody have any advice or where to start. Should I start making batches at home? Look into a small office space with a big enough kitchen to start making batches? Look into a good marketing firm to help me with getting my product into peoples ears and mouths? Being in Canada i have a huge market to tap into with regarding hot sauce as there are many diversities scattered around from Caribbean to Indian and Chinese 
 
My first big step is to start testing out recipes and see which one is going to be the main starter for my company.I do not know Canada and growing hot peppers so I would have to see which peppers are grown in Ontario by local farmers or suppliers.
 
Any help would be appreciated. 
 
Thanks
 
Tyler Valdal
 
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Hey Valdal,
You seem to be a money focused guy, so I'll give you advice from a business perspective.  Treat this like any startup.  Do your research.  Fully understand the market place, your customers, and your operational expenses. Then model the financial numbers to see if it makes sense.  

Research the market space.  How crowded is the market space?  Who are your primary competitors?  What are the competitive price ranges per bottle?  What is your value proposition (you said its a Canadian hot sauce)?  Interview a LOT of people is see if there is even a demand for a Canadian branded hot sauce.  And when I say a LOT I mean hundreds from different cities.  

Interview inventory buyers for restaurants and grocery stores chains.  Ask them how much shelf space they give to hot sauce, what is their weekly turn on inventory and how many brands is that split across, what it takes to get on the shelves, etc.  What kind of volume would you need to produce to actually sell to 1, 2, 5, 10, 100 stores / restaurants?

Figure out the operations and expense side of the equation.  What is it going to cost to actually make that many bottles?  What are your operating expenses?  How many people are you going to need to hire to support production operations?  How much is labor going to cost?  What about distribution?  Do you hire people or outsource that?  How much is that?  If you are going go get any kind of traction in grocery stores, you'll probably need some serious marketing to build your brand so its highly recognized to the average customer.  How much is that going to cost per year.

Make a projected 5 year income statement.  Very conservatively model your sales growth over 5 years, taking into consideration how hard it'll be to get into restaurants and grocery stores.  How much revenue will that bring in.  Then take all you learned and model how much its going to cost to support that kind of growth.  If your revenue is greater than your expenses, yay profit!  Now in order to grow year over year, you have to re-invest your profit back into the company to support increased production, sales, marketing, distribution, and labor expenses.  Is there enough profit for that?  And finally, as the founder of the startup, did you make enough money to make all this worth while?

I don't know anything about the business of hot sauce.  But I know startups, and at an absolute bare minimum these are the steps I'd take before starting any company.  The key to any startup is to FULLY understand the competitive landscape, your target customers, your key value proposition(s), and the market demand for that value, then model the finances to see if its worth the risk and effort. 
 
Hope that helps
 
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I don't have too much to offer that hasn't been said already, but...
 
take your time and do things right the first time around...I am constantly telling myself to slow down and pace myself with all the idea's and opportunities there are out there...Organic growth....
 
I have been 'active' since Jan 2014, but getting all the behind the scenes stuff  together (business organization, sauces, taste testing, branding, etc..) for about 12-16 months prior to even introducing myself.
 
still learning, adapting, re-organizing and implementing new lessons, idea's, and corrections every day....
 
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