If you are looking for a fast-growing field for your next entrepreneurial venture or even for a new product that will sell well, food just may be the right match for you. Food and food products are some of the hottest products being sold by entrepreneurs. Here is a little information on the genre and a few of the reasons that we think it is so hot right now.
A Growing Industry
The American restaurant business grew one and a half percent last year. This may not seem like a lot, but keep in mind that many industries barely remained flat or even lost ground. There are other good indicators as well; food co-op membership is at an all-time high, which packaged upscale and foreign foods are selling at higher rates than ever. Venture capitalists are catching on; it is much easier to get an investment in a restaurant right now than in other businesses. An entrepreneur recently was loaned $10 million for the development and opening of a restaurant based on the humble grilled cheese sandwich.
Because of the increase in consumer and investor interest, many entrepreneurs are becoming interested as well. But why do consumers care so much about food all of a sudden?
- Home and hearth connotations. American home life is less stable than it used to be, or at least we perceive it that way. What could be homier than a high quality meal? Whenever Americans are longing for simpler times, food is an easy answer. It takes years to create a traditional family, but a comforting meal can be had quickly. This is particularly true in the case of small businesses selling classic comfort foods, such as the grilled cheese sandwich restaurant discussed before.
- Health concerns. The obesity epidemic is rampant, which has led to heightened concerns about diet and health. If a product has been shown to lower the rate of certain diseases or to have other health benefits, many Americans will be interested. If you can offer a healthy product with comfort food appeal, the masses will beat down your door to buy it. Investors know that. In addition, many people have special health needs that are not being adequately met by most food manufacturers, such as the need for gluten free foods.
- Green fever. Many people feel that the environment is in a state of rapid decline. While most of us do not have the power to make huge changes, there is a lot to be said for making small changes that can add up quickly. Plus, buying green or locally sourced food is a good way to at least feel like you are making a difference. Green food and related items are big sellers right now for these reasons.
- Ethnic traditions. How better to experience a culture than to sample its eating traditions? Many Westerners are becoming hooked on exotic foods, with their new and interesting flavors and textures. Packaged exotic foods are enjoying particular success right now because they make it easy for people to sample new and interesting foods on a daily basis. In the restaurant business, people are interested in sampling cuisines that they have never tried before, such as Ethiopian and Taiwanese.
If you are thinking about getting into this in-demand line of business, you are not alone. It can be a very lucrative proposition if you approach it correctly and plan for success. Here are a few things to think about when planning a move into the booming food industry.
- Start small. You cannot jump into a new line of business feet first; test the water by trying a single food product and seeing how it sells. Start with a product that can later become the core of your brand, and then expand once that is successful.
- Know the regulations. Because of the potential for illness in poorly prepared food, there are many regulations for people who want to commercially prepare it. These vary from state to state and from area to area, so you will have to find out on your own which apply to you. The list will probably include ingredient labeling, health department inspections and special certifications for food handlers. Sometimes your local government gives special grants to cover these costs.
- Get your products out there. People may be reluctant to try a new food product, which is why you need to give them ample opportunities to see, taste and experience it. Get a booth at your local farmer’s market and sell product or at least hand out small samples. Cater for friends and generally do everything that you can do to expose people to your product. In addition, you may want to send samples to bloggers who post about your particular niche. This type of word of mouth advertising can be very powerful.
- Look for capital before you need it. Food businesses typically operate with very low margins, which can mean that there will be a long interval before you begin making a profit—or even break even. This means that you will likely need funding. Luckily, there are many venture capital firms and other lenders that are interested in food businesses. Compared to other industries, it is relatively easy to get the loans that you need in order to start your business.
- Talk to an accountant. There are some tax considerations when opening a food business that don’t arise as quickly in most fields. First, most food businesses need employees almost from the start; there are special tax credits if this is the case for you. In addition, there may be research and development grants that can help you as you try out new recipes, or at least tax credits. In addition, there are now special deductions for companies that are completely domestically based, which will probably include you.
Food and food products make up a unique field, but also one that is uniquely lucrative. They can be a huge success when run by the right person. Are you that right person?
