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Introduction
This business planning guide has been developed to help you get started in the processed food industry or for the established processor to use as a checklist. It's meant to serve as a general reference for food processors, to answer some frequently asked questions, and to recommend additional sources of help.
Starting Out
Starting or expanding your food business takes some planning. Six months to a year isn't an unreasonable amount of time to expect to spend in preparation for opening your business.
Business Planning
A business plan helps you formalize the thinking and planning process. Developing and recording a plan helps you systematically think through the steps involved in your business development.
Business Considerations
Developing and expanding your business is not a 1-2-3 process. It does not move along one step at a time. You are often thinking of many aspects of the business at once. Some parts of the planning and development may be easy for you. Sometimes you may struggle with a decision. This section covers a variety of business topics that you need to consider as you expand your business.
Food Processing Regulations
Do I need a permit or a license? All three levels of government have legislated acts and regulations dealing with food safety, packaging, labeling, licensing and taxation.
Facilities
While working on product development, you also need to be thinking about your production facilities.
Food Safety and Quality Assurance
Food safety refers to the production of food, which is safe and wholesome throughout the shelf life of the product. At the same time that consumers everywhere are demanding safe food, they also want high quality food.
Product Development
Product Development is one of the most rewarding aspects of the food processing business. The development of new products is an integral part of the manufacturing and commercial process and can take a great deal of company resources. Therefore, the most important part of the process is planning.
Processing and Packaging Equipment
Food processing equipment is used for sorting, cleaning (food and equipment), cutting, heating, cooling, mixing, moving, packaging, mastering and palletizing. Equipment is expensive so careful consideration should be given to the cost/benefit of capitalization. Is the savings or efficiency of using equipment sufficient to offset its cost in a reasonable period of time, as compared to the cost of employing more labor?
Packaging and Labeling
Packaging, which includes the container and the label or graphics on the container, does more than attract the consumer. It also protects your product from contamination and deterioration throughout its' life. It must also provide information about your product, in compliance with federal food labeling regulations.
Distribution and Sales
Distribution is the means of getting your product into the hands of consumers. Although distribution methods and strategies vary depending on the individual company, its product, business plan and target market, there are six basic ways to get products distributed.
Promotion
In order to sell your product, you need to promote it to wholesale buyers and to consumers through a combination of efforts including public relations, advertising and sales promotions. There are two target groups to reach; those who buy the product for resale and consumers who buy for their own use. Each target group should have a specific type of promotion.
Financing
It is said that there is really no such thing as risk capital from a bank. Although banks are concerned with the high risks of new businesses, they are still the chief source of debt financing for small and medium size businesses in Canada.
Sources of Assistance
Through the support of technical divisions such as Ag-Entrepreneurship, Business and Innovation, Processing Development and Food Safety, we supply a wide range of technical, financial, planning and market development support for farms, agribusiness and food processors.
Additional Resources |