By Christine Myers, Region 2 Advocate
Did you grow up eating your grandmother’s special cake or your mother’s special gravy? Have you spent 20 years fine tuning a barbecue sauce or creating an alternative snack because you are gluten free or vegan? If so, you are not alone. Last week, Rutgers Food Innovation Center hosted a day-long bootcamp for more than 100 food entrepreneurs. While some attendees were just planning their business, most had already launched a food business and came to the workshop to learn how to grow.
The food industry is unique because the barrier to entry is low – anyone can bake a cookie and sell it. You don’t need to be a technology wizard or a financial genius, which is what made this event so interesting. The average age of the attendees was north of 35 and all but a few were still working in their careers outside the food industry. Virtually all the attendees had created or re-created their products and were encouraged by friends and family to turn it into a business. Only one member of the audience revealed that he didn’t particularly like his product, he just thought it would sell. Passion and ownership of their product drove the attendees as they plunged into the effort to create their own business.
Beginning a business is relatively easy; the hard part comes later as the entrepreneurs learn branding, packaging, manufacturing, sourcing ingredients, selling, and building the necessary infrastructure. They heard about the Hazard Analysis Critical Control Points (HAACP) plan and good manufacturing procedures, the chain of custody paperwork required for all ingredients, and labeling. They were advised to have third party certifications and audits before they declare their products organic, non-GMO, kosher, gluten free, or vegan. One speaker emphatically warned the audience to never declare their products “all natural,” because all natural is a term that can never really be proven through a third-party audit. Several companies using this claim have been sued – successfully.
Complying with these regulations is not easy or inexpensive, according to one owner. “I make six different types of potato salad, and each one is required to have its own HAACP plan.” Add his varieties of coleslaw and seafood salad to the list of required HAACP plans, and the result is an overwhelming amount of time spent on paperwork. Getting certified organic or non-GMO can take months of preparation and engaging and paying a third party to test your products, and of course, more paperwork.
These regulations give a food entrepreneur definitive steps they must follow even if it is expensive and time consuming. In addition to the regulatory burdens on food entrepreneurs, they also experience difficulties getting a major supermarket chain to put a product on their shelves, and consumers to buy it. A buyer from Whole Foods was very candid with the audience as he explained that food market is very competitive and space on his shelves is at a premium. He made it clear that he looked for a product “in the crease”. These are products that make the customer say “I never thought of that” or fills a void even customers didn’t realize existed. He gave an example of a product in the crease–plant-based frozen desserts. The buyer was correct, most of the audience hadn’t really thought about plant-based frozen desserts.
Although the panel never specifically addressed product liability insurance, it is important for all prospective food entrepreneurs to learn about insurance for food products and to get the right insurance for their business.
Thankfully, Rutgers stacked the room with external resources to assist and guide these entrepreneurs. Marketing experts, angel investors, the local SBDC, technical and food scientists from Rutgers, and others helped provide an enlightening day that left the entrepreneurs feeling more educated and empowered. Best of all, they became members of a community of small businesses willing to help one another.
Christine Myers serves as the Region 2 Advocate for the SBA Office of Advocacy, representing small businesses in New York, New Jersey, Puerto Rico, and the U.S. Virgin Islands. Myers works with small business owners, state and local governments, and small business associations to bring the voice of Region 2 to Washington DC. She can be reached at Christine.myers@sba.gov.