We’ve all had that moment where we came up with the next revolutionary invention while daydreaming in the shower. Maybe after a drink or two (or three) with a group of friends, someone says something completely random that sends you on a long ideation session. The world has no shortage of ideas. Some people, like Netflix co-founder Marc Randolph, go as far to claim that there is no such thing as a good idea. “What you need to do is immediately collide your ideas with reality…hundreds if not thousands of times.”
Further, Randolph notes that the key to success isn’t a good idea. Instead, create systems and processes that allow you eliminate all of the bad ideas on the way to landing on the ones that actually work. “That has been one of the concepts at Netflix from the very beginning, and I fundamentally believe it is one of the most important things that they do that allows them to constantly stay ahead of the curve.”
As a new business owner, there is no amount of Google searching that will fully prepare you for the road ahead. The natural twists and turns will teach you lessons far greater than anything you can find online. The only catch is that you won’t be in a position to learn unless you get started!
We’ve already worked through the ideation phase of building a business; creating a strong foundation for turning your passion into a business, as well as figuring out where your business fits in the market. Now that it is time to actually operate as a business, what comes next?
Many early-stage food business owners skirt around regulatory requirements, such as business licensing and food liability insurance, as a way to save time and money. The relatively small size of their business allows them to go undetected. While these issues don’t typically jeopardize the integrity of their products, they do eliminate the ability to grow.
This is true, even for cottage food operations where home kitchens are permitted. If you are a cottage food baker that creates great products and you have a strong customer base, the convenience of a home kitchen will eventually evolve into a restriction. The need for a true commercial kitchen can stand between taking on additional clients, expanding operations, and increasing sales potential.
We’ve all had that moment where we came up with the next revolutionary invention while daydreaming in the shower. Maybe after a drink or two (or three) with a group of friends, someone says something completely random that sends you on a long ideation session. The world has no shortage of ideas. Some people, like Netflix co-founder Marc Randolph, go as far to claim that there is no such thing as a good idea. “What you need to do is immediately collide your ideas with reality…hundreds if not thousands of times.”
At the end of the day, it is ultimately your decision when it comes to what is best for your business. However, if you want to set your business up for long term growth, here are the key steps to go from business ideation to operation.
You don’t actually have a business until you register it. In future pieces, we will really break down the pros and cons of each formation structure but the most common structure chosen by new business owners is the limited liability company (LLC). If you’d like to go ahead and dive into more about business formation options, here is a great resource provided by the SBA.
The most commonly known and widely accepted provider of Food Manager Certifications is ServSafe. For those already comfortable taking the exam, it is $99 for a package that includes the online exam with a verified proctor. They also offer packages that include their ServSafe Manager’s Book that provides all of the knowledge necessary to pass the exam.
If you plan to spend countless hours creating and building your business, it would be wise to protect it. While you could go through just about any insurance provider to get coverage for your food business, the big-name providers typically don’t tailor policies specifically to food business needs. In many cases, this can mean you end up paying for coverage you don’t even need.
The Food Liability Insurance Program (FLIP) is a great resource for food business owners. For as little as $299/year (it is $399/year for businesses doing between $50,000-$100,000 in annual revenue), you can get a comprehensive policy that is designed for food businesses. Additionally, if you use the promo code ingredient10 at the time of purchase, you’ll receive $10 your annual premium.
You will need to acquire your Federal Employment Identification Number (FEIN) via the IRS for most business license applications. The name of the license and the regulating authority behind it will vary depending on the city, county, and state you are operating in.
An easy way to introduce yourself to this process is to talk to others that have gone through it. There are some amazing Facebook groups for cottage food operations, food truck owners, private chefs, meal prep, or any other food business you can think of. Most of the communities are very willing to share their experiences and advice.
