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February 9, 2012
The whole "food start-up" thing is getting out of control—especially in the Bay Area! My phone is ringing off the hook and I am being bombarded with rich, bored professors, housewives and Gen-Y'ers who all want to launch their amazing food concept that, for some odd reason, NO ONE ever thought of until they did! Well, I have some news for you all … Kraft, Unilever and Nestlé have pretty deep pockets when it comes to paying people to come up with ideas, and if the concept is not out there yet, there is a reason; either it IS already out there (and you missed it), there are too many technical challenges to make it worth the price point, or, lastly … the market of people who want to buy it is so small that you will lose money trying to make money.
But the start-upers continue to grow as more people become dissatisfied with the corporate-chained-out, cardboard-tasting products on the market and want to be part of the solution! So if you insist on starting your own food product line—and have a vision of taking your concept from the basement to across the nation, or even if you just want to sell it locally—I have created a checklist that I encourage you to read before you call me or any other food-science consultant looking for one of those "food techie people that can help me develop my food product." So until there is a "Food Start-Up for Dummies" book, I hope this list helps you understand some of the challenges you have ahead.
Be a Man (or Woman) With a Plan: Do you have a plan? A business plan? Even though you and all your friends think your product is fabulous, you still need to market it to get everyone else to buy into its greatness. Have a plan that outlines what you will do once you have a finished, manufactured product. Food has a shelf life, and a marketing plan should be put together before the product is stashed and aging in a warehouse somewhere in the Midwest.
Cash Flow: Do you have money? I am not just talking about the money you need to pay a consultant (rates range from $75 to $250/hour by the way—or higher for big firms), but manufacturing costs? If you want to manufacture your product, you need money. You will have to either use your own personal wealth, find an investor who is willing to take a risk, or get a bank loan. Either way, you need to have money to buy ingredients, pay a co-packer, do microbiological testing, shipping, packaging, warehouse storage, etc. Unfortunately, unless you live in a state that has a cottage industry (i.e., Michigan) you cannot make this food in your non-health-approved basement and sell it. Even in Michigan, the rule only applies to non-PHF, which stands for "potentially hazardous foods," like dairy and meat and thermally processed foods.
Do Your Research: How do you know that your product is not on the market already? Has anyone tried and failed? What are the technical challenges that may prevent this product from becoming a reality? Figure out why nobody else has ever thought of this brilliant idea (chances are, it’s not because no one thought of it!). Google the heck out of your concept and visit every mainstream, gourmet and foodie shop with a website, in the U.S. and overseas. Have competitor samples tested for water activity, Brix and moisture, so you know what the industry standards are for that particular product.
Find a Consultant: We are the few, the proud, the food scientists, and if you don’t have any experience making or manufacturing products, you definitely need to hire one. There are big consulting firms and independent specialists—the key is finding the one who knows how to make your type of product. Making yogurt? Find someone with a dairy background. What about beef jerky? Find someone who made beef jerky for 100 years because beef jerky is a combination of art and science! Not all food scientists can make all food products, and you want someone who can breeze through it, not troubleshoot around too much. Interview several consultants and make sure you "connect" with them. Creating food gets personal, and you need to find someone you can trust.
Get an NDA/Confidentiality Agreement: People talk, and the food industry is a small place. Have your lawyer draw you up a simple nondisclosure agreement (NDA) and have anyone you share your idea with sign it. The guy you told your story to on the plane, the investor, your consultant … even your mom should sign it. The NDA just promises that they won’t tell anyone your idea—or worse, steal it for themselves. But be aware that one cannot patent a recipe, only a process.
Find a Testing Lab: Find a local certified laboratory that specializes in food testing and develop a relationship with them. Let them know what you are planning to do (after they sign an NDA!) and get a general idea of what types of tests will be needed to measure the quality and safety of your product.
Audit the Co-Packer: If you already know who is going to make your product, don't just take their word or even a third party’s word that their facility is clean and GMP-compliant. Pay your own auditor and make sure the co-packer follows all state and federal regulations. While the co-packer is ultimately responsible for anything that leaves their facility, it's still and always your good name on the line and your dream that will be literally and figuratively recalled if they screw up!
Do you still want to make your own product? It's a big risk, and thousands of products enter the market and fail every single year, BUT you could be one of the lucky ones, and you may just have that one idea that one of the big, evil corporations has not thought of yet. This list is not complete—there are probably dozens of other steps that must be taken—but you have to start somewhere! Now, stop procrastinating and get this out there before Kraft does!
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