Does the idea of serving unique and flavorful delicacies and cuisines fascinate you or are you considering setting up your food business. As you must be aware, setting up a food business comes with its own set of challenges and hurdles. Entrepreneurs face numerous hurdles on the way to setting up a restaurant or food business. A large number of factors need to be considered prior to setting up a business starting from the ‘idea’ itself to planning, execution, customer engagement and retention, building brand reputation and credibility to service expansion.
Anyone in the food business has to work really hard and put in long hours to drive their idea to execution. From getting your business idea legally approved to finalizing location, entrepreneurs need to consider numerous areas.
Young entrepreneurs usually lack awareness about the steps involved in setting up a food business and end up committing mistakes that eventually lead to failure of their business models.
Entrepreneurs must perform some market research to understand some key points to setting up a food business.
Through this blog, we will highlight some major key points that you must know and fulfill prior to setting up your food business.
Key Points you must know before starting your food busines
Meeting the Legal Requirements
The first step to setting up a food business involves performing an in-depth research to understand the legal procedures and requirements you need to fulfill to set up a new business. This is the most important part and you must get familiar with the procedures to obtain trademarks, licenses and taxes you need to charge and pay for your new business. Rules and regulations to obtain licenses and other legal procedures can vary according to country and states.
The best option is to take a lawyer’s and accountant’s advice to ensure that your new business complies with all legal guidelines. You also need to go through the employment laws to get idea of government’s regulations on pay scale. This is important since you need to decide the pay structure in accordance to the government regulations infringement of which can lead your business into legal trouble.
Deciding between ‘On-Premises’ and ‘Off-Premises’ category
Food businesses are both ‘on’ and ‘off’ premises. On premises businesses are the ones having their outlets and ‘off-premises’ businesses refer to catering services. Both on and off premises food businesses have a huge customer base and both of the businesses are equally profitable. You need to first determine which version you are interested in and only then you will be able to proceed further.
Identify Potential Customers and Research Competitors
Both type of food business versions have different customer base. On-premises food businesses cater to the needs of general public while off-premises businesses have corporate clients, social occasions and cultural organizations as the main customer base. You need to identify your potential customers before starting a food business. You must also research competitors in your field to ensure your business growth and expansion.
Register your Business Name and File for Trademark Protection
The next step should be selecting a business name that involves performing an online search to analyze all food business name already registered with the government. The next step should be obtaining a trademark for your business. For this, you can perform a online search to see how you can create a unique and distinctive trademark that can be registered on your business name.
Designing a trademark involves considering numerous factors such as avoiding generic words, avoiding completely descriptive words, avoiding surnames in trademarks, using distinctive words and avoiding trademarks which cannot be registered. After designing your company’s trademark, you need to file for registering your trademark to ensure legal protection. Registering your business’s trademark will ensure quick recovery of your properties. For instance, if someone tries to utilize your business name on any social media platform for their business/profit, you will own a legal right to that account and you will be given right to that handle/account/page.
Design an Innovative and Unique Food Menu
Competition nowadays is too high and you cannot just enter the market without an innovative business idea. Thousands of restaurants exist at every single place these days and therefore, you need to perform an in-depth market research to analyze what type of services are being offered at different brands.
Researching and exploring the missing gaps in other brands’ products will take plenty of time and you can make your dish/cuisines more innovative and unique only once you come up with an appealing menu that no one else offers. Proper research will make you aware with the ingredients and techniques with which cuisines and delicacies you target are served by other brands. Try to design a menu that offers innovation in traditional cuisines and offers new and unique cuisines as well.
Analyze whether a market exists for your services/products
You need to perform research on whether potential customers/market exists for the products and items you seek to offer. Launching products having no market will only make your business last a few months. To prevent your business from running into losses, you need to figure out whether your products have enough market and whether customers will be interested in your services.
As a pilot version of your business, you can get your cuisines tasted for free from small groups of people in different regions and get their feedback on how they find them. You can also package and sell your products to a few retail owners before completely investing in the business to get market feedback.
Decide the Location
Location plays a vital role in deciding the success of the food business. You need to perform market research to analyze your potential competitors at the location you are planning to set up your business. You can select a location where other brands targeting services similar to yours are less established or a location where not enough restaurants are present. You also need to consider your customers while deciding a suitable location for a food business.
This implies visualizing whether a market exists for your products/cuisines at the location where you plan to set up your business or is it a location commonly visited by community. For instance, selecting a location having huge crowd visiting the market could work in your favor as it will have the potential to generate more revenue for your business. You must also decide on whether to buy a location or use a rented space for your business.
Deciding Prices for your products
Deciding prices for the products you offer is one of the most important factors to consider before starting a food business. The best way to pricing your products is to perform a market research and analyze the competitors’ prices for the products/cuisines you seek to offer. You need to examine your costs before deciding the prices. Costs will involve operational and maintenance costs, establishment costs, employee payouts, etc. You need to price your products in a way to ensure your business goes profitable and you never get into losses.
Also Read: How to get funding for your startup?
Defining Quality Metrics
You need to analyze how will you offer food products that conforms to standard quality norms, what quality metrics you define for your products and how will you ensure that your products are free from prohibited or toxic ingredients and procedures for delivering foods safe for human consumption.
Take advice from Experts and Mentors in the field
A novice generally does not have much knowledge on how to drive their business to success and have no knowledge about the do’s and don’ts of a food business. It is always good to take discretion and guidance from mentors and experts having immense experience in food business field. Having a mentor serves invaluable for your business success and growth.
You need to find an expert or mentor from your industry who can guide you about the do’s and don’ts, advice you on business matters, provide answers to your questions and with whom you can discuss new business idea. An expert from your industry will provide interesting ideas, give positive and negative feedback about your business ideas, help you formulate a strong marketing strategy, guide on legal and finance matters, etc. Hence, make it a point to consult an expert in your field and gain knowledge about all matters related to food business prior to opening a new business. You must also seek advice from accountants and attorneys who will guide you more on financial and legal matters.
Formulate a strong marketing strategy for your business
Engaging new customers is never an easy task and an entrepreneur has to put in an immense degree of effort to get new customers while also keeping the old customers hooked. Sound marketing is the most important factor that helps get new customers and results to tremendous revenue generation. It is impossible for a new food business to gain momentum instantly without the presence of a strong and working marketing strategy. You need to formulate a marketing strategy for your business prior to setting up your new business. You need to plan a strong marketing strategy as well as test it to see if it works in favor of your business. Depending on your location and business version, you can use both online and offline marketing techniques.
Offline marketing will involve distributing business cards, flyers and collaterals to advertise and promote your food services. Online marketing will involve advertising your products through social media platforms, Google Adwords services, website and so on. Online marketing will involve creating your official business account on social media platforms and advertising your products to attract new customers. You need to analyze the budget that you will allocate to both online and offline marketing campaign and also decide the frequency and schedule of online marketing activities.
Analyze Financials and potential business investors
Finance is the most important aspect when it comes to setting up your new food business. You need to consider the budget that will be required for the establishment and successful operation of your food business. Getting finances from potential investors is never easy and entrepreneurs face a lot of hurdles in getting investors and raising funds for business. You need to perform extensive market research to explore investors who will be interested in investing in your business.
You need to present your business idea and plan outlining your business’ USPs (Unique Selling Points) and marketing strategies you consider for your business to a potential group of investors to drive them to invest in your business. You can also consider approaching investors outside your industry. Getting investors from both inside and outside your industry will depend on strength of your business idea, your USPs, convincing power and your manner of presenting your idea.
Deciding about Team
You need to also figure out what type of staff you will require to run your business. This can include chefs, kitchen managers, waiters, bartenders, trainers, floor managers and sales/marketing professionals. You need to decide about the team size that you will require at initial level.
Decide Customer Services, Payment Modes, Customer Support
This involves deciding about the mode through which you will be offering customer services which can include both customer stepping in directly to your outlet or home delivery services. You must also decide payment options and also the mode through which you will address customer complaints. You can also address complaints through phone as well as online platforms.
Equipments and Technology
You need to analyze the equipments and appliances you need to procure for your food business. You also need to analyze the softwares that will be required for processing orders, tracking inventory, accounting and payroll software and business and financial management softwares.
We are sure that this post will familiarize you with the key points you must consider prior to setting up your new food business.
