4 Tips for Artisan Food Startups

So you still want to start a food business, despite the obstacles? Here are four things to consider:

1. Amateurish packaging won't cut it.

This is where many artisan food makers fall down. You spend so much time getting your bacon-caramel sea salt truffles to taste great that you barely consider what it'll look like on a store shelf. "If you make the best chocolate bar ever, but you're packaging it in a little bag that falls over on the shelf and breaks every day, there is no way we'll put that in the store," says Alli Ball, assistant grocery buyer at Bi-Rite Market in San Francisco. "Packaging and labeling has to be attractive and interesting."

Emily Olson, cofounder of the specialty food subscription service Foodzie, agrees that "unprofessional" packaging is the downfall of many. "If it's in a plastic bag, you wonder, 'Is this safe enough to eat?'"

"The packaging helps you trust what you purchased," continues Olson. "You can't run a business just by delighting people with good food. It has to look good too. And since we ship, it has to arrive in good shape; the owner has to have put thought into how it will travel. If someone sends a sample to us that's broken, we know we can't buy it."

2. Fill a market gap.

It's easier to sell a unique product than one that's similar to many others. Sure, your grandma's macaroon recipe is the best ever! Problem is the customer, surveying a shelf of macaroon brands, doesn't know that.

"It's a pretty basic part of a business plan," says Caleb Zigas, executive director of San Francisco business incubator La Cocina, "to stand in a grocery store and evaluate competitor products. You can't be a successful entrepreneur if you can't identify a market for your product."

Olson thinks the baked-good space is particularly crowded: "I think it's mostly that those are easy to make in your home kitchen," she says. "You'd have to be unique and really special to stand out." But she has noticed a lack of terrific basic jams. "People get creative with them, which is good, there's room for creativity. But they put in too much sugar, too many ingredients. There's room out there for jams that are just one or two ingredients and that preserve wonderful fruit."

3. Develop retail pricing savvy.

It's easy to cringe with Ball when she describes small producers who tell her they've been selling jam at farmers' markets for $10 a jar, so they'd like her to pay $9. "I can't do that!" Ball says. "I will have to price the jam at $11 and no one's going to buy it."

"Whole Foods won't take a product unless they can mark it up 50 percent," Zigas says. The right strategy is to figure out what the retail price should be, then work backwards. A 5- to 7-percent margin of profit is about right, he says. That price, naturally, has to take into account every single aspect of production and delivery, including the cost of ingredients, and (this is important) paying yourself. "A lot of new businesspeople forget that," Zigas says.

Of course, you'll have to account for scale. If you start making more product, where will you source your ingredients? Do production? Will you hire help? What about delivering to stores?

4. Research ingredient requirements.

Buyers of artisan products expect them to have high-quality standards. "At a basic minimum, we sell nothing with artificial ingredients, artificial coloring, high-fructose corn syrup, or artificial preservatives," recites Ball in a practiced tone. "If your food has animal products in it, they cannot have hormones or antibiotics." The rules at Whole Foods are similar. Would-be artisans routinely come into Bi-Rite bearing foods made with random ingredients bought from Amazon, or small amounts of food coloring. It won't fly.

It's tough: You're expected to make food with quality ingredients while keeping prices down. That's why not everyone makes it. But some do. The experts we talked with all know plenty of people making a living from food—it can be done. It's just a lot harder than it looks.

Image source: Flickr member @superamit under Creative Commons

CHOW contributor Joyce Slaton is an editor and writer in San Francisco. She takes her tea with sugar and milk and will sew you an apron if you ask nicely. Follow her on Twitter. Follow CHOW, too, and become a fan on Facebook.