You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your baby food business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a baby food business?
A baby food business can be started for fairly little money.
Business owners need a commercial kitchen to prepare food in and a retail space to sell food at. The cost of a kitchen can be kept low by renting a commercial kitchen at a church, VFW or other nonprofit organization. At first, an inexpensive booth at a farmer’s market can be used to sell in-person to customers.
Other initial expenses include the price of ingredients and packaging supplies. These can be purchased in small quantities at first to keep upfront expenses down, though. As a business grows, more supplies can be bought with the revenue that’s brought in from sales.
What are the ongoing expenses for a baby food business?
The ongoing expenses for a baby food business include rental costs for a commercial kitchen and the cost of purchasing more supplies. These costs are minimal.
Who is the target market?
A baby food business’ ideal client is a new parent who wants to give their baby high-quality food and has discretionary income. Such a parent will likely be willing to pay a premium for good baby food, and they have the income required to buy premium baby food on a regular basis. Once hooked on a brand, a new parent will likely get baby food for several months or years. They’ll need baby food until their child can eat solid food.
How does a baby food business make money?
A baby food business makes money by selling packaged baby food. Businesses may sell baby food to customers in-person or online. Or, they may sell through other retailers.
How much can you charge customers?
Most baby food comes in a small package that lasts a few meals, at most. These packages generally sell for a few dollars, and sometimes even less than $1.00. Organic and premium baby foods command higher prices than non-organic foods.
While businesses can’t charge a lot for individual packages of baby food, parents usually buy several packages at once. Additionally, parents buy baby food for several months after their baby begins eating food. Investopedia places the amount parents spend on baby food each month at about $60.
How much profit can a baby food business make?
Baby food businesses can be highly profitable. When she was selling baby food only at a local farmer’s market, Carlson brought in $30,000 a month. Businesses that get their foods into national retailers can bring in millions each year.
How can you make your business more profitable?
Baby food businesses can increase profitability by shipping baby food to customers. Little Spoon is a baby food business that does this.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your baby food business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a baby food business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a baby food business
One of the best ways to market a new baby food business is to directly connect with customers. Parents will recommend a business to other parents if they're pleased with the product. New parents are always asking each other about different things they need.
Connecting with customers directly lets business owners get feedback on their foods and make adjustments. This ensures that business owners develop a product parents like.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
A baby food business can set itself apart from other businesses in the industry by specializing in a particular type of baby food. For example, a business might offer only organic foods, or it might focus on locally sourced foods.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Baby Food Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Anyone who enjoys young children and isn’t afraid to experiment in the kitchen may like running a baby food business. Coming up with unique recipes requires creativity. Being fond of babies helps business owners connect with parents they hope to sell baby food to.
A baby food business can be started as a part-time endeavor. Baby food can be made during weekday evenings and then sold on weekends. This is what Jennifer Carlson did when she opened a baby food business. She made baby food during the week and froze it. On the weekends, she sold it at a local farmer’s market.
What happens during a typical day at a baby food business?
A baby food business owner spends a lot of time making, packaging, and selling baby food. When not directly working with baby food, business owners take care of other tasks. They clean their kitchen, order supplies, pay bills, and market their baby food business.
At times, business owners also research new flavors. This is a trial-and-error process that involves creating many test batches.
What are some skills and experiences that will help you build a successful baby food business?
To run a baby food business, owners must know how to make baby food.
After taking a course, business owners may want to keep a baby food recipe book on hand for reference and inspiration. A few titles that might be helpful include The Big Book of Organic Baby Food, 201 Organic Baby Purees and The Baby and Toddler Cookbook.
What is the growth potential for a baby food business?
A baby food business may be a small operation that only sells baby food locally, or it can be a national business that has food in stores throughout the country. Carlson grew her business from a stand at her local farmer’s market into a national company that has baby food in Wal-Mart, Target, and other major retailers. Similarly, Fran Free grew her baby food business from a small startup into a company that has food in many Whole Foods Market stores and offers private label baby food.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a baby food business?
How baby food is packaged impacts the final product in three ways. Packaging should be convenient so parents can use it without making a mess. It also should be affordable, so it doesn’t increase the cost of the final product too much. Finally, the packaging used ought to preserve the nutrients in the food.
Choosing the wrong packaging can devastate a business because parents won’t buy the product. When she packaged baby food in frozen form, Free struggled to sell Oh Baby Foods’ baby food. Once she switched to convenient pouches, her company’s sales increased several fold. These shelf-stable pouches are now Free’s primary packaging solution.
How and when to build a team
Most baby food businesses start out with no or few employees. Business owners hire employees to help make and sell baby foods as their business grows and can support employees’ salaries.