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Crafting fine chocolate is a true art that takes mastery of candy making to the next level. Develop treats that your customers will go out of their way to purchase at a small shop or seek out for online delivery. You will be involved in packaging and marketing your sweets, and possibly running your neighborhood candy store along with the candy kitchen. Franchises for candy stores often feature products made at a distant factory, but are profitable in high foot-traffic areas and do not require candy making knowledge to operate.
Who is this business right for?
If you love creating new and original chocolate treats, and enjoy spending hours every day crafting fine candies, opening your own chocolate making business might be right for you. The successful candidate will also enjoy teaching others to duplicate their recipes, manage portion control, market their products, and balance the books.
What happens during a typical day at a chocolate business?
When you own a chocolate making business, you can expect to complete these tasks on any given day:
- Craft fine chocolates with a keen attention to detail and consistency
- Adhere to sanitary food preparation guidelines according to your Board of Health
- Clean the kitchen
- Order supplies
- Conduct quality control tests
- Train chocolatiers in new recipes and products
- Pack candies for shipment or delivery with attention to maintaining product quality
- Market your product and business to potential customers nearby and online
- Pay invoices and collect payments
- Complete payroll for your staff
- Operate your store, if included with your business model
- Inform consumers of ingredients with complete list of potential allergens
What is the target market?
If you operate a small kitchen, your perfect customer will value fine chocolates personally crafted for their enjoyment and be willing to pay a premium for your treats. For a bigger candy kitchen, target gift shops, grocery stores, and other local retailers who would be willing to sell your product on their shelves. Gift services such as flower shops and fine food baskets may hire you to provide chocolates for their larger designs.
How does a chocolate business make money?
For the finest chocolates, it takes time to create perfection. You will charge your customers for the highest quality ingredients and the hours spent crafting your product. However, lower quality chocolate generates the most money through volume, selling lots of small bags of sweets to hungry customers. Carefully target your audience before settling on recipes and pricing structure.
What is the growth potential for a chocolate business?
Should you create a new chocolate treat that takes your neighborhood by storm, expansion into larger candy stores, distribution to more outlets and increasing internet sales provide endless opportunities for expansion. However, success begins with the best chocolates.
What are some skills and experiences that will help you build a successful chocolate business?
- Good palate and appreciation of what fine chocolate tastes and looks like
- Extensive knowledge of the art of chocolate making
- Basic accounting and personnel knowledge
- Safe food handling practices that include obtaining proper certifications
- Good marketing background
- Understanding of packaging/display and how that affects your customer's perception of your product
- Knowledge of product distribution networks/shipping options
What are the costs involved in opening a chocolate business?
Should you want to start your chocolate making business from the comfort of your home, you can do it for about $5,000-$10,000. You'll need to invest in quality thermometers, a cold table, additional refrigerators and freezers for your business materials. You cannot store product for public consumption with your family's groceries. Should you be going full-scale, a small professional stand alone candy kitchen can be built for around $50,000 with room for packaging and an office area. Should you wish to add a storefront, start-up costs can skyrocket up to $200,000 depending on location and targeted clientele.
What are the steps to start a chocolate business?
Once you're ready to start your chocolate business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your chocolate business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your chocolate business keeps your finances organized and makes your business appear more professional to your customers.
- 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.
- 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.
- 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.
- 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.
- Establish a 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.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
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.
Recommended: Fizzle.co offers video courses and a supportive online community of like-minded entrepreneurs. Try one month membership for free.
What are some insider tips for jump starting a chocolate business?
Find your superstar sweet that will become your specialty. It must stand out from the generic checkout candy and easily compete with big brand name treats found in popular mall stores. Sampling your creation helps to get consumers excited about your product who will then spread the word for you. Think about conducting sales at high-traffic events such as fairs, pop-up mall locations, and cooking trade shows.
How to promote & market a chocolate business
Taste is everything in the chocolate world. When introducing your business to potential clients, whether a distributor or individual, they will need a sample of the product they are purchasing. Consider a direct-mail sampling campaign to kick-off your success. If you are opening a single shop, make sure to hold a grand opening with lots of freebies for your guests. Target a busy holiday like Christmas, Valentine's Day or Easter for your opening, as more people will be looking to add chocolate to their shopping list.
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How to keep customers coming back
During your initial year, consider holding a several sampling campaigns at malls, grocery stores or farmers markets. Create a direct mail campaign with attractive photos depicting your sweets and their gift-worthy packaging. An attractive box with festive ribbon helps to draw the eye and encourage customers to pay an additional premium. Customers will keep coming back when they eat your delicious chocolate.
How and when to build a team
If you are opening a large kitchen from the beginning, you will need to hire chocolatiers during your research and testing period in order to perfect your product before you sell the first unit. For the home baker, you may wish to hire a business partner when distribution starts to outpace your capacity.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a chocolate business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Food establishments are randomly inspected by the local health department on a regular basis. These inspections will check for compliance with local health laws, typically related to prevention of food contamination. Tips for faring well on a health inspection can be found here.
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, check out our informative guide, 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
Certificate of Occupancy
A chocolate making business is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a chocolate making business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your chocolate making business will be in compliance and able to obtain a CO.
How much can you charge customers?
A one pound box of fine chocolates can run as high as $30. For more ordinary chocolate, expect to charge around $7 to $10 per pound. If you add special occasion packaging, tack on an additional 10% to the price.
What are the ongoing expenses for a chocolate business?
Marketing will always be part of your costs. Paying for supplies of ingredients and maintaining your kitchen will be your other major cost, followed by payroll.
How much profit can a chocolate business make?
The large volume companies have a lower profit margin of around 8 to 10%, while boutique chocolatiers can enjoy margins between 55 to 75%. Your total profit for a year will depend entirely on the volume and type of product you produce and sell. The home-based candy kitchen can earn enough for a nice vacation, or a well-positioned boutique can bring in $1,000,000 in annual sales.
How can you make your business more profitable?
Through constant business model review, cull any recipes that do not sell from your selection. Increase profits by supplying demand for your most popular items, answering your customers' desire for all things deliciously chocolate.