Start a jam business by following these 9 steps:
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 jam 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 jam business?
Since a jam business can be started from a residential kitchen, the costs associated with starting a business are quite low. The expenses can be categorized into equipment costs and supply costs.
Business owners who have extremely tight budgets may be able to open a business using only equipment that’s already in their kitchen. Jams, jellies, and preserves can be made in one pot, and jars can be sterilized by boiling water in a large pan.
Business owners who have a little capital to work with, however, may want to invest in some basic equipment. Nabanita Kundu recommends getting a juice extractor, slicer, mixer/grinder and pulper, none of which costs too much.
The supplies that business owners need include:
- Juice extractor: $50
- Fruit slicer: $20
- Mixer/grinder: $100
- Pulper: $35
- Jars: roughly $1 per jar in bulk
- Pectin: $3 per box
- Fruit: $1-5 per pound
- Sugar: $23 per 50 pound bag
Business owners can reduce their initial supply costs by purchasing jars and pectin through wholesale suppliers, who typically charge much less than retailers do.
Business owners can also pick the fruit they need themselves, Jo-Ann Monconduit of Jo’s Jellies says. Going to you-pick farms when the fruit is in season. not only lets business owners greatly reduce their fruit costs -- which are one of the biggest supply costs -- but it also provides an opportunity to use local ingredients in jams.
What are the ongoing expenses for a jam business?
The ongoing expenses for a jam business are relatively low. Business owners must purchase additional jars, fruit, and pectin, and they need to pay for the electricity or natural gas used when preparing jam. The other significant ongoing expense is the cost of shipping or delivering jams to customers, but this cost is usually built into the price that customers are charged.
Who is the target market?
A jam business’ ideal customer is a local business that regularly uses jam or jelly, such as a restaurant that wants to serve up locally made jams with breakfast or a small bakery that needs jams for certain baked goods. Such a business won’t pay retail prices for jams and jellies. A business will, however, place regular orders that can provide stable income.
How does a jam business make money?
A jam business makes money by selling jams, jellies and preserves. When sold retail, jams may be sold individually or in variety packages (e.g. three jams together). When sold wholesale, jams may be sold in larger jars (e.g. for use by a bakery) or in lots of small jars (e.g. for resale by a grocer).
How much can you charge customers?
Jams, jellies, and preserves are normally priced according to margin. Michael Adams recommends seeking a margin of 40 to 60 percent over the cost of making a product when selling through distributors. On top of this, distributors add another 30 percent margin, and retailers typically add a final 30 to 50 percent margin. The end result is that a jam that costs $1.48 per jar to make has a retail price between $6.04 and $8.46.
How much profit can a jam business make?
How much a jam business owners can make depends on how well they market their products and how many distribution channels they have. Reagan Boon, a small but successful jam business owner, makes about $25 per hour after all the work required to run her business is taken into account. Working full time, this would equate to an income of $1,000 per week.
How can you make your business more profitable?
A jam business can increase its sales and revenue by offering jams in unique packaging. For instance, customers may purchase variety packs as gifts, or brides might buy customized sample-size jams as wedding favors.
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.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your jam 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, and it's easy enough to form by yourself, or check out the top business formation services.
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.
Recommended: You can get $200 when you open a Chase business checking account with qualifying activities. Learn more.
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
In most states, it is necessary to obtain a jam business license. Certain state permits and licenses may be needed to operate a jam 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 jam business
The most effective way to promote and market a jam business is through samples. Whether given out at a farmers market or grocery store, people love free samples -- and many customers won’t purchase a jam, jelly, or preserve unless they know what it tastes like.
How to keep customers coming back
A jam business can set itself apart from similar businesses by continually developing unique flavors. Another business may copy a single popular flavor or even two. As long as business owners continue creating new recipes, though, they’ll be one step ahead of copy cat businesses.
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 Jam Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Anyone who likes canning and jarring may enjoy running a jam business. Jams and jellies are frequently packaged in jars, and mot small jam businesses jar their jams by hand.
It’s also helpful to have good people skills. Being able to connect with people can, of course, help business owners develop relationships with individual customers and wholesale purchasers. It also can help establish relationships with local farmers, which may lead to unique opportunities to purchase local produce.
What happens during a typical day at a jam business?
To maximize efficiency, most jam business owners spend different days focusing on different tasks. For example, a business owner might:
- Sell jams and jellies at a farmer’s market
- Make jams
- Deliver jams
- Market their business and take care of administrative tasks
What are some skills and experiences that will help you build a successful jam business?
In order to run a jam business, it’s necessary to know how to safely jar them. Many online companies, local canneries and online companies offer courses on canning and preserving foods. For example, Taste of Home Online Cooking School and Universal Class both offer online courses on the subject. Glass Rooster Cannery in Sunbury, Ohio and Fresh from the Gardens in Dallas, Texas offer in-person classes. Healthy Canning maintains a directory of university extension classes, which are often free or have a minimal charge.
After completing a course, business owners may want to purchase a couple of books to keep as references. Canning and Preserving for Beginners, and the Ball Complete Book of Home Preserving are two popular works.
What is the growth potential for a jam business?
Many jam businesses start out as small operations, with many business owners making jams, jellies, and preserves in their kitchens. Business owners may initially sell only by word of mouth or at a roadside stand where customers pay on their honor.
As a business grows, business owners may purchase a stand at a market or open a retail location. Most businesses don’t open multiple locations. Instead, they grow beyond a single location by acquiring more and more wholesale clients.
(When starting a jam business from home, it’s important to abide by all your state’s cottage food laws. PickYourOwn.org has compiled a list of each state’s applicable laws.)
TRUiC's YouTube Channel
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Take the Next Step
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.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a jam business?
When developing jam, jelly, and preserve recipes, business owners should come up with unique and complex flavors. In Jo-Ann’s experience, these sell much better than plain flavors do. For example, she had a peach jam that hardly sold at all. She revisited her recipe and added bourbon and vanilla. The resulting jam is now one of her best sellers.
How and when to build a team
Many jam businesses start out as one- or two-person operations, and some business owners never hire employees. Those that do typically bring on employees once the work becomes too much for them to handle by themselves. At this point, a business’ revenue can usually support an employee’s salary.