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 pasta 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 pasta business?
The startup costs for a pasta business run between $10,000 and $50,000. These funds go toward ingredients, packaging supplies, and pasta-making equipment. At a minimum, the following equipment is required:
- Work table
- Pasta dryer (multi-shelf)
- Sink and stove
It’s possible to start with just this equipment, although only limited types of pasta can be made with this list. Business owners who have additional funds available may alsowant to get the following:
- Automatic ravioli maker
- Gnocchi maker
- Molding pasta machine (for agnolotti and cappelletti)
- Cutter attachment (for short pasta)
Business owners can reduce their startup costs by purchasing used equipment and renting kitchen space.
What are the ongoing expenses for a pasta business?
The ongoing expenses for a pasta business include rent and utilities, as well as ingredient and shipping/delivery costs. Businesses with employees must also pay those employees’ salaries.
Who is the target market?
The target market for a pasta business tends to be foodies who have some discretionary income. Because fresh pasta commands a higher price than dry pasta, the people who buy it usually appreciate good food and are at least somewhat affluent.
How does a pasta business make money?
Pasta businesses make money by selling pasta. Noodles are typically sold by weight, and they may be sold to retail or wholesale customers.
How much can you charge customers?
How much profit can a pasta business make?
RP’s Pasta Company produces between 2,000 and 2,500 pounds of pasta a day. Even if all of this were plain fresh pasta, it could bring in between $7,500 and $9,375 in retail sales each day.
How can you make your business more profitable?
After a pasta business offers a variety of pastas, the next natural area to branch into is sauces. Pasta sauces can be sold separately from pastas, or they can be packaged together for easy dinner kits and gift baskets.
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 pasta 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.
Federal Business Licensing Requirements
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
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a pasta 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 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 pasta 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 pasta 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 pasta business will be in compliance and able to obtain a CO.
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
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 pasta business
When marketing a pasta business, business owners should shy away from grocery stores and supermarkets. The dry pasta sold at these locations is too cheap to compete with, especially when people are worried about their grocery budget and just looking for a quick dinner.
Instead, business owners can sell their pastas at niche food stores, farmers markets, craft fairs and foodie events. People who shop at these locations are frequently willing to pay more for a premium product.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Pasta businesses can set themselves apart from the competition by making organic, gluten-free, stuffed or other unique pastas. These types of products can be offered when a business launches, or they can be added as a business grows.
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 Pasta 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 likes cooking and is able to connect with people may enjoy running a pasta business. A passion for cooking will help business owners get through the many days that they spend at the stove making pasta, and having people skills will make it easy for business owners to share their enthusiasm for pasta with others.
What happens during a typical day at a pasta business?
A typical day at a pasta business may be spent in the kitchen or out selling.
When in the kitchen, business owners spend a lot of time prepping ingredients, actually making the pasta, and packaging it. They must, of course, clean up once finished.
When out selling, business owners spend a lot of time talking with other people about pasta. Fresh pasta typically sells for more than commercial pasta does, so it’s necessary to educate customers on why this type of pasta is worth the added cost.
What are some skills and experiences that will help you build a successful pasta business?
In order to successfully grow a pasta business, business owners must know how to make delicious pasta. Those who don’t already have a famed family recipe can learn how to make pasta by working at another pasta business, taking a pasta making class, and/or reading books on the subject.
There are pasta making courses throughout the world, including in New York City, San Francisco and (of course) Italy. Because pasta making is a hands-on process, online courses aren’t a very effective way to learn the techniques involved.
A few popular books on making pasta include Mastering Pasta, Making Artisan Pasta, and Flour + Water. These can be especially helpful when read after taking a course or if business owners have a mentor who can answer questions that arise while reading.
What is the growth potential for a pasta business?
A fresh pasta business may remain a small operation run by just the business owner, or it can grow to become a large company. For example, Fresh Pasta Delights is a business in Dallas-Fort Worth that has been operating for more than 30 years and continues to primarily serve the metroplex area. In contrast, RP’s Pasta Company has been in business about a decade less but sells throughout North America.
TRUiC's YouTube Channel
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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 pasta business?
Business owners can sometimes both reduce their upfront expenses and jump-start their business by forming a joint venture with an Italian restaurant owner who doesn’t already have their own line of pasta. Such an arrangement has benefits for both parties.
Restaurant owners benefit from having high-quality pasta that they can purchase at cost to use in their eatery’s dishes. They can also sell the pasta on-site for additional revenue, and they may receive some compensation from sales completed elsewhere.
Pasta business owners can split the startup costs with someone else and can use the restaurant's kitchen during non-peak hours to make pasta. Marketing the pasta under the restaurant’s name also instantly boosts the brand.
How and when to build a team
Most pasta business owners start out working by themselves, bringing on employees as the workload requires and profits allow. Peter Robinson of RP’s Pasta Company hired a president to help grow the company about 15 years after starting out.