The food industry is considered one of the most challenging and high risk spaces to enter as a business. However, there’s no shortage of appetite amongst entrepreneurs wanting to enter the market. In fact, the food retail and service industry in Canada is currently a $200 billion industry and shows no signs of slowing down.
Whether you’re starting a food service or retail business, here are five key considerations to help you prepare for common risks so you can enter the market with your best foot forward.
1. Differentiate Yourself from the Competition
There is a high level of competition in the food industry which is one of the factors that makes starting a food business so high risk. It is important that you determine what your unique selling proposition is to make you stand out from the competition. Focus on what you do well and make sure that you communicate this in your marketing strategy to appeal to your target market.
2. Test Your Products
Test the saleability of your product on a small scale before you make a major investment like signing a lease or purchasing major equipment. Make your product available at a local community market or even try setting up a pop-up location. Your initial customers will serve as your test market, which will provide proof of concept during your business planning stage.
A test run will give you valuable insights on how your products will be received. It provides primary research data to help you test out key strategies, such as pricing, and is an opportunity to work out potential kinks in your operations.
Validating your product is valuable for any business. However, food businesses have significant start-up costs that make this testing process a necessary step for any entrepreneur in the industry.
3. Know Which Industry Regulations Apply to You
There may be specific industry regulations that apply to your food business, in addition to the basic legal requirements that apply to all BC businesses. Start by checking these resources to determine what might be required of you.
Food Premises Guidelines
The BC Health Act: Food Premises Regulation is administered by the Local Health Authorities in British Columbia. They license, inspect and respond to complaints regarding food facilities in BC. Food service operators are required to obtain a Health Operating Permit, as well as complete regular health inspections.
All food service operators in BC are required to obtain FOODSAFE Certification.
If you intend to serve alcohol at your food establishment, you must apply for the appropriate liquor licence through the BC Liquor Control and Licencing Branch.
Food Service Industry
Visit Restaurants Canada for information on current food service industry issues and regulatory changes specific to BC.
Small-Scale Food Processing
Visit the Small Scale Food Processor Association for information on catering and using your home kitchen to prepare food intended for sale.
4. Create a Realistic Cashflow Forecast
Having enough cash can be particularly critical for food businesses, as you will have expenses long before you start generating revenue. You need to make sure you can cover those expenses or you may be unable to pay your suppliers. It’s essential that you identifying and plan for potential shortfalls early on so you can assess whether you need to access financing.
5. Learn From the Successes and Mistakes of Others
Consider finding a mentor in the food industry. They can provide you with valuable insights into starting and running a food business that can potentially save you from costly mistakes. You can visit MentorshipBC to search for relevant mentorship programs that are available in BC.
Even if you don’t enter into a formal mentorship program, you can still benefit from surrounding yourself with advisors. This could include people with experience in the same industry or professionals, such as an accountant and a lawyer. Attending networking events can also be an effective way to meet relevant contacts in your community.
Finally, consider meeting one-on-one with a Small Business BC Business Advisor to help guide you through the business planning stage or to answer your specific questions about starting and growing your food business.
Small Business BC Meetups
The first Small Business BC Meetup focused on starting and growing a food business, but if you couldn’t make to this great event, there are still many more to come. Small Business BC Meetups occur every second Tuesday of the month in Vancouver, and explore common opportunities and challenges that entrepreneurs and small business owners face today, and leverage networking sessions with valuable connections. Sign up today for next month’s event, as space is limited.
Are you taking advantage of Small Business BC’s wide selection of seminars for entrepreneurs and small to medium-sized business owners? Space is limited, so don’t miss your chance to register today.