Hi guys, I would be happy to share any information I've learned thus far in my packaged foods (powdered plant protein mix, and real-fruit powdered water enhancers) for those thinking about starting out in this industry.
[For reference, I am in Portland, OR, USA and my products can be seen here: www.earthcultivated.com]
Out of necessity, convenience, and laziness, I use plant protein powder daily for meal replacement/protein supplementation while at home or on the road. And I'm also terrible at drinking just water to stay hydrated, and also hated every other water enhancer on the market, so I created my own of both.
First, coming up with a recipe and sourcing the ingredients was the most work. I wanted very specific ingredients with very high quality. There are a lot of other brands on the market, but I wanted to make sure that since I was consuming these ingredients daily, that they were organic, raw (low-temp processed), and contained NO "natural flavors" (which sound innocent, but potentially are not), NO guar gum, xanthan gum, gums of any type, and no fake or artificial ingredients.
Next, forming an LLC and registering my business with the State was relatively straightforward.
Next, finding a commercial kitchen to mix ingredients was surprisingly easy. Search google for local "commissary kitchens" to find professional kitchens which are typically pay-by-the-hour to rent. In some states, you can mix product from your own home if it is inspected, but since I have pets (dogs), I did not qualify for this ability. Some states even have great "Cottage Food Laws" (may have another name in your state), where if you make less than a certain amount of money per year, you do not even need a registered facility, and can begin making food out of your own kitchen to sell (depending on type of food. some such as baked goods or very stable shelf-life products are much easier to qualify for this).
Next, after finding a commercial kitchen, I needed a Food Handlers Card and insurance coverage. After comparing a few companies for insurance, I found one that charged about $45 per month. Not too bad.
Next, I needed an inspection and license from the local Dept of Agriculture. This involved inspecting the shared kitchen (he was already very familiar with the facility and licensed many individuals at the same facility), and approving of my process of mixing and packaging the ingredients. License was about $325 I believe for 1 year (beginning June of every year in my state, rather than one year from the date of inception. This is important, because if you register in May, it will be an expensive 1 month license)
For product storing, I am allowed to store $2,000 worth of product (based on cost, not retail price) at my home with no additional permits. My dept of agriculture contact said that it is pretty easy to get a shelf at my home permitted to store product so that more than that can be stored at my home, but I have not needed to do that just yet.
After being able to mix, package, and store; marketing is the most work/highest expense. Trying to tell people about your product in a saturated market can be difficult, so you have to get crafty. Local markets, FBA Amazon selling, and direct-to-consumer have been the best return on financial/time investment thus far.
Next steps for myself are lots more marketing. Strategic partnerships will be crucial, and since funds are very limited, choosing the right ones will be critical.
Also, there are local resources which have been very helpful, which include my commercial kitchen being very community-based. And also Mercy Corps has many small business resources, and I recently attended a great event by Samuel Adams called Brewing the American Dream in which buyers and experts from the industry were there for a free event to give expert advice, which was greatly appreciated. See if it is happening nearby you soon.
Once large enough, we can enlist the help of a co-packer, but that is down the road.
Any suggestions or questions I can help with are welcomed. I hope someone finds any of this information useful, as it would have been helpful to me when starting up. Cheers and good luck!