Slide 1

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 2

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 3

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 4

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 5

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 6

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 7

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 8

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 9

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 10

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 11

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 12

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 13

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 14

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 15

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 16

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 17

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 18

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 19

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 20

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 21

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 22

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 23

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 24

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 25

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 26

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 27

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 28

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 29

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 30

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 31

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 32

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 33

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 34

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 35

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 36

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 37

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 38

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 39

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 40

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 41

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 42

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 43

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 44

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 45

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 46

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 47

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 48

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 49

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 50

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 51

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 52

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 53

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 54

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 55

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 56

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 57

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 58

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 59

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60


Slide 60

STARTING A FOOD
BUSINESS
3204
Steven C Seideman
Extension Food Processing Specialist
Cooperative Extension Service
University of Arkansas

1

Starting a Food Business
This module of instruction is for people
who are interested in starting a food
processing business or learning more
about how to get a food product on the
market.
It will assist you in the process of getting
started with helpful hints and contacts to
make your journey easier.
2

Introduction
Everyday, people come up with ideas for food
products that they think may have a market.
Some of these ideas are simply an old family
recipe for a salsa, barbeque sauce or something
that friends have encouraged them to market.
Some of these ideas involve totally new products
that may have a market. Almost every major
food company in existence today started with
someone in your situation- an entrepreneur.
3

So you have an idea for a food
product

15,000 new food products introduced to the
marketplace every year.
Only about 10% last more than one year.
Only about 1-2% ever return the investment
made to introduce them to the marketplace.
As a future entrepreneur, you need to be aware
of these statistics and make prudent, minimalrisk decisions that get you where you want to go.

4

5

GETTING MARKET SHARE
The single most important success factor a new
entrepreneur needs to focus on is getting market
share or volume.
People tend to be “creatures of habit”. This
means they tend to eat the same foods over and
over again. They tend to eat what they are
accustomed to.
In any retail food store, there are literally
thousands of types and brands of food.
6

7

GETTING MARKET SHARE
So how are you going to get a potential
customer to pick up your product? Why
should they pick up your product versus
the competition??
If you have a great tasting product, how
will the potential customer ever know it
until they pick it up, purchase it, take it
home and try it?
8

FOCUS ON THIS
WHAT WILL I DO TO GET A
POTENTIAL CUSTOMER TO
PICK UP MY PRODUCT???
9

VALUE ADDED FOODS
Value-added food products result when a food
commodity is further processed to produce a
benefit to the consumer.
Examples are precooked meats and entrees
where all the customer needs to do is “heat and
serve”
Another example is individually wrapped slices
of cheese. This is truly a benefit to customers
and they are willing to pay for it.
10

FOOD CHANNELS
Food goes through one of 2 channels;
*Retail-Sold directly to ultimate consumers
where thousands of products are on
display and competition is fierce.
*Food Service-Sold to restaurants and
institutions that prepare the food for the
ultimate consumer.

11

Photo courtesy of USDA

12

The Food Service Channel
The food service channel is one of the
most fertile grounds for value added
products.
They want food items that are prepared so
all they have to do is “heat and serve”.
They are concerned with the cost and
quality of the workforce.
Food Safety concerns are also at the top
of their minds.
13

Photo courtesy of
National Restaurant
Association

14

Developing Formulations and
Preparation Schedules
This is the first step in commercializing your
product idea.
Write out the name of the product, what it does,
how it will be used etc
Write out the formula in detail. What are the
ingredients and how much of each
Write out how the product is made-where
mixing, cooking etc take place in the flow of your
product from raw material to finished/packaged
product.
15

Developing Formulations and
Preparation Instructions
After you have collected and wrote down
all these formulas and preparation
instructions, contact Steve Seideman at
the Institute of Food Science &
Engineering;
We will help you decide if you want to
process the food item yourself or take it to
a food processor who will copack it for
you.
16

FOOD PROCESSING
ASSISTANCE
Steven C Seideman, PhD
Extension Food Processing Specialist
Institute of Food Science & Engineering
University of Arkansas
2650 North Young Ave
Fayetteville AR 72704
479/575-4221
[email protected]

17

FOOD PROCESSING
ASSISTANCE
The Institute of Food Science &
Engineering works with the Department of
Food Science to assist entrepreneurs like
yourself in food product development and
commercialization.
Details of the services we provide can be
found at www.uark.edu/ua/foodpro.

18

Directory of Services
Pilot Plant Testing
Nutritional Labeling
Instrumentation Food Analysis
Short Courses/ Work Shops
Distance Education Courses
Sensory/ Taste Panels
Idea Development
Grants Assistance
Publications
19

20

21

Regulations and Regulatory
Agencies
The following are the contacts
for the regulatory agencies
that cover food products.
22

Government Agencies
There are basically 2 federal agencies involved
in food regulation
1)The U.S. Department of Agriculture-Food Safety
and Inspection Service (USDA/FSIS) controls
meat and meat products, any food item
containing 5% or more meat and open-faced
sandwiches (including pizza).
2)The Food and Drug Administration (FDA)
controls all other food items and has contracted
with the Arkansas Department of Health for
services in Arkansas.
23

USDA/FSIS
USDA/FSIS District Office
4700 S. Thompson
Springdale, AR 72764
479/751-8412

24

The Arkansas Department of
Health
Arkansas Department of Health State
Office
4815 West Markham
Little Rock AR 72205
501/661-2171

25

FDA Small Business
Representative
David Arvelo
Small Business Representative
Southwest Region
Federal Food & Drug Administration
Dallas, TX 75204
214/253-4952

www.fda.gov/fed_state/small_business/sb_guide
/default.html

26

Government Food Agencies
If you have a food product containing
meat, you must contact USDA/FSIS.
For all other products, it is best to start by
going to your county Department of
Health. Obtain a copy of the regulations
from the county sanitarian and review the
regulations.

27

Department of Health
Requires that all food prepared/processed for
sale must be manufactured in an approved
facility.
To be approved, the facility must meet
requirements related to such things as kinds and
number of sinks, location of restroom and
materials used in flooring, walls and counters.
Home kitchens or ranges placed in garages will
not be approved for commercial food
preparation.
28

COUNTY HEALTH
DEPARTMENT
The county Health Department has two
publications that will help you with the
regulations;
*Plan Review Guidelines for Food Related
Establishments
*Rules and Regulations Pertaining to Good
Manufacturing Practices (GMPs) for
Food
Processing Establishments.
29

PRODUCT CODE
The Arkansas Department of Health requires
that food processors provide a meaningful code
for food products.
The code provides a means for tracking product
should there be complaints or if a recall is
necessary.
The code should consist of where the product is
manufactured, the date and year it was
manufactured, the product and batch number.
30

31

Labeling your Product
The label is the means by which consumers
identify your product, so time and thought should
be spent developing a label that draw customers
to your product and also complies with federal
and state regulations.
The federal regulations require that your product
be labeled to conform to a standard of identity,
qualifying statements, weight standards, name
and address of processor, ingredient statement
and a nutritional label.

32

33

34

NUTRITIONAL LABELING
All food agencies require nutritional
labeling if you do more than $50,000 in
business. The requirements for nutritional
labeling can be found at the FDA Small
Business website previously listed.
The Institute of Food Science &
Engineering can assist you with the
nutrition figures.
35

36

UNIVERSAL PRODUCT CODEUPC
If you plan to sell your product through retail
stores, you should plan to get a UPC code.
This barcode provides a means for automated
identification of your product.
Most brokers, wholesalers and retail buyers will
not handle your product without a UPC code.
To obtain a UPC number, contact the following.

37

38

UPC CODE
Uniform Code Council, Inc
7887 Washington Village Dr, Suite 300
Dayton, OH 45459
937/435-3870

39

UPDATE
Up to this point, we have covered;
*New product ideas and value added.
*Writing out the product description, formula,
processing instructions.
*Regulations and regulatory agencies
Now we can go into one of the most difficult, yet
exciting parts of the new product development
scheme.

40

BUSINESS CONSIDERATIONS
Most difficult, yet most exciting and
important aspect of starting a food
business.
A majority of companies that go into
business go broke the first couple of years
because the entrepreneurs did not fully
understand the marketplace or the
financial realities of the business.
41

DON’T PANIC- THERE IS
HELP!!
There is help available from experts to
help you in this area.

42

Small Business Development
Center
The Small Business Development Center at the
Sam Walton School of Business at the University
of Arkansas offers free brochures and consulting
to Arkansas-based businesses in planning the
business considerations for entrepreneurs.
It is strongly suggested that you have as much
of your plan written up before going to them for
advice so they can go through what you have
and what you plan to do.

43

Sam Walton School of Business
Contact;
Jay McLaughlin, Center Director
Small Business Development Center
Sam M Walton School of Business
140 Reynolds Center
Fayetteville, AR 72701
479/575-6072
www.waltoncollege.uark.edu/sbdc
44

BUSINESS PLANNING
Before entering a food processing business, you
should develop a comprehensive business plan
to include detailed descriptions of the following;
*Organization of the business
*The product(s) to be produced.
*Market analysis and marketing plan
*The financial plan
*Operational characteristics and management
plan.
45

The Business Plan
Such a plan will help in determining the
feasibility of the enterprise and will likely
be required when seeking outside
financing.
This information should be written down
before contacting the Small Business
Development Center.

46

TWO CONSIDERATIONS
The two most important areas to be
considered as you decide whether or not
to enter the food processing business are
marketing and finance.

47

The Art of Marketing
One has to constantly find ways to get potential
customers to buy your products.
This is rarely done by advertising the simple
truths of a product because it doesn’t work.
It must appeal to the customer in some way that
personally affects them or by repetition (eg How
many times do we see the same commercial
over and over).
These may seem odd but they work.

48

MARKETING
The most important marketing consideration is to
simply understand your product and its place in
the marketplace.
*What are the characteristics of your product which
will make it appeal to the target market?
*Who are the constituents of the target market?
*Is the market for your product likely to grow?
*Is the production, distribution and/or promotion of
your product seasonal or restricted by
geographic or other factors?
49

COMPETITION CONCERNS
What is the availability of the same or similar
products?
Are substitutes available?
Why should a consumer buy your product rather
than that of a competitor?
How many competitors exist and what is their
size (market share)?
Are competitors willing to protect their market
share by cutting prices?

50

DISTRIBUTION AND
PROMOTION CONCERNS
Will your product be distributed through direct sales,
mail order, wholesalers, specialty shops or large
retailers?
Do the characteristics of your product fit your
distribution channel?
What is your advertising plan?
*How to differentiate your product from the
competition?
*What media to use to reach the consumer?
*Are you willing to accept introductory discounts,
coupons, slotting fees or other promotional tie-ins?
51

PRODUCT COSTING
CONCERNS
What will be the price of your product and will it
sell at that price?
Does the market for similar goods exhibit relative
price stability?
Are the costs of producing the product likely to
remain relatively stable?
And lastly and most important, can the product
be produced, distributed and sold at a profit?

52

FINANCING
While help is available in answering
questions about financial issues, one is
well-advised to seek competent
professional advice when attempting to
address the various financial issues.

53

FINANCIAL CONCERNS
Form of business organization-Sole
proprietorship, partnership, limited liability
company or corporation?
Capital intensity-is your type of business
characterized by high fixed or high variable
costs?
Start-up costs
Level of inventory needed
Level of accounts receivable
Sales forecast
54

Financial Concerns
If you know the answers to the previous
questions, you may be able to determine
the amount of internal versus external
funding you will need.

55

FROM RECIPE TO REALITY
The University of Nebraska holds
seminars several times per year for
entrepreneurs.
This seminar is an excellent way for
individuals to learn about the issues they
will need to consider when starting a food
manufacturing business.
This seminar has been going on for years
and is the best of its type.
56

FROM RECIPE TO REALITY
It is a one-day program and costs about
$350.00.
The University of Nebraska has other programs
in place to help entrepreneurs.
Contact;
Jill Gifford
Food Entrepreneur Assistance Program
Manager.
402/472-2832
[email protected]
57

Photo from University of
Nebraska

58

CONCLUSIONS
Having a solid idea for starting a food
processing business is a good start, but
knowledge of the regulatory, production,
marketing and financial aspects of starting such
a business is an integral part of the overall
process.
This module has covered some of the highlights
and available resources you can use to get
started.

59

60