Before you turn your business idea into a reality, you need to consider its viability. Each year, a staggering 6.5 million businesses are launched – a significant proportion of them in the food industry. For instance, the online food delivery industry is set to be worth $200 billion by 2025, according to a published report from ResearchAndMarkets.com. However, not every food business idea makes it past the starting gate.
Given that 20 percent of businesses fail by the end of the first year and the food business industry is such a competitive space, testing the viability of your food business idea before investing is always a good move. Whether it’s a food delivery business or a new restaurant, the food business industry is ever-evolving, and with a more complicated landscape post-pandemic, here’s what you need to know about testing the viability of your food business viability before launch day.
1. Give It A Test Run On A Small Audience
Market research is crucial to successfully launching a business idea – and it’s no different in the food business. While family and loved ones may be encouraging you to launch your food business, it’s always recommended that you test your food idea out on an unfamiliar audience for honest feedback. One way to do this is to hold a sampling session or taste-testing session in your local community. Another innovative idea is to work with your local diner or go to a food establishment to include samples of your food on their menu for a day, or to set up a booth at your local farmers market with a limited amount of your food product.
Ensure you get feedback from your customers on all aspects of your product, including taste, packaging and pricing. If your food idea does well at the testing, you can then think about scaling up production based on the feedback of your testers.
2. Do You Have The Right Resources To Go From An Idea To Reality?
To launch a business idea you also need to have the right resources at your disposal. Along with funding to launch your food business, you will need a suitable business premise, appropriately qualified employees, and food and beverage workers comp to protect your employees in the event of a workplace accident. If you’re starting a food business, you will also need to budget for the cost of equipment, license fees, and marketing.
3. What Sets Your Food Idea Apart From The Others – The Good And The Bad
Whether you are launching a food product or opening a new restaurant, competition will be stiff. To ensure your food business idea is going to be viable, you need to outline what sets it apart from the others. Either your business idea is one of a kind, or it is done in a way that distinguishes itself from similar ideas on the market. Where will your competitive edge be? For instance, is your food product going to be made from locally sourced organic ingredients? Will you be introducing innovative flavors or production techniques to a well-known food product? Understand what it is that your food idea will do differently, and then you can judge how your target market will respond to it.
Finally, you need to consider whether your business idea is financially viable. A well-detailed business plan can help you solve this by highlighting all of the decisions you will be required to make that would either incur a cost or create revenue. For instance, you may find that your overheads like the rent for your restaurant space are eating into your profits. You can then make alternative decisions like choosing another location for your food business to reduce location costs.
The nature of your food business will also determine what legal requirements you will need to satisfy. Restaurant owners will need to apply for business, liquor, and foodservice licenses, along with other miscellaneous costs like registration fees. There is much more that goes into opening a successful food business. Having a great food business idea is just the start.