08 Aug Starting Your Food Business – A Lasagna Love Story
by Teresa Sanders and Ruy Garcia-Zamor
Memories from your childhood – the long family table under the Italian sun with family and friends, good wine and the best food coming out of your Mother’s kitchen. Five years later – you’re at your family table with the worst store bought lasagna imaginable. Stick a fork in it – you’re done! Time to bring your Mother’s lasagna to the world. From this moment on you are determined to start a business selling the best lasagna ever, the lasagna from your childhood!
Great family recipes, quality ingredients and fabulous taste are not enough to build a business. You know you will need the help of a trusted attorney and accountant to help you organize and build the company and its processes. How do you develop, protect, and finance your product, packaging, manufacturing, and marketing?
Develop a Budget and Obtain Cash
Whether you want to fill the Italian frozen food section in grocery stores nationwide or sell fresh cooked food from your kitchen at the local farmers market, you need to have a detailed plan for your processes and how much it will cost to get there.
What are your costs for recipe and packaging development, ingredients, equipment, production, delivery, marketing….? Setting a budget for all aspects of your start-up ensures that you will know how to price your lasagna! Budgeting also prevents over spending and sets benchmarks to which you can measure your progress.
Once your budget is set you need to come up with the cash! Depending on your goal outside investment may not be necessary. Savings, loans from family and friends, SBA loans, credit cards, and other financing instruments are available for start-ups and small businesses. If you want to keep control of the company you might not want to sell ownership or bring on partners.
A Perfect Lasagna needs a Perfect Brand
Loving your lasagna isn’t enough. You knew that Coca-Cola had arrived when their ad played their theme music and your never saw a bottle of Coke but knew what they were selling! Your lasagna needs to have a federally protect image that resonates with consumers across all your marketing platforms. Your federally protected image includes obtaining trademark registrations for your brand name, slogan, logos and company name.
Carefully crafting a detailed branding and trademark strategy from the outset avoids wasting resources. Don’t waste time and money investing in branding that does not qualify for federal protection. This planning should occur prior to initiating packaging, website, and marketing development. This could be the secret ingredient in your company’s success!
Obtaining federal trademark registrations reduces legal fees when dealing with competitors trying to mimic your brands – even if they are in states where you don’t operate! Registration also simplifies dealing with companies on Facebook and other social media sites that purposely select similar but different brands or user names.
Running the Business by the Numbers – Your Processes and Accounting are One and the Same
It is important in all businesses to track your costs every step of the way. With all the moving parts in a food production (manufacturing) business it is imperative. You need to monitor and gather your costs throughout every step of your manufacturing process. From purchasing and receiving materials, paying for production labor, delivery costs, paying overhead costs (rent, electricity, water, machinery repairs, etc) you should track costs to your budget to ensure all the cost centers of your business are in line.
Comparing actual costs to your budget through your processes allows for real time adjustments that leads to increased profitability and cash flow. It also prevents running off the cost overrun cliff and not realizing it until you hit rock bottom!
Don’t Find Your Mother’s Picture on your Competition’s packaging – Structure your business and employment contracts to protect your trade secrets
Coca-Cola keeping its recipe secret is why everyone wants their soda – and not somebody else’s. Its why when you ask for a Diet Coke in a restaurant they say “We only have Pepsi is that ok?” before bring you soda. (It’s not ok by the way). Similarly, keeping your Mother’s recipe secret from your competitors is job one!!
To take advantage of federal and state trade secret laws it is important to set up protections for the recipe even within your company. This is done by limiting access to the actual recipe and by proper use of employment agreements and confidentiality agreements with vendors. Failure to set up the proper legal protections and systems will enable your competitors to ‘steal’ your recipe by simply hiring away one of your employees. Then you are out of business!
Flash forward – your neighbor has set up the long family table on their deck underneath the North American sun with family and friends, good wine, and your lasagna. Magnifico!!!
Ruy Garcia-Zamor and Teresa Sanders bring a collaborative team approach to your attorney and accounting needs. With years of experience they have successfully aided businesses large and small.
If you have any questions regarding business entity formation, employment and subcontractor agreements, trade secret protection, software licensing, branding, trademarks, patent planning or other intellectual property matters, please contact Garcia-Zamor Intellectual Property Law, LLC. Ruy Garcia-Zamor has been helping individuals and businesses with their intellectual property needs for over nineteen years. By the way, my Mother made one heck of a lasagna.
If you have any questions regarding accounting, bookkeeping, and business/process consulting services please contact TBooks. Teresa Sanders has been helping individuals and business with their accounting, bookkeeping and business needs for over twenty years.