Wondering how to start a dehydrated food business? Well, you’ve come to the right place. Dehydrated food refers to foods that have been dried to eliminate the majority of their natural moisture in order to preserve them and avoid the difficulties that can arise when fresh foods mold or ferment. The best part about starting a dehydrated food business is that you don’t have to be available on a fixed schedule to operate it. Furthermore, if you are passionate about dehydrated food and dehydrated food products, the learning curve is significantly flatter. Additionally, the initial investment required to start a dehydrated food business is comparatively low. If you don’t have enough knowledge regarding dehydrated food products, don’t worry! This step-by-step guide will assist you in learning more about this business venture and determining whether it is the right step for you as an entrepreneur.
1. Familiarize yourself with the dehydrated food Industry
In order to operate a successful dehydrated food business, you must first learn everything there is to know about the dehydrated food industry. This will not only make starting this business easier but will also assist massively during the scaling phase. The best aspect about starting a dehydrated food company is how low it costs to get started. Keep in mind that the dehydrated food market is constantly evolving, so you should stay updated with current trends.
The dehydrated food market can be classified into different types such as spray-dried, Freeze-dried, Vacuum-dried, Drum-dried, and Others. All in all, the global dehydrated food market is forecasted to reach a CAGR of 4.8% during the period 2022-2027. One of the best growth markets for dehydrated food products is Asia and the largest market is North America.
During the COVID-19 pandemic, there was a tremendous increase in customer demand for non-perishable food items, particularly dehydrated food products. Although it was mostly driven by the consumer’s stockpiling tendencies during the pandemic, which was triggered by an extended lockdown, and in most cases, even consumers avoided going outside in public areas to protect themselves.
Furthermore, in order to maintain their immune systems during the pandemic, consumers are focusing on getting enough protein in their diets, which leads to an increase in sales of freeze-dried meat products, and other dehydrated food products with longer shelf lives and similar nutrients to fresh products. Therefore, if you want to get into a food business, starting a dehydrated food business is a great choice.
How much does it cost to start a dehydrated food business?
You could start a dehydrated food business at a basic level for around $1500 (assuming you buy a new commercial-quality food dehydrator). An extra $1000 could get you off to a great start by promoting your brand. That being said, if you want to operate on a bigger scale and want to provide a variety of dried food choices to your prospective customer, you will need to buy at least 3 commercial food dehydrators to start with, which alone could cost around $2100. Therefore, it will cost you around $4,000(food dehydrators plus marketing-related costs) to start a dehydrated food business on a large scale.
Keep in mind, if you want to go really cheap, you can either buy used food dehydrators, make your dehydrators or you could buy as you grow. If you don’t mind a little hard work, the dehydrated food business is one of the best businesses to start and grow.
Is dehydrated food business profitable?
Yes, Starting a dehydrated food business is incredibly profitable. However, make sure to do your market research properly and have a solid marketing strategy in place. The success of your dehydrated food business will be determined by the number of customers you find. Furthermore, this industry is highly scalable and you can reinvest a portion of profit back into the dehydrated food business and scale it to million-dollar food business in no time.
2. Plan your Dehydrated Food Business
The planning phase is integral for the success of any business. The same applies to the dehydrated food business too. Let’s get into some of the key points you’ll need to consider while planning your dehydrated food business.
Choose a name for your dehydrated food business
Whether you want to start a dehydrated food business or a banana bread business from home, you must choose a name that reflects your values and beliefs.
Keep in mind that the legal business name must comply with state naming rules in the states where you intend to operate your business; otherwise, the state may refuse to accept the documents filed to form or qualify your dehydrated food business.
Prior to deciding on a name for your dehydrated food business, it is also a good idea to talk about branding and how it will affect your business. The main question here is whether your legal business name will also be your brand name, or whether your brand name will be distinct from your legal name.
To be honest, it is preferable to use your legal business name as your brand name when first starting out. Why? You may inquire. The reason for this is that it simplifies things, is extremely simple, and is significantly less expensive.
However, if you operate an informal business (sole proprietorship, limited liability partnership, or general partnership), some states require you to use your surname as the legal name of your dehydrated food company.
Would you mind if your surname served as your legal business name? If the answer is YES, you can proceed to the next step. On the other hand, if your answer is NO, please stick with me.
If you do not want to use your surname as your legal business name, you must file a Fictitious Business Name Statement with the county in which your dehydrated food business’ head office is located.
Shopify’s Business Name Generator is super useful while brainstorming brandable names for your dehydrated food business. Once you decide on the name of your dehydrated food business, you need to perform three final checks.
- First, check your State’s business name database to see if your desired business name is available.
- Second, do a domain name search to check if your business name is available as yourbusinessname.com. If it is available go ahead and register the domain before anyone else gets it. Namecheap offers domain names with multiple extensions at reliable cost.
- And lastly, do a federal search on the US Trademark Electronic Search System and make sure nobody has already trademarked your name.
If the name for your dehydrated food business is available you can choose to trademark it, but honestly – don’t bother about it right now. It is a lengthy process and will cost you around $600. I would rather spend the money and time on marketing channels.
Dehydrated food business plan
If you want to start a successful dehydrated food business, you will need a detailed business plan at a minimum. A well-written business plan should explain the company’s core objectives and how it plans to achieve them. One of the other purposes of a dehydrated food business plan is that it makes your business look professional and appealing to prospective lenders and investors.
All in all, a well-written actionable dehydrated food business plan is a crucial document for your dehydrated food business. Without it, you’d be running around like a headless chicken.
A compelling business plan for your dehydrated food business should have many sections, some of the must-includes are:
- Executive Summary
- Business Description
- Market Analysis
- Competitor Analysis
- Products to Offer
- Competitive Pricing Strategy
- Marketing Strategy
- Financial Projections
Moreover, You can also use business plan software like BizPlan and Enloop to compose a professional-looking business plan for your dehydrated food business. However, don’t get lazy and pay someone 5 bucks to write a simple business plan for your dehydrated food business. You will need professional high-quality work.
3. Register your Dehydrated Food Business
In order to run your dehydrated food business as a legal entity, you’ll need to register it first. However, before you register your dehydrated food business, you must first comprehend and establish a business structure. You’ll want to make an informed decision because the way you set up your dehydrated food business will have an impact on your taxes and legal obligations.
Consider some of these popular business structures to register your dehydrated food business.
This form of unincorporated business is can be owned by a single person or a married couple. Your business will not need to be registered, therefore, your taxes will be reported on your personal income tax return.
This form of business structure is very similar to Sole Proprietorship except, it can be formed by multiple owners. In the case of regulations and taxes, it is very similar to a sole proprietorship.
Limited liability company (LLC)
An LLC is one of the most popular structures to register your dehydrated food business. This business structure provides personal protection to all of its members in the event that your company gets sued. Furthermore, You can also decide whether you want to be taxed as a partnership or as a corporation while registering as an LLC.
This structure is a form of an incorporated business, with S-corporations and C-corporations being the most popular. The taxes you pay will differ based on the sort of corporation you form.
4. Register for Taxes and Obtain an EIN
You must always follow the law as a responsible business owner. That is, you must follow all applicable tax, licensing, and employment laws. Investing the time to learn about any legal requirements for operating your dehydrated food business now will save you a lot of time, money, and stress later. The company entity you choose, as well as other factors of your dehydrated food business, will impact what business taxes you must pay and how you must file them. It’s a good idea to speak with a tax professional right now to be sure you’re on the proper track.
You’ll need an employer identification number if your dehydrated food business employs others. This is also known as a business’s EIN or tax ID number. You may get your EIN for free from the IRS online and use it to file taxes for your dehydrated food business. If you want to create a business bank account, get a company credit card, or apply for a business loan, you’ll need an EIN. Even if you don’t plan to hire staff, getting an EIN provides a lot of benefits.
5. Get funding for your Dehydrated Food Business
Even if you offer some of the best-dehydrated food products in the market, but don’t have enough cash flow for the business, your dehydrated food business is destined to fail. This may sound absurd, but you need money in order to make money. There is no escaping the fact that starting your dehydrated business will need startup and operational funds. Well, if it was free and easy, everyone would buy a dehydrator and start a dehydrated food business, and the dehydrated food industry would be dormant. Not to mention the fact that you may be paying exorbitant rent, marketing your products, and hiring employees with lucrative salaries and benefits.
The best thing about starting a dehydrated food business is that it can be started on a small scale. Small businesses like dehydrated food businesses can take advantage of numerous incentives, subsidies, loans, and equity investments. However, regardless of the funding source you choose, you will need to have (at a minimum) the following documents:
- A Dehydrated Food Business Plan
- Projected Financial Statements
- Tax returns of both the business owner and the business itself (when available)
- An explanatory document on how the money will be used
- A description of products offered by your dehydrated food business
After you’ve done the number crunching and figured out how much money you’ll need for your dehydrated food business, you may look into the following options for sourcing your funds.
Obtaining Funds Through SBA Backed Lenders
You may be eligible for an SBA loan, even if you have little or no money for your dehydrated food business. The United States Small Business Administration (SBA) works with lenders to provide loans to small businesses around the country.
Keep in mind, that SBA doesn’t directly lend loans to small business owners. Rather, it develops guidelines for its lending partners, community development organizations, and micro-lending institutions.
If you are wondering about the differences between a traditional loan and an SBA-backed loan, always remember that an SBA-backed loan comes with a number of added benefits. The loan rates and prices are frequently equivalent to those of non-guaranteed loans. SBA-backed loans also come with continuous assistance to help you launch and run your dehydrated food business. Moreover, certain SBA loans have lower down payments, more flexible overhead restrictions, and no collateral requirements.
Obtaining Funds through Banks
If you are unable to obtain funding for your dehydrated food business through state-level agencies or SBA-backed loans, your next option is to seek regular small business loans from banks. As a result, you must conduct due diligence and understand how lenders evaluate your dehydrated food business. If you do, you may be able to obtain a traditional loan with a longer term and a higher loan amount.
Obtaining Funds through P2P Lenders
The term “P2P” or “Peer to Peer” usually refers to a sort of financing that is very similar to crowdfunding, with the exception that your dehydrated food business loan application is vetted and presented to numerous lenders and investors. If traditional lenders have turned down your dehydrated food business loan application, this sort of funding is a perfect alternative. Some of the well-known peer-to-peer lending companies are:
6. Promote your Dehydrated Food Business
Most small business owners make a big mistakes while operating their business. They, for some reason, do not include marketing in their business strategy. This is likely one of the most serious mistakes you can make, and you should avoid it at all costs. For a product-oriented business like the dehydrated food business, marketing, and advertising make or break your business. Furthermore, if you do not have a large sum of money to invest right away, you must understand what it takes to successfully promote a dehydrated food business. You’ll also need a solid marketing strategy and communication strategies in place.
Let’s go over some of the traditional and modern marketing strategies you can use to promote your dehydrated food business.
Build a Website
I can’t stress this point enough. You will NEED an online store in order to operate your dehydrated food business. There is no way around it. The world has become digital and you must create a digital presence for your dehydrated food business.
Make sure to utilize the power of the internet. Additionally, you must customize your dehydrated food online store and make it align with your brand. You can put pictures of your food products plus testimonials and make an excellent impression on your customers. After all, actions speak louder than words.
Moreover, don’t forget to include your mission statement on your dehydrated food business online store and let your customers know why they should buy from you. Having a website creates a digital presence for your dehydrated food business so your potential customers can search and find you on the web.
It has never been easier to set up an online store for a business. Thanks to Shopify, paying a web developer thousands of dollars for a simple online store is a thing of the past. You can now launch a new online store for your dehydrated food business with Shopify for as little as $29. The cherry on top is that Shopify provides a 14-day free trial (no credit card required). This gives you plenty of time to set up an online store, add products, and configure payment methods for your dehydrated food business.
Establish Social Media Accounts
Creating a digital presence for your dehydrated food business by establishing social media accounts plays an important role in the modern world. You must be strategic in this regard, as you do not want to waste your time appearing on all social networks, particularly those that do not align well with your target audience or brand.
Depending on the size of your operation, you’d want your dehydrated food business to be on these social media platforms:
Nowadays, almost everyone uses social media not only to communicate with friends and family but also to shop for goods and services. Getting your dehydrated food business in front of your target audience can result in more leads and sales. Moreover, it can also be used to keep current customers informed and to attract new customers.
Run Paid Ads
Paid Ads will play an integral role to determine the success of your dehydrated food business. Paid Ads have the ability to target prospective customers within a specific demographic and region, making them an excellent tool for your business. Consider running paid ads through services like Facebook Ads, or Google Shopping Ads. Furthermore, the best thing about paid advertisements is that they produce results quickly, allowing you to scale your dehydrated food business both vertically and horizontally.
If you need any professional help to run paid ads for your dehydrated food business, please contact us. We will be more than happy to provide you with help and resources for absolutely free.