You probably have a dog and have thought of the perfect dog food business idea. According to DogLeashPro, many pet owners want what’s best for their canines and that means eating healthy food and vegetables that are organic, gourmet, and home-made.
In 2019, a total of $93.9 billion was spent on pet food globally. Over the next few years, this total amount is expected to increase. If you’re thinking of starting a dog food business, you’re on the right path to success. But first, you’ll need to make sure your business is carefully planned out and properly registered.
Keep reading to learn the 10 steps to start a dog food business.
Step 1: Map out your business
Before diving into all the nitty-gritty details, you’ll need to create a business plan. In your business plan, consider who your target market is and how much it will cost to open a dog food business. Will you be making dog food in your own kitchen or in a food processing facility? Think about whether you’ll be selling the dog food online, at a local farmer’s market, or in your newly opened store?
List down all the food you’ll need to purchase and any supplies you need. It’s best to purchase from wholesalers to keep your costs low. Figure out what ingredients you’ll need and how much they will cost.
Be sure to sell your dog food at a price higher than the costs to make the food so your company has a profit margin. Many companies charge by the pound of between $7.00 and $10.50 per pound.
Over the past few years, dog food businesses have proved to be very profitable. Gourmet and organic dog food usually see a profit margin of about 40 percent. Again, your profit will depend on how large your company will be. To increase that profit margin, expand your dog food business to include dog treats in addition to dog food.
Next, you’ll have to estimate how much shipping and delivery fees will be. Is it a standard fee or will the fee increase depending on where your customers live?
Step 2: Form and create a legal entity
Forming a legal entity includes coming up with a name for your company. The name has to be relevant to your business.
It is recommended to use a business name other than your own personal name if you operate a sole proprietorship. After coming up with a business name, check it against the business records in your state. See if your business name has already been taken by checking the federal and state trademark records.
If you plan to create a website later, see if you’re able to use that name as a web domain and secure this name as soon as possible before someone else takes it.
In addition to a sole proprietorship, there are also three other common business structure types including limited liability company (LLC), partnership, and corporation. Choose the structure type that’s best for your business. Your business entity will protect you from personal liability if your dog food business is sued. You can hire someone to form the entity for you or you can start a business entity yourself.
Step 3: Register for state and federal taxes
Before you can open your business, it’s important to register for both federal and state taxes. First, you’ll need to get an Employer Identification Number or EIN from the IRS. EIN identifies your dog food business for tax purposes. Luckily, it is free and easy to do.
Depending on which business structure you choose for your company, it will affect how your business is taxed. Make sure to ask your accountant or CPA for tax advice.
Step 4: Open a bank account or credit card for your business
Instead of using your own personal account for your business, it’s best to set up a business banking account as well as a business credit card. This way, your business expenses are not mixed with your personal expenses. When filing taxes for your business, it will be easier if you have all your business expenses under one account instead of mingling with your personal account.
There are several reasons why this is important. First, it provides personal asset protection. In the event that someone sues your business, your personal assets are not at risk.
Step 5: Business accounting set up
You can hire someone to handle your company’s finances or you could do it yourself. If you’re on a budget starting out, it’s best to record your business’ expenses and revenue yourself so you know how your business is doing.
Remember to keep a detailed account and record accurate numbers. You’ll be happy you did when it’s time for your annual tax filing.
Step 6: Apply for licenses and permits
When it comes to dog food, there are special requirements from the FDA. So depending on the type of dog food you’re making, some require certain state licenses and permits. Make sure to visit your town or city clerk’s office to apply for any license or permit that applies to your business.
Step 7: Business insurance is a must
In order for your dog food business to operate lawfully and safely, you’ll need to get business insurance. In the event of a loss, business insurance helps protect your company’s finances.
Choosing the best type of insurance policy depends on your business type and what risks are associated with your business. Start with General Liability Insurance and get Worker’s Compensation Insurance if your business is expecting employees.
Step 8: Create your food business brand
Branding is key. It’s how the public perceives your business and company. If you’re looking to stand out from the crowd, choose a strong brand that is personal and meaningful.
You can market your dog food business online or locally at your local market. You can inform others of your business through word of mouth or social media. If you plan to sell your dog food locally, speak with your local pet store. With the age of technology, you may choose to sell online through your own site or through a large retailer like Amazon.
Step 9: Create a website for your food business
Creating a website for your dog food business is crucial. If you don’t have website-building experience, hire a designer or a web developer. Note that all legitimate businesses have an online presence and that includes a website.
Step 10: Make your dog food and sell, sell, sell
Lastly, start making your dog food and start selling. Reach out to friends, family members, and fans on social media to inform them of what you’re making and if they would like to purchase from you.