People buy all kinds of boxed foods because they are convenient. In fact, people are buying more and more packaged foods, and the food packaging business is expected to grow by more than 40% by 2028. Food package companies mostly make containers for foods that are already made, like deli items from the grocery store, takeout from a restaurant, baked goods, frozen foods, and more. Starting a business that packages food takes a lot of money, but it’s a great way to get in on a growing market and make good money.
But you should know that starting a business is a serious task that takes a lot of knowledge about business. This step-by-step guide has all the business advice and information you need to start your food packaging company successfully.
The demand for all kinds of prepared foods is on the rise.
Step 1: Find Out if this is the Right Business for You?
Positives Vs Negatives
| The demand for all kinds of prepared foods is on the rise. Packaging food is a business that could go public at some point. Customers will spend hundreds of dollars per order, which is good money. | High costs to get started – Equipment for making things is expensive. Labor-intensive – You’ll need a large staff Food Safety Modernization Act rules may apply to regulations |
Industry Trends
- Size of industry and past growth – After growing by more than 6% in 2020, the global food packaging market was worth $338.34 billion in 2021.
- Growth prediction: It is expected that the global food packaging business will grow by more than 40% by 2028, reaching $478 billion.
Cost of Starting Food Packaging Business
A food packing business can cost anywhere from $100,000 to $250,000 or more to start up. Costs include making tools, paying employees, and running the business, all of which need to be in place and working before you can start making money.
Investment Items:
- Making things like machines
- Paper and plastic are examples of raw materials.
- Safety gear
Is Food Packaging Business Profitable?
Prices for food packing depend on what kind of food it is. For instance, you can get about $25 for a pack of 100 Styrofoam cases. Customers like grocery shops and restaurants tend to buy in bulk, so these numbers are based on an average order of $500 when you’re just starting out. After processing costs, overhead, and labor, your profit margin should be about 20%.
In the first year or two, you might have 50 users who buy once a month, bringing in $300,000 a year. Using the 20% margin, this would mean a profit of $60,000. As you get more regular customers, your average order size might go up to $1,000, and you might have 200 customers who buy once a month. Your profit margin will drop to about 10% because your labor costs will go up. With yearly sales of $2.4 million, you’d make a profit of almost $250,000.
Entry Barriers
- The high start-up costs of equipment and other costs
- Getting in line with strict government rules
Step 2: Create a Strategy
Identify a Gap
Do some research on the food packaging companies in your area to see what they sell, how much it costs, and what sells best. You want to fill a hole in the market. For example, the local market might be missing a company that makes eco-friendly food packaging or a business that makes bendable food packaging.
This could get people talking about you right away and bring in customers right away.
Solutions
- Containers for frozen foods
- Safe to heat in the microwave
- Tilt-top tubs
- Styrofoam dishes
- Clear cases for packaging
- Bakery boxes made of cardboard
- You could also create labels and food packaging with company logos on them.
Pricing
Prices will change depending on what kind of packages you make. To make sure you’re competitive, you’ll need to check the average market prices for different kinds of packing. After paying for everything, you should aim for a 20% profit margin.
Once you know your costs, you can use this Step By Step Profit Margin Calculator to figure out your markup and end price. Remember that the prices you use at start may change if the market says so.
Target Market
Depending on the products you make, your target market will be different. You could target restaurants, grocery shops, companies that process food, companies that make frozen food, food trucks, or people who run commercial kitchens. You can find relevant businesses on LinkedIn, but your best bet is to use Google or Yelp to find nearby businesses and call them.
Location
For your manufacturing plant, you will need to rent a space. Sites like Craigslist, Crexi, and Instant Offices can help you find business space to rent in your area.
When looking for a commercial space, you might want to keep these general ideas in mind:
- Central position accessible via public transport
- Well-lit, well-ventilated, and with a lot of space
- The lease is flexible and can be extended as your business grows.
- Ready-to-use space that doesn’t need big repairs or renovations
Step 3: Write a Business Plan
A plan is important for any business. This will help you guide your new business through the launch process and keep your eye on your main goals. A business plan also helps possible partners and investors understand your business and its goals:
- Executive Summary: A brief outline of the whole business plan that should be written after the plan is done.
- Business Overview: A summary of the company’s goals, vision, purpose, ownership, and ownership structure.
- What we make and what we do: Explain in detail what you’re selling.
- Do a SWOT analysis and look at market trends like changes in demand and growth opportunities.
- Competitive Analysis: Look at your key competitors’ strengths and weaknesses and make a list of your services’ benefits.
- Sales and Marketing: Look at the unique selling propositions (USPs) of your business and come up with sales, marketing, and promotion plans.
- Management Team: An overview of the team’s tasks and professional backgrounds, as well as a corporate hierarchy.
- Operations Plan: Your company’s operational plan includes how it will get supplies, where it will put its office, what its most important assets and tools are, and other logistical details.
- Financial Plan: A three-year plan for money, including start-up costs, a break-even analysis, predictions of profits and losses, cash flow, and a balance sheet.
- Appendix: Add any other papers related to money or business.
Step 4: Create a Marketing Plan
Some of your business will come from random online visitors, but you should still spend in digital marketing! Getting the word out is especially important for new businesses because it will bring in more customers and make people more aware of the brand.
Link your website to your social media accounts once your site is up and running. Social media is a great way to market your business because you can make posts that are interesting and sell your goods.
- Facebook is a great place for paid advertising because it lets you target specific groups, such as guys under 50 in the Cleveland area.
- Instagram has the same perks as Facebook, but it’s for a different crowd.
- Website: Search engine optimization (SEO) will help your website show up higher in appropriate search results, which is a key part of making more sales. Make sure your website has clear calls to action. Try out different words, colors, sizes, and places for calls to action like “Buy Now.” This can make people buy a lot more.
- Google and Yelp: Getting listed on Yelp and Google My Business can be very important for businesses that depend on local customers.
- Person-to-person sales: Give your food packaging to grocery shops and restaurants in your area.
- Email marketing and newsletters: Send customers and potential customers regular emails. Personalize them.
- Start a blog. Start a blog and update it often. Change your information and post it on more than one site.
- Press releases: Write press releases about new goods, sales, etc.
- Paid ads on social media: Choose sites where your target market is most likely to be and run focused ads there.
- Pay-per-click advertising: Use Google AdWords to improve your search results. First, look into your terms.