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Ignore the “basics” if you want to learn how to establish a potato chip firm.
The “basics” that most “how to start a potato chip business” publications address, such as receiving a bank loan and forming an LLC, are what I mean by “basics.” That’s something you don’t want to do. Instead, you should concentrate on getting your business up and running as quickly as possible and making money before doing anything else.
Let’s have a conversation about it…
Is it possible to make money selling potato chips?
Whether you’re new to the potato chip industry, you’re probably wondering if it’s even worth your time, work, and money to invest in.
But, unless you’ve been living under a rock, you’ve most likely purchased a large number of potato chips from multibillion-dollar corporations. Lays and Pringles, for example. You may fairly conclude that a category is lucrative when corporations generate ridiculous sums of money by simply selling one sort of goods to millions of consumers.
The remainder will be determined by how you handle your unit economics. You will fail if you do not pay attention to and respond to your statistics. You can prosper, however, if you’re clever about margins, pricing, shipping, cash flow, and acquisition expenses.
A slew of new DTC potato chip companies is launching… So why don’t you try it?
What Is The Cost Of Starting A Potato Chip Company?
When it comes to the specific expenses of beginning a potato chip firm, there is no one-cut answer.
That’s because the two variables you have to deal with might be rather different…
1/ The Price Per Unit
The cost per unit is the cost of a single bag of potato chips. It will cost extra per bag if you want better-grade ingredients. It will cost extra if you prefer eco-friendly packaging. If you wish to start with fewer bags, each bag will be more expensive.
Minimums are the number of units you must purchase to begin working with a manufacturer. Some companies may allow you to start with 1,000 bags. Others will only cooperate with you if you purchase 20,000 bags.
All of this implies that the cost of starting a potato chip firm will be determined by your choices.
As a result, I recommend beginning with a budget of $10,000-$25,000.
Is it feasible to start with a smaller amount of money? Sure, with the correct manufacturer. It’s also likely that you’ll need to start with more, particularly if you’re attempting to create a high-end potato chip product.
Build a Potato Chips Business Plan
One issue that potato chip companies have, particularly at the start of their travels, is that they are not well optimized for advertising. It doesn’t imply they can’t or shouldn’t, but in an ideal world, organic traffic would be the first step.
That’s why I recommend taking six months to create a “pre-launch” audience.
To do so, you’ll need to create a channel and then post material to it. This might be a blog, Youtube, or TikTok for a potato chip company. Recipes, lifestyle, and a smattering of promotional material will be included in the mix.
This will enable you to begin promoting your brand long before it is officially launched.
So when you do debut, you’ll already have a group of individuals that know, like, and trust you. It also removes client acquisition expenditures, which are crucial to your bottom line, allowing you to begin the “profitability flywheel” sooner and more profitably.
Launching a Potato Chips Business Plan
You’ll want to go from having merely a social audience to establishing an email list of individuals who are eager to purchase your chips a month before your formal debut.
Set up an opt-in page where visitors can enter their email address in return for being alerted when your new brand launches.
Don’t scrimp on this consumer group since it will be your most lucrative.
Once you’ve launched, you’ll want to get every last drop of juice out of your audience while limiting overall risk by releasing in three stages rather than one big one. This means you should sell your first batch of chips first, gather consumer feedback, make any necessary product improvements, and then order your second batch. Then do it again with the third group.
You’d keep your business open indefinitely after the third batch. If you’re debating between Clickfunnels and Shopify for this, Shopify is the way to go.
You want to do this because it causes you to slow down and concentrate on your product and profitability. It also helps you cope with the enormous amount of stress you’ll certainly face.
You’re not seeking to scale at this point.
Instead, you want to make sure that the company and the concept will succeed.
Scale Up Your Potato Chips Business Plan
When you’re ready to scale, you have a few alternatives to choose from.
The most apparent thing you can do is begin employing sponsored advertisements to increase sales more quickly. This is crucial in the potato chip industry. Just be careful not to overdo it. Always keep an eye on the bottom line. To make your advertising lucrative, you’ll also need an eCommerce email marketing funnel.
After that, the best thing you can do is look at both online and offline stores.
The online form of retail would be marketplaces.
Amazon is the most well-known example of an online marketplace. When you’re ready to grow, it’ll be critical to do well on Amazon, which is the world’s largest eCommerce search engine. You may not be allowed to retain customer information, but the income generated by Amazon may assist improve the unit economics and overall profitability of your company.
In some ways, offline shopping is even more vital than internet retail.
This is due to the fact that the CAC in offline retail is consistent. All you need to do now is concentrate on visiting as many shops as possible. It’s easier said than done, but it’s the tried-and-true approach for all new DTC food and beverage businesses. Build a strong online presence, but the sooner you can expand into physical retail, the better.