25 Mistakes and Suggestions for Avoiding Them

After years in the food industry, I’ve seen a lot of mistakes made by well-intentioned food entrepreneurs. I’ve made many myself.

Here are 25 mistakes and suggestions for avoiding them.

1: Not thinking through the idea thoroughly enough.

It’s not enough to have a great idea. In fact, that’s just the spark. For the spark to become a flame, you need to flesh out marketing, operations, sales, accounting, packaging, labeling, distribution and hiring. Otherwise, you may find yourself with an expensive hobby rather than a business.

Suggestion: Write a business plan. It doesn’t have to be fancy. Just do it and research your idea to see if it’s doable.

2: Not adequately protecting your business and personal assets.

Are you familiar with Hello Kitty? Did you know that the parent company, Sanrio, goes after anyone and everyone who uses the image or name. That’s called trademark infringement and it can be costly. 

Suggestion: Before naming your product or producing something recognizable, do your research. Does the name already exist? Does your logo closely resemble an existing logo? Change the name. Change the logo. The reverse is also true. When you spend time and money developing a logo or slogan, you don’t want someone, particularly a competitor, copying you. Trademark attorneys aren’t cheap but failing to protect your name, logo and slogan is more costly.

3. Not setting up your business properly

Even if you’re a sole proprietor, it’s important to set up your business right. There are benefits and drawbacks to being an LLC, S-Corp or C-Corp. Simply remaining a sole proprietor exposes you and your personal assets to risk.

Suggestion: Speak with a small business accountant. Choose your structure. Apply for licenses, permits and your EIN under that name.

4. Failing to obtain adequate business liability insurance.

You’re making food that’s going in people’s bodies. That’s a big responsibility. Not to mention, we live in a litigious world. Protect yourself.

Suggestion: We recommend FLIP (Food Liability Insurance Program) for food entrepreneurs. It’s cost effective, you can apply online and get a $10 discount by using our discount code, CraftedKitchen10.

5: Using debit cards to finance your startup.

It may seem financially responsible to “pay cash” to fund your idea rather than run up credit card debt. Using cash may work at the beginning, but remember that, food businesses are cash intensive. Money comes in and goes out. Sometimes there’s a time lag and that can create a “cash crunch”.

Suggestion: Apply for and use a business credit card. First, you’ll have 30 days to pay. That’s called float. Second, you’re building business credit. Caveat: Only if you can pay the bill in full and on time. Paying 30% interest, which is what most banks charge, will sink your ship.

6: Thinking you can produce the product by yourself.

You may have started out making a batch of cookies and selling them, then “scaling up” to 4 batches then 8, etc. Is your product sustainable? If it is (and if you want more than an expensive hobby it must be), as your business grows, that’s not sustainable. And, if you’re in the kitchen all night, who’s going to sell the product?

Suggestion: If this is a side hustle, as it grows, do you want to come home from your day job just to work in your kitchen all night? Have a plan for scaling. Look into and price the cost of renting a commercial kitchen. Then, when you grow beyond that, it’s time to find a co-packer.

7: Thinking you can do everything yourself. 

Starting out, unless you’re independently wealthy, money is tight so you wear all of the hats. To illustrate, if you can’t afford a bookkeeper, you do it yourself. Then there’s marketing, sales, distribution, etc.

Suggestion: As the founder, your job is to grow the company, not wash dishes. Start outsourcing quickly. Order fulfillment, shipping, social media, bookkeeping and the like should be delegated to others.

8: Failing to hire a professional packaging designer. 

Seems easy enough to draw out a simple design, print it and slap it on your jars. What’s wrong with that? 

Suggestion: Unless you’re a graphic designer, don’t try to do this yourself. That’s not an insult, it’s the truth. It’s one thing to get your product on store shelves. It’s another to have the jars flying off the shelf and into customer carts. You need to stand out and attractive packaging and labeling go a long way. Ugly labels don’t do that. Your labels have to be at least as beautiful and captivating as your competition. 

9: Failing to accurately weigh your product.

Net weight, volume and container size are not the same thing. A 9oz jar may or may not hold 9oz of pasta sauce.

Suggestion: Before buying jars (or any other packaging), check the content net weight that the container can hold. No one wants to be adding stickers, individually, because the weight is off. And, speaking of net weight, make sure your labels accurately state the net weight of the contents. In fact, you could be found guilty of “misleading” consumers.

10. Not choosing the best packaging solution for your product.

Today, straight sided jars are about all you see on shelves. They’re inexpensive, but are they right for you?

Suggestion: Don’t choose the cheapest due to the fact that it may be more cost effective. Just because everyone else is doing one thing doesn’t mean you should be. Use straight sided jars only if that’s what you want. Also, in addition to labels (see above), your packaging is an opportunity to stand out in the crowd. 

11. Ordering an excessive numbers of labels just to get a better price.

Does this need an explanation? What if your ingredients change? The package size changes? You realize you forgot to add your QR code? New branding? Changes in food laws? I could go on.

Suggestion: Labels are part of your COGS, so keeping the cost in check is important. Buying, say, 5,000 instead of 25,000 will cost more per unit. In the final analysis, it acts as a bit of insurance in the event that you need to print new labels before you’ve used up all 25,000. Balance. 

12. Thinking a distributor will sell your product for you.

Contrary to popular belief, even though they have salespeople, distributors only get your product from point A to point B. After that, it’s on you.

Suggestion: To begin with, you are your best salesperson. Period. Use the fact that you’re carried by X distributor to help land wholesale accounts.

13: Thinking that in-store demo’s are a waste of time.

It may be true that, in the same number of hours, you could sell more units at a food event than an in-store demo. Also true? If a customer enjoys your product, they’re likely to buy again (from that retailer) and that could lead to the retailer re-ordering.

Suggestion: On balance, look at demo’s as an opportunity to get immediate customer feedback. Don’t like doing demo’s? Outsource it to an energetic person who loves your product. After all, it’s a great opportunity to get face time with your supporters.

14. Being reactive rather than proactive

Guilty as charged. And as a one-person organization, you may be, too. Being in reaction-mode takes time and energy away from activities that will grow your business.

Suggestion: This is a hard one. Keep a personal to-do list with daily, weekly, monthly proactive tasks. People who lack a cash cushion make rash (and often poor) decisions.

15. Being too risk averse when you’re still young.

I was in my 50’s before I built Crafted Kitchen. Reread that. It’s true that the idea hadn’t sparked earlier, but I wasn’t happy in my job and was terrified of losing that safety net. Sound like you?

Suggestion: Even if you start your business as a side hustle, decide early on if you want this to be a lifestyle business or a startup. If you want to be a startup, have a path to profitability and a plan for transitioning from side hustle to success story.

16. Overreacting and getting stressed when you have a bad day.

Guilty as charged. By starting a food business (or growing one), you’re assuming a lot of risk. You’ll have good days and bad days. That’s natural. Don’t give in to the temptation of throwing in the towel. That’s almost always an overreaction. 

Suggestion: Things will be different tomorrow. Give yourself some grace. Someone once said, “You didn’t come this far just to come this far.

17. Not having the courage to say, “No’.

Again, guilty as charged. To survive, your business needs to make a profit. In the early days, or when launching a new product, you’ll likely be anxious. If you’re offered a deal that, on the surface, looks great but deep down, the margins are razor thin or you aren’t sure about your ability to deliver, at this time, it’s ok to say “No”. 

Suggestion: Your business comes first. Accepting low-ball terms, just to land an account, puts you at a disadvantage. Even if you’re scared, all things considered, the health of your business comes first. Just say “No”. 

18. Not writing your sales forecast on Day 1.

Wow. Guilty again. How much revenue to you plan to generate this year? Don’t know? Is it just a shot in the dark, a hope and a prayer? Guessing is no way to run a business.

Suggestion: Write your forecasts, adjust (if necessary) quarterly. In fact, start forecasting for next year in June of the current year. Sales forecasts help you plan production, set goals and are helpful if anyone (read: investor or bank) are curious.

19. Not keeping a tight grip on your COGS

Another key point: When you’re making a batch of cookies at home, it seems cheap, right? That’s because you’re not factoring in the cost of labor and overhead. As a result, your “guesstimate” of expenses is way off course.

Suggestion: Compute your COGS correctly and often. There’s a COGS calculator on the Crafted Kitchen website. In fact, there’s a whole eBook about pricing. Go get it!

20. Thinking that increased volume translates into increased growth.

You’d think that increased sales and increased growth go hand in hand. It’s not true. To begin with, your production costs, as you scale, may increase. Not to mention going to a co-packer. Get ready for your margins to shrink significantly. 

Suggestion: Focus on higher margin products and activities.

21. Launching too many SKU’s too quickly

More SKU’s does not translate into higher sales. Sure, recipe test all you want. In this case, though, to look at your sales. Let’s say you have 12 SKU’s and 1 or 2 account for the bulk of your sales. It’s important to realize that increasing your product line comes with increased costs. Say you make 12 different salsas and one uses mango. Only if that product is your #1 or #2 seller, rethink the value of that product in your portfolio.

Suggestion: With a smaller product line, at least you’ll save money on inventory, at the same time, your sales pitch will be tighter and you’re saving your customers from the “paralysis of analysis”.

22. Not taking advantage of online specialty food groups.

Another key point: Stop thinking you can do this alone. 

Suggestion: There are people further down the line than you. Being that they’ve travelled the same road, use their experience to your advantage. Take a look at specialtyfoodresource.com. It’s a great resource and has an active community forum. These forums usually have horror stories. As a matter of fact, learn from them.

23. Not forming an advisory panel on Day 1.

As can be seen, you can not do this on your own. 

Suggestion: There are benefits and drawbacks to being a solo-founder. In fact, one of the benefits (e.g., not having to come to a consensus with your fellow founders) is, in fact, a drawback. Multiple viewpoints allows you to see aspects of your business that you many have overlooked. Even if you’re a solo founder, from Day 1, you need a knowledgable advisory board. Preferably with others who have experience with CPG. 

24. Ignoring email marketing.

Regardless of the size of your mailing list (accumulated through your POS and website), by opting against email marketing, you’re passing up sales.

Suggestion: Collect email addresses. I can guarantee you this: If you use email marketing for the people who’ve previously ordered off of your website, at least one person will order again. Your cost to send that email is virtually nothing. For this reason, it’s got a great ROI.  

25. Above all, failing to realize you have a life outside your business.

In the beginning you’ll work long hours. Yes, you’ll be exhausted. As a result, yes, you’ll reach burnout sooner rather than later.

Suggestion: Your business is not your entire life. Nor should it be. In a word, get out of the kitchen, go for a walk, see family and friends, make it to your kid’s soccer game. Turn off your phone. Know when it’s time to call it a day. 

In conclusion, we all make mistakes. So long as you learn from them, you’re going to be okay.

Hunger for more? We’ve got tons of free resources. Made a mistake with your food business? We’re here to help. Schedule a call!

Bonus mistake: Choosing the wrong commercial kitchen rental in Los Angeles. Crafted Kitchen offers flexible, affordable commercial kitchen rentals in Los Angeles…plus so much more.