How to open a gluten-free food manufacturer?
Want to start a gluten-free food manufacturing business but don't know where to begin? Then you've come to the right place!
Our comprehensive guide covers everything related to opening a gluten-free food manufacturing business - from choosing the right concept to setting out your marketing plan and financing your business.
You'll also learn how to assess the profitability of your business idea and decide whether or not it can be viable from a financial perspective.
Ready to kickstart your entrepreneurial journey? Let's begin!
Understanding how a gluten-free food manufacturing business works
The very first step when exploring a business idea such as starting a gluten-free food manufacturing business is to make sure you understand how the business operates and makes money (which is what we call the business model).
This will not only give you an initial idea of how profitable the business can be, but it will also enable you to make sure that this is the right business idea for you, given your skills, start-up capital and family or personal lifestyle, in particular.
The best ways to get to grips with the gluten-free food manufacturing business's business model are to:
- Talk to gluten-free food manufacturing business owners with experience
- Work a few months in a gluten-free food manufacturing business already in operation
- Take a training course
Talk to gluten-free food manufacturing business owners with experience
Experienced gluten-free food manufacturing business owners have valuable insights and can provide practical advice based on their firsthand experiences.
They've likely encountered and overcome challenges that a newcomer might not anticipate. Learning from other’s mistakes can save you both time and money and potentially increase your venture’s chances of succeeding.
Work a few months in a gluten-free food manufacturing business already in operation
Obtaining work experience in the industry can be a crucial factor in confirming whether you truly want to start a gluten-free food manufacturing business, as it provides insight into the day-to-day activities.
For instance, if the working hours are longer than expected or if other business requirements don't align with your personal lifestyle or preferences, you might reconsider your entrepreneurial goals.
Even if you've decided that this business idea is a good fit for you, gaining work experience will still be valuable. It helps you better understand your target market and customer needs, which is likely to be beneficial when launching your own gluten-free food manufacturing business.
Take a training course
Obtaining training within your chosen industry is another way to get a feel for how a gluten-free food manufacturing business works before deciding to pursue a new venture.
Whatever approach you choose to familiarise yourself with the business, before going any further with your plans to open a gluten-free food manufacturing business, make sure you understand:
- What skills are required to run the business (compare this with your own skills)
- What a typical week in the business is like (compare this with your personal or family life)
- What is the potential turnover of a gluten-free food manufacturing business and the long-term growth prospects (compare this with your level of ambition)
- Your options once you decide to sell the business or retire (it's never too early to consider your exit)
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What is the ideal founding team for my gluten-free food manufacturing business?
The next step to opening your gluten-free food manufacturing business, is to decide whether to assemble an ideal team or venture solo.
The failure rate for business start-ups is high: almost half don't make it past the five-year mark, and setting up a gluten-free food manufacturing business is no exception.
Starting with a group of co-founders helps reduce this risk as each of you brings complementary skills and enables the financial risk to be spread on multiple shoulders.
However, managing a business with multiple partners comes with its own set of challenges. Disagreements among co-founders are quite prevalent, and they can pose risks to the business. That's why it's essential to carefully weigh all aspects before launching a business.
To help you think things through, we recommend that you ask yourself the following questions:
- Do you need more co-founders for this venture?
- Do you share the same vision and ambition as your potential partners for this project?
- What is your plan B?
Let's look at these issues in more detail.
Do you need more co-founders for this venture?
To answer this question you will need to consider the following:
- Are there any key skills missing for which you would rather have a business partner than recruit an employee?
- Do we have enough equity? Would the company benefit from more capital at the outset?
- Will the proposed number of founders make it easy to make decisions (an odd number of partners, or a majority partner, is generally recommended to avoid deadlock)?
In simple terms, co-founders bring skills, money, or both to the table. Having more partners is beneficial when there's a lack of either of these resources.
Do you share the same vision and ambition as your potential partners for this project?
One of the main sources of conflict between co-founders comes from a lack of alignment on the long-term vision.
To avoid any risk of disagreement, it is advisable to agree on ambitions from the outset and to provide an exit mechanism for one of the partners in the event of disagreement.
What is your plan B?
We hope your gluten-free food manufacturing business takes off and thrives, but it's smart to have a "plan B" just in case things don't go as expected.
How you tackle potential failure can vary broadly depending on the type of co-founders (close friend, spouse, ex-colleague, etc.) and the personal circumstances of each of them.
For example, launching a family business with your spouse might seem exciting, but if it fails, you risk losing all of your household income at once, which might be stressful.
Likewise, starting a business with a friend might strain the friendship if things go wrong or if tough decisions need to be made.
Before diving in, make sure to thoroughly think about your choices. This way, you'll be ready for whatever might come your way when starting up.
Is there room for another gluten-free food manufacturing business on the market?
The next step in starting a gluten-free food manufacturing business is to undertake market research. Now, let's delve into what this entails.
The objectives of market research
The goal here is straightforward: evaluate the demand for your business and determine if there's an opportunity to be seized.
One of the key points of your market analysis will be to ensure that the market is not saturated by competing offers.
The market research to open your gluten-free food manufacturing business will also help you to define a concept and market positioning likely to appeal to your target clientele.
Finally, your analysis will provide you with the data you need to assess the revenue potential of your future business.
Let's take a look at how to carry out your market research.
Evaluating key trends in the sector
Market research for a gluten-free food manufacturing business usually begins with an analysis of the sector in order to develop a solid understanding of its key players, and recent trends.
Assessing the demand
After the sector analysis comes demand analysis. Demand for a gluten-free food manufacturing business refers to customers likely to consume the products and services offered by your company or its competitors.
Looking at the demand will enable you to gain insights into the desires and needs expressed by your future customers and their observed purchasing habits.
To be relevant, your demand analysis must be targeted to the geographic area(s) served by your company.
Your demand analysis should highlight the following points:
- Who buys the type of products and services you sell?
- How many potential customers are there in the geographical area(s) targeted by your company?
- What are their needs and expectations?
- What are their purchasing habits?
- How much do they spend on average?
- What are the main customer segments and their characteristics?
- How to communicate and promote the company's offer to reach each segment?
Analyzing demand helps pinpoint customer segments your gluten-free food manufacturing business could target and determines the products or services that will meet their expectations.
Assessing the supply
Once you have a clear vision of who your potential customers are and what they want, the next step is to look at your competitors.
Amongst other things, you’ll need to ask yourself:
- What brands are competing directly/indirectly against your gluten-free food manufacturing business?
- How many competitors are there in the market?
- Where are they located in relation to your company's location?
- What will be the balance of power between you and your competitors?
- What types of services and products do they offer? At what price?
- Are they targeting the same customers as you?
- How do they promote themselves?
- Which concepts seem to appeal most to customers?
- Which competitors seem to be doing best?
The aim of your competitive analysis will be to identify who is likely to overshadow you, and to find a way to differentiate yourself (more on this see below).
Regulations
Market research is also an opportunity to look at the regulations and conditions required to do business.
Ask yourself the following questions:
- Do you need a special degree to open a gluten-free food manufacturing business?
- Are there necessary licences or permits?
- What are the main laws applicable to your future business?
At this stage, your analysis of the regulations should be carried out at a high level, to familiarize yourself with any rules and procedures, and above all to ensure that you meet the necessary conditions for carrying out the activity before going any further.
You will have the opportunity to come back to the regulation afterwards with your lawyer when your project is at a more advanced stage.
Take stock of the lessons learned from your market analysis
Market research should give you a definitive idea of your business idea's chances of commercial success.
Ideally, the conclusion is that there is a market opportunity because one or more customer segments are currently underserved by the competition.
On the other hand, the conclusion may be that the market is already taken. In this case, don't panic: the first piece of good news is that you're not going to spend several years working hard on a project that has no chance of succeeding. The second is that there's no shortage of ideas out there: at The Business Plan Shop, we've identified over 1,300 business start-up ideas, so you're bound to find something that will work.
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How should I position my gluten-free food manufacturing business on the market?
The next step to start your gluten-free food manufacturing business is to define precisely the market positioning your company will adopt in order to capitalise on the opportunity identified during your market research.
Market positioning refers to the place your product and service offering occupies in customers' minds and how they differ from the competition. Being perceived as a low-cost solution, for example.
To find a concept and a market positioning that will resonate with your customers, you need to address the following issues:
- How can you differentiate yourself from your competitors?
- Is it better to start or buy a gluten-free food manufacturing business already in operation?
- How will you validate your concept and market positioning before investing in the business?
Let's look at these aspects in more detail.
How can you differentiate yourself from your competitors?
Opening a gluten-free food manufacturing business means starting with a major disadvantage compared with competitors already active on the market.
While you will have to create everything from scratch, your competitors already have everything in place.
Your competitors' teams know the business well, whereas yours has only just been recruited, their customers are loyal and they benefit from word of mouth that you don't yet have.
So you're going to need a solid plan to succeed in taking market share from your competitors and making your mark.
There are a number of aspects to consider in order to try to avoid direct confrontation if possible:
- Can you target a different customer base than your competitors?
- Can you offer products or services that are different from or complementary to what your competitors already sell?
- How will your competitors react to your gluten-free food manufacturing business entering their market?
- Can you build a sustainable competitive advantage that will enable you to compete with your current and future competitors?
Is it better to start or buy a gluten-free food manufacturing business already in operation?
The alternative to setting up a new independent business is to buy out and take over a gluten-free food manufacturing business already in operation.
A takeover is a good way of reducing the risk of your project compared with a pure start-up.
Taking over a business has two enormous advantages over setting up a new one: you start out on an equal footing with your competitors since you take over the team and the customer base, and you don't increase the supply on the market enabling you to maintain the existing balance on the market where the business operates.
However, the capital requirements for a takeover are higher because the business will have to be bought from its previous owners.
How will you validate your concept and market positioning before investing in the business?
However you decide to set up your business, you will need to ensure that there is a good fit between what you sell and what customers are looking to buy.
To do this, you'll need to meet your target customers to present your products or services and check that they meet their expectations.
Explore the ideal location to start your gluten-free food manufacturing business
The next stage in our guide on how to start a gluten-free food manufacturing business: choosing where to set up shop.
Setting up your business in the right location will have a direct impact on your chances of success, so it's a good idea to think things through before you launch.
To help you decide where to set up your business, we recommend considering the following factors:
- Visibility and foot traffic - This is important for a retail business as it allows for potential customers to easily find the store and increases the likelihood of sales.
- Parking space, road and public transport accessibility - Since a gluten-free food manufacturing business may require delivery trucks and transportation of goods, having ample parking space and easy access to roads and public transport is necessary.
- Proximity to target customers - For a retail business, being close to the target customers can increase sales and improve customer satisfaction.
- Competitor presence - Knowing the competition in the area can help a retail business determine their pricing and marketing strategies.
- Efficient logistics - As an industrial business, having efficient logistics is crucial for timely and cost-effective production and delivery of goods.
- Storage space - A gluten-free food manufacturing business may require ample storage space for raw materials and finished products.
- Availability of skilled labor - Having a pool of skilled labor to hire from is important for an industrial business to ensure high-quality production.
- Easy access to main roads - This is important for a construction business as it allows for easy transportation of materials to and from the site.
- Climate and soil quality - For an agricultural business, the climate and soil quality can greatly impact the growth and quality of crops.
- Adequate infrastructure - A good infrastructure, such as access to water and electricity, is important for an agricultural business to ensure efficient production.
- Premises layout - For a hospitality business, the layout of the premises can greatly impact the customer experience and flow of operations.
- Space to grow - As an e-commerce or online business, having room for growth and expansion is important for future success.
- Demographic of local population - For a transportation business, understanding the demographic of the local population can help determine the demand for transportation services and potential target markets.
These criteria will need to be refined according to the specific features of your project.
After weighing the factors mentioned earlier, it's crucial to focus on your startup's budget. Look for a location that suits your business needs while being affordable, especially in the short term.
One of the issues that will also come up is the long-term future of your location, particularly if you opt to rent your premises rather than buy. In this case, you will need to consider the conditions for renewing the lease (duration, rent increases, etc.).
Lease agreements vary widely from country to country, so make sure you check the terms applicable to your situation and have your lawyer review your lease before you sign.
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Choosing your gluten-free food manufacturing business's legal form
The next step to open a gluten-free food manufacturing business is to choose the legal form of your business.
The legal form of a business simply means the legal structure it operates under. This structure outlines how the business is set up and defines its legal obligations and responsibilities.
Why is your gluten-free food manufacturing business's legal form important?
Choosing the legal form for your gluten-free food manufacturing business is an important decision because this will affect your tax obligations, your personal exposure to risk, how decisions are made within the business, the sources of financing available to you, and the amount of paperwork and legal formalities, amongst other things.
The way you set up your business legally will impact your taxes and social contributions, both at a personal level (how much your income is taxed) and at the business level (how much the business's profits are taxed).
Your personal exposure to risk as a business owner also varies based on the legal form of your business. Certain legal forms have a legal personality (also called corporate personality), which means that the business obtains a legal entity which is separate from the owners and the people running it. To put it simply, if something goes wrong with a customer or competitor, for example, with a corporate personality the business gets sued, whereas without it is the entrepreneur personally.
Similarly, some legal forms benefit from limited liability. With a limited liability the maximum you can lose if the business fails is what you invested. Your personal assets are not at risk. However, not all structures protect you in such a way, some structures may expose your personal assets (for example, your creditors might try to go after your house if the business incurs debts and then goes under without being able to repay what it owed).
How decisions are made within the business is also influenced by the legal form of your gluten-free food manufacturing business, and so is the amount of paperwork and legal formalities: do you need to hold general assemblies, to produce annual accounts, to get the accounts audited, etc.
The legal form also influences what sources of financing are available to you. Raising capital from investors requires having a company set up, and they will expect limited liability and corporate personality.
What are the most common legal structures?
It's important to note that the actual names of legal structures for businesses vary from country to country.
But they usually fall within two main types of structures:
- Individual businesses
- Companies
Individual businesses
Individual businesses, such as sole traders or sole proprietorships, are legal structures with basic administrative requirements.
They primarily serve self-employed individuals and freelancers rather than businesses with employees.
The main downside of being a sole trader is that there's usually no legal separation between the business and the person running it. Everything the person owns personally is tied up with the business, which can be risky.
This means that if there are problems or the business goes bankrupt, the entrepreneur's personal assets could be taken by creditors. So, there's a risk of personal liability in case of disputes or financial issues.
It is also not possible to raise equity from investors with these structures as there is no share capital.
Despite the downsides, being a sole proprietorship has some advantages. There is usually very little paperwork to get started, simpler tax calculations and accounting formalities.
Companies
Companies are all rounders which can be set up by one or more individuals, working on their own or with many employees.
They are recognized as a distinct entity with their own legal personality, and the liability is usually limited to the amount invested by the owners (co-founders and investors). This means that you cannot lose more than you have invested in the business.
This separation ensures that in legal disputes or bankruptcy, the company bears primary responsibility, protecting the personal assets of the founder(s) and potential investor(s).
How should I choose my gluten-free food manufacturing business's legal structure?
Deciding on the legal structure is usually quite straightforward once you know how many co-founders you'll have, whether you'll have employees, and the expected revenues for the business.
A good business idea will be viable whatever the legal form you choose. How businesses are taxed changes every year, therefore one cannot rely on specific tax benefits tied to a particular structure when deciding to go into business.
One easy way to proceed is to take note of the legal structures used by your top five competitors, and assume you're going with the most commonly chosen option. Once your idea is mature and you're prepared to formally register the business, you can validate this assumption with a lawyer and an accountant.
Can I switch my gluten-free food manufacturing business's legal structure if I get it wrong?
You can switch your legal setup later on, even if it involves selling the old one to a new entity in some cases. However, this comes with extra costs, so it's better to make the right choice from the beginning if you can.
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Assess the startup costs for a gluten-free food manufacturing business
The next step in creating a gluten-free food manufacturing business involves thinking about the equipment and staff needed for the business to operate.
After figuring out what you need for your business, your financial plan will reveal how much money you'll need to start and how much you might make (check below for more details).
Because every venture is distinctive, providing a reliable one-size-fits-all budget for launching a gluten-free food manufacturing business without knowing the specifics of your project is not feasible.
Each project has its own particularities (size, concept, location), and only a forecast can show the exact amount required for the initial investment.
The first thing you'll need to consider is the equipment and investments you'll need to get your business up and running.
Startup costs and investments to launch your gluten-free food manufacturing business
For a gluten-free food manufacturing business, the initial working capital requirements (WCR) and investments could include the following elements:
- Equipment: This includes any machinery or tools needed for the production of gluten-free foods, such as mixers, ovens, and packaging equipment.
- Facility Renovations: If you are starting your business from scratch, you may need to make renovations to your facility to ensure it meets the necessary standards for gluten-free food production.
- Inventory: As a gluten-free food manufacturing business, you will need to purchase ingredients and packaging materials in bulk to keep up with production demands.
- Transportation: In order to distribute your products to retailers and customers, you may need to purchase a delivery vehicle or invest in shipping services.
- Software: To track inventory, manage orders, and handle other aspects of your business, you may need to invest in specialized software designed for food manufacturing companies.
Of course, you will need to adapt this list to your business specificities.
Staffing plan of a gluten-free food manufacturing business
In addition to equipment, you'll also need to consider the human resources required to run the gluten-free food manufacturing business on a day-to-day basis.
The number of recruitments you need to plan will depend mainly on the size of your company.
Once again, this list is only indicative and will need to be adjusted according to the specifics of your gluten-free food manufacturing business.
Other operating expenses for a gluten-free food manufacturing business
While you're thinking about the resources you'll need, it's also a good time to start listing the operating costs you'll need to anticipate for your business.
The main operating costs for a gluten-free food manufacturing business may include:
- Staff Costs: This includes wages, salaries, and benefits for all employees, including production workers, administrative staff, and management.
- Raw Materials: As a gluten-free food manufacturing business, you will need to purchase specialized ingredients that are free from gluten, which can be more expensive than traditional ingredients.
- Packaging Materials: In addition to raw materials, you will also need to purchase packaging materials, such as boxes, labels, and bags, to package your gluten-free products.
- Utilities: This includes electricity, water, and gas used in the production process, as well as any other utility costs for your manufacturing facility.
- Rent/Lease: If you do not own your manufacturing facility, you will need to pay rent or lease fees to use the space.
- Accountancy Fees: You will likely need to hire an accountant or bookkeeper to manage your financial records and file taxes for your business.
- Insurance Costs: To protect your business and products, you will need to purchase insurance coverage, such as liability insurance and product recall insurance.
- Software Licences: As a food manufacturer, you may need to invest in specialized software for inventory management, production planning, and quality control.
- Marketing and Advertising: To promote your gluten-free products, you will need to allocate a budget for marketing and advertising efforts, such as social media ads, influencer partnerships, and trade show attendance.
- Banking Fees: As a business, you will incur fees for banking services, such as transaction fees, wire transfer fees, and account maintenance fees.
- Transportation and Shipping: If your business involves shipping products to customers or retailers, you will need to factor in transportation and shipping costs.
- Training and Development: It is important to invest in ongoing training and development for your employees to ensure they have the necessary skills and knowledge to produce high-quality gluten-free products.
- Taxes and Licensing Fees: As a business, you will need to pay taxes on your profits and obtain necessary licenses and permits to operate legally.
- Repairs and Maintenance: Your manufacturing equipment and facility may require regular maintenance or occasional repairs, which can be a significant expense.
- Professional Services: You may need to hire outside professionals, such as lawyers or consultants, for specific projects or advice.
Like for the other examples included in this guide, this list will need to be tailored to your business but should be a good starting point for your budget.
Create a sales & marketing plan for your gluten-free food manufacturing business
The next step to launching your gluten-free food manufacturing business is to think about the actions you need to take to promote your products and services and build customer loyalty.
Here, you'll be looking at the following issues:
- What is the best method to attract as many new customers as possible?
- How to build customer loyalty and spread word of mouth?
- What human and financial resources will be required to implement the planned actions?
- What level of sales can I expect to generate in return?
The precise sales and marketing levers to activate will depend on the size of your gluten-free food manufacturing business. But you could potentially leverage some of the initiatives below.
Besides your sales and marketing plan, your sales forecast will be affected by seasonal patterns related to the nature of your business, such as fluctuations during the holiday season, and your competitive landscape.
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How do I build my gluten-free food manufacturing business financial forecast?
Let's now look at the financial projections you will need to prepare in order to open a gluten-free food manufacturing business.
What is a gluten-free food manufacturing business's financial projection?
Your financial forecast will help you budget your project so that you can evaluate:
- Its expected sales and growth potential
- Its expected profitability, to ensure that the business will be viable
- Its cash generation and financing requirements
Making your financial forecast is the only way to determine the amount of initial financing required to create your gluten-free food manufacturing business.
There are lots of business ideas out there, but very few of them are viable, and making a financial forecast is the only way to ensure that your project makes economic and financial sense.
Creating a gluten-free food manufacturing business financial projection is an iterative process, as you'll need to refine your figures as your business idea matures.
You'll start with a first high-level version to decide whether or not to continue working on the project.
Then, as your project takes shape, your forecasts will become increasingly accurate. You'll also need to test different assumptions to ensure that your idea of starting a gluten-free food manufacturing business holds up even if your trading environment deteriorates (lower sales than expected, difficulties in recruiting, sudden cost increases or equipment failure problems, for example).
Your financial forecast will be part of your overall business plan, which we'll look at in more detail later. Your financial partners will use your business plan to decide if they want to finance you.
Once you've launched your business, you can compare your actual accounting figures with your forecasts, to analyze where the discrepancies come from, and then update your forecasts to maintain visibility over your future cash flows.
Financial forecasts are, therefore, a financial management tool that will be with you throughout the life of your company.
What does a financial projection look like?
The following financial tables will be used to present your gluten-free food manufacturing business's financial forecast.
The projected P&L statement
Your gluten-free food manufacturing business's forecasted P&L statement will enable you to visualise your gluten-free food manufacturing business's expected growth and profitability over the next three to five years.
The projected balance sheet of your gluten-free food manufacturing business
The projected balance sheet gives an overview of your gluten-free food manufacturing business's financial structure at the end of the financial year.
The cash flow projection
A cash flow forecast for a gluten-free food manufacturing business shows the projected inflows and outflows of cash over a specific period, providing insights into liquidity and financial health.
Which solution should you use to make a financial projection for your gluten-free food manufacturing business?
Using an online financial forecasting tool, such as the one we offer at The Business Plan Shop, is the simplest and safest solution for forecasting your gluten-free food manufacturing business.
There are several advantages to using specialised software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You have access to complete financial forecast templates
- You get a complete financial forecast ready to be sent to your bank or investors
- The software helps you identify and correct any inconsistencies in your figures
- You can create scenarios to stress-test your forecast's main assumptions to stress-test the robustness of your business model
- After you start trading, you can easily track your actual financial performance against your financial forecast, and recalibrate your forecast to maintain visibility on your future cash flows
- You have a friendly support team on standby to assist you when you are stuck
If you are interested in this type of solution, you can try our forecasting software for free by signing up here.
Choose a name and register your gluten-free food manufacturing business
The next phase in launching your gluten-free food manufacturing business involves selecting a name for your company.
This stage is trickier than it seems. Finding the name itself is quite fun; the difficulty lies in finding one that is available and being the first to reserve it.
You cannot take a name that is similar to a name already used by a competitor or protected by a registered trademark without inevitably risking legal action.
So you need to find a name that is available, and be able to register it before someone else can.
In addition, you will probably want to use the same name for:
- Your company’s legal name - Example LTD
- Your business trading name - Example
- The trademark - Example ®
- Your company’s domain name - Example.com
The problem is that the procedures for registering these different names are carried out in different places, each with their own deadlines:
- Registering a domain name takes only a few minutes
- Registering a new trademark takes at least 12 weeks (if your application is accepted)
- The time taken to register a new business depends on the country, but it's generally fast
You will therefore be faced with the choice of: either registering everything at once and hoping that your name will be accepted everywhere, or proceeding step by step in order to minimise costs, but taking the risk that someone else will register one of the names you wanted in the meantime.
Our advice is to discuss strategy with your legal counsel (see further down in this guide) and prioritise your domain names and registered trademarks. You'll always have the option of using a trade name that's different from your company's legal name, and that's not a big deal.
To check that the name you want is not already in use, you should consult:
- Your country's business register
- The relevant trademark registers depending on which countries you want to register your trade mark in
- A domain name reservation company such as GoDaddy
- An Internet search engine
In this area too, your legal counsel will be able to help with the research and formalities.
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Deciding upon the corporate identity of your gluten-free food manufacturing business
The next step in opening a gluten-free food manufacturing business is to look at your company's visual identity.
Your company's “visual identity” plays a crucial role in shaping your brand image. It helps you to be recognizable and to stand out from your competitors.
Although you can define your visual identity yourself, it is generally advisable to call on the services of a designer or marketing agency to achieve a professional result.
At a minimum, you will need to define the following elements:
- Logo
- Brand guidelines
- Business cards
- Website theme
Logo
Your gluten-free food manufacturing business's logo allows others to quickly identify your company. It will be used on all your communication media (website, social networks, business cards, etc.) and official documents (invoices, contracts, etc.).
In addition to its design, it's important that your logo is available in a variety of colors, so that it can be seen on all media (white, dark background, etc.).
Brand guidelines
Having brand guidelines enables you to maintain consistency in formatting across all your communications media and official documents.
Brand guidelines define the font (family and size), design and colours used by your brand.
In terms of fonts, for example, you may use Roboto in size 20 for your titles and Lato in size 14 for your texts.
The colours used to represent your brand should generally be limited to five:
- The main colour,
- A secondary colour (the accent),
- A dark background colour (blue or black),
- A grey background colour (to vary from white),
- Possibly another secondary colour.
Business cards
Designing business cards for your gluten-free food manufacturing business is a must, as they will allow you to communicate your contact details to your customers, suppliers, partners, potential recruits, etc.
In principle, they will include your logo and the brand guidelines that we mentioned above.
Website theme
In the same way, the theme of your gluten-free food manufacturing business website will be based on your logo and the brand guidelines we mentioned above.
This involves defining the look and feel of your site's main graphic elements:
- Buttons,
- Menus,
- Forms,
- Banners,
- Etc.
What legal steps are needed to start a gluten-free food manufacturing business?
The next step in opening a gluten-free food manufacturing business is to look in detail at the legal and regulatory formalities.
Although it is possible to do the formalities yourself and draft some of the documents detailed here, The Business Plan Shop recommends that you seek advice on these aspects from a law firm.
Registering a trademark and protecting the intellectual property of your gluten-free food manufacturing business
One of the first things you need to do here is to protect your company's current and future intellectual property.
One way of doing this is to register a trade mark, as mentioned earlier in this guide. Your lawyer will be in a position to do the formalities for you and to help you select the classes (economic activities) and jurisdictions in which you have an interest in obtaining protection.
Your law firm can also advise you on other ways of protecting your company's intellectual property.
Preparing the legal documents for your gluten-free food manufacturing business
Your gluten-free food manufacturing business will need a set of legal and contractual documents to operate on a daily basis.
Your exact needs in this respect will depend on the country in which you are launching your gluten-free food manufacturing business and the size and legal form envisaged for the company. Once again, we highly recommend having these documents prepared by your lawyer.
As a minimum, we recommend that you have the following documents prepared:
- Employment contracts
- General terms and conditions of sale
- General terms and conditions of use for your website
- Privacy Policy for your website
- Cookie Policy for your website
- Invoices
- Etc.
Applying for licences and permits and registering for various taxes
Here too, the list of licences and business permits required for your business to operate legally will depend on the country in which you have decided to start your gluten-free food manufacturing business.
Your law firm will be able to advise you on all the regulations applicable to your business.
Likewise, your accountant will be able to assist you and take care of the formalities involved in complying with the tax authorities.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast and write a business plan to help convince investors that your business idea can be profitable.
How do I write a business plan for a gluten-free food manufacturing business?
Once you've completed all the above steps, you can start writing the business plan for your gluten-free food manufacturing business.
What is a gluten-free food manufacturing business's business plan?
The business plan is a document containing:
- The financial forecast (discussed earlier in this guide), highlighting the project's financing requirements and profitability potential,
- A written presentation, which presents your project in detail and provides the necessary context for the reader to assess the relevance and coherence of your forecast.
The business plan is particularly important: it will help you validate your business idea and ensure its coherence and financial viability.
But it's also the document you'll send to your bank and potential investors to present your plan to open a gluten-free food manufacturing business and make them want to support you.
So it's best to draw up a professional, reliable and error-free business plan.
How to write a business plan for my gluten-free food manufacturing business?
If you're not used to writing business plans, or if you want to save time, a good solution is to use an online business plan software for startups like the one we offer at The Business Plan Shop.
Using The Business Plan Shop to create a business plan for a gluten-free food manufacturing business has several advantages:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You are guided through the writing process by detailed instructions and examples for each part of the plan
- You can access a library of dozens of complete startup business plan samples and templates for inspiration
- You get a professional business plan, formatted and ready to be sent to your bank or investors
- You can create scenarios to stress test your forecast's main assumptions
- You can easily track your actual financial performance against your financial forecast by importing accounting data
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
Interested? If so, you can try The Business Plan Shop for free by signing up here.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast and write a business plan to help convince investors that your business idea can be profitable.
Raise the financing needed to launch your gluten-free food manufacturing business
With your business plan in hand, you can tackle one of the final steps to open a gluten-free food manufacturing business business: the search for financing.
Raising the capital needed to launch your business will probably require a combination of equity and debt, which are the two types of financing available to companies.
Equity funding
Equity is the sum of money invested in a gluten-free food manufacturing business by both founders and investors.
Equity is a key factor in business start-ups. Should the project fail, the sums invested in equity are likely to be lost; these sums therefore enable the founders to send a strong signal to their commercial and financial partners as to their conviction in the project's chances of success.
In terms of return on investment, equity investors can either receive dividends from the company (provided it is profitable) or realize capital gains by selling their shares (provided a buyer is interested in the company).
Equity providers are therefore in a very risky position. They can lose everything in the event of bankruptcy, and will only see a return on their investment if the company is profitable or resold. On the other hand, they can generate a very high return if the project is a success.
Given their position, equity investors look for start-up projects with sufficient growth and profitability potential to offset their risk.
From a technical standpoint, equity includes:
- Share capital and premiums: which represent the amount invested by the shareholders. This capital is considered permanent as it is non-refundable. In return for their investment, shareholders receive shares that entitle them to information, decision-making power (voting in general assembly), and the potential to receive a portion of any dividends distributed by the company.
- Director loans: these are examples of non-permanent capital advanced to the company by the shareholders. This is a more flexible way of injecting some liquidity into your company as you can repay director loans at any time.
- Reserves: these represent the share of profits set aside to strengthen the company's equity. Allocating a percentage of your profits to the reserves can be mandatory in certain cases (legal or statutory requirement depending on the legal form of your company). Once allocated in reserves, these profits can no longer be distributed as dividends.
- Investment grants: which represent any non-refundable amounts received by the company to help it invest in long-term assets.
- Other equity: which includes the equity items which don't fit in the other categories. Mostly convertible or derivative instruments. For a small business, it is likely that you won't have any other equity items.
The main sources of equity are as follows:
- Contributions made by the owners.
- Private investors: business angels, friends and family.
- Crowdfunding: raising funds by involving a group of people through campaigns where they contribute money or make donations, often getting something in return for their support.
- Start-up aid, e.g. government loans to help founders build up their start-up capital.
Debt financing
Debt is the other way of financing companies. Unlike equity, debt offers lenders a limited, contractually guaranteed return on their investment.
Your gluten-free food manufacturing business undertakes to pay lenders' interest and repay the capital borrowed according to a pre-agreed schedule. Lenders are therefore making money whether or not your company makes a profit.
As a result, the only risk lenders take is that of your gluten-free food manufacturing business going bankrupt, so they're extremely conservative and will want to see prudent, hands-on management of the company's finances.
From the point of view of the company and all its stakeholders (workforce, customers, suppliers, etc.), the company's contractual obligation to repay lenders increases the risk for all. As a result, there is a certain caution towards companies which are too heavily indebted.
Businesses can borrow debt in two main ways:
- Against assets: this is the most common way of borrowing. The bank funds a percentage of the price of an asset (a vehicle or a building, for example) and takes the asset as collateral. If the business cannot repay the loan, the bank takes the asset and sells it to reduce losses.
- Against cash flows: the bank looks at how much profit and cash flow the business expects to make in the future. Based on these projections, it assigns a credit risk to the business and decides how much the business can borrow and under what terms (amount, interest rate, and duration of the loan).
It's difficult to borrow against future cash flows when you're starting a gluten-free food manufacturing business, because the business doesn't yet have historical data to reassure about the credibility of cash flow forecast.
Borrowing to finance a portion of equipment purchases is therefore often the only option available to founders. The assets that can be financed with this option must also be easy to resell, in the unfortunate event that the bank is forced to seize them, which could limit your options even further.
As far as possible sources of borrowing are concerned, the main ones here are banks and credit institutions. Bear in mind, however, that each institution is different, in terms of the risk it is prepared to accept, what it is willing to finance, and how the risk of your project will be perceived.
In some countries, it is also possible to borrow from private investors (directly or via crowdfunding platforms) or other companies, but not everywhere.
Key points about financing your gluten-free food manufacturing business
Multiple solutions are available to help you raise the initial financing you need to open your gluten-free food manufacturing business. A minimum amount of equity will be needed to give the project credibility, and bank financing can be sought to complete the financing.
Track your actuals against your forecast
You've reached the end of the road and are ready to launch your gluten-free food manufacturing business.
Congratulations and welcome to the fantastic world of entrepreneurship! Celebrate the work you've done so far, and get back to work quickly, because this is where the real work begins.
Your first priority will be to do everything you can to make your business sustainable (and thus avoid being one of the 50% of start-ups that fail within five years of launching).
Your business plan will be your best ally to ensure that you're on track to achieve your objectives, or to help rectify the situation if necessary.
The key to financial management is to regularly compare your actual accounting data with your gluten-free food manufacturing business forecasts, in order to be able to :
- Quantify the gaps between what you planned and what you achieved
- Adjust your financial forecasts as the year progresses to maintain visibility over your future cash flow
No one can predict the future with certainty, but by closely monitoring the variances between actuals and forecasts, regularly adjusting your forecasts and simulating several scenarios, you can prepare your gluten-free food manufacturing business for the worst while hoping for the best.
It's the only way to keep an eye on your cash flow and actively manage the development of your gluten-free food manufacturing business, ultimately reducing the risk to your company.
There's nothing worse than waiting for your company's annual accounts to close, which can be many months after the end of your financial year (up to nine months in the UK for example), only to realize that you've fallen far short of your forecasts for the past year, and that your gluten-free food manufacturing business urgently needs a cash injection to keep going.
That's why it's strongly recommended to use a financial planning and analysis solution that integrates forecasting, scenario analysis, and actuals vs. forecast tracking, like we do at The Business Plan Shop with our financial dashboards.
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Key takeaways
- There are 15 key steps to opening a gluten-free food manufacturing business.
- Your financial forecast will enable you to accurately assess your initial financing requirements and the potential profitability of your project.
- Your business plan will give your financial partners the context they need to be able to judge the consistency and relevance of your forecast before deciding whether or not to finance the creation of your gluten-free food manufacturing business.
- Post-launch, it's essential to have an up-to-date forecast to maintain visibility of your business's future cash flows.
- Using a financial planning and analysis platform that integrates forecasts, business plans and actual performance monitoring, such as The Business Plan Shop, makes the process easier and reduces the risks involved in starting a business.
We hope this guide has helped you understand how to open a gluten-free food manufacturing business. Please don't hesitate to contact us if you have any questions or want to share your experience as an entrepreneur.
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Founder & CEO at The Business Plan Shop Ltd
