May 30 2013
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brooklyn, copackers, food manufacturing, food startups, investment, lean startup, startup basics, Uncategorized, venture capital

Some Events for You Food Producers Out There

Hey folks, thought you all might be interested in some of the upcoming events being put on by Small Food Producers Network! Check these resources out:

ITAC Solutions Fair
Tuesday, June 4th from 1pm-5pm
at Pace University – 3 Spruce Street, in Manhattan

[FROM ITAC] The ITAC Solutions Fair is a half-day forum designed for NY manufacturing companies to meet directly with technology experts in one-on-one consultations to solve problems and support growth. Meet with experts from universities and Centers of Excellence across NYS who can address challenges in areas like: automation, packaging, materials science & engineering, intellectual property, sustainability, new product development, process improvement & supply chain. Furthermore, ITAC will have experts directly related to food science issues, including: representatives from Cornell Dept. of Food Science, Green Packaging guidance, and Automation experts.

Attendance to Solutions Fair is free to NYS manufacturing companies. For more information about the event, or to register online visit the ITAC website
.

Slow Money NYC: Finance for Food Workshop Facilitated by Elizabeth Ü
Monday, June 10th from 5:30 PM to 7:30 PM
At The Moderns – 900 Broadway, 2nd Floor in Manhattan

[FROM Slow Money NYC] Elizabeth Ü, author of the soon-to-be-released: Raising Dough: The Complete Guide to Financing a Socially Responsible Food Business, will present the Finance for Food Workshop, outlining capital options available for sustainable food businesses — including pros, cons, criteria, and sources. In simple terms, Elizabeth Ü will provide valuable insights into the world of finance, including descriptions of various capital options available (including traditional debt and equity, government grant and loan programs, cutting-edge social finance options such as crowdfunding, and community-based alternatives). She will suggest guidelines for choosing capital options are most appropriate given size, stage, entity type, growth plans, mission, and values of an enterprise. This interactive session will afford participants at least an hour opportunity to ask questions at the end of the presentation.

Tickets are $15.00 in advance, $20 at the door. Please RSVP ASAP as space is limited! You can register for this event online HERE.

Council Member Stephen Levin’s Co-packing Survey for Brooklyn Food Manufacturers
[From Council Member Levin’s Office] Attention all food businesses! Council Member Stephen Levin (he represents Brooklyn Heights, Greenpoint, parts of Williamsburg, Park Slope, and Boerum Hill) is looking for feedback from Brooklyn food manufacturers about the need for co-packing here in NYC. We strongly recommend that you fill out this survey! This is your chance to affect public policy and bring more resources to the NYC food manufacturing community. If feedback is limited, it will be that much harder to convince the powers that be to invest in infrastructure that can support food production. The food community is at a critical mass, and we need to work together to make our voices heard!

You can fill out the survey at: http://bit.ly/11zif3u

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Apr 29 2013
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food entrepreneurs, food startups, growth, investment, venture capital

VCs Love Tech – And They’re Loving Food

Photo credit: Bryce Vickmark for The New York Times

Photo credit: Bryce Vickmark for The New York Times

Happy Tuesday! The New York Times published an article highlighting the growing trend of VC capital flowing into innovative food startups.

An excerpt from the article sums up the attraction VCs have for food:

“Part of the reason you’re seeing all these V.C.’s get interested in this is the food industry is not only is it massive, but like the energy industry, it is terribly broken in terms of its impact on the environment, health, animals,” said Josh Tetrick, founder and chief executive of Hampton Creek Foods, a start-up making egg alternatives.

And by the numbers: last year, VCs invested $350 million in food projects, which marked an 37% increase from the year before. Even though the $350 million is a small proportion of the total VCs invest, the growth rate is remarkable.

There are still a doubts VCs have about food startups, and it’s intriguing to see they are grappling with some of the same issues we are trying to explore in our meetup group!

Check out the full article here.

Apr 09 2013
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business models, food entrepreneurs, food startups, lean startup, meetup

Lean Food Startup NYC Meetup 1 Wrap

LFS NYC Meetup 1 (1)

Thanks to those of you who came for the first installment of Lean Food Startup NYC meetup!

Tonight, we covered the context of lean startup, basic underlying principles, explored the concept of startups as a series of untested hypotheses, and posed the question of whether or not lean startup practices can be applied to food.

We also took some time as a group to go over the Business Model Canvas, which is a variant of the Lean Canvas. You can view a quick video about it here.

We used Seamless.com as a case study, and the results are logged in the slides which you can download here: LFS NYC Meetup 1 Slides – PDF

Lastly, we wrapped up with some discussion about how we could best structure future meetups, and a call to action for people to read up about lean startup, and try to put some practices to use in their own food startups. Try to do a business model canvas on your own, and if you like, share your results. We also proposed different ways we could make use of the meetup discussion board as well as this blog. If you have ideas/content you’d like to discuss, or post, let us know.

Till next time!
Lean Food Startup Team

Apr 01 2013
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food licenses, food permits, startup basics

Notes from EWVIDCO Permits & Licensing Workshop @ BK Kitchen

Below are notes from a seminar organized by EWVIDCO, an organization specializing in supporting local north Brooklyn manufacturers, and hosted by Brooklyn Kitchen, a local purveyor of kitchen supplies, spices, equipment. The topic was about food permits and licenses. Slides will be made available and we will post as they become available.

There is some great info in here, as well as references to resources available to food entrepreneurs based in NYC.

David Lepkoff, NYS Department of Agriculture, Food Safety and Inspections
NYS Jurisdiction

  • Restaurants and retail bakeries are under jurisdiction of New York City
  • NYS also do not regulate caterers
  • If the majority of your sales will be retail, you will fall into NYC’s jurisdiction. If majority of sales will be wholesale, you will fall into NYS’ jurisdiction. A joint determination will be made, but only one license will be needed.
  • However, if you are going to manufacture for retail and wholesale, you cannot do so in the same location with two 20-C licenses, but you can do it with a 20-C license and city license.
  • Grocery stores
  • Bodegas
  • Food warehouses
  • Wholesale manufacturers
  • Wholesale bakeries (not direct selling to customer)
  • Wineries and 3 distillers
  • Butchers
  • Live poultry market and red meat slaughter facilities

Figure out your location
If you’re under state jurisdiction, you’re going to be producing in one of three settings:

  • Home (home processing), license exempt, very limited items can fall into this category, such simple baked goods
  • Commercial kitchen, 20-C license required ($400 for 2 years, good from date of issuance, an inspection will take place in a few days and be issued within a week), prior approval needed for complex food products (acidified foods, acid foods, refrigerated foods, etc.)
  • Your own facility, 20-C license required, although meat producers (more than 3% raw, 2% cooked meat by content) will fall USDA regulation
  • Separate locations require separate licenses

Licensing Information, Article 20-C

Licensing Process

  1. You have your product.
  2. You need to have proper food labels- http://www.fda.gov/food/labelingnutrition/default.htm. Improper labeling could result in serious consequences (allergens).
  3. You have a facility to manufacture that’s up to code: http://www.agriculture.ny.gov/FS/industry/circs.html
  4. You get the necessary inspection, minimum once a year. Inspections are unscheduled. Inspectors are trained to look over many factors. Basics include checking for vermin, proper equipment, strict adherence to food safety. If you fail your first inspection, you will be given tips on what you need to fix within 2 months to pass re-inspection. You could be allowed to operate in the interim.
  5. If you pass inspection, you will receive notice of inspection which you can post at your business, and you will get your 20-C Food Processing License within a few business days.

————————————————————————
Roxanne Mills, speaking on Home Processing
Home Processing

  • Home processor: a person who wants to use home kitchen, with standard kitchen equipment (not industrial).
  • You have to check if your residence is zoned for commercial activity. Check with your local zoning board.
  • You can make bread and rolls, baked goods without fresh fruit, meats, or butter. Traditional jams and jellies as well.
  • If you are producing for events, you are considered a caterer, and subject to NYC regulation.
  • Labeling requirements: name, address of manufacturer (city, state, ZIP if you are incorporated), name and type of product, ingredients (greatest to least by weight) find guidelines: http://www.agriculture.ny.gov/FS/consumer/processor.html
  • You cannot list prices or take orders online or by phone. You can advertise.
  • You cannot split your operation between home and commercial kitchen.
  • Get your ingredients from approved sources and maintain traceability.
  • You will receive a home processor’s license upon passing a proper inspection.
  • Home processors can sell both retail and wholesale.
  • Exemption from licensing
  • Prohibited items: food requiring refrigeration, acidified foods, not even fried plantains, no active cultures.

The Dark Side – why you shouldn’t gamble

  • No inspection and no license = unapproved source.
  • The state will seize and destroy your product.
  • The state may issue a recall for your product.
  • The state may pursue legal action.
  • You could harm or kill someone!

————————————————————————
Steven Shallo, New York City New Business Acceleration Team (NBAT)
The City’s Fabric

  • Restaurants are integral to the city’s economy
  • 4,700 new restaurants opening yearly
  • Employs nearly 270,000 New Yorkers
  • 20,000 establishments in all boroughs
  • Manhattan has majority of all establishments

Government agencies that you have to deal with:

  • Department of Buildings
  • Department of Health
  • FDNY
  • Department of Consumer Affairs
  • Department of Environmental Protection
  • Department of Transportation
  • Department of Landmarks Preservation
  • Department of Planning

Services NBAT can provide for small businesses

  • Local government navigation
  • Accelerate DOB and FDNY plan reviews
  • Identify potential cross designation of agency resources
  • Streamline existing inter agency processes
  • Coordinate and sequence multi-agency inspections:
    • Dept. of Health 0 ex: food establishment
    • Dept. of Environmental Protection – ex: Grease interceptors
    • FDNY – rangehood
    • Dept. of Buildings – ex: construction, plumbing

How to utilize NBAT services
NYC Business Express: one stop online tool that makes it easier to start, operate, and expand a business in NYC

  • Provides single source of information
  • Offers instructions for meeting requirements
  • Provides a platform for businesses to offer their information
  • You can create an account and view later
  • Business owners who utlizie the wizard can submit credentials to NBAT via Salesforce

Upon enrolling in the NBAT program, each business is assigned a client manager, who provides the following services:

  • Facilitates all interactoins with the city on behalf of the business
  • Evaluate the business and identify requried items/inspections
  • Address all business specific concerns to avoid future compliance issues
  • Schedule and coordinate most required inspections
  • Address all questions, comments, and concerns

Businesses then undergoing new construction within their space can receive streamlined plan reviews through NBAT

  • NBAT Plan examiners will review most e-filed plans
  • Schedule meetings with applicants to discuss objections or compliance issues
  • Work in conjunction with DOB and FDNY to address/resolve complex code requirements

NBAT coordinates multi-agency inspections:

  • Inspections are conducted to ensure satisfactory compliance with all health and fire codes
  • Scheduling available online at http://www.nyc.gov/nbat
  • Results are provided immediately
  • Re-inspections are conducted when necessary

Mobile Food Vending Units (food trucks, carts)

  • NBAT does not deal with this process
  • Number of permits is fixed
  • Permits are issued on a lottery basis, permits can be freed up from deaths, seizure, but are very limited

————————————————————————
Question and Answer

  • Q: Can you be in a commercial kitchen and do wholesale as well as catering? A: Yes, you could be licensed to do both.
  • Q: What is the general difference between State and City licensures? A: City regulates almost all direct to customer food service establishments. State requirements are so extensive that it’s not easy to generalize. Contact a consultant to help differentiate what is required of you in terms of regulation, or something like NBAT.
  • Q: What licenses does the city offer? A: Mobile food vending license. Non-retail food establishments permit. Food protection certificate (safe handling of food). Restaurant and food handlers license.
  • Q: Beer and wine licenses? A: These are regulated by the state, although if you are a bar, you need certification from the City’s department of health
  • Q: Out of state producers, if you are storing here in New York State? A: You’d have to obtain a warehouse permit. If you’re selling direct to customer then you’re subject to City regulation.

Here are the slides:
NYS Ag and Markets Presentation

Mar 29 2013
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food licenses, food permits, insurance, law, liability, startup basics

Food Law

Lei attended the Just Food Conference today and was in a food law workshop. Here are some notes from the workshop that might be of use to you. When slides are available, Lei will post them here.

The presenter was Jason Foscolo, Attorney at law, founder of Food Law Firm, a private practice that specializes in all aspects of food regulations and laws.

Food is subject to unique regulations

  • Legal exceptionalism, special rules for food producers
  • Unique obligations for food producers
  • Exemptions to broadly applicable laws that confer advantages

Sources of food law

  • Clean Water Act – food producers are exempt and as much as 40% of water pollution is related to food production
  • Fair Labor Standards Act
  • Capper Volstead Act – exempts food producers from anti-trust laws
  • Farm Bill
  • Chapter 12 Bankruptcy
  • Packers and Stockyards Act
  • Civil Liability
  • Forward contract leases, labor laws, contracts, trademark

Types of risk

  • Regulatory risk, absolute quantity of penalty known ahead of time
  • Civil liability risk, there’s really no known quantity ahead of time. Depends how big your scale is and how many people you can get sick
  • Economic risk, producers need to manage risks of planting crops

Strict liability

  • Civil liability, the entire burden falls on you as food business
  • Liability without regard for negligence
  • If you make someone sick, you are liable. In a chain of distribution, all parties in the distribution chain can be collected from, the parties then need to settle what each party’s relative liability
  • Litigation moves quickly, since it is strict liability
  • If you are a small business, you have zero margin for error, since you have no defense and can quickly get bankrupted
  • Does consumer have any liability? If they fail to follow instructions, it depends what makes them sick

Contracts

  • Contracts are promises that stimulate the economy
  • Interlaced promises are key to promoting trust among businesses
  • Agreements facilitate risk management

Food product liability: risk management
How do you manage risk?

  • Procedural controls, be preventative, invest heavily upfront in food safety all along your production chain
  • Corporate shield, get limited liability, be careful and don’t abuse it
  • Product liability insurance: you need it. If your business is new, go with the minimum $1M standard policy required by retailers. If you have a larger company and personal assets, buy more insurance, don’t go too minimal if you have a lot to protect.
  • If you’re thinking of a home based business, you need commercial insurance. None of your existing homeowners insurance covers this. You need to be extra scrupulous to prevent food safety problems
  • Top three things you need: legal incorporation (based on what benefits you most from a tax perspective), insurance, trademark your brand.
  • Product recall plan: how do you get faulty product back as quickly as you can? Met a farmer who spent $500k to recall 800 lbs of beef. Traceability is key.
  • Recall insurance
  • Contracts with suppliers, know the rules, read contracts. Most retail outlets will not adjust their contracts to suit you. Most retailers will also try to direct all liability to you.

Why compliance is important in food labeling (retail and packaged food)

  • Anything non-compliant is “misbranded”, it could be as little as a misplaced font!
  • Warning letters, administrative detention
  • You may face criminal sanctions
  • Allergens, see below
  • Wholesale buyers are gatekeepers to your success
  • Small scale producers often get exempted

Allergen labeling, really really important (email for slide)

  • 8 major food allergens: milk, egg, tree nuts, wheat, peanuts, shellfish, soybeans
  • Declarations in plain English
  • Labeling exemptions: less than $500k gross a year, but a wholesaler may require labels. Fresh produce, zero nutrient foods, deli and bakery goods are exempt
  • You don’t make functional claims: nutrient content, health claims, qualified health claims

Trademarks
Why file a trademark?

  • Offense, carving out a space, easier to issue cease and desist if someone treads on your toes
  • Defense, don’t step on other people’s toes, do your homework with other brands or you’ll get a cease and desist
  • National registry: check it for names

Statement of identity

  • Product name as plainly and simply as possible
  • Acceptable names may even be determined by law or regulation

Wordmarks

  • Fanciful: Xerox
  • Arbitrary: Apple (computers, try it for cider and good luck)
  • Suggestive: Brewla Bars
  • Descriptive: International Business Machines
  • Generic: Hard Wood Flooring

Here are the slides:
Just Food 2013

Mar 24 2013
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Lean Startup Principles

In preparation for our next meetup event, here are some links to useful resources to learn about lean startup basics and principles:

We’ll be finalizing details about the meetup and have that info posted soon.

Mar 12 2013
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More from Launching a Food Business on a Lean Budget Event

Here’s an excerpt from the opening remarks made by Alex Ginsberg, Founder of Lean Food Startup, at last week’s inaugural Lean Food Startup event hosted by Union Seminary:

First, some introductions are in order about who has helped organize this event:

Columbia Food Lab is a new group out of the business school dedicated to making Columbia the top school for food entrepreneurship, help students launch food businesses. Make sure to keep an eye out for our conference April 12, here at Union Seminary. We have early bird tickets available in the back after the panel.

 
Lean Food Startup NYC is a group on meetup.com that you should go join. We are seeking to apply concepts from the Lean Startup movement in the tech world to the food world.

The Columbia Union-Kitchen is a joint venture between the Food Lab and Union Theological Seminary to create a kitchen space open for local entrepreneurs to develop and produce their products without investing in their own commercial space.
 
And now, on to the main course of the evening. We’re all here because we’re interested in helping increase the success rate of aspiring food entrepreneurs.

The Lean Startup movement has its roots in the tech world, where it advances practices that get startups to focus on only those actions that add value to customers, so that entrepreneurs don’t spend precious time and money building something that nobody really wants.

Constantly improve your understanding of what customers want through frequent experimentation is at the heart of how lean practices can help entrepreneurs eliminate waste. A key component is to make tweaks to your product, business model, sales pitch, marketing, and other business operations based on measurable feedback. Instead of building the perfect, all-encompassing product right away, lean advocates building the minimum viable version that can test the riskiest parts of your idea and business model.

One of the big premises of the Lean startup movement is that it’s easier and cheaper to experiment, learn and start up a company in the tech space than ever before. While much of the Lean philosophies seem to be applicable to food, it is unclear whether the premise that experimentation, learning and starting up is cheap and easy applies to the food industry.

I would argue that new business models such as food trucks and pop-ups, and resources such as incubator kitchens are making learning cheaper. But, do these lead to sustainable businesses? This panel (and the Lean Food Startup as a whole) is going to address some of these topics and this question as a whole.

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Mar 12 2013
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Highlights from Launching a Food Business on a Lean Budget

Hey folks, our friends over at Harlem Food Local did a great job with a writeup on our inaugural event, Launching a Food Business on Lean Budget back on February 27th. In it, the highlight 15 of their takeaways from the panelists, so if you didn’t get a chance to go, here are their crib notes 🙂 We encourage you to sign up for The Lean Food Startup NYC MeetUp Group and come to the next meeting scheduled for March 26th.

Interested in starting a food business? Here are the top 15 take-away tips from the panel that will help you navigate this insane startup business.

  1. Delusion is a Necessity. You must have uncompromising and unwavering belief in your product, your idea, and your mission. But, this delusion must be anchored by the slightest bit of reality, where you also have to realize that you are not going to have any idea what you are doing for most of the time.
  2. You must be intensely and extremely stubborn (coupled with the aforementioned ‘delusion’, they work very well together). Every time someone tells you’re wrong, tells you that your product stupid or that your packaging is ugly, and that you’re never going to succeed, you have to dig your heals in even more and stay committed.
  3. However much money you have for StartUp and Operating costs, chop that amount in half and use it as your actual budget. Don’t worry, the reserved half will get used too (on costs you never anticipated) but you’ll be under much less financial stress if you budget conservatively.
  4. Have a very honest conversation with yourself about how much money you have, what your costs will be, and when you need to start being profitable. Remove all of the delusion from this step. Really figure out if, with the tools and capital you have, your plan will turn into a winning equation. If you aren’t absolutely certain, take inventory of where you feel you could improve, and do that before you sink a ton of cash into discovering your hunch about it not working out was right.
  5. Plan for a ton of costs that you never anticipated because they are ‘unknown unknowns’ and they will materialize when you least expect them.
  6. Question and Negotiate EVERY expense. Go through each and every line item on your debit sheet and if you don’t know why you are spending that amount on a particular item, try to get it for cheaper. The worst that can happen is that you’ll be paying exactly what you are right now.
  7. Everyone is NOT your Target Market. Know who your market is and get to know them on a personal level. Stop pretending that your product is so amazing that every consumer in the world will want it, because they won’t.
  8. When designing your business model, keep scalability, agility, and adaptability in mind.
  9. If you are selling a packaged food item (specifically to a grocery chain, or a gourmet specialty store), make sure any and all of your potential clients taste your product in front of you. If you leave it up to them to taste it, they never will, and you won’t get a new customer.
  10. Creating different product lines, with different costs, and different margins is one of the best way to ensure profitability. BUT, don’t expect to launch multiple products simultaneously.
  11. Plan for profit margins of no less than 50% because it is very likely that margin will shrink.
  12. The best way to learn about the industry is to get yourself a mentor. Seek out a successful business that is like yours (but does not directly compete with you) and make friends with them.
  13. Don’t think that Kickstarter (or similar types of crowd fundraisers) will get you all of the cash you need. You will need alternate funding sources. Successful crowd fundraisers require an extremely developed and vast social networks with high visibility. If you don’t have a social network like that, don’t expect for Kickstarter to be the answer to your prayers.
  14. You will need an internet presence, but chances are, you aren’t a food industry professional that is also an expert web developer. Whether you decide on a site that will be dynamic or static, outsource what you can of it. You don’t need to learn how to be a web developer while building your business. It’ll save you a lot of time, effort, and frustration if you outsource the project to someone who can do it painlessly.
  15. By throwing your hat in the ‘entrepreneur’ ring, you are signing up to have an adventure. Bound to encounter a few of your lowest lows and your highest highs, remember to have fun the whole time, because it’s an adventure of your own creation.
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Mar 04 2013
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Our Next Meetup

Just a real quick update on a tentative next meet up for the Lean Food Startup NYC Meetup Group. We’ll be exploring the principles of lean startups and discussing whether and how they can be applied to food startups. Please join the Meetup group if you’re interested in attending! Hope to see some of you there

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Feb 28 2013
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Lean Food Startup, Columbia-Union Kitchen Event

Just a quick update on the Lean Food Startup panel sponsored in part by Columbia Food Lab and Columbia-Union Kitchen last night.

It was a very successful inaugural event, with about 80 attendees. Three panelists discussed the ins and outs of being a food entrepreneur, and trying to keep things lean. Our panelists were:

In addition to panel discussion and Q&A, attendees also got a chance to tour the kitchen at Union Seminary, which hosted the event last night. Columbia Food Lab and Union Seminary are working on converting the Seminary’s underused kitchen into a new kitchen incubator. The kitchen does need a thorough cleaning, and perhaps some equipment upgrades, but it does already have several solid pieces of capital equipment, and a ton of storage space. More news on this as it develops.

As we get the video we took edited, we’ll be posting some segments of the panel here. We’ll also have some more events planned for the Lean Food Startup NYC Meetup group. If you’ve got questions you’d like us to answer about food startups, comment here, and we’ll see if we can’t get you the info you need.

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