How to start a business Food Business Q A Catering Auto Insurance Co Packers Commercial Insurnace

It’s Damian here from Marketing Food Online, and in this video, I’m going to get another group of great questions from you guys, my subscribers, and we’re going to get into that Q&A session right now. It’s Damian from Marketing Food Online, and I’m here in our shipping department, and I wanted to sit down for a few minutes, and answer some Q&A, little questions from you, my subscribers, and I appreciate it as always, you guys asking questions.

It helps me get a chance to interact with you guys, not only just sitting down and typing a response, but doing a video so I can maybe help a handful of other subscribers who may not have asked that question. So let me get right into it and dive into these questions. And as always, if you’re not a subscriber, hit that magical red button.

We’ve got over, we have nearly 600 videos now to show you how to get your food product up and running or get a food business online or anything related to food, that’s what we do.

All right, really quick question. I’ve got about five or six questions that I want to cover those in the video. One of the questions here, and I just made a few notes if you see me looking down, I’m just looking at some notes here. How do I, I’m operating a catering business from home, do I need some special type of automobile or car insurance or commercial auto insurance or something along those lines for the vehicle?

Which actually is a great question and as a matter of fact has some really big tax benefits. Really quick disclaimer, I am not an accountant, but I am going to go over a few things in regard to auto insurance and like the different types of small business insurance and that type of stuff that you can get for the vehicle. Because if you’re using a vehicle, and you have a home-based business, for instance, and you’re getting ingredients, you’re using it for a business, that is going to be a business vehicle, and there are tax deductions that are available for home-based businesses if you’re using your automobile or your car or your truck or what have you for use of the business.

So, if you’re going out and getting ingredients, if you’re doing some catering, and you’re transporting food, then you need above and beyond just standard automobile insurance, car insurance. You need to check into commercial auto insurance which allows you to get a type of coverage which will benefit you if you happen to have any employees, or if you happen to have any incidences where your vehicle were to, god forbid, but gets into an accident, or if you’ve got some issues with the transportation of product or food or what have you from your home-based business, you need to check out some automobile insurance. Now one of the things I would recommend you checking into Google and how would you search for that? Go to Google, you want to type in things like auto insurance. You can actually check out auto insurance quotes comparison. This is a great way to shop for different types of commercial auto insurance. And it will give you an opportunity to get really good rates based on how small your business is, if it’s home-based and such.

But that’s a great question, I’m glad she asked. And if you’re operating, again, if you’re doing some type of catering business from home, or if you’re not doing it from home and certain states may not allow that. If you’re working from a commercial kitchen, and you’re using that vehicle, again, to pick up ingredients, transport your food to the event. And let’s say you have a truck or refrigerated truck maybe for your catering business, you need to definitely go to Google and check that out. It’s, again, auto insurance quotes comparison.

And you want to check out commercial auto insurance as well as standard auto insurance policies. And a lot of companies like Geico, Allstate, and State Farm these companies have a lot of commercial policies available. They don’t just write out standard insurance as well. They do work with businesses.

So, check into that.

It could also be under catering insurance and business insurance. So, to help you out with your question, I won’t necessarily use her name. But to help you out with the question, yes. You can definitely check into that type of insurance because having the commercial auto insurance policy does differ from just a standard auto policy. And again, check with your accountant because the insurance premiums you pay on that automobile for business and for your small business is going to have some tax ramifications, and it’s going to be a benefit to you.

So double check with your accountant on that as well. So, I hope that helps you out with that question. All right, so next up we had a question actually in regard to the video I just put out about the meat jerky private label, co-packer, meat jerky business where you can start it for less than $2,000. I had a really great question about working with co-packers in general. So if you have a recipe, let’s say that you want to just start a beef jerky, and you have a recipe of your own.

The question was, do they work with our recipes, and can we use those for them to make them? Yes, and no. And let me explain why. Many of the co-packers no matter who you work with, if it’s a co-packer who is simply piecing together a finalized product like if you’ve got trail mix. And you’re bringing together nuts, and seeds, and things. And you got a bag. You got a label. And they’re just bringing it together, that’s one thing. Now depending upon the co-packer and the service they provide sometimes they actually have recipes pre-made and preexisting.

Okay, so that means that they’ll have some stuff basically recipes that will bring together the same type of product, but they have their own flavor profile, their own flavors. Now in some cases, you can come on board with a meat packing company or a meat jerky business for instance. They will have some recipes already made, but in some of the websites they’ll say there’s a little disclaimer saying, “Hey, if you’ve got a recipe, send it to us.”And we can scale that recipe for you “and create a co-packer or private label product for you “using your recipe.” So, the answer is yes and no. Because it’s going to be dependent upon the co-packer or the private label company that you’re working with, and whether or not they allow you to use your own recipes or strictly using what they have kind of like stock recipes if you will, that are basic recipes that they’ve always used, and they just put your name on.

Okay, so that is actually a great question. Because that is something I didn’t cover in that video. So next up, I have a food product that I’m working on. It’s actually prepared meals, can I sell them locally to markets and restaurants? This is another really actually great question because I’ve had this actually asked quite a few times. There’s a lot of really great cooks out there, and people who want to do stuff from home and that is fantastic, it’s great, but the cottage food laws which dictate home food businesses will not allow in most states, it’s like 99% of the time, will not allow prepared foods like, you know, turkeys and chicken or meat, that type of stuff, things that are potentially hazardous to produce those things and then sell them to a retailer which then sells it to another customer.

Normally that’s not something that’s allowed, but you can definitely inquire about a commercial kitchen, sorry about that, commercial kitchen, and you can produce a product that is based on potentially hazardous product such as meats and shrimps, or chickens, or what have you, basically meals that are not like baked goods or things that are non potentially hazardous. When you’re working in a commercial kitchen, you can piece together those meals and you can create like a meal delivery service or you can sell that to a local retailer, if they’re interested in your product, of course. But where you actually produce the actual final product is super, super important. So, when it comes to prepared meals working from home is something that’s very restrictive. They do that for a reason, just to make sure that if you’re preparing food from home, that you’re educated enough, you’re knowledgeable enough about temperatures and potential hazards and bacteria and stuff.

If it’s not kept at certain temperatures in your refrigerator, or if it has to stay warm. Yes and no on that one as well. It’s a great idea and it’s a hugely popular pre-made meals is a gigantic industry, and I think it’s over, it’s been the last three or four years or so, maybe about seven years maybe, seven years or so, it’s been really taking off online, and there’s an enormous number of companies doing this. The only drawback to this, and I want to give you a really quick tip, because I have a little inside scoop on the profitability of these things, the prepared meal business, I did a really quick video a couple months ago, Blue Apron, which is one of the most, one of the first ones on the market and one of the biggest, actually posted losses in the negative actually, they were not making money for a year or so when they had first started out.

I think they had an IPO and they went public with their stock and they still were showing a loss. They had an enormous amount of sales, but the cost to generate profit on those types of businesses is very hard. Reason being is the amount of shipping and packing, the production costs, the ingredients, everything is quite expensive when you do those meals. So those companies who actually make money do it off of volume.

They have to ship out a tremendous amount of product in order to just make a profit.

So, but your idea, your question is actually great if you’re selling locally because you can distribute and bring it out to your customers or retailers when you make it in the commercial kitchen and your margins actually may be much, much better. Keep that in mind. All right so next up, okay so LLC, what is the best way to form a, what’s the best way to incorporate a food business? Okay, now this is really up to you and I know that that’s not really a great answer. You can technically, you can form an LLC, a sole proprietorship, corporate, you could do a C corp, an S corp. The different types of classification and entity classifications as it’s called, is really dependent upon what you want to do. The LLCs are a simplistic and easy way to do it. It’s quick and fast. Also has some great legal coverage, not that other corporate entities don’t, but for us, for instance we are an LLC.

When I formed it, our business, it was an LLC, it stayed that way.

Unless your accountant can show that there’s some benefits to creating an S corp or C corp, I won’t get too technical into that right now, but those different entity classifications have tax benefits and tax drawbacks. So it’s gonna be really dependent upon sitting down with your accountant, ask them some questions, say, hey look I want to form a business, what do you recommend in your state. It varies by state. It’s how you form it. Is it a home-based business or a commercial entity?

There’s a lot of different variables. So check and see what’s really best for you and at where you are, what stage you’re at in your food business. Plus the benefits that it’s gonna be for your taxes. Okay, so with that being said, I’ll wrap it up. I keep my videos short and sweet and to the point, I’ve got a whole bunch of other questions I will put out in a couple other videos shortly.

So, if those questions were helpful, give me big thumbs up and as always ask me questions down in the comment section and I’ll be more than happy to get back to you as soon as possible. So have a great day and I will see you guys on the next video.

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