Starting a meal prep business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful meal prep business.
Importantly, a critical step in starting a meal prep business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Meal Prep Business:
- Choose the Name for Your Meal Prep Business
- Develop Your Meal Prep Business Plan
- Choose the Legal Structure for Your Meal Prep Business
- Secure Startup Funding for Your Meal Prep Business (If Needed)
- Secure a Location for Your Business
- Register Your Meal Prep Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Meal Prep Business
- Buy or Lease the Right Meal Prep Business Equipment
- Develop Your Meal Prep Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Meal Prep Business
- Open for Business
1. Choose the Name for Your Meal Prep Business
The first step to starting a meal prep business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your meal preparation business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your own meal prep business.
2. Develop Your Meal Prep Business Plan
One of the most important steps in starting a meal prep business is to develop your meal prep business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your meal prep business.
- Company Overview – this section tells the reader about the history of your food prep business and what type of meal prep business you operate. For example, are you a meal subscription, meal assembly, meal kit, or a meal prep delivery business?
- Industry Analysis – here you will document key information about the food industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing strategy should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your own business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your meal prep business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Meal Prep Business
Next you need to choose a legal structure for your meal prep business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the meal prep business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a meal prep business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a meal prep business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a meal prep business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your meal prep business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Meal Prep Business (If Needed)
In developing your meal prep business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a meal prep business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a meal prep business that they believe has high potential for growth.
5. Secure a Location for Your Business
The best way to find a location for your meal prep business is to look for areas with a lot of foot traffic, as this can help you attract new customers. Additionally, consider the cost of rent and other business expenses when choosing a location.
If you’re looking to start small, consider renting a shared kitchen or running your business out of your home. Working from home can be a great option if you’re on a tight budget, but it’s essential to be aware of the restrictions that come with working from home. For example, you’ll need to be able to work in a space that is separate from your living area, and you’ll need to have adequate storage for your supplies.
Whatever location you choose, make sure to research and get feedback from other business owners in the area. By taking these steps, you’ll be able to find the perfect location for your meal prep business.
6. Register Your Meal Prep Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your meal prep business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your meal prep business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
There are a few licenses and permits you will need to start a meal prep company. A food business license is required, as well as a permit to operate a food service establishment. In addition, if you will be preparing meals in your home kitchen, you will need a Home Occupation Permit from your local government. Reach out to your local health department for more information on the specific licenses and permits you will need to start a meal prep business in your area.
10. Get Business Insurance for Your Meal Prep Business
The type of insurance you need to operate a meal prep business will vary depending on the state and the scope of your operation.
Some business insurance policies you should consider for your meal prep business include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Meal Prep Business Equipment
To start a meal prep business, you will need some essential equipment. You will need a refrigerator, freezer, stove, oven, and kitchen supplies such as pots, pans, knives, and cutting boards. You may also want to invest in a commercial-grade blender or food processor. You will need a canning pot and dehydrator if you will do any canning or dehydrating. Finally, you will need some storage containers to store your food. You can purchase plastic or glass containers or use Mason jars.
12. Develop Your Meal Prep Business Marketing Materials
Marketing materials will be required to attract and retain customers to your meal prep business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your meal prep business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional meal prep business website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media platforms will help customers and others find and interact with your meal prep business.
13. Purchase and Setup the Software Needed to Run Your Meal Prep Business
To run a meal prep business, you need software to track inventory, manage orders, and process payments. You’ll also need a Point of Sale (POS) system to manage transactions.
There are many different software options available for businesses, so you should be able to find one that fits your needs.
14. Open for Business
You are now ready to open your meal prep business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Meal Prep Business FAQs
It's not hard to start a meal prep business, but it is important to understand the work and money that goes into it. The first and most necessary step for anyone who wants to start this kind of business is coming up with an idea. What do you want your meal prep delivery service to offer?
Start by considering your strengths. Do you have special cooking skills such as baking or grilling? Or, maybe you have personal knowledge of healthy recipes? Do some research on the internet and in cookbooks to understand better what meal prep services are already out there and how they operate. You can create balanced meal plans once you have a general idea of the kind of meals you want to make.
From there, the next step is to create a business plan. This document will outline the goals of your business, how you plan to achieve them, and the estimated costs associated with starting and running your service.
Starting a meal prep business can be difficult if you don't have any experience. However, there are a few things you can do to make it easier. First, do some research to learn about the industry and what it takes to run a successful business. Next, create a business plan and make sure you have a solid marketing strategy. Finally, make sure you have the necessary resources to get started. With a little bit of hard work and planning, you can start a successful meal delivery service.
The most profitable meal prep business is the one that can provide affordable and healthy meals customers desire. This is because there is a growing demand for healthy options, and people are becoming more conscious of their spending. Additionally, a meal prep business that can provide a variety of meal options will be more successful than one that specializes in only one type of cuisine.
It can cost anywhere from $5,000 to $50,000 to start a meal prep business. Factors that will affect the cost include the size of the business, the type of equipment needed, and the location.
One of the major ongoing expenses for a meal prep business is the cost of ingredients. Other ongoing expenses may include the cost of packaging and labeling materials, employee wages, and rent or mortgage payments on the facility. It's important to factor in all of these expenses so you can create a realistic budget and ensure that your business is profitable.
There are a few different ways a meal prep business can make money. One way is to charge customers a set price for a certain number of meals. Another way is through an online meal prep business where the owner sells meal kit subscriptions online and customers pay a monthly fee in order to receive a certain number of meals each week. Meal prep businesses can also sell food products to supermarkets or other retailers. Finally, some meal prep delivery services offer cooking classes or catering. No matter which way a meal prep business decides to make money, the most important thing is to provide high-quality food that customers will love.
There are a few reasons owning a meal prep business can be profitable. First, there is a growing trend of people wanting to eat healthier, and meal prep businesses offer healthy, convenient, and delicious meal options. Second, successful meal prep businesses usually have lower overhead costs than restaurants, so they can be more profitable. Finally, as the owner of a meal prep business, you have the opportunity to scale your business by franchising or licensing to other operators. This can help you grow your business and increase your profits.
There are many reasons a meal prep business might fail. One of the most common is a lack of planning and organization. Other reasons might include a lack of marketing, poor customer service, or high startup costs. Most meal prep businesses also require a lot of time and effort to get up and running, so it's important to make sure you have the resources and dedication necessary to make your business successful.