Co-packaging may seem like an attractive option for your business right off the bat. Co-packaging allows you to take on more business by ramping up your production and overall volume, in order to increase your revenue. But co-packing is not a small commitment, and many businesses who are interested in this prospect actually are not ready to take such a step. So, how do you know if you’re ready to go the co-packaging route? In this article, we discuss 3 steps in making sure that this is the right move for your business.
What Stage is Your Business In?
Before deciding to sign your business up with a co-packer, you need to ask yourself: what stage is my business in? It’s important to note that co-packaging is not always an ideal choice for a start-up. Having said this, there are plenty of times where start-ups do require co-packers, especially if you’re lucky enough to find yourself with a demand for high volume right away.
Deb Mazzaferro from Growing Your Specialty Food Business tells PartnerSlate about the different stages that food businesses go through:
“If you are in the Exploring stage, you are probably just thinking about starting a food or beverage business and you may or may not even have a product idea. If you are at this stage you are most likely not ready for a co-packer. If you are in this stage, that’s awesome, continue doing just that. Explore what type of product you want to make, do your research, develop a formula and if you need help, start by reaching out to a food scientist or consultant because you are still a bit premature to begin co-packing conversations.”
You Have the Required Capital
Of course, making sure that you have the required funds is absolutely necessary in making the decision to take on a co-packer. Co-packers require a contract, and while the length of this contract can usually be negotiated, it cannot be changed after it is signed. This is why it’s essential that you’re financially confident in your decision before doing so.
Fleetchem.com explains why making sure you have the required capital is a must when it comes to co-packers:
“Once you’ve made sure that your recipe is set and demand is high enough, it’s time to think about capital. Partnering with a contract packer isn’t a small financial investment. The co-packer will be providing bulk manufacturing services, and you need to make sure you have the capital to sustain that.”
You Understand the Implications of Co-Packing
Working with a co-packer is often a multi-layered process, with lots of potential hidden fees. It’s important to make sure that you know exactly what your co-packer can offer you, and what it truly means to work with a co-packer. Discuss every detail with your potential new business partner, and don’t be afraid to ask questions.
Working with a co-packer is often a multi-layered process, with lots of potential hidden fees. It’s important to make sure that you know exactly what your co-packer can offer you, and what it truly means to work with a co-packer. Discuss every detail with your potential new business partner, and don’t be afraid to ask questions.
Pod Foods explains why you need to thoroughly do your research before signing on with a co-packer:
“Even if you are not ready to make a commitment to a co-packer, familiarizing yourself with how they work over time will mean you are ready when the time comes. Different co-packers may offer different services, each with their own costs. Knowing exactly what you are looking for will give you an indication of how close you might be to working with a co-packer. Talking to fellow food business owners about their experiences with co-packers can prove extremely beneficial in judging your readiness for a co-packer.”
Here at The Greater Goods, we offer consultation services for your business, from food production to distribution. If you’re looking for advice on how to get up and running, we offer a free consultation with our expert food industry consultants and food brokers.