Business planning

Food production business

Michelle Hammond /

Food productionAustralia’s food industry encompasses a wide range of products which, combined with cutting-edge technology, makes Australia a long-term supplier to global markets.

 

Local food producers usually position themselves as providing the highest international standards of quality management and food safety, and new entrants are expected to maintain these benchmarks.

 

To ensure your offering is well above par, StartupSmart offers a bite-size sample of the industry.

 

What is it and who is it suited to?


The food industry is made up of diverse businesses operating across agriculture, manufacturing, wholesale and distribution, and marketing.

 

Food manufacturing businesses range from multinational giants like Kraft to independent factories with just a handful of staff producing one or two products for local retailers.

 

Unless you’re planning on restricting sales to school fairs and weekend markets, this is not a business that you can run part-time.

 

Starting a food production business will almost certainly involve taking on dedicated premises and at least a handful of staff.

 

Rules and regulations


There’s no getting away from the fact that any business dealing with food is strictly governed by vast amounts of regulation and legislation.

 

For obvious reasons, the food production industry is monitored carefully and subject to more stringent hygiene, and health and safety rules, than most other sectors.

 

There are also different regulations that apply to different sectors within the food production industry.

 

For example, a business dealing with meat, such as an abattoir, will be bound by different rules to those in the dairy sector. Your local authority should be able to tell you what applies to you.

 

It’s worth contacting an industry association to gain insight into the rules and regulations of the sector, or even consider becoming a member.

 

The Food Technology Association of Australia is a major food industry body for companies involved in Australia’s food industry.

 

Membership ranges from small individual companies to some of the country’s biggest manufacturers. Members are privy to technical workshops and networking opportunities.

 

Research and competition


Your first step should be to thoroughly research your market. Ask yourself who your competitors are, how your products measure up against theirs and why customers would want to buy off you.

 

Once you’ve established your unique selling point, don’t be fooled into thinking you can start the business the following day. There is a lot more preparation involved.

 

Unless your operation starts off small, it’s unlikely you’ll be able to get away with running the business from your own kitchen.

 

You’ll need to think about securing factory premises and some dedicated machinery to produce your products efficiently and in the required quantities.

 

If you’re new to the industry, you’ll want to get some sound advice before you commit to factory premises or start ordering expensive equipment.

 

Although you won’t want to pay money for more space than you need, you should also consider how quickly you’ll want to scale up production to avoid time-consuming and expensive relocation further down the line.

 

If you can’t afford the right level of quality equipment, consider leasing as opposed to going for a cheaper and less efficient option.

 

This is a commonly used option when trying to save on start-up costs. You may find it suits you during the early stages as you assess your production requirements.

 

Costs and earnings


You’ll need to think carefully about how much you need to start your food processing business. Manufacturing by its very nature involves expensive equipment.

 

A production manager within the food manufacturing industry can expect to earn a median salary of around $80,000, while an operations manager earns a median salary of $100,000.

 

An average day


There are various ways in which food can be produced, which will ultimately determine how you spend your days:

 

One-off production. This method is used when customers make an order for something to be made to their own specifications, such as a wedding cake.

 

Making one-off products could take days to complete, depending on how intricate the design is and also the ability of the chef.

 

Batch production. This method is used when the size of the market for a product is not clear, and where there is a range within a product line.

 

A certain number of the same goods will be produced to make up a batch or run. This method involves estimating the number of customers who will want to buy that product.

 

Mass production. This method is used when there is a mass market for a large number of identical products, such as chocolate bars or canned food. The product passes from one stage of production to another along a production line.

 

Just in time. This method is mainly used in sandwich bars, such as Subway. All the components of the product are there for the customer to choose from, so the products are made to order.

 

Useful contacts


Food Technology Association of Australia

[email protected]

 

Australian Chamber of Commerce and Industry

02 6273 2311

03 9668 9950

 

Australian Government Small Business Support Line

1800 777 275

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