Should a new Business require a lot of investing or not?

It all depends on the market you are trying to enter, and the impression you want to make.

But I think in general, more money initially invested makes it easier to succeed.

Even in the food business?

What I mean is, I think I heard that a very low percentage of food businesses make it past their first year.

Things do change a lot from your initial plans usually. The more thinking through that you do initially and the more detailed your operating plan is, the less money you will waste.

Some money has to be invested up front because humans are shallow and appearances count. Potential customers will be reluctant to sign contracts or drop old suppliers if they are not sure that you will be around.

There is a high failure rate for all small businesses, but restaurants are pretty vulnerable. What type of food business do you want to open? You don’t have to invest a lot in stuff like marketing materials at first, but you do have to set up the “legal business framework,” especially if you want to sell food. There are two types of businesses that most small business owners set up at first- a sole proprietorship or partnership, and a Limited Liability Corporation. A sole proprietorship is the easiest to set up, and I’m pretty sure it’s free. You fill out a simple tax return as a self employed person, so the business’s income is lumped together with your own personal income. What this means is that if your business gets sued or goes into debt, you are personally liable for the amount, because there is no legal distinction between the business and all your other assets. So if you, say, gave someone food poisoning and they sued you for $10,000, but your business only has $5000, you are personally responsible for the rest.

Another type of business license you can start with is a Limited Liability Corporation. It costs a little more to set up (here is a list of fees by state.) This type of business gives you a lot of flexibility and protections, because the business is considered a separate entity. If the business goes bankrupt, you don’t have to go bankrupt. It’s good for a small business, because you are allowed to have I think 1–100 employees, and your income gets taxed less than if your business was a corporation.

Businesses fail for all kinds of reasons, but a lot of people start small businesses without really knowing what they are doing. Not everyone realizes that it can take several years for the business to be profitable, and you will need money for all the business expenses and your own personal expenses, like rent and food, during this time. A lot of people start business that they are very passionate about, without finding out of the idea is marketable, and a lot of restaurant owners pick really bad locations that cost less, and then they don’t get any foot traffic.

If you want a storefront, starting a foody business will be pretty expensive, because you have to worry about stuff like rent, supplies, and employees. This is the type of thing that most people dream of starting, but there are a lot of great business in my area that do other things with food and are really successful.

For someone just starting out, a business-to-business model makes a lot of sense. There are a lot of great companies in my area that are really successful at doing this. You can either make a product, like baking gourmet bread or making handmade soap, or be a wholesaler, and sell to other small businesses. You might also be able to sell your products first at a crafts fair, street festival, or farmer’s market- it’s a dirt-cheap way to make some sales and build recognition of your product, and from there you can move to wholesaling.

Having nice brochures or a nice website won’t do much for you if you don’t market yourself in other ways. You should join a small business association so you can network with other business-owners, send press kits to your local newspapers, or maybe host events to drum up excitement about your business. If there are local blogs about food or culture, you could also send them information about yourself, and maybe they will host it. Your materials don’t have to be elaborate, they just have to be clear, professional, and allow someone to get in touch with you and find out where your product is available.

The best investment you can make to start off is take an introduction to business class if you don’t really know what you’re doing yet. You can take this as a three-credit course at a community college, and it might be as little as $100 per credit before financial aid. You will learn a lot, and you’ll be able to start building a network of other business-minded people who might be able to help you. You should also try to get some work experience in the food industry if you want to open this kind of business- a job in management would be especially valuable, but any job in the food industry will give you good insight.

If you are talking about turning your cookie baking into a business, you need to be sure and check the laws about home based food business in your area. Probably starting out small (hobby like) and then grow according to the demand is best.

Cookie baking? Yum! You could teach baking classes during the holidays. :)

Super answer, Haleth! Thanks a ton! Is there anyway to give extra points on fluther, I wonder?
All of the answers I have received for this question are really good, actually.

Well, yes, so far I started hobby more than a decade ago, but now I´m trying to make it a bit more professional, which is still probably what you mean by “hobby like”, yarnlady. And I am into various desserts, so your guess was close.
Haleth, I´ll try to figure out what food fairs or similar activities there are in my area. And thanks for reminding me to take the entrepeneur class.