Co-packing is a complex business that requires extensive knowledge in order to be profitable. But for many, it’s increasingly difficult to find the time or expertise to enter into this industry.
Here are 6 rules you can follow to grow your co-packing business and help you get started on the right foot.
For retailers, any co-packing company that enters their network is subject to scrutiny. After all, they need to ensure that they’re making the right business decisions. And the first step to learning about a company is by searching for them online. As a co-packer, advertising your services can bring in traffic. Businesses will more likely choose you over lesser-known competitors.
But it’s important to know that advertising within the food industry entails legal compliance from governing bodies. On that note, you can’t advertise that you’re Kosher-certified when you haven’t obtained a certificate. Or a cruelty-free facility when you work with animal products. Being honest upfront is crucial in building honest relationships. A track record of good business practices can help you secure long-term contracts.
Nowadays, consumers associate services with a specific name or logo. Therefore, it’s more important than ever to build a brand. Branding isn’t common in the manufacturing and packaging sector. But in a landscape where there are many Gen Z business owners, it helps to stay up-to-date. That way, your business can stand out in the modern-day retail industry.
You need to focus on three key areas when optimizing your business’s facilities: design, space, and capacity. Most co-packing businesses service multiple clients at once. That entails keeping track of different guidelines, specifications, safety, and QA measures. If the packing facility isn’t organized, mistakes are inevitable. And it’s possible to lose clients over generating waste due to failed batches.
It’s recommended to plan your facilities while complying with FDA standards. This will allow you to build optimal facilities that retailers like to see—while still operating efficiently.
According to the Association of Talent Development, companies that offer robust training programs enjoy a 24% increase in profit margins. In a co-packing business, trained staff are particularly important in maintaining smooth operations. It applies especially in:
Co-packing employees need to have plenty of technical knowledge to meet high-volume demands. As a result, it’s important to invest in staff training and development.
Food and beverages must live up to the expectations of consumers. It’s important that each product retains the same look and feel throughout its shelf life. Yet, errors in measuring food coloring or the natural colors of produce from a new supplier can change the way a product looks or tastes.
Quality assurance is the first step to eliminating common production errors. By doing so, you can provide high-quality services to brands and retailers. This will help your business gain trust among clients. Forming trust goes a long way in this industry—it helps you stay competitive in the growing market.
Finding the “perfect client” is the first step to boosting your co-packing business revenue. Dairy Foods conducted a Contract Manufacturing Survey in 2017. Among provider respondents, 48% reported purchasing equipment to service a client.
As a provider, your company likely spends a good chunk of revenue to accommodate a client. Imagine having to buy new machines every time you sign a contract—you’ll lose profit over operating costs. So it’s a no-brainer that long-term collaboration is the golden rule to sustainability.
You’ll be able to save on constant equipment and facility changes. Mastering a specific niche also opens doors to servicing many others with similar products.
But finding the right client is tough in a competitive market. Small brands may appear and disappear just as quickly, and it can be difficult to begin working with larger brands. That’s why partnering up with a sourcing broker is crucial for driving growth and sustainability. They can connect you with the perfect client that suits your capacity and goals.
Growing your co-packing business can be challenging in a supply chain-dependent industry. Nevertheless, you can get ahead of the market by streamlining operations that involve working with a sourcing broker, advertising your services, and building robust business relationships.
If you are ready to grow your co-packing business, and increase your revenue this way, contact us today for more information.