Considering going commercial. Am I nuts?

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Considering going commercial. Am I nuts?

Postby Thewitt » Fri Jul 12, 2013 5:56 am

I started out not very long ago making sausages as a hobby, as I suspect many of you did, and I have found very quickly that it has turned into a hobby business. There seems to be a pent up demand here that opens up new opportunities every time I speak to anyone about real pork sausages.

I have a real job that I work 50 hours a week at plus international travel - and as some of you know I live in Malaysia to do this job.

What I have uncovered with my little sausage making endeavor is that I have paying customers now who have sprung up out of the woodwork, and I cannot keep up with the demand for my sausages in the time I have around my real job.

Current weekly demand for fresh non-halal sausage looks like this:

200 Longganisas
250 Bangers
240 American Breakfast Sausages
350 Satay (special flavor mix with beef and pork)

This is all from 4 customers - the first 4 I introduced to my sausages...

I'm afraid to introduce my sausages to any more potential customers now because there is not enough time in the week for me to fill the orders and to still play at my new hobby - and of course to do my real job.

Sausage making at the current volume and with these commitments has turned into a job... My single mincer/stuffer has turned into a mincer, a mixer and a stuffer almost overnight - consuming one long counter in my fairly large home kitchen.

I'm getting smaller "retail" requests as well, and am considering opening up a small kitchen factory with limited retail hours to support this growing commercial business as well as a small retail business.

I had an agent locate several properties that I can rent which would be appropriate for opening a small kitchen factory with a limited retail counter.

Labor here is very inexpensive - as is overhead in general - and I have someone willing to manage the business who understands how to run a business, but nothing about meat processing. I would more than likely need to hire someone with meat process experience - however I don't think that's a real issue. One of the local butchers expressed an interest when I described what I'm planning. He has a son - an accomplished butcher already - who he would like to have learn more about meat processing and business in general, and has committed to providing me with the meat I need at an even better price if I take on his son.

I would have to grow the current business in order to pay the overhead for the kitchen, pay myself back for the kitchen renovation and equipment (I would loan the business the cash for the equipment setup and renovation), and pay three employees.

I have some supply issues being in Malaysia. Right now I have no local source for hog casings and am still looking for a less expensive supplier for sheep casings for the American Breakfast Sausage.

I really am a little overwhelmed with it all at this time, and am looking for your collective experience and advise as I move forward. I know there is a great deal of experience here, and I would be foolish not to try to learn from those who have gone before me.

I have been in the food services business before (owned and operated a successful restaurant) as well as owned both wholesale and retail businesses - so the business end of this doesn't really frighten me - though a healthy fear of any new business endeavor is always present, and there are some nuances to doing business in Malaysia as a foreigner that I'm still working through.

I can keep this just a hobby business and work out of my kitchen at home - even if I have to bring in help to make sausages every day I can do that. My home kitchen is a little overwhelmed if I try to make 2000 sausages in a day, but spread out over a week I can keep the current volume without too much difficulty. It's not ideal, but it's working.

I have a potential new customer who ate my Bangers at the cafe serving them, and he wants 500 polish sausage and kraut (which I also make as a hobby) to add to his western menu in his restaurant... In addition, the breakfast sausage customer wants to double his order - however I'm having an issue supplying sheep casings so I have to put him off for a while.

Any advice?

Am I crazy to think about making this a real business?

My customers have been extremely impressed with the quality of these fresh sausages and they really do not have alternatives available in the local market. I know I'm still a novice sausage maker, but the product quality has been good, and customer acceptance has been very high, so I'm motivated to continue. I'm charging a premium relative to the Halal sausages in the marketplace, but the market seems willing to bear it, and there really is no comparison between a Halal beef or chicken sausage and something with 35% pork fat.

All comments are welcome!
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Re: Considering going commercial. Am I nuts?

Postby wheels » Wed Jul 17, 2013 11:44 am

It's hard to comment, knowing nothing of your position, or business in Malaysia.

The best thing to do would be to put together a realistic business plan. Ignore the fact that it's a hobby, just treat it like any other business, and see whether it all adds up.

HTH

Phil
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Re: Considering going commercial. Am I nuts?

Postby vagreys » Wed Jul 17, 2013 12:51 pm

I'm in a similar situation, except that the local, state and federal laws, here, create significant barriers to entry for small-scale meat processors. To make this a legitimate business, exactly as things stand, now, in order to comply with USDA/FSIS, FDA, State Health, and local laws and ordinances, I'd have to spend a minimum of $150k-200k in new construction and/or leasehold improvements. I couldn't work out of my home, or even have a dedicated shop attached to my home. I'm having to turn away potential customers because I have more than I can produce, now, but nowhere near enough to offset startup expenses within a reasonable timeframe, nor would I be able to procure necessary financing. It sounds like you have more freedom to operate in Malaysia. I agree with Phil - you need to treat it like a business, develop a business plan, and realistic projections of cashflow and net worth over 5 years, including growth, inventory, and necessary equipment acquisition (capital assets investment) to meet projected demand, revenue and profit. It would have to provide a living wage after all expenses are covered.
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Re: Considering going commercial. Am I nuts?

Postby Thewitt » Wed Jul 17, 2013 3:07 pm

Yes, I am working up a business plan and will proceed accordingly. I've owned a restaurant, wholesale and retail businesses in the past - all varying levels of success - and won't go into this lightly.

I've just accepted an order for 1000 sausages a week from another new customer - and this one might stretch me a bit thin...
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Re: Considering going commercial. Am I nuts?

Postby wheels » Wed Jul 17, 2013 3:27 pm

It looks like the decision's been made for you! :lol: :lol:

I wish you every success.

Phil
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Re: Considering going commercial. Am I nuts?

Postby quietwatersfarm » Wed Jul 17, 2013 4:02 pm

Tom, have you looked into the 'irregular' route. everything prepared in an entirely correct manner and then offered free of charge through a private food club which accepts 'suggested donations' to cover costs.

no requirement to pay but then potentially no guarantee of supply either :wink:

All legal and above board and a nice social way of getting good handmade quality food out there.

Just a thought.
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Re: Considering going commercial. Am I nuts?

Postby JerBear » Wed Jul 17, 2013 5:37 pm

ooooh... I like that idea QWF!!
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Re: Considering going commercial. Am I nuts?

Postby vagreys » Wed Jul 17, 2013 6:11 pm

I'll look into that QWF. A guy protesting Virginia's law against selling raw milk did essentially that for years - offering free plants for a suggested donation along side his protest petition, with free raw diary or raw dairy goods at farmers markets - and was stopped by the State, a couple of years ago. He didn't do a club approach, though. Thanks for the suggestion.
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Re: Considering going commercial. Am I nuts?

Postby Thewitt » Fri Jul 19, 2013 2:01 am

wheels wrote:It looks like the decision's been made for you! :lol: :lol:

I wish you every success.

Phil


Thanks Phil,

I delivered the 1000 and he increased next week to 1500.... so I now have labor working in my home kitchen 3 days a week.

Nice to be busy, but quality must be consistent and supply must be predictable - so I need to stop growing the business for a while...
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Re: Considering going commercial. Am I nuts?

Postby BriCan » Fri Jul 19, 2013 7:41 am

Thewitt wrote:I delivered the 1000 and he increased next week to 1500....


Just out of curiosity .... the 1500 sausage ... what weight are we looking at??
But what do I know
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Re: Considering going commercial. Am I nuts?

Postby quietwatersfarm » Fri Jul 19, 2013 8:09 am

Cool, guess the weight of the sausages!

100-120 kg's ?

Do I win a pound of gummi bear brats ? :)
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Re: Considering going commercial. Am I nuts?

Postby Thewitt » Fri Jul 19, 2013 12:39 pm

BriCan wrote:
Thewitt wrote:I delivered the 1000 and he increased next week to 1500....


Just out of curiosity .... the 1500 sausage ... what weight are we looking at??


These are am American Breakfast Sausage and are roughly 3oz or 90g. They are however hand linked, so probably range from 70-110...
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Re: Considering going commercial. Am I nuts?

Postby BriCan » Sat Jul 20, 2013 4:57 am

Thewitt wrote:These are am American Breakfast Sausage and are roughly 3oz or 90g. They are however hand linked, so probably range from 70-110...


I am assuming that you are not three linking (as in the traditional ((English))way). If pinch and twist away from ones self and the next is twisted towards oneself I would (and do) the story board method as (IMO) it increases speed without loosing quality
But what do I know
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Re: Considering going commercial. Am I nuts?

Postby Thewitt » Sat Jul 20, 2013 7:31 am

Not three linking, no. I do that for my Longganisas as they are resold by weight and hang on a food cart. This makes a very nice presentation. The breakfast sausages are simply linked as you describe, twist the first away, then the next toward. I've marked my catch tray with lines to give me a quick measurement guide for hand linking with a little more consistency.
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Re: Considering going commercial. Am I nuts?

Postby Thewitt » Thu Aug 15, 2013 8:16 am

I walk into the rental kitchen after a full day at my real job, to find that my staff have stuffed 110kg of sausage today - without first running it through the mixer.....

Yes it was double-ground, yes it was corrctly seasoned, no it was not mixed to bind.... Guess the night shift will be redoing these.... Oh yes, that would be me....

Don't forget that mistakes happen in any business and you should have a buffer in your overhead costs to make sure you stay solvent!
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