Uncle Stephen’s Blog

In  a previous post I mentioned using personal money to produce a test batch of sauce with my co-packer, then sending it out for free to the market. We set aside about $1000 of personal money to do this. Read the original post to understand the plan in more detail.

A couple things need to be done before a test batch with the co packer is produced. Of course, they all take more money than originally budgeted for. Anyhow, here are the legal things that need to be done before talks with the co-packer begin:

• Register a parent company (I decided on an LLC)
• Register a Doing Business As (DBA) name
• Obtain a Registration Certificate from the Texas Department of Health, Division of Food and Drugs.
• Register a UPC Bar Code for my sauce.
• Get Liability Insurance.

So this realization throws a curve ball our way, to get everything done it will take more than $2000.00 to do (a guesstimate). That’s more money than we originally set aside. Not to mention, about $1000 that is still needed to run a test batch with the co-packer. I am beginning to think that my “give free samples over Memorial weekend” plan may not happen.

Anyhow, this post is going to discuss the 5 steps highlighted above to get the company up and running. Below are some thoughts on each topic and links to resources that I’ve come across.

Registering a Parent Company

We’ve decided that we will register a Limited Liability Company (LLC) to be the parent company over Uncle Stephen’s Sauce. An LLC has the same personal liability protection as a corporation with less of the formalities, making it is the desirable business structure for the parent company.

Related links:

• Comparison chart of Sole Prop vs C Corp vs S Corp vs LLC
• Selecting a business structure
• Comparison of Corporations vs LLCs by LegalZoom.com
• Information on forming an LLC in Texas
• Texas Secretary of State (Contains info on how to register a LLC in Texas)

Estimated Cost: $300.00

Registering a DBA name / Assumed Name Certificate

A  DBA will be used as the public facing name for selling the sauces. I need to use Form 503 to register the DBA with the Texas Secretary of State. I am not sure If I can do both the LLC and DBA at the same time or if I need to do the parent company  (LLC) first. Does anyone know?

Related links:

• Form 503
• Selecting a business structure

Estimated Cost: $25.00

Registration Certificate from the Department of Health

I need to register with the Texas Department of Health because our business deals with food products. I am not to sure what this entails, I just know it is a requirement because of the nature of my business. Hopefully the interaction with the Department of Health will be minimal seeing how the sauce will be manufactured by my co-packer, and will just be stored in our home.

Related links:

• Texas Department of State Health Services
• Food labeling
• Determination of the need for a permit
• Good Manufacturing Practice
• Licensing of food manufactures, food wholesalers and warehouse operators

Estimated Cost: $250 for a two-year license (For a business making $25,000 – $99,999.99)

UPC Bar Code

UPC stands for Universal Product Code. These are the bar codes that can be found on every product. Guess what? I need one for every type of sauce I plan on selling. This has to be printed on the label of the bottle.

Related links:

• GS1 US Bar Codes Home page
• Online application for Bar Codes
• What is a Bar Code?
• Bar Codes FAQs

Estimated Cost: $700-$1200

Liability Insurance

Insurance is a basic necessity for all companies. Being a food oriented company, we definitely need it. I will look at both local and national insurance companies for quotes. I have a contact at The Hartford for a business insurance underwriter . I’ve already recieved a quote from him and will discuss it in more detail in a future post.

Estimated Cost: $500 – $900 (yearly)

Closing Notes / Updates

I am still unsure of how we are going to fund Uncle Stephen’s. What I do know is however it’s funded, having this information researched and documented can only be a good thing.

Until next time,

Take Care and thank you for following us in the journey.

I’m going to keep this one short and sweet. I need to document my start up cost for Uncle Stephen’s. I need to do this for two reasons:

1. To be organized for myself.
2. To be organized in case an investor comes along or I try to get a loan.

I’ve started a document to keep track of the items needed to launch the business (or at least what I think is needed). This is a link to the document. I will continue to fill it out as time goes on. My goal is to have it complete by 03/30/2009 for the latest.

Please feel free to review the document and share your feedback (both positive and negative) via the comments below. If you know were to get any of these items at better prices please let me know.

As usual, thanks for following a long with us!

-Stephen

I’ve done countless Bar-B-Q’s using my sauce for family, friends, friends of family and families of friends. Needless to say, the response to the sauce has been phenomenal. Now it’s time to take that feedback to the next level and quantify it. Having this data will do a tremendous amount for my business, especially if I plan on looking for investors.

How am I going to do this?

I plan on doing a test batch with my co-packer to see if we can reproduce the recipe on a larger scale. The minimum run for a test batch is 80 gallons and cost anywhere from $300 – $800. I am going to assume that everything will go well and the batch turns out as expected. I will then take the 80 gallons and send it out for free to any and everyone over the Memorial weekend. In return for supplying the Bar-B-Q sauce at your Memorial party (for free), I will ask that everyone who has tasted it fills out an online survey.  This will enable me to finally gather the facts that I need in the most unbiased manner.

I think the key information that I need from a survey is:

• Demographics
• Print Point
• Sauce qualities (good / bad etc)

I’ve put together a short survey using Google Docs. It can be found by going to the following web address:

http://betasurvey.unclestephens.com

What do you think of it? Is it too long, too short? Is anything offensive or unclear? Am I missing anything?

Last thing, if you are interested in having free Bar-B-Q sauce for your grub over Memorial weekend please let me know via the comments. I will contact your with more details as soon as I have them.

As usual, thanks for taking the time to read this and a big thanks for all the positive feedback so far.