Do you love dogs and dream of starting your own small business? You’re in the right place! Starting a dog treat business can be exciting for those with a passion for pets and a knack for entrepreneurship. As more pet owners prioritize their furry friends’ health and well-being, the demand for high-quality, nutritious dog treats has skyrocketed.
While there are many steps involved, our guide aims to provide the information and resources you need to get up and running smoothly.
Business Overview
A gourmet dog treat business creates homemade treats for dogs, typically with healthy and natural ingredients like fresh meat, fruits, and vegetables. They make everyday treats and/or specialty treats like birthday cakes or holiday-themed treats. The business sells these treats in its own store, at farmer’s markets, online, or both. Often a dog treat bakery will sell their treats at third-party businesses such as pet stores, veterinarian’s offices, or pet boarding facilities.
Selling pet treats is a fun and flexible business that can be run full-time or part-time to make some extra money.
Dog Treat Industry
The pet food industry, specifically the dog treat segment, is a booming market. With an increasing number of pet owners willing to spend on premium products for their pets, businesses in this space have ample opportunities to thrive. However, it’s crucial to understand that this industry is regulated to ensure the safety and health of pets.
According to Packaged Facts, in 2022, pet owners spent over $11 billion on pet treats, and that number is expected to grow, especially for private label brands. Sales made online increased to 34% of overall sales.
Most dog treat companies are small businesses, specializing in natural, organic, or niche treats. By starting small and focusing on quality ingredients and unique recipes, you can set your business apart.
Several notable trends are shaping the industry right now. These include an increase in all-natural and grain-free treats, “human grade” ingredients, treats for dogs with special dietary needs, and innovative flavors and textures. Subscription dog treat boxes are also gaining popularity among pet owners.
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Steps To Start A Dog Treat Business
Starting a dog treat business requires more than a love for pets and it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.
Step 1: Assess the Market
Before diving headfirst into starting a new pet treat business, it’s crucial to assess if there is any interest in your dog treats. While market research cannot guarantee success, it provides valuable insights to generate feedback to determine if your ideas align with real consumer needs and shape your business plan. Some cost-effective ways to research the market include:
- Surveys: Create free online surveys asking pet owners about treat buying habits, preferences, pricing, etc. Distribute through social media groups and forums to collect data.
- Local pet stores: Speak with local pet retail store owners to get their input on current treat sales and gaps in the market. Their insights into customer purchasing are invaluable.
- Industry associations: Check out associations like the American Pet Products Association (APPA) to access industry research, statistics, and trends that may indicate opportunities. Their data can validate or invalidate assumptions.
- Competitor analysis: – Research competitor offerings, pricing, and product differentiation so you can position your business competitively. Analyze gaps you could fill.
Step 2: Write a Business Plan
The next step in starting your dog treat bakery business should be to write a business plan. While this step is optional (unless bank funding is needed), the business plan is worth considering as it has you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, competitor analysis (any why pet owners would choose your treats over the competition), projecting sales and expenses, You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
As you’re working on the business plan, think about what makes your treats special. Is it the unique ingredients or the cute shapes? The key to a good business is offering something that others don’t.
Related: How to write a business plan
Step 3: Source Funding
Next, we want to make sure that you have access to sufficient funds to start your dog treat business. If you didn’t calculate the startup costs during the business plan step, now is a good time to do that. Most pet treat businesses draw from their personal funds as they start small and need very little initial funding.
if your personal savings aren’t enough to cover startup costs, you may need to consider external funding sources. A few of these include:
Friends and family: Borrowing from friends and family can be an effective way to raise funds. However, to maintain healthy relationships, it’s important to treat these arrangements professionally. Make sure to put agreements in writing, explicitly stating repayment terms, interest rates (if any), and what happens in case of default.
Microloans: If your funding needs are low or traditional credit isn’t available, microloans could be an option. These are smaller loans often provided by economic development organizations. Some microloan providers also offer business training alongside funding, which can be beneficial for new entrepreneurs.
Bank loans: Securing a bank loan is an option. Banks typically require borrowers to invest at least 15% of their personal funds towards the total cost of the project. They also look for a good credit score and sufficient collateral. If a bank deems a loan too risky, they might opt to use an SBA loan guarantee to reduce their risk.
Related: Finding the money to start a business
Step 4: Register the Business
Choose a business structure: The first step is to decide on a business structure. There are four main types: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC). The choice depends on various factors, such as the number of owners, tax implications, and liability concerns. A sole proprietorship is the simplest and least expensive structure to set up, making it a common choice for small businesses. However, LLCs and corporations offer liability protection that sole proprietorships and partnerships do not.
For pet treat businesses, the sole proprietorship is the most popular entity due to the low cost and minimal requirements, while the LLC is next as it provides liability protection for the owner’s personal assets.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!
Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!
Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Related: Finding a domain name for your business
Obtain business licenses and permits: There are a number of licenses and regulations that a dog bakery business needs to be aware of.
At the federal level, the Federal Drug Administration (FDA) requires that all animal foods, like human foods, be safe to eat, produced under sanitary conditions, contain no harmful substances, and be truthfully labeled. Learn more about the FDA’s pet food safety regulations. Additionally, many states require a business selling pet foods to register with the state’s Department of Agriculture, while other states may require that your company be licensed to sell in that state. Last, your local health department may also have local regulations and rules to follow.
The Association of American Feed Control Officials (AAFCO) has more information and a checklist for Model Pet Food Regulations and the Pet Food Labeling Checklist.
In addition to food regulations and labeling, there is also general business licensing that may be needed. A few of these may include a sales tax permit and an Employer Identification Number if you plan to have employees.
Related: Common business licenses, permits, and registrations by state
Step 5: Set Up Operations
Many dog treat bakery businesses operate out of their home and sell directly to consumers on their website or to dog-related businesses such as kennels, vets, etc. In some areas, there are restrictions to making pet treats for sale in the home, however, investing in a commercial kitchen may be too expensive. In this case, look for a shared community kitchen or look to partner with a restaurant during off-hours or a church with a kitchen to rent space as needed.
Wherever your production facility is, take a look at the equipment you’ll need. This might include baking trays, mixers, ovens, packaging materials, and other kitchen essentials. Depending on the scale of your operation, you might start with basic home kitchen equipment and upgrade as your business grows.
With the production facility being set up, the next task is to start sourcing ingredients. Try to establish relationships with local suppliers for fresh and quality ingredients. Ensure your ingredients are safe for dogs, and consider focusing on natural and healthy dog treats as they are increasingly popular among pet owners.
Finalizing recipes is another important step in this stage. Start by researching nutritional requirements for dogs and consider consulting with a vet or pet nutritionist. Experiment with different ingredients, keeping in mind that all ingredients should be safe for dogs. Some popular choices include peanut butter, pumpkin, sweet potatoes, and oats. Avoid ingredients like chocolate, onions, and grapes which are toxic to dogs. Once you’ve developed a few potential recipes, test them on a small scale. Get feedback from friends or family members who own dogs, and make adjustments based on their feedback.
Step 6: Create a Distribution & Marketing Plan
With the launch date of your business very close, it’s time to turn your attention to finalizing a marketing plan to let people know how they can buy your treats!
Selling your treats at local events such as farmers’ markets, flea markets, or pet shows can be a great way to get your products in front of potential customers. These venues allow you to personally interact with customers, answer their questions, and even offer samples.
Another popular method is to leverage word-of-mouth marketing. Customers who enjoy your dog treats will likely share their experiences with others, creating a network of referrals. You can encourage this by providing excellent customer service and even offering incentives for referrals.
Creating an e-commerce website is a big step for a dog treat business as you can now reach customers beyond your local area. To create an e-commerce website, you can use platforms like Shopify, WooCommerce, or BigCommerce. These platforms offer templates and tools that make it easy to set up and manage your online store. They also integrate with various payment gateways for smooth credit card processing.
Online advertising, such as Pay-Per-Click (PPC) advertising, can also be an effective way to reach a broader audience. Platforms like Google Ads allow you to target specific demographics, ensuring your ads are seen by potential customers who are likely interested in your products.
Social media can also be a powerful marketing tool. Regularly posting engaging content about your products, sharing customer testimonials, and running promotions can help attract and retain a loyal following. Collaborations with influencers and pet bloggers can also work wonders. Picture a well-followed pet influencer sharing a rave review of your treats; it can boost your brand image significantly.
Step 7: Prepare to Launch!
As you prepare to launch your dog treat business, there are several additional steps you may need to consider. Each business will have different needs, but here are some of the common final tasks.
Business insurance: Insurance like general liability to protect against risks like product recalls or customer injury. We recommend getting at least three insurance quotes, including local insurance agents and online providers like Coverwallet or Hiscox to get the best coverage and price.
Bookkeeping: Establishing a bookkeeping system is crucial for tracking income, expenses, and overall business performance. You may want to hire a professional accountant or use accounting software like Wave Accounting (FREE) or Quickbooks.
Bank account: Open a separate bank account for your business to keep personal and business finances separate. This makes bookkeeping and taxes easier.
Credit card processing: To accommodate customers’ preferred payment methods, set up a system to accept credit cards. Services like Square or Stripe can facilitate this.
Grand opening: Plan a grand opening event to attract your first customers. Consider offering discounts or free samples to entice people to try your products.
Common Questions When Starting A Dog Treat Business
How much does it cost to start a dog treat business?
Starting a dog treat business can see a wide range in initial investments, largely contingent on the scale at which you intend to start. On a very small scale, you could potentially start with as little as a few hundred dollars, while a larger scale operation might require closer to $30,000 to $50,000. Let’s break down the different expenses you’ll likely face:
Equipment and supplies: The biggest expense is the cost of equipment and supplies, including ovens, mixers, packaging materials, and other baking tools, which can range from $100 for used equipment to $10,000 for top-of-the-line, new equipment.
Ingredients: A decent stockpile of quality ingredients to start could be anywhere from $100 to $500, depending on your recipes and the quality of ingredients you are going for.
Marketing: Marketing costs can vary widely depending on your strategy. For example, setting up a basic website can cost as little as $100 if you do it yourself using a platform like Shopify, Wix, or Squarespace. However, if you hire a professional to design your website, the cost can go up to several thousand dollars. Other initial marketing costs might include logo design, business cards, and promotional materials.
Business licensing and certification: Securing the appropriate licenses and adhering to the necessary certification processes would generally cost around $100 to $500, contingent on your local government’s regulations and requirements.
Location: If you decide to operate from a physical location, you’ll need to consider the initial deposit for the lease. This typically equates to one to three months’ rent, depending on your agreement with the landlord. In addition, there will be costs to renovate the property.
Miscellaneous: There might be other minor costs, such as utility deposits, packaging, office supplies, and small wares, which could sum up to about $1,000.
It’s important to note that these are estimates, and the actual costs can vary based on a variety of factors, including geographic location, the scale of the business, and personal choices regarding equipment, ingredients, and more. Doing a detailed cost breakdown based on your business plan will give you a more accurate picture of the startup costs you’re likely to incur.
How profitable is a dog treat business?
Opening a dog treat business can be a profitable opportunity with the right planning and execution. A common formula for estimating potential profit is:
(Average Sale Price – Unit Cost) x Estimated Monthly Sales Volume
Let’s assume an average sale price of $15 per bag of dog treats at a unit cost of $5 per bag (which is pretty common). If we estimate selling 500 bags monthly, the math would be:
($15 – $5) x 500 bags = $10 profit per bag x 500 bags = $5,000 profit
This means the business could generate around $5,000 in profit per month, or $60,000 annually.
Expenses like rent, utilities, marketing, insurance, and more would still need to be deducted from this amount. But it provides a simplified view of the potential profit margin.
Of course, the actual numbers will vary greatly based on your recipes, pricing, costs, production efficiency, and sales. But following industry benchmarks can provide a reasonable profit projection to determine viability. With strategic planning and effective marketing, a dog-treat businesses can ultimately deliver healthy returns by tapping into the steadily growing pet industry.
What skills are helpful in running a pet treat business?
A knowledge of baking: Some knowledge of baking will be a huge advantage even if you’ve never made dog treats. You can find recipes and make them your own. Your dog will love the taste testing!
Knowledge of trends: You need to keep up with what customers are looking for at any given time.
Knowledge about pet’s dietary needs: Understanding what foods are healthy for pets and which ones to avoid is vital. You may also need to understand different dietary needs for different breeds or ages.
Business knowledge and experience: You should have some basic knowledge of marketing and finance/accounting, but that can be learned on the job with the right research and mentorship.
Customer service: You’ll need to be able to build rapport with your customers so that you retain them as customers and gain repeat business and referrals.
What is the NAICS code for a dog treat business?
The NAICS code for a dog treat business is 311111, which is classified as Dog and Cat Food Manufacturing. If you don’t operate a store, it’s 453910, which is Pet and Pet Supplies Stores.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
