If you want to take your food or beauty product to market, you probably know the difference between creating your goods at home and being in a commercial facility. When creating your products in small batches in your kitchen, you can sell your products locally, such as at a flea market or a local boutique. Selling your products online is another option.
But if you are looking to scale your business and get your products into the hands of more customers, then you will need to create a lot more of what you’re selling.
This is where contract packing (better known as co-packing or contract manufacturing) comes in. Co-packing involves a company taking your product (e.g., a facial cream) and packaging it so it can be sold in stores.
Co-packing can involve manufacturing the product, putting price labels on packages, creating specialized packaging, and building displays for your products. Co-packers can do this all at significant savings of time, effort, and cost.
If you’re wondering if co-packing services would be a good fit for your business, then consider some of the following reasons.
Reasons for Using a Co-Packer
Besides wanting to grow your business, there are other reasons why you’d want to partner with a co-packer.
- Your business is already growing. Demand for your products may have significantly increased and you may be finding it hard to keep up with your sales. A co-packer can create more of your product in less time.
- You have laws and regulations you need to follow. This is especially important for the food industry. You may have regulations from the USDA, the FDA, or other certifying bodies that help you not only legitimize your business but help keep your customers safe. A reputable co-packer knows all these regulations and by taking on the packaging for you, you can focus on other things.
- Your side hustle has now grown into a full-fledged business. Like many other small business owners and entrepreneurs, you may still be working full-time as you’re growing your business. That means you are using your free time to create your goods. And, if your business as grown, then you may find yourself working all the time.
- You want to focus on other things. Maybe you want to focus on marketing your business. You could be simply tired from producing the product yourself. If you want to focus on the sales side of your business and have another company take care of the manufacturing and/or packing, then hiring a co-packer can help free up your time.
- You need a commercial facility for production. This is especially important if you are creating food products. Because of those laws and regulations, you may be in a state that has stringent laws for home baking. Or your state may even require that you must cook or bake in a commercial kitchen. Finding one to rent or purchase can be challenging. A co-packer can have all these facilities and more to help scale your business.
Choosing the Best Co-Packer for Your Business
Selecting the best co-packer for your business needs can be a make-or-break decision for several reasons, including that you’re handing off some if not all of your production work to a third party. So how can you find a co-packer that works best for you? Here are some things you should do.
- Ask for referrals from colleagues or other fellow producers. Whether you meet through a local industry group or at a local farmer’s market, you can find fellow producers and colleagues in your industry to ask about their co-packing experiences as well as how they handle production in general. This may be a win-win for you both if they receive a bonus for referring you.
- Check out industry websites. If you’re in the beauty industry, websites like GCI Magazine can help you find a good co-packer. Cosmetic Business has a directory of co-packers (and other industry businesses). For food and beverage, sites like Cornell University’s Food Venture Center has a list of commercial kitchens and small co-packers. There are even sites like PartnerSlate that can help match you with the right co-packer. The agriculture department in your state can also link you to the best co-packer for your business (like this one from Minnesota’s Department of Agriculture). You can also request a quote from Contract Packaging Association who can help to match you with the right co-packer.
What to Consider When Choosing a Co-Packer
Every business has different needs, so you need to find a co-packer that can deliver exactly the services you are looking for.
One area to explore is how much help you need to produce your goods. For example, you may just need a co-packer to package your products. Another business owner may need an end-to-end solution from sourcing ingredients, manufacturing the product, storing and shipping the product. Make sure you first know what you want and how fast you want it.
You’ll want to assess a co-packer’s quality and safety records. What methods of quality control do they have? How will they manufacture your goods? What kind of equipment do they use? What are their policies and procedures on safety? What do their other clients have to say? Do they have the right certifications to produce your product?
Co-packers have their own individual minimums, or the lowest number of goods produced on a run. Find out what a co-packer’s minimum run is and make sure you know how many goods you can sell. You don’t want to go too high or too low. Otherwise, you can end up with too much inventory or not enough to justify the expense.
Ultimately, your relationship with your co-packer comes down to trust. You are trusting them with your formulations or recipes, and to create them with greater ease and efficiency. So you’ll want to make sure that your co-packer has great communication processes in place (e.g., who will be talking with you or your business team? How available and transparent are they about the production process?)
One Final Thought
Although co-packing your products can be overall a more cost-efficient process, you have to have enough money upfront to pay for these products. And that’s different from creating your goods as you go. So as you’re exploring if co-packing is right for you and your business needs, you’ll want to assess your financials, see if you can afford to scale or consider financing options.
Finding a co-packer can be a stressful and challenging process, but it’s one that’s well worth your while. To help you with that search, we have a list of beauty and food co-packers who can help take your product and business to the next level.
Not ready for a co-packer just yet? Read this post to discover ways to produce more in less time and manage home production like a pro.
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