How to Start a Dog Treat Business
We all love our dogs and want them to be healthy, so they are with us for a long time. If you have ever made your dog home-baked healthy treats or food, maybe you want to share your recipes with others. Starting your own dog treat business is a great way to do just that.
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.
According to Pet Food Processing, in 2019, pet owners spent over $34 billion on pet food and treats, and $6 billion was for treats alone. That number is expected to grow by about 4% through 2025. Of the $34 billion, $4.9 billion was spent on pet food and treats online. 43% of dog owners buy premium pet food products.
Dog treat bakeries are growing more and more popular, with nutrition and fresh ingredients being to be a major factor in choosing dog treats. Some dog treat offerings are made for specific health purposes, such as teeth health or fresh breath. Consumers also like fun and aesthetically pleasing treats for special occasions.
The target market for a dog treat business is anyone who has a dog and is interested in healthy, fun snacks for their dog, or a pet-related business like a veterinarian, pet groomers, dog trainers, dog show, boarding kennel, or doggie daycare.
Skills, Experience, and Education Useful in Running a Dog Treat Bakery
There are several specific skills that you will need to open a homemade dog 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.
- Business knowledge and experience. You will need to have some basic knowledge of marketing and finance/accounting,
- 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.
Checklist for Starting a Dog Treat Business
Starting a dog treat business can be an incredibly rewarding experience, but 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: Write a Business Plan
After coming up with the idea, the next step in starting your dog treat bakery business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you to think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect dog treat business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a dog treat business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
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!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
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.
Others pet treat businesses will open a retail storefront, which comes with higher rent costs as a location with high foot traffic is beneficial.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
There are specific regulations when making homemade dog treats.
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 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 have local regulations and rules to follow as well.
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.
Step 6: Find Financing
Many home-based pet treat businesses won’t need funding since the startup costs are low, however, if you are opening a retail storefront, a loan or investment may be necessary.
In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs. Some entrepreneurs use their own funds, a home equity loan, or credit cards, but you are putting your funds at risk and will have payments that may or may not be more than those of a business loan.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A pet treat business will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a dog treat business include social media marketing or flyers at the local dog parks. Signage and window displays will be important if you have a brick-and-mortar store.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a dog treat business. A couple of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
The cost to insure a dog treat business will vary depending on several factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
You may need employees to help run your dog treat business.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your dog treat business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a dog treat business?
Here are the typical costs you will face when you start a dog treat bakery business. If you choose to sell online and to third-party stores only, your costs will be minimal.
– Initial inventory of ingredients $100-$500
– Packaging and shipping supplies $100-$250
– Licensing your home kitchen or your shop kitchen $100-$200
– Shop rental (if operating from a retail location) $500-$2,500 per month
– Shop setup for fixtures, shelving, signage, etc. $5,000 +
– Insurance $100-$200
How much money can you make with a dog treat business?
Many small pet treat businesses have become very successful quickly, making $500,000 – $1,000,000 in revenue in the first year. Your revenue will be highly dependent on your location if you have one or your marketing and sales strategy if you sell online or to third-party stores.
Are there grants to start a dog treat business?
It’s extremely rare to find a grant to start a dog treat business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
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.