How to Start a Jam and Jelly Business
Are you an expert jam and jelly maker? Do your friends and family love the jars that you give them for the holidays? You could turn your jam and jelly-making hobby into a profitable business. You’d be doing what you enjoy and making money.
A jam and jelly business makes various flavors of jams and jellies, jars them, and sells them directly to customers, online, or retailers for resale.
While having unique flavors is important, you will also need to have the popular flavors, which include (by order of popularity) strawberry, grape, raspberry, blackberry, apricot, blueberry, and cherry.
According to Intrado, the jam, jelly, and preserves market size was $7.9 billion as of 2020 globally and is expected to grow to $8.9 billion by 2027. The market has been very stable historically and not significantly impacted by economic fluctuations.
Jams and jellies are becoming increasingly popular due to consumers looking for healthy and vegan alternatives to other types of spreads. Jam is the fastest-growing segment of the market.
Your target market will be people seeking healthy alternatives to other spreads.
Skills, Experience, and Education Useful in Running a Jam and Jelly Business
There are several specific skills that you will need to open a jam and jelly business.
- Experience. Experience making jams and jellies is a must.
- Business knowledge and experience. You will need to have a basic understanding of marketing, finance/accounting, and human resources.
- People skills. You’ll need to build rapport with your customers so that you retain them as customers and keep them coming back.
Checklist for Starting a Jam and Jelly Business
While selling homemade jam can be an incredibly sweet experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off right.
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your jam and jelly 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 start-up 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 jam and jelly 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 jam and jelly 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: 3 steps 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 businesses making jams and jellies operate out of their home, however, some will need access to a licensed kitchen on an occasional basis or even expand into a retail store.
Be sure to understand rules and regulations from your local health department regarding the proper kitchen setup.
Step 5: Apply for Business Licenses and Permits
The Federal Drug Administration (FDA) has guidelines on the safety requirements and labeling of jams the Food Safety Modernization Act. Additionally, most states also have requirements to follow regarding food safety, however, there are some exclusions businesses with volume under a certain amount.
Most states have less strict requirements for a small cottage food operation, which sell in small volumes. The local health department will be the best first contact to learn more about these requirements.
In addition to food safety, specific licensing, there will likely be general business requirements such as a local business license, sales tax permit, and an Employer Identification Number.
Step 6: Find Financing
Especially when starting from home, the cost to start a jam business is low, however, if funding is needed, the borrower(s) will need to have good credit and invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your 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
While jams and jellies are sold in grocery stores, you are selling the taste, quality, and uniqueness of your products – in addition to tieing into a locally made product, which people are more than willing to pay more for.
You will face competition, so you need to make sure that you are offering a high-quality product. Be creative with your flavors and recipes and set your business apart.
Selling at local farmers markets and area retailers will get your product in front of a lot of potential customers. The more opportunities you have to let people sample your product will greatly increase sales.
Common marketing techniques for a jam and jelly business include social media marketing and online advertising. Developing a website can be a significant expense, but it can also give your jam and jelly business greater visibility online.
Step 9: Get Business Insurance
A jam and jelly business needs several types of insurance for full coverage:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– 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 of insurance policies will vary based on a number of 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 you run your jam and jelly business. Make sure that you select people with appropriate experience and training.
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 jam and jelly 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 jam and jelly business?
Here are the typical costs you will face when you open a jam and jelly business.
– Kitchen Equipment (juice extractor, fruit slicer, pulper, mixer, grinder, cap sealing machine, bottle washing machine, stove, scales, utensils, etc.) $250 – $2,000
– Initial supply of ingredients (pectin, fruit, sugar, citric acid, spices, preservatives, etc.) $100 – $500
– Jars, labels, and packaging – $100 – $500
How profitable is a jam and jelly business?
Jams and jellies sell for around $6 -$8 per jar. If you sell 100 jars a week at $7 per jar, you will make $36,400 In revenue per year.
The cost of ingredients is the largest expense, so as the business gets larger, developing relationships and buying fresh fruit directly from local farmers will help preserve profits and ensure access to quality supply.
Are there grants to start a jam and jelly business?
It’s extremely rare to find a grant to start a jam and jelly 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 jam and jelly business?
The NAICS code for a jam and jelly business is 311421, which is categorized under Fruit and Vegetable Canning. Related business in this NAICS code include;
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.