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How to Start a Dog Treat Business
Anybody who owns a dog knows that dogs are crazy about treats! And as people have been spending more time at home, they’ve also been spending more time with their pets, which is why the pet treat industry has exploded in recent years and is now worth nearly $10 billion.https://www.packagedfacts.com/Pet-Treats-Chews-Edition-30337885/
Now is a great time to start your own dog treat business, make countless dogs and their owners happy and grab a slice of that massive and fast-growing market. You can start from home to keep costs low, then steadily build your brand and open a pet bakery, or several of them.
Of course, starting a business requires more than determination and a love for animals. You’ll also need planning and preparation. Thankfully, this step-by-step guide is chock-full of all the insight and information you’ll need to be well on your way to doggie treat success.
Time to build
Step 1: Decide if the Business Is Right for You
The first step to starting a dog treat business is to investigate the market and understand where it’s headed. The dog treat market is definitely headed in the right direction!
Pros and cons
Still, owning a dog treat business comes with upsides and downsides. You should weigh the pros and cons carefully to help you determine whether the risk is worth the reward.
- Low startup costs
- Highly lucrative
- Possible to scale into a national dog treat business
- Low startup cost
- Increasingly competitive as market expands
- Dog foods face stringent regulation
Since the start of the pandemic, more and more people have pets: 1 in 4 pet owners adopted a new pet in 2020.https://www.supermarketnews.com/winning-pet-care/5-opportunities-retailer-success-pet-food This helps explain why the foods segment of the $100 billion pet goods industry has expanded rapidly in recent years, including 10% growth in 2020.https://www.petfoodindustry.com/articles/10128-us-pet-food-sales-rose-10-in-2020-5-projected-for-2021
Within that segment, pet treats have grown twice as fast pet foods overall. Sales of pet treats and chews increased 15% in 2021, after stunning 20% growth the previous year, and now total just under $10 billion.https://www.researchandmarkets.com/reports/4849787/pet-treats-and-chews-in-the-u-s-4th-edition Analysts expect the good times to continue, projecting steady 12% growth in pet treats and chews through at least 2025.
The latest industry trends include greatest interest in natural and organic ingredients, locally and USA-made products, functional ingredients, such as CBD oil, and exotic proteins. For instance, in a recent survey 54% of pet owners expressed interest in pet treats with plant-based proteins, rather than meat-based.https://www.prnewswire.com/news-releases/us-pet-treat-sales-approach-10-billion-mark-301439425.html
In addition, pet treats had long been an impulse purchase shoppers made when picking up other items, but the pandemic has led to a surge in online buying of pet treats as more and more people rely on e-commerce for all their retail purchases.
How much does it cost to start a dog treat business?
Startup costs for a dog treat business range from $3,000 to $10,000, averaging about $6,500. The main costs are setting up a virtual storefront, buying equipment, and marketing. You could also brush up on your dog treat-making skills by finding videos online, on popular sites like YouTube.
Check the table below for a more detailed cost breakdown.
|Start-up Costs||Ballpark Range||Average|
|Licenses and permits||$300-$1,000||$650|
|Marketing and advertising||$500-$3,000||$1,750|
How much can you earn from a dog treat business?
The average price of a quality pack of dog treats is about $11. If you work at home with reasonable priced ingredients and sell via your own website, you should be able to achieve a profit margin of about 60%.
In your first year or two, you might sell 100 dog treat packages per week, which would give you nearly $53,000 in annual revenue and a profit of about $32,000. Once you’ve established your brand, you could sell 250 packs per week, which would give you $132,000 in annual revenue and a profit of nearly $80,000.
You could then save up and invest in opening your own doggie bakery, which could charge $15 per package due to the use of top-quality ingredients and homemade treats. You’d have to rent a space and hire a few employees, so your margin would fall to 30%. But you could sell 500 packages a week, which would give you $360,000 in annual revenue and a tidy profit of $110,000.
What barriers to entry are there?
The dog treat business barriers to entry are relatively moderate. Some challenges you’re likely to encounter as a new entrant include:
- High saturation: It is relatively easy to start a home-based dog treat business, resulting in cut-throat competition.
- Competitive pricing: Big firms leverage economies of scale to beat new entrants on pricing.
- Strict regulation by state and federal bodies
Step 2: Hone Your Idea
Once you have a bird’s eye view of the business, developing your idea further is in order. During this phase, you’ll want to focus on the following:
Why? Identify an opportunity
Proper market research is at the core of any successful business. Market research involves understanding your competitors while pinpointing their strengths and weaknesses. It also includes gathering information about your customer to uncover their needs and wants.
Research pet stores and pet treats companies to examine their products, price points, and customer reviews, as well as what sells best. You could also talk to pet owners to see what they might be missing. You’re looking for a market gap to fill. For instance, maybe the market is begging for a fully plant-based doggie treat.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as doggie treats with special ingredients, such as CBD oil. This could jumpstart your word-of-mouth marketing and attract clients right away.
What? Determine your products or services
To succeed as a dog treats business owner, you’ll need to be able to select and offer the right products to your customers in a competitive market.
The first step is to determine why a typical dog owner would buy their pet a treat. In most cases, treats are given as a reward for good behavior or achieving a certain milestone. Owners also give treats to their dogs on special occasions such as Christmas or the dog’s birthday. You could offer seasonal specialties and holiday specialty treats, such as for Halloween and the year-end holidays.
To stand out, it’s best to use unique recipes for your dog treats. Common dog treat ingredients are peanut butter, fruits, veggies, rice, honey, and whole wheat flour. You should also incorporate organic ingredients and minimize additives and preservatives. It’s a good idea to search online platforms like YouTube to see which dog treat-making videos are drawing the most eyeballs.
How much should you charge for dog treats?
The price of dog treats vary depending on the ingredients and pack size. High-end treat packs can go for high as $20, but when just starting out you might want to start lower, around $10-$11.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Who? Identify your target market
Determining your target market allows you to focus your marketing and branding efforts on people who are more likely to buy your products. Obviously, the primary target market for a dog treats business is dog owners. You could find them on Instagram and Facebook, where many share photos of their doggies and even discuss their consumer preferences in relevant groups.
There are other strategies to reach pet owners, including:
- Listing your treats on marketplaces such as Amazon.
- Creating your own virtual storefront website.
- Partnering with realtors to connect you to pet owners buying or renting houses.
- Stocking your products in department stores, pet boutiques, supermarkets, and pet stores.
Where? Choose your business premises
In the early stages, you should run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a production facility or pet treats shop. Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
- Central location accessible via public transport
- Ventilated and spacious, with good natural light
- Flexible lease that can be extended as your business grows
- Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm a Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
- Short, unique, and catchy names tend to stand out
- Names that are easy to say and spell tend to do better
- Name should be relevant to your product or service offerings
- Ask around — family, friends, colleagues, social media — for suggestions
- Including keywords, such as “doggie treats” or “dog treats”, boosts SEO
- Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Step 4: Create a Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
- Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
- Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
- Product and Services: Describe your offerings in detail.
- Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
- Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
- Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
- Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
- Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
- Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
- Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.
Step 5: Register Your Business
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Choose where to register your company
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to pet treats.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Choose your business structure
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your pet treats business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
- Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
- General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
- Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
- C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
- S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Step 6: Register for Taxes
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.The IRS website also offers a tax-payers checklist, and taxes can be filed online. It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
- Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
- SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
- Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
- Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
- Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
- Personal: Self-fund your business via your savings or the sale of property or other assets.
Bank and SBA loans are probably the best option, other than friends and family, for funding a pet treats business. You might also try crowdfunding if you have an innovative concept.
Step 8: Apply for Licenses/Permits
Starting a pet treats business requires obtaining a number of licenses and permits from local, state, and federal governments.
You must have a business license in most states to sell dog treats. You’ll also need to check if your city or state requires you to obtain a manufacturing license and a commercial kitchen. In addition, your facility may require a formal inspection. Online dog treats sales are limited to the states in which your business is registered, as no single agency can give you blanket approval to sell your treats in all states. Lastly, you’ll need to check if your state or city requires registration of every dog treat recipe you plan to sell.
It’s a good idea to join the Association of American Feed Control Officials, a group of local, state, and federal associations that share knowledge on the licenses and permits required for every state and jurisdiction, as well as other helpful information.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties. If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Step 9: Open a Business Bank Account
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your pet treats business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Step 10: Get Business Insurance
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
- General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
- Business Property: Provides coverage for your equipment and supplies.
- Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
- Worker’s compensation: Provides compensation to employees injured on the job.
- Property: Covers your physical space, whether it is a cart, storefront, or office.
- Commercial auto: Protection for your company-owned vehicle.
- Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
- Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
Essential software and tools
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You should invest in an Enterprise Resource Planning (ERP) system, such as Wherefour, NetSuite, or Sherpa, to to track inventory, production, ingredients, and quality, while also keeping an eye on customer demand and supply chain management. It’s also a good idea to use industry-specific software, such as Animal Diet Formulator or Adifo to build and manage your pet food recipes while gauging nutritional value and comparing to established dog treats and foods.
Some of your business will come from online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
- Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
- Instagram: Same benefits as Facebook but with different target audiences.
- Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
- Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.
Focus on USPs
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your dog treats meet their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your pet treat business could be:
- Fully organic ingredients to ensure your dog’s health and long life!
- Plant-based doggie treats to keep your baby healthy and happy
- Homemade dog treats delivered to your door in 24 hours or less
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
- Flyering – Distribute flyers in your neighborhood and at industry events
- In-Person Sales – Offer your dog treats at local markets, trade shows
- Post a video – Post a video about your dog treats. Use humor and maybe it will go viral!
- Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
- Influencer marketing – Pay people with large social media followings to promote your doggie treats. You can find micro-influencers with smaller followings and lower rates.
- Do a webinar – Share your dog treat-making expertise online with a video seminar
- Testimonials – Share customer testimonials about how your treats helped their dog
You may not like to network or use personal connections for business gain, but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a pet food business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in the pet industry for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in pets and pet food. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
- Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
- If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Step 12: Build Your Team
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a dog treat business include:
- Production Workers
- Marketing Lead
- General Manager
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Step 13: Start Making Money
Congratulations! You’re well on your way to making your first dollar with your dog treat business.
You’ve now gained all the knowledge you’ll need to start your business, it’s time to get into the kitchen and start building your pet treat paradise! But you might want to bookmark this page, just in case.
Dog Treat Business FAQs
Yes, there is. You can easily generate $4,000 to $5,000 per month working a few hours with a home-based dog treat business. If you live in a highly populated area with many pet owners, you can scale your startup into a large dog treat manufacturer to boost your income potential.
The first step to making healthy dog food is choosing the right ingredients. Nutritious dog food ingredients include veggies, peanut butter, fruits, whole wheat flour, honey, rice, and eggs.
Yes, you can. However, you need to understand your recipes. Also, you’ll need to have a reliable supply of healthy ingredients. Further, you’ll have to invest in some basic equipment and packaging material before you can start.