How to Open a Food Brokerage Firm

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Food brokers arrange sales for producers and manufacturers of food products. They sell to cooperatives, retail stores or chains and independent wholesalers. Because food brokerage firms usually represent many producers and manufacturers, their customers save time and money by dealing with one source of products rather than numerous sales representatives. A start-up brokerage firm can become a profitable business with a thoroughly researched business plan, effective marketing strategy and sufficient financing.

Research the food producers and manufacturers in your geographic area to determine what they produce and how they sell them. Use trade magazines, the Internet and newspaper files to identify potential companies whose products you can represent. Visit producers of a variety of food products within your community and in distant locations to gather information on their products and sales potential. You may sell products grown or processed anywhere in the world, so investigate how food brokerage firms get these products to sell in the U.S., what licenses and permits are needed and whether non-dollar currencies are required. Talk with retailers about their sources of products and why they purchase through their current brokerage firms. The more useful information you can gather, the greater are your chances of creating a successful business.

Choose an appropriate legal structure for your business. Decide if you will form a partnership or a corporation and seek investors or loans. Examine the legal, tax, liability and management issues before deciding.

Write a business plan based on the information you have gathered. To create a profitable food brokerage business, you need steady customers. Describe a system which maintains a record of the amounts of each product you sell to each outlet. The ability to anticipate when their stock requires replenishing helps create efficiencies and enhances your service to customers. An effective system enables you to inform your suppliers when you need more products shipped, creating further efficiencies.

Describe the facilities you need to store and transship products and house clerical and sales staff. Some of the products you sell can be drop-shipped directly from the supplier, but some may require warehousing. If your sales workers travel to meet your retail store owners, managers and wholesalers, you must have procedures for travel reimbursement and auto liability insurance. Your business plan should describe systems for invoice processing, bookkeeping and accounting, banking, payroll processing and other business-related activities.

Devise a marketing strategy that enables you to compete successfully with food brokerage firms already operating in your geographic area and enhances your ability to maintain outlets who agree to use your services. Your staff can help store managers develop adequate inventories of your products. Services might include moving merchandise, rearranging product displays and replacing spoiled or returned merchandise.

Describe in considerable detail your financial plans. Obtain professional help with this part of your business plan if you need it because investors and banks will scrutinize this material before deciding to assist with financing your food brokerage firm.

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About the Author

Roy Sylvan has a Ph.D. in communication studies. He directed a large city department of aging, was COO of a consulting company and provided management training to companies and nonprofits. Writing for more than 40 years, Sylvan has authored articles in trade journals, magazines and blogs, and wrote a how-to book on starting a business.

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