Sausage making as a business?

Thewitt
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Sausage making as a business?

Post by Thewitt » Thu Jul 11, 2013 10:25

I started out not very long ago making sausages as a hobby, as I suspect most of you did, and I have found very quickly that it has turned into a hobby business. There seems to be a pent up demand here that opens up new opportunities every time I speak to anyone about real pork sausages.

I have a real job that I work 50 hours a week at plus international travel - and as some of you know I live in Malaysia to do this job.

What I have uncovered with my little sausage making endeavor is that I have paying customers now who have sprung up out of the woodwork, and I cannot keep up with the demand for my sausages in the time I have around my real job.

Current weekly demand for fresh non-halal sausage looks like this:

200 Longganisas
250 Bangers
240 American Breakfast Sausages
350 Satay (special flavor mix with beef and pork)

I'm afraid to introduce my sausages to any more customers now because there is not enough time in the week for me to fill the orders and to still play at my new hobby - and of course to do my real job.

Sausage making at the current volume and with these commitments has turned into a job... My single mincer/stuffer has turned into a mincer, a mixer and a stuffer almost overnight - consuming one long counter in my fairly large kitchen.

I'm getting retail requests as well, and am considering opening up a small kitchen factory with limited retail hours to support this growing wholesale business as well as a small retail business.

I had an agent locate several properties that I can rent which would be appropriate for opening a small kitchen factory with a limited hour retail counter.

Labor here is very inexpensive, and I have someone willing to manage the business who understands how to run a business, but nothing about meat processing. I would more than likely need to hire someone with meat process experience - however I don't think that's a real issue. One of the local butchers expressed an interest when I described what I'm planning. He has a son - an accomplished butcher already - who he would like to have learn more about meat processing, and has committed to providing me with the meat I need at an even better price if I take on his son.

I would have to grow the current business in order to pay the overhead for the kitchen, pay myself back for the kitchen renovation and equipment (I would loan the business the cash for the equipment setup and renovation), and pay three employees.

I have some supply issues being in Malaysia. Right now I have no local source for hog casings and am still looking for a less expensive supplier for sheep casings for the American Breakfast Sausage.

I really am a little overwhelmed with it all at this time, and am looking for your collective experience and advise to go forward.

I have been in the food services business before (owned and operated a restaurant) as well as owned both wholesale and retail businesses - so the business end of this doesn't really frighten me - though a healthy fear of any new business endeavor is always present, and there are some nuances to doing business in Malaysia as a foreigner that I'm still working through.

I can keep this just a hobby business and work out of my kitchen at home - even if I have to bring in help to make sausages every day I can do that. My home kitchen is a little overwhelmed if I try to make 2000 sausages in a day, but spread out over a week I can keep the current volume without too much difficulty. It's not ideal, but it's working.

Any advice?

Am I crazy to think about making this a real business?

My customers have been extremely impressed with the quality of these fresh sausages and they are really not available in the local market. I know I'm still a novice, but the product quality has been good, and customer acceptance has been very high, so I'm motivated to continue. I'm charging a premium, but the market seems willing to bear it...

Comments?
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Post by ssorllih » Thu Jul 11, 2013 15:52

You have seen the FAO book for the business, that is an excellent piece of work. In the USA meat handling areas are kept very cool and separated from sales areas by doors. My biggest concern would be maintaining food safety. When I was in the US Air Force the dining hall kitchens were required to preserve a sample of every food served at each meal in case anyone became ill.
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Post by Thewitt » Thu Jul 11, 2013 16:08

My intention with the building would be to set up a shipping/receiving area in the back with two large double door refrigerators. One for incoming meat and one for packaged, outgoing sausage. I would continue to purchase meat from a butcher and not the slaughter house, so incoming cuts would be manageable and I would not be dealing with whole hogs - though I grew up slaughtering hogs and steers on a family farm...

The processing area in the kitchen would be separate from this area with a hanging plastic strip wall, and kept very cool - a must in this climate. Additional refrigeration would be available in the processing area for in process materials.

The retail area would be in the front, completely separate from the processing area, with refrigerated display cases and a retail counter.

One of the buildings I looked at would also let me set up a separate drying and smoking area, however at this point I'm only looking at fresh sausages. There are some interesting issues with drying and smoking sausages in the tropics that I would need to more fully understand before building out that space. One of the local halal sausage manufacturers has given me extensive tours of his facility and freely discussed the challenges he faces in his factory. He uses hepa filters to maintain air quality in his drying room.
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Post by ssorllih » Thu Jul 11, 2013 16:14

Check the posts by Story28. He and his wife built an establishment in Washington DC called, " The Three Little Pigs ". He has faced all of the problems that you will encounter and has installed some rather sophisticated equipment. He is also very helpful.
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Post by el Ducko » Thu Jul 11, 2013 18:28

Most entrepreneurs that I've met are either crazy or "driven." Maybe that's the same word. ...but we couldn't make progress without 'em. More power to you.

Rytek Kutas' book describes his efforts in setting up a sausage business. Perhaps that would guide you through the thicket of things you must do and good ways to set up your shop. ...plus, it's good reading and includes good recipes.

Good luck.
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Post by sawhorseray » Thu Jul 11, 2013 20:25

One of the many great aspects of sausage making as a hobby is being able to do it when you want to and making what you feel like making at the time. Sausage making as a job means deadlines and quotas to meet, might not be as much fun anymore. Good luck on whatever you decide to do. RAY
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Post by Chuckwagon » Fri Jul 12, 2013 00:45

Hi Witt,
I too, would like to add my sincere "best luck" wishes. However, before you step in with both feet, please consider and study a few issues you just cannot avoid:
1. Local laws and ordinances (You don't need any surprises later on).
2. Public safety and health department. (Talk to owners of similar businesses.)
3. Licenses and permits
4. Competition
5. Advertising (You'll be surprised how much you'll actually need to carry on a day-by-day business). This is no small item. Even if you have the best sausage in the world, people will not automatically beat a path to your door without advertising. You will find you'll have to consistently promote your own products through advertising.

Making good sausage is the easy part! Running a business is a tough row to hoe. Be realistic and consider the long-range issues and problems. Examine problems and possible solutions before you start. Then study the possible solutions again and make sure you consider every possible angle. Write everything down on paper, sleep on it, and then reconsider it all later.

My advice? If you go into business, sell people the best product you possibly can... at a FAIR price. Your success will depend upon returning customers and repeat business . And one last thing... forget about the wholesale business. You'll spend all your time collecting bills from months long past, while someone else marks up the price and collects the profits on your sausage.

Good luck pal,
Best Wishes, Chuckwagon
Last edited by Chuckwagon on Fri Jul 12, 2013 06:27, edited 1 time in total.
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Post by ssorllih » Fri Jul 12, 2013 03:47

I have been in business for 35 years. There are a few things that you must do and a few things that you must consider before you start putting gold on the table.
At present you have a good side line sausage making venture that can be handled in your non employment hours. You have no overhead expense. As soon as you establish a separate location you will have expense for electric supply, water supply, rent, and the cost of new equipment. You still have not made or sold any product. To produce the quantities that you will need, two people will have to produce product. They will not have time to sell your product. There must be someone to handle sales. Now you have three people on your payroll. In order to be able to pay them you will have to make more product and sell it everyday.
The volume that you now sell per week will have to be sold everyday. To make matters worse you are still just making your expenses.
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Post by Thewitt » Fri Jul 12, 2013 06:47

What makes me think there is real opportunity here is that this business is all from the first 4 customers I have contacted. No rejections at all so far. Every contact has resulted in immediate sales and promise of future growth (the breakfast sausages are flying out the door and he will be doubling his order starting next week... I'm waiting on casings to arrive in the mail before I can expand his volume!).

I had a call yesterday from another potential customer who has asked if I can supply 500 polish sausages a week - though he has not actually placed an order. He simply had bangers at the coffee shop that added them to their menu and now wants to feature a sausage and kraut dish on his Western menu. When I told him that I can also supply locally made kraut as well he was very interested in that too - so I'll be dropping off samples of sausages and kraut this weekend.

I have owned several successful businesses in the past - along with a couple of failures - so have a pretty broad base to draw from when it comes to the business side.

I have never considered entering a business with a product that is this new to me personally however, and that is a bit overwhelming at times.

I'm sure I'll miss something...

I have an appointment with another sausage maker on Monday who again only makes Halal sausages. He will know all the local rules and regulations, and will have dealt with local supplies and distribution. He grew his business from a small home business his parents ran, to a 30 employee factory over the last 10 years, so I'm really looking forward to some local insight from him.

Since I have no plans for Halal sausage, we are effectively serving two different markets, and he doesn't consider me a potential threat at all - which I find very refreshing.

Overhead in Malaysia is very low relative to many other parts of the world, so though I am not discounting those costs, the volume needed to just break even in the shop is much less than you would expect in other parts of the world.
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Post by crustyo44 » Fri Jul 12, 2013 09:31

Thewitt,
It's great to see that you can get a lot of information from your Halal sausage acquaintance.
I hope that you are going to do very well.
Do remember that static costs and this includes all overheads are usually interwoven with your turn-over and profit margins.
If you can tightly control your static costs you will be on the way to a profitable future.
I wish you all the best.
Best Regards,
Jan Ooms,
Brisbane. OZ.
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Post by EricLam » Fri Aug 02, 2013 00:28

Thewitt, helllo thewitt....my name is eric...i am new here...can i ask u one question? Do you knw where can i get a hog casing? i from malaysia too :) thanks

regards: eric
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Post by Thewitt » Fri Aug 02, 2013 02:17

I have spoken to the local slaughter house and they will be cleaning casings for me very soon. Depending on how much I need to purchase - we are still discussing this - I may be selling them myself.

In the meantime I'm purchasing mail order from Australia. http://www.countrybrewer.com.au/

I was not able to locate a steady supply anywhere around Penang. There are options in KL but only for pickup, not shipping. I have no idea about Sarawak.

I was quite surprised when I spoke with the abattoir manager that they did not clean casings today, but he was open to the idea and though I'm not sure he will sort them for me by size, it's a fairly simple process for him to clean and prep them for me. I may need to purchase quite a large quantity...

Meeting again next week to pick up my first samples

Tim
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Post by story28 » Fri Aug 02, 2013 03:41

ssorllih wrote:Check the posts by Story28. He and his wife built an establishment in Washington DC called, " The Three Little Pigs ". He has faced all of the problems that you will encounter and has installed some rather sophisticated equipment. He is also very helpful.
I am happy to help, if needed. El Ducko, Chuckwagon, and Ross all have some great points mentioned above. Ross really nailed it about what can happen to margins when you shift from hobbyist black-market seller, to a legal producer.
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Post by Thewitt » Fri Aug 02, 2013 04:02

Thanks story28. I've read thru most of your posts on the forum and appreciate your sharing.

My business plan looks reasonable and I've arranged to rent space temporarily in an existing commercial kitchen with all of the logistics in place - just needs my specific sausage making equipment and labor.

Should be a very valuable 6 month investment into the viability of this as a business.

I've booked even more business since my initial posting and am very optimistic at this point.

I'll be working in the kitchen over the weekend (they do not run weekends at all) and will get a feel for what type of volume the facility can support. Going to process 400kg of pork shoulder and back fat arriving tonight.

-t
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Post by el Ducko » Sun Aug 04, 2013 02:24

Regarding a sausage business startup:
Story28 (Jason)'s experiences are an eye-opener, but it looks like he and his wife are coming out on top now. I read through the reviews of their shop, Three Little Pigs, on yelp.com and they got beaten up pretty badly those first few weeks. (Pay attention to posting dates. Yelp jumps around, for some reason.) However, Jason and Carolina paid attention to their customers, evidently, because soon they were garnering rave reviews, and they continue to do so today.

I have a feeling that theirs is a thirty hour day, ten day a week job. But it is evident that they share a passion for what they are doing, and that's why they are making a success of it. Frankly, I don't know how they can pack it all in to a normal day. (Maybe they have a little time machine, hidden away in the back.)

Their story would make a good movie. ...but only if someone can make it believable. Seeing what they have accomplished in such short time, that will be tough. ...unless maybe J.K.Rowling can work their shop into the next Harry Potter series.
<<<Harry Potter and the Magic Charcuterie Shop>>>
Watch for it in a theater near you (if you live in DC).
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