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Written by: Howard Tillerman
Howard Tillerman is the Chief Marketing Officer for Step By Step Business and an award-winning marketing professional.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on October 11, 2021
Investment range
$3,000 - $10,000
Revenue potential
$57,000 - $390,000 p.a.
Time to build
0-3 months
Profit potential
$34,000 - $117,000 p.a.
Industry trend
Growing
Commitment
Flexible
Here are the most important things to consider when starting your dog treat business:
The Bark and the Bite: Building a Business in Dog Nutrition
You May Also Wonder:
Is there money in making dog treats?
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.
How do I make healthy dog food?
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.
Can I make dog treats at home and sell them?
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.
What are the best distribution channels for selling dog treats?
The best distribution channels for selling dog treats include online platforms such as your own e-commerce website or popular marketplaces like Amazon, Etsy, or Chewy. Local pet stores are also ideal distribution channels, as you can approach independent pet stores in your area and build relationships with store owners or managers.
How can I make high value dog treats?
To make high-value dog treats, focus on quality ingredients that are natural and safe for dogs. Avoid artificial additives and prioritize nutritional value by formulating treats that are grain-free, low in calories, or rich in essential nutrients. Experiment with unique flavors and textures to create treats that dogs find enticing and enjoyable.
What are the best packaging options for dog treats to maintain freshness?
To maintain freshness, consider packaging options such as resealable bags that allow customers to seal the bag after each use, preserving freshness and preventing exposure to air and moisture. Airtight containers made of glass or BPA-free plastic can also help maintain freshness and protect against external elements. Individual packaging can ensure freshness and provide convenient portion control.
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!
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.
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))
Trends in the dog treat industry include:
Challenges in the dog treat industry include:
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 |
| Insurance | $250 - $500 | $375 |
| Marketing and advertising | $500 - $3,000 | $1,750 |
| Website | $300 - $1,500 | $900 |
| Software | $250 - $600 | $425 |
| Equipment | $500 - $1,500 | $1,000 |
| Raw material | $100 - $300 | $200 |
| Packaging | $500 - $1,000 | $750 |
| Miscellaneous | $300 - $600 | $450 |
| Total | $3,000 - $10,000 | $6,500 |
The average price of a quality pack of dog treats is about $11. If you work at home with reasonably 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 around $57,000 in annual revenue and a profit of about $34,000. Once you’ve established your brand, you could sell 250 packs per week, which would give you $143,000 in annual revenue and a profit of around $85,000.
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 $390,000 in annual revenue and a tidy profit of $117,000.
The dog treat business barriers to entry are relatively moderate. Some challenges you’re likely to encounter as a new entrant include:
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:
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
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.
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.
The price of dog treats varies 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.
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:
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. You can find a 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:
Here are some ideas for brainstorming your business name:
Discover over 250 unique dog treat business name ideas here. If you want your business name to include specific keywords, you can also use our dog treat 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 set 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.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
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!
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.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your dog treats business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
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 an 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.
Choose Your State
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.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a dog treats business. You might also try crowdfunding if you have an innovative concept.
Starting a dog 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.
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.
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:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
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 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 them to established dog treats and foods.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. 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.
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.
Here are some powerful marketing strategies for your future business:
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:
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.
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:
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.
Congratulations! You’re well on your way to making your first dollar with your dog treat business.
Keep in mind, you’ll be competing with big companies with well-known brands so it’s important to think of creative ways to gain customers and increase awareness about your products. If you can’t compete with the giants in the traditional marketing channels, consider going directly to the pet owners and providing additional services with a personal touch.
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!
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