If you’re thinking about starting a chocolate business, you’ve probably got a lot of questions.
Is chocolate a good business to start? How much money do you need to start a chocolate business? Is it profitable? What machines do you need? Which all licenses you will need?
There's a lot to consider.
But before you seek answers to any of the above questions, it is a good idea to take a minute to consider why in the first place you want to do a business?
Whatever the reason for wanting to start, now’s a great time to kickstart your chocolate startup. Research shows that the chocolate industry is booming, continuously growing year after year. According to Statista, the chocolate confectionery market revenue in the US is expected to increase from $48 billion (as of 2021) to around $59 billion by 2027.
Looking at these numbers, we can see that there is indeed a good opportunity for an online chocolate business. Of course, if you want to get a piece of that market, you need to have a good business plan.
Our guide below will go over everything you need to know about how to start a chocolate business. It takes a lot of planning, but you can successfully start your own chocolate company even from home if you’re ready to dedicate time to it.
Now that you have decided on starting a chocolate business, the next logical step is to get a clear picture of the market you are hoping to enter. Having some baseline information of the industry you are entering and the other businesses that you will be competing with, is absolutely essential.
The Business
Broadly speaking, the chocolate companies create chocolates as an end product. As a chocolate business owner, you have multiple options to sell chocolates:
- Sell chocolates directly to customers from your own shop
- Collaborate with other businesses such as bakeries who may buy chocolates in bulk from you
- Sell chocolates at small outlets such as farmers market or via kiosks in big box stores
- Via your own online store or on the marketplaces
You may decide to craft your own chocolates and sell them. Or, if you don't want to get into manufacturing and rather focus just on sales, you can do that too via franchising or business collaborations with chocolate manufacturers.
The Opportunity
Globally, the chocolate confectionery business is a trillion dollar business and The United States is amongst the world’s biggest chocolate consumers. According to recent statistics, on average Americans consume over 10 pounds of chocolate every year.
Looking at such numbers, there surely is a big opportunity in the chocolate business segment. It is totally up to your craft and business execution to make it reach the business scale you want it to.
Know your customer
Along with everything else, one important thing you need to understand next is your customer. Some important things to ask yourself:
- Who will buy your chocolates?
- Are you planning to craft chocolates for kids, teens or adults?
- Why will they buy your chocolates?
- How frequently do they buy chocolates?
When you get to know who your target customer is, it will be a lot easier for you to make a lot of decisions regarding your chocolate business.
Before you can start your chocolate business, you need to know what type of business you want to own. You might want to own a franchise, build your own brand from scratch, purchase an existing business, or work with a chocolate manufacturer.
Each type of chocolate business has its pros and cons, you just have to find the one that’s right for you. Let’s take a closer look at some of your options.
Franchise
If you decide on a chocolate franchise, you will purchase the rights to use the brand name and business model of an existing chocolate business brand.
Independent chocolate brand
The biggest advantage of starting your own chocolate brand is to have full control over your business. You can choose which chocolate variety you want to sell, which all sale channels you want to sell on and the price points you want to target.
With this power, comes a big responsibility too. You will need to build your brand from scratch and will be competing with the big brand names as well.
Purchase existing business
It could be possible that you may not want to start your chocolate business from scratch and also not be bound under a franchise agreement. In that scenario, you have an option to buy an existing business, whose owners are looking to sell.
This way you won't have to start everything from scratch and also may acquire a loyal customer base as well.
Work with another chocolate manufacturer
One other option that you choose is to work with another chocolate manufacturer, who can manufacture chocolate as per your specifications and brand them under your name. These chocolate manufacturers are generally business to business focussed companies, who do not want to get into retail directly.
As they will be doing the manufacturing, you won't have to invest in factories and expensive equipment. This along with the cost savings, will also help you in getting to market sooner than what it would take for you to start from scratch.
Once you have decided on the target market, The next question that you may need to answer is the type of chocolate you want to start with. It is impractical ( and super expensive ) to start with all chocolate varieties available in the market.
It is a well known fact that if you scale your business organically, the chances of success are very high. Additionally, deciding on the product variety is also going to be helpful in deciding other costs that will come up soon on your balance sheet.
For example, once you have decided the chocolate variety, you can finalize on the decisions such as where you will source your ganache from, what kind of molds you will need etc.
This exercise will also help you decide on the costs involved in starting your own chocolate business. Equipment such as Chocolate tempering machines, melters, vibrating tables, confectionery guitar cutters are expensive and run into $5000 - $10000. With a clear understanding of the type of chocolate you can make calls such as, if you need a 6 lb melter that costs around $899 or a 30 lb melter that costs around $4500.
That said, here are some most common chocolate types that you can choose from:
- Chocolate truffle
- Keto chocolates
- Luxury chocolate
- Chocolate pralines
- Swiss chocolate
- Vegan chocolate
- White chocolate
- Dark chocolate
- Bean to bar chocolate etc.
Next important step in starting your chocolate business is to have a clearly defined business plan. It will not only help in getting your chocolate business organized but will also help in showing its value to the potential investors whenever you look to secure funding.
Please note that writing a detailed business plan may take some time to complete. But it is an important step and will be very helpful in later stages of your business. It will be helpful to use a business plan template to make sure you cover all of your bases.
A business plan will act as a foundational document for your chocolate business. It will clearly lay out your plan of action and demonstrate to potential lenders, investors and advisors what it is that you plan to do with your chocolate business.
You can customize the business plan as the need be as there is no set format, but successful business plans usually include the following elements:
- Executive summary
- Company description
- Market analysis
- Business organizational structure
- Product & service details
- Marketing & sales plan
- Funding requests
- Financial projections.
Choosing the business structure is again a very important step in starting your chocolate business. Your decision on the structure will impact the taxes that you will need to pay, your ability to secure funding and also determine your personal liability related to your chocolate business.
As this step affects taxes and other legal responsibilities, getting expert help will be your best bet.
For general business advice you can start by consulting the small business administration (SBA). Basically, what you are looking for is to determine which entity is the best choice for your chocolate business:
- A sole proprietorship
- Limited liability company (LLC)
- General partnership
- Corporation
If you haven’t already done so, now is the time to decide on the name for your chocolate business. In the end you need to find a name that can be rightfully yours.
As a part of this step, you need to double check that no other business is using the same name for their business. You can perform a Google search to determine that and also use the official state website name search to find it out.
In theory there are three names that you need to consider:
- Entity name that you will be registering your business in the state
- Trademark name that will make your business unique on the national level
- Doing business as (DBA) name, which is what you will trade under
Pro Tips :
- While choosing your business name, also perform a search for the domain name. Because ideally you would not want to be in a situation where someone else owns the domain for the name that you have decided for your business
- A creative name can do wonders for your business, thus if possible you can hire services of a brand consultancy for naming.
You would want to make sure that you follow all the rules and regulations set up by the state and other authorities. This step will help you in the right zone and away from legal trouble and penalties at the later stages of your business.
As each and every state has its own set of rules and regulations, it is best to research the government websites ( the city, state and county), to get information about licenses and permits needed to start a chocolate business.
The rules and regulations vary according to the location and business type, but generally any food related business will likely need more licenses than most other businesses. Thus as you are planning to start a chocolate business, you should make sure that all the documentation and licensing requirements for your business are spot on.
Registering your business for taxes is an extremely important step in setting up your chocolate business. Not only will it make you an owner of a responsible business, it will also help you adhere to all tax, licensing and employment laws.
The business entity structure that you have chosen earlier will decide which all taxes you will have to pay and also when and how you need to file them to be compliant with tax laws.
As your chocolate business will need employees as soon as you launch your business, you will need an employer identification number, also known as EIN or business tax ID number. You will need to get it from the IRS and is an important part of filing taxes for your chocolate business.
Additionally, EIN will also be needed whenever you apply for any business bank account, credit cards or as a part of a business loan application.
When you open your chocolate business, there is a very high chance that you will be using your personal money to fund the initial launch and set up. If not taken care of, pretty soon your personal expenses are bound to get mixed up with business expenses.
This mix up not only makes things difficult at the time of filing of taxes, but will also create difficulties in separation of personal and business assets in the event of a lawsuit.
Opening a business bank account will automatically force you to create the separation and put you in the right financial path.
In addition to the business bank account, you should also apply for a business credit card. There will be plenty of options to choose from and most likely your chocolate business will be eligible for a 0% APR in the beginning. This credit will surely help you cushion the early stage of your chocolate business.
Starting a chocolate business is expensive and needs money, especially when purchasing equipment and bulk supplies. It is a no-brainer that you will need money to make money. Quite literally you will need money to make chocolates for your business.
In addition to the equipment and supplies you will also need to consider your requirements related to the rent, salaries and other costs. Even if you start your business small and may be from the basement, as you start to grow you will need to move to a location and hire people.
Mostly these funding requirements will be part of your business plan that you have ready with you. Once you know the requirements you can consider the following as your funding options.
Some popular chocolate business funding options include:
- Small business administration (SBA) loans
- Business line of credit
- Debt financing
- Friends and family
- Grants
- Crowdfunding
- Angel investment
- Venture capital
It isn't a surprise that you will be competing with many other businesses when it comes to getting customer attention for your chocolate business. Professional branding is an amazing way to make your chocolate business stand out.
As a part of your target audience research, by now, you will have a fair idea of the price points and the competition landscape.
You will need to take branding decisions that will intentionally create a distinctive and compelling identity for your chocolate business. Every decision that you make will influence how your customers view your chocolate business.
As a part of branding exercise, you need to consider the following areas:
- Brand identity
- Brand positioning
- Brand story
- Visual identity
- Brand voice and tone
For your chocolate business branding, you may specifically look at things such as product names, chocolate packaging and social media messaging. The key to a successful branding is consistency. The more consistent your branding is, the better it will be to acquire and retain loyal customers.
A professional website is no longer a “good to have” thing to have for your business. When you launch your chocolate business, especially in the beginning, the customers will expect to have a place on the web where they can learn more about your brand and you.
A website also doubles as an ecommerce sales channel to your revenue strategy and thus is a wise investment. With the advance of technology, you can start your website in a matter of minutes by selecting from a set of amazing website tools.
If you are confident that your customers will love the chocolates that you have crafted with so much of love and attention, you can be assured that they will be happy to tell their friends about it. When it comes to marketing, nothing can beat having a loyal customer base who is ready to do word of mouth marketing for you.
Consider spending some time building a presence on the following digital channels to spread the word about your awesome chocolate business:
- Social media: Definitely something on top of your list. You can choose a relevant social media platform or two and start building a presence on them. For your chocolate business, Instagram and Tiktok are worth checking out as many other businesses have found a lot of success on their social media marketing efforts.
- Email: Email marketing is the most underutilized marketing tool used by businesses. If you use it well, it will give your chocolate business direct access to your loyal customers. You can reach them with promotions and new product launches, as and when you have something to share.
- Review platforms: Even though the review platforms are considered more of a burden than being a boon, they actually are a blessing in disguise. Just remember that it is unrealistic to believe that each and every customer will love your chocolates.
There would definitely be a set of people who may not like it for a reason. Rather than not being ready to take negative feedback, you can actually learn a lot from it. If there is something that genuinely needs to be fixed, by learning and fixing them, you will be helping your chocolate business in the long run.
The bottom line
Learning how to start a chocolate business can feel overwhelming in the beginning. But with patience, planning and attention to detail, you can make your chocolate business a successful enterprise.
As a chocolate business owner, you will need to focus on quality of your chocolates, branding, marketing and many day to day tasks. But that itself won't be enough. To make sure that your chocolate business is successful, you will need to have a concrete business plan, all your finances in order and are compliant with all rules and regulations.
We wish you the best of luck and can’t wait to hear the stories of what you’ll build.
This women owned chocolate brand provide natural, health-conscious chocolate options that everyone can enjoy even the ones with any dietary restrictions. Their homemade chocolates are made from vegan ingredient without nuts, soy and gluten.
Elements Truffles, Union City, NJ
Unique offering. Inspired by the science of Ayurveda, their artisanal chocolates are free from any dairy, refined sugar or emulsifiers. The chocolates are infused with Ayurveda superfoods like turmeric, moringa, honey, etc.
Exquisito Chocolates, Miami, FL
This is a full bean to bar brand which using single source cocoa beans from around the world; with every chocolate piece presented like a piece of art. They also provide tour of the store's on-site factory.
