How to Start a Yogurt Company

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The best planned yogurt business can't lick the competition without dairy resources.
The best planned yogurt business can't lick the competition without dairy resources. (Image: Jupiterimages/Photos.com/Getty Images)

It’s yummy and creamy. As irresistible on a hot day in July as it is in December when the ice cream you’ve declared “too fattening” isn’t a dessert option. If you’ve found yourself waxing poetic about frozen yogurt so often you realize it’s the business start-up idea you’ve been looking for, proceed with caution. This is one business that could freeze your assets if you don’t heed advice from folks who have been there and done that.

Go into your yogurt business with eyes wide open. Yogurt is considered a trend food, ebbing and flowing in popularity since companies such as TCBY launched operations in the 1990s. Yogurt reinvented itself as the go-to dessert for health and weight-conscious eaters and it’s frequently marketed to people seeking “low-fat, no-fat, gluten-free and even lactose-free” treats. Says Chenoa Farnsworth of Farnsworth Consulting, “Trend businesses like this always scare me because there’s a significant amount of cost just to start up a company.” Heed the warning.

Focus on location. Read the story of an entrepreneur like you whose interest in launching a yogurt company in Kenya paid off big time (see Resources) because he did his homework. His efforts resulted in retail shops and supermarket placements as he strove to introduce the affordable, healthy treat to Kenya’s working class. Identifying neighborhoods that cater to upscale shoppers with a taste for healthy treats may be the place you want to start.

Raise funds to match your ambitions. Cash required for a retail yogurt shop could dwarf funds needed to open a preparation and distribution center. The owners of Stonyfield Organic Yogurt wanted their own plant, did their homework and learned that their plant start-up would cost $529,500. To raise the kind of cash you need for your specific yogurt business, approach local banks, venture capitalists and lenders with a solid business plan to prove that your concept is more than a delicious fantasy. Lenders are particularly interested in competitive analyses -- if your yogurt company will be the only game in town, you could get extra kudos for coming up with the idea.

Establish relationships with area dairies to obtain the fresh milk and cream you’ll need to make your yogurts. Also contract with food purveyors specializing in the fresh fruit and flavorings that will be mixed into your yogurt creations. Apply for the licenses and permits your state and municipal governments mandate for food preparation businesses and conceive a unique selling proposition (USP) -- one characteristic of your yogurt business that separates it from the herd.

Lease a building and purchase equipment. Self-serve yogurt machines average around $16,000 each. Commercial refrigeration equipment, plumbing upgrades and a professional kitchen set-up designed for mass producing yogurt are extremely costly, so consider buying reconditioned appliances to get started. Protect your yogurt business by buying enough insurance to cover property replacement costs, and since all types of people won't be able to resist your delicious yogurt, better add liability coverage to cover all possibilities -- like the lactose intolerant kid who concludes that since it's not ice cream, it's safe to eat.

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