Small Business Development

Small businesses are propelling the growth of local food sector up and down the local food supply chain. At first, we might only think of the vendor at the farmers’ market selling pickles as the main type of small business in local food. On closer examination, we see that there are small businesses operating urban farms, hydroponic farms, food hubs, local food restaurants, meal delivery services, and more. The definition of a small business, which is defined by the Small Business Administration, depends on the type of business, but most food businesses fall under the following categories for average annual receipts.

  • Farming: $750,000 or less
  • Food manufacturing: less than 500-1250 employees
  • Specialty food stores: less than $7.5 million
  • Supermarkets: less than $32.5 million
  • Farm Product or Refrigerated warehousing and Storage (food hub): less than $27.5 million
  • Caterers and Restaurants: less than $7.5 million

As you can see, small businesses include startups and mature companies. Because the idea of local food is a more recent development in mainstream culture, it’s easy to forget about the mature, small, local food businesses that were local before local was cool. Now that local food is a growth market, there are new business startups launching across the state and country to meet the demand of consumers.

Local food entrepreneurs come from a variety of backgrounds. It’s very common to see local food farmers who come from a farming background or local food restaurant owners with restaurant experience. On the other hand, entrepreneurs from non-traditional backgrounds are also starting and operating local food businesses. One common thread that unites them is that they saw an opportunity and took it.

Local food small businesses are starting up and operating in cities and rural areas. A lot of them start at home, but they also start in newer facilities called incubators that help develop small businesses. There are incubators for processed food companies called kitchen incubators and for farmers, like the new Purdue Urban Farm Incubator in Indianapolis. Once they get past an incubation stage, a business like a farm would start operating on rented or purchase land and a business like a beverage company could operate in a shared-kitchen, a co-packer, or its own facility.

Improving the community is part of the reason many local food businesses start. Creating a local food business instills a sense of pride in the community and for businesses that operate a storefront, is a placemaking venture. At With more entrepreneurs starting local food businesses, a community of supportive entrepreneurs is also taking hold. Thanks to the internet, small food business can connect with their peers across the country for advice. Connecting over shared values like community, sustainability, or economic development means many local entrepreneurs may even receive support from their competition.

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