Sausage Making Business Plan, With a Projection

A sausage making business plan starts with a question about where the sausage can be sold, because the answer decides the kitchen. Meat products sold to the public need federal or state inspection, unless they're made and sold the way a retail store traditionally does it: in the shop, from inspected meat, to its own customers, in retail quantities. A small sausage shop can work inside that exemption, and the plan has to stay within its limits. In the example below, a sausage shop in Pennsylvania sells bratwurst, smoked kielbasa and breakfast links over its own counter and bulk sausage to restaurants, and ends its first year about $12,900 ahead on $148,500 of sales, with every hour paid at $20. Below is a description example, each part of the plan, the rules, the first year month by month, the startup budget, and a free template.

The short version

• Describe the shop in a paragraph: the sausages, who buys, the goals.
• Decide where you'll sell before you choose a kitchen: over your own counter, or wholesale.
• The retail store exemption covers sausage made in the shop from inspected meat, sold to consumers.
• Sales to restaurants are capped under the exemption; past the cap you need inspection.
• Cost a pound from the pork shoulder up: meat after trim, casings, spices, time, packaging.
• Give every batch a lot, so a pound in the case leads back to its meat.
• TaroStack gives every batch of sausage a lot, records which meat lots went into it, and costs it. More below.

Part 1: the business description

Nanticoke Sausage Kitchen, a made-up sausage shop in Wilkes-Barre, Pennsylvania, I use in these examples, writes:

Nanticoke Sausage Kitchen makes fresh bratwurst, smoked kielbasa and breakfast links in its own shop from federally inspected pork and beef, and sells them over the counter, with bulk sausage for a few local restaurants. In its first year it aims to sell 2,300 pounds a month.

Part 2: the rules, and the retail store exemption

Federal inspection doesn't apply to the kinds of preparation retail stores and restaurants traditionally do, including grinding and curing, cooking and smoking, when it's done at a retail store for sale in normal retail quantities to consumers there (9 CFR 303.1(d)). To count as a retail store, the shop sells only to consumers, uses only federally or state inspected and passed meat, sells no customer more than a normal retail quantity (100 pounds for pork, a half carcass), and makes at least 75% of its meat sales, by dollar value, to household consumers, with sales to restaurants and other non-household buyers under a yearly dollar limit that FSIS adjusts each year; ask FSIS for the current figure. Fresh pork sausage has a standard too: no more than 50% fat (9 CFR 319.141). States license retail meat shops and may add rules of their own. Selling at farmers markets or to grocers is outside the shop's counter; check with your state and FSIS before planning on it. This is general information, not legal advice.

Part 3: what a pound costs

Pork shoulder at about $2.40 a pound loses about a tenth to trim, so the meat in a pound of sausage costs about $2.67.

The meat is the biggest cost of every pound, and the trim and smoking losses are why a batch's yield matters; how to measure it is in batch yield formula.

Part 4: customers and prices

In a month at full speed the bratwurst brings $3,708 of the $7,720 of contribution, the kielbasa $2,090, the restaurants $990 and the breakfast links $932. The restaurants are $3,250 of a full month's $21,832 of sales, about 15%, inside the exemption's 25%; the plan also has to stay under the year's dollar limit. The breakfast links earn the least for their time, because sheep casings cost more and fill slower; they stay on the menu because customers who come in for them buy bratwurst too.

Part 5: the first year, month by month

Fixed costs are $3,300 every month: shop rent with a cutting room ($2,200), power for the walk-in and smokehouse ($600), insurance ($150), licenses averaged ($40), the till and software ($60), and ads ($250). Sales start at 15% of full speed:

The year's sales are $148,458 and the profit $12,896, with every hour paid at $20. A shop's rent and cooling don't shrink in a slow month, so the first five months lose $6,464 at the lowest, which the working cash covers. A full month is about 240 hours of making, the owner and a part-time helper.

Part 6: the startup budget

The $34,000 spent before working cash isn't earned back in the first year; at $4,420 a month it takes about five more months.

Get the template

Download the sausage making business plan workbook. Four sheets: your sausages with price, variable cost and a month at full speed in pounds; the first year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

Pork shoulder from two suppliers, each case with its establishment number and pack date, batches ground and stuffed every morning, kielbasa in the smokehouse overnight, and restaurants that have to stay under a yearly limit. A notebook can't say which supplier's pork went into Tuesday's bratwurst, or how much the restaurants have bought this year. What a recall plan for a small maker looks like is in recall plan example.

How TaroStack does it

TaroStack gives every batch of sausage a lot, records which meat lots went into it, and costs it.

Meat lots in, sausage lots out. Each case of pork is received with its supplier's lot alongside your own, and each batch of bratwurst takes its meat, casings and spices off stock and gets a lot of its own, with the meat lots it used recorded automatically. If a supplier's lot is ever in question, one recall report shows which batches used it and who bought them.

Yield and cost. Each batch records how much came out good and how much was rejected, and its cost comes from what the meat cost, so the trim and smoking losses show in each pound's cost. A batch record form carries your own fields, such as the smokehouse temperature, with limits and a sign-off.

Restaurants by customer. Each restaurant's order is a sales order, so what each one, and all of them, bought this year is a report by customer. How actual costs drift from the recipe is in food cost variance formula.

Recipes, batches, lots, recalls and sales orders are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

Do you need USDA inspection to sell sausage?

Not if you make and sell it the way a retail store does: in your shop, from inspected meat, to consumers there, in retail quantities, with most sales to households. Selling wholesale beyond the exemption's limits needs inspection.

Is a sausage business profitable?

It can be, slowly. In the example, a sausage shop ends its first year about $12,900 ahead on $148,500 of sales, with every hour paid at $20, and the startup takes about a year and a half to earn back.

How much does it cost to make a pound of sausage?

In the example, about $5.87 for fresh bratwurst: $2.67 of pork after trim, casings, spices, six minutes of making, packaging and card fees.

How much does it cost to start a sausage making business?

In the example, $42,000, with the walk-in cooler, the shop build-out, the grinder and stuffer, the smokehouse and $8,000 of working cash the biggest parts.