I get questions about selling bbq sauce and bbq spice rubs frequently via e-mail. I've written a few posts about my research previously, but thought I'd do a more recent post for anyone with similar thoughts.
If you want to start by bottling and selling your own bbq sauce recipe, you're probably looking at about $10,000 in start-up costs because most bottlers will only do it in fairly large batches. That's an estimate based on research I did several years ago, so it's likely even higher now.
I found a bottler a few years ago who would do small batch bottling (less than 500 gallons), but based on my experience this is somewhat risky. The bottler I was using went out of business before filling my order and he kept my deposit. He changed his name and relocated the business to another state, so I was completely out of luck. Other than filing a complaint with the State Attorney General's office, there was little else I could do.
If you want to put your label on someone else's recipe, you can probably pull that off for $3,000-$4,000 to start depending on how much your liability insurance costs, the corporate structure you choose, how much you want to advertise, and several other variables.
The best thing to do is do a Google search for private label bbq sauce suppliers. You'll likely find 5 or 6 possibilities within 15 minutes or less.
I decided to pursue bbq spice rub instead of bbq sauce. Spice rub has a much lower cost of entry than bbq sauce, but it's also a Catch 22 because bbq sauce sells much, much better.
Whatever you decide, I think the "gimmick" you have for your name and the design of your label and overall branding approach is much more important than your actual recipe. The best bbq sauce in the world might not sell very well if you can't, or don't know how to market it.
In my personal opinion, taking the "selling it on the side to friends and family and at bbq contests" is not a viable business strategy. I tried that for 4 years with my spice rub. And, although I did not lose money doing it, I didn't really make much either.