by Amy Rose
Thinking of starting a home food business on your own, with friends or with family?
Cottage food laws are changing in your favor in many locations. Locally produced,
hand-made and artisan foods have grown immensely in popularity and the
demand continues to rise. The Trends Research Institute predicted local
micro-brands would be a wave of the future.
And you don't necessarily need a lot of start-up dollars to begin a home-based food business. Bootstrapping can work.
Beebout of Iowa started a canned food business because of an overly
productive apricot tree. She eventually learned to can foods the proper way for safety and started a business. You may be able to learn canning by contacting your local or regional extension service about becoming a Master Canner. Extension courses are often low-cost and some are free.
Whatever your vision for a home based food business, the article below assumes you know how to make the food product or products, and it will take you from step one of starting a food business at home to the point of receiving that very first paycheck.
Steer your home food business towards the right trends
Unless you already have a target niche (for example, a local ethnic restaurant or organization wants you to produce your ethnic recipe for them), tweak the foods you want to make towards one or more of the following trends: Locavore, organic/sustainably produced ingredients, locally grown, artisan foods, hand-crafted, local farms, heirloom, eco-friendly, generational family recipe, regeneratively produced, and/or regionally produced.
Before you start a home based food business, practice.
I don’t mean practice making the foods, I mean you or you and your group of friends who are starting this business should practice the business end itself. This may sound needless, but it's a time honored first step for developing a successful home food business. It allows your group to work out the kinks you don't yet know you have without the tense pressure once you've become a revenue earning business and your reputation is on the line.
To do this, set yourself goals with your food product beyond just making the item when you feel like it and serving it to whom ever happens to show up. Create pretend “tension” so the food product must be made and delivered on time. This will be slightly more tension than none at all (which can lead to procrastination) but not as much tension as it being your first paid gig.
Perhaps offer to donate a certain amount to a charity bake sale by a specific date, or, if your home food business will be about shipping foods, mail some to every family member by a specific date. Notice any kinks in the shipping process. Notice people's responses, and if you have more than one food product, which ones do they like the best? Tweak your products and delivery based on these experiences.
Develop a "working" business name, logo and slogan
A “working” business name means it’s what you think you might call your home food business, but it’s still in the works and can change. Then make mock business cards either by hand or on the computer for everyone involved in the home based food business. For example: SBC, Sherri's Best Cookies: Where Desserts are Delicious and Healthy.
By creating these three upfront -- the business name, logo and slogan -- an energy will begin to form around your home food business. Carry the pretend business cards around with you in your wallets, take them out now and then, and allow your intuition to work on the name and design for a week or so. After a week or two, have a meeting and make changes if you want. You can create and receive a minimum of 100 print-on-demand business cards through our Zazzle affiliate. Make them online and they send them to you within a few days. When you tweak the idea later, you just go back and redo the design. But, at this point, 100 may be way too many, and a handful of business cards made by hand or printed from your personal computer should be just fine. Larger amounts can be ordered later. You can play around with designs, though, for free, and make a final decision later. There's no fee for making changes to the business cards if addresses or other information changes down the road.
Write a quick overview
When you write a business plan for your home based food business, you discover its strong points as well as the blank spots that need to be filled in. But it's nice to start with a quick overview first to keep yourself motivated and better prepare for the actual business plan later. Go to SCORE.org for their free Quick Start Business Plan and fill it out.
Unlike traditional business plans, this one is very short and gives your group a clear, focused snapshot of your future at-home food business. You'll also sharpen your ideas, and the act of writing it down will access areas of your brain that can help you succeed. It can help you decide or make sure, for example, whether your idea of selling to retail stores at a discount will pay off. If not, you can re-adjust now instead of after it's too late, and maybe find ways to sell direct to customers for full retail. At this point, don’t get discouraged if profits don’t seem to add up…
Make sure you’ve considered all possible markets: How about local personal chefs? Local B&Bs? Even your own roadside stand? Maybe schools, caterers, farmers’ markets, or flea markets.
Get legal and finalize your business name
Regulations for selling food (vs. giving it away) must be followed at the federal, state, county and city levels. If, by now, you understand what you want to produce for sure and feel you really want to go on with your food business, don't go any further without making sure it will be legal.
Contact your state, county and local health departments to see what rules apply to start a home food business. Ask them about federal regulations also and where to go for information. If they say your food product must be prepared in a certified kitchen, find out what the rules are for such a kitchen. If it's something simple one of you can do to your own kitchen, complete this step. If not, find a local church, university or school that allows you to use their certified kitchen on Saturdays for free or for a low price. Also contact your county extension service, as they're sometimes aware of sources of certified kitchens for farmers who want to make food products from their crops for sale.
Once the making of the food itself will be legal, it’s now time to decide permanently what your home food business name will be. Then contact your Chamber of Commerce to see what other local, state or federal business permits or licenses are required for doing business under a specific business name. Complete their requirements using your now permanent business name. See below under "Get a personal business coach" first, though, before deciding which type of business entity (sole proprietor, LLC, partnership, etc.) your food producing enterprise should become.
Get financing if necessary – but it might not be necessary.
Some people prefer not to finance with loans. They either find grants or just start from the bootstraps: They save loose change, hold garage sales, and embezzle a little of their own grocery money to pay for permits, any extra insurance they're advised to get (see below) to sell their first food product. With money from the first sales they buy promotional materials (such as a $5 bumper sticker with the name of their business to place on their car) and ingredients to make and sell a few more than the first time. Etc., etc.
But if you need either legitimate grants or financing, go to SCORE.org's how-to page and look under financing your business and you'll find how to get loans and other ways to finance when opening a small business. If you want formal financing, on that same website, you'll find tutorials for writing a longer, more detailed business plan which some financing institutions require, and it will help you make sure the cost of financing will eventually bring in a profitable cash flow.
Get a personal business coach (for free).
By now, you may have noticed that SCORE.org allows you to ask custom questions, and find and choose an experienced volunteer business coach who will help you with customized concerns every step of the way when opening a small business. Find one that has experience in your type, or a similar type of business. They are in every geographical location in the country, but you can also correspond online. Along with any customized questions you have, find out if you should get extra liability insurance and as mentioned above, if you should operate as a sole proprietorship, an LLC, a small corporation, or another form of business entity that will protect you and your assets.
Complete your final business print materials and web presence.
With the help of your business coach, finalize the look of any print (such as business cards) promotional materials you'll hand out, and set up a web presence. If you won't be selling online, you may simply want a one page low-cost or even free description and contact information for a web presence. But most businesses need some sort of online profile.
Market your business and begin.
To start a home food business, unless you plan to sell only online, make sure you get your marketing materials to all the possible outlets that apply to your food product or products: Local restaurants, local B&Bs, personal chefs, caterers, gift basket businesses, event planners, etc. Then consider getting yourself known by offering your food item as a prize for a drawing where many people will see it. For example, work with a non-competing food-related merchant (such as a kitchen shop) where you can make up a beautiful gift basket full of your food items and allow people to enter their name in the drawing for free, or buy a raffle ticket with the money going to a local charity. Send a press release to the media about this project.
Finally, be both flexible yet consistent as you navigate the ups and downs. And congratulations on contributing to a new nation of micro food producers!
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