by Amy Rose
Thinking of starting a home food business on your own, with friends or with family?
Cottage food laws had been changing in your favor in many locations, although we still wait to see how the COVID-19 incident will affect it, either making restrictions stronger, or actually causing a larger demand for locally, regionally, and even American made (insert your own country) wholesome food products. And especially food products with storage ability, now that newer generations have discovered why Great Depression Era and WWII folks were so fond of keeping at least a few weeks of food on hand, just in case.
Not only had locally produced,
hand-made and artisan foods already grown immensely in popularity with no signs of slowing down, but earlier, the Trends Research Institute predicted local
micro-brands would be a wave of the future.
You don't necessarily need a lot of start-up dollars to begin a home-based food business. Bootstrapping can work in some cases.
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.
First step: Search for and check out the 'cottage food laws' for your own state, along with other legalities
Cottage food laws offer lists of foods that are legal to sell, and lists that are off
limits. Some food items might be able to be sold across state lines, others not. Make sure yours is on the legal list for the market you're aiming for. If not, see if it can be
tweaked in some way to make it legal. For example, if canned apricots are not allowed in your area, check to see if apricot preservers instead are allowed if you make preserves just as well.
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 the product itself and all other steps will be legal.
Contact your state, county and local health departments to see what rules apply to start a home food business that may not have been included back when you searched cottage food laws for your state. 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.
Some entities may allow you to fill out forms and get permits before you have a permanent legal business name. After all, you don't want to go through the expense of business licenses only to find out they won't issue you a permit for the food. Some, though, might insist on knowing what the business name will be. If so, see further below about creating both a temporary and a final permanent business name.
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, some of which appeal more to one or the other end of the political spectrum: Locavore, organic/sustainably/regeneratively produced ingredients, artisan foods, hand-crafted, local/regional farms, heirloom, eco-friendly, all-American traditional foods, exotic recipes with locally grown ingredients, or generational family recipes.
Before you start a home based food business, practice.
I don’t mean practice making the foods, unless you're working with an unfamiliar certified kitchen and want to make that go smoothly before proceeding. I mean you or you and your group of friends who are starting this business should practice the business end itself before jumping in. 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 higher 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 “ moderate tension” so the food product must be made and delivered on time. This will cause 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? Were they delivered on time and in good shape? Tweak your products and delivery based on these experiences.
Develop a "working" logo, business name 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. Here's a sample logo, business name and slogan: SBC, Sherri's Best Cookies: Where Desserts are Delicious and Healthy.
By creating these three upfront -- logo, business name, 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.
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.
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 a personal business coach (for free).
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 who 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 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.
Finalizing your business name
It’s now time to decide permanently what your home food business name will be and to set up the proper business structure under that name (sole prop., LLC, etc.) with help from your business coach. Contact your Chamber of Commerce to see what other local, state or federal business permits or licenses are required for doing business under the specific business name and entity. You'll also need to find out what your bank requires for a home food business account. Complete their requirements using your now permanent business name. If local cottage food laws allowed you to get a permit without the business name, but want to be notified as soon as you have it, be sure to take care of that as well.
Get financing if necessary – but it might not be necessary.
Up until now, there have most likely been some expenses such as for business licenses. For more funding, 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 more promotional materials (such as a $6 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.
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.
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 don't already have one. 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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