What You Need to Start a Home-Based Food Business
Starting a home-based food business appeals to many business owners.
If you’re simply a home cook, getting your food items on supermarket shelves may seem like a dream that’s far from reality.
However, you can begin a cottage home business and enter the food market without all the investments that go into setting up a restaurant.
Whether you re-invent recipes or have a rich heritage of family recipes you can easily twist to meet market needs, you can easily begin a home-based food business.
You may even focus on a niche such as preparing meals based on your unique recipes for people with dietary restrictions.
You can turn your hobby into a career and earn a living if you possess great baking or cooking skills. However, just like any other business, your home-based food business would need proper planning and research to take off.
Many food entrepreneurs began their food empires at home in their kitchens. Some include:
- Paul Newman
- Debbie Fields aka Mrs. Fields
- Martha Stewart
Ranging from marketing strategies to kitchen inspection to permits, you have to get a number of things done before making your first sale.
If you lack professional experience and uncertain of where to start, here’re a few things to consider:
7 Steps to Starting a Cottage Food Business
- Look into local cottage laws
Find out about local cottage laws in your state before beginning your food business.
Cottage food laws are regulations at the state level that enable small-time producers to make low-risk foods from home for sale.
Low-risk foods are less likely to cause illnesses related to foods. They don’t need refrigeration and include:
- Baked goods
- Learn about your local competition
Determine what to sell after going through relevant local laws on existing restrictions. Choose a viable idea you can easily sell online and eventually into stores.
Check local competition to help you choose what to sell. Find out if there’s high demand for your product and if other brands are already retailing a similar food item.
Differentiate your product to stand out from your competition and fill a gap in the market. Choosing a food item in high demand is key to the success of your business.
- Buy the kitchen equipment you don’t have
You also need to source for kitchen equipment and supplies you’ll need to operate your business. Although they depend on the specific food items you intend to prepare, they may include:
- Baking dishes
- Food labels
- Smokers and stoves
- Serving trays for public events
- Measuring items
- Packaging materials for store-destined food items
Keep your personal food items separate from those meant for your cottage business. When choosing kitchen equipment, opt for those that have been tried and tested to get value for your money.
For instance, you can check out user and product reviews when buying smokers to buy one with many good reviews. This ensures that you buy a product bound to support long-term use.
- Get a business license
Apart from cottage laws, you’ll likely need a business license to operate your business. However, this depends on your town or city and specific state.
Business licenses are easy and cost-effective to obtain. They protect businesses from legal hassles and potential penalties the government may impose if you lack one.
Check out the US Small Business Administration to get started. You can also talk to local small business owners or consult a legal expert for the same. It’s good for your business to be on the safe side of local laws.
- Give your business a name
Choose a name relevant for your business. It’s as relevant as what you intend to do in the business. According to Inc., it determines your business perception in the eyes of potential clients and can affect your branding, marketing and online presence.
A good business name has the following characteristics:
- Short or brief
- Lacks complex or difficult spellings
- Easy to remember
- Related and relevant to your business
Take time to come up with the right name for your business.
Don’t rush this process.
Leave the stress out to obtain good results.
You can even continue working on other aspects of starting your food business as you brainstorm on the best business name.
For instance, you can look into local requirements that businesses should meet and perfect your food product recipes.
- Brand your business to give it a professional image
With a good business name already chosen, tie your website, logo, packaging and other elements of your startup together to create a professional image.
Cohesively tying all aspects of your business together allows potential customers to identify with your business. They can easily spot it when they go shopping for similar products.
Hire a graphical designer on Etsy, Fiverr or Upwork to work on your business branding at a reasonable cost. However, custom services usually cost more. Consider a generic branding design or logo for starters because you can easily change it later on.
- Legitimize your business
Legalize your business through sole proprietorship or LLC to legally safeguard yourself and the business. Learn about the two forms of business to determine which one is more suitable for your food business.
Register your business for tax purposes with the IRS (you’ll be given a tax number for your business).
Open a business bank account to ease tax payments and management of your business funds.
Unlike an online-based business, beginning a food business based at home is more sophisticated.
However, if you have big plans for your business, it gives you a platform to initiate your idea and run your business at low cost before you can transition into the food market. You’ll test your food product, get acquainted with the industry and eventually determine if your idea is viable without spending so much on it.