Starting a Home-Based Food Production Business: Making Your Culinary Hobby Your Job

 

If it is your passion to reap the rewards of your culinary skills by starting an at-home catering or food business, you can find yourself at the center of a very rewarding form of business ownership.

In addition to providing the flexibility of a work-from-home business model, it can also offer a low risk entry into the competitive and ever-popular restaurant and food service business industry. And, it will allow you to learn the ropes at your own pace, in the familiar surroundings of your own kitchen! Take Martha Stewart, for example: She famously entered the food service business with a basement-based catering company in 1976. From there she quickly branched out and opened a gourmet food store, before entering the media industry and becoming one of the most successful lifestyle brands in the U.S.

Of course, before you start a home-based food business you will need to understand the rules and regulations that govern the production of food for public consumption in an at-home environment. For example do you need a separate kitchen? What about product labeling? And so on.

You'll also need to pay attention to the basic legal and regulatory requirements that all small business start-ups have to address (registering your business, getting a tax ID, e-commerce, etc.). And lastly, do you need financing for your venture?

All this can seem overwhelming, so here are five steps that you can follow that will help comply with the rules and regulations that govern home-based catering or food production businesses:

 

1. Ensure that You and Your Home Are Properly Equipped for the Business of Food Production

While this isn't necessarily your first step as a home-based food business owner, it is something you will need to consider before you kick-off your new venture.

If you already know what product(s) you intend to produce, ask yourself if you have the right equipment with which to adequately prepare, cook, store and transport your product. Will you need to invest in a separate kitchen or additional equipment to scale to your business needs (many states forbid the use of residential kitchens for commercial food production)? How do you intend to support the ebb and flow of production? Are you willing to hire employees? And, once you share control of food production, how will you ensure consistent quality standards?

Some local governments also restrict at-home commercial food production, so be sure to check out local zoning laws and contact your local Public Health Department.

 

2. Finance your Home-Based Food Business

While starting a home-based food business can be low risk, you may need to consider available financing options to help cover your start-up equipment or other asset costs. The government's Small Business Administration (SBA) offers a variety of loan programs - it won't lend you the money, but the government does provide a guaranty to banks and lenders for money lent to small businesses. A great option is the SBA's Microloan program, which guarantees loans up to $35,000 but typically averages $13,000. Find other loans using the government's Loans and Grants Search Tool.

 

3. Register and License Your Home-Based Business

Once you are ready to start your business venture, you will need to take the appropriate steps to 'register' your business with your state and county government; obtain appropriate food service and general business permits; as well as register with the IRS. The government (through SBA.gov) provides a lot of guidance on making sure your new business is operating legally; check out this guide on Steps to Registering a Business.

 

4. Understand the Regulations that Govern Food Production

Aside from ensuring that you can produce food for commercial purposes from your home, you will also need to understand and comply with a variety of laws that govern food preparation, food safety, product packaging and labeling, etc. At the local level, your county's Public Health Department is responsible for regulating commercial food production activities, and regulations vary from jurisdiction to jurisdiction.

If you produce a food product that is shipped across state boundaries then the FDA and Department of Agriculture both provide compliance guidelines. For an overview of federal regulations that affect this industry, check out the resources on Business.gov's Restaurant and Food Service Business Guide or visit www.foodsafety.gov.

 

5. Marketing Your Food Product or Services Online

If you intend to accept orders or even just advertise your food service business online via a Web site, there are a few government laws that you'll need to follow with regard to e-commerce, sales tax, truth in advertising, data privacy, and so on. Find out more at Business.gov's Online Business Compliance Guide.

So these are five basic steps you need to consider before embarking on a home-based commercial food production or catering business. Since much of the regulation is at the state level it's worth talking to a small business expert in your community to get practical advice. The SBA has local offices across the country; Small Business Development Centers and SCORE (link is external) can also help you get started.

 

http://www.sba.gov/blogs/starting-home-based-food-production-business-making-your-culinary-hobby-your-job

An entrepreneur's story of setting up a food business from home

Running a business from home has its challenges, but it's convenient, cheap and a good option for a fledgling company

 

          

Depending on your business, the only space you need might need is somewhere to put your laptop. Photograph: Royalty-Free/CORBIS

Where you base yourself is a vital decision for all small business owners. Whether you go straight into office or shop premises, or decide to work from home, there are pros and cons for each option.

I established The Little Smoked Food Company Ltd in 2012, bringing Moorish Smoked Hummus to market in Waitrose and other retailers. I work from home in the Midlands.

With a fledgling company, I wouldn't deny that a key reason to work from home is financial necessity; but there are other great advantages, like flexibility.

The most obvious plus point is lack of overheads, such as rent. We don't need to hold stock, as we work with a manufacturer, so technically I only need to find space for my laptop, plus a little extra cooking equipment for new product development purposes. But this does mean there is little separation between my work and home environment. With young children and the accompanying constant noise in the house, that can create its own problems.

It's possible to offset some domestic costs against the business, such as a proportion of the mortgage and utility bills. I also avoid supplementary costs that come with 'normal' work - I have no commuting expenses, avoid daily visits to the coffee shop and pre-packaged lunches. It's cheaper to raid the fridge - but the ability to do so, all day long, can be a disadvantage!

Aside from cost, gaining extra spare time is the other major plus. I don't waste it commuting and I can use office dead time, such as being on hold, to multitask and get chores done or put the dinner on. Flexibility is part of this too: I can get things done in the middle of the night if I have to, and my working day is less disrupted by the school run or having to get home for things like deliveries.

My business partner is also a mum and working as we do gives us some control to fit things around family life. We often have complicated discussions in the evening. You have to be disciplined about this though, as it can run the other way. It's hard to switch off if the notebook beside the bed seeps work thoughts into your mind, just as you're trying to sleep. And callers might not understand why you can't talk right now, in a critical child-tantrum moment.

I don't spend my whole week at home though, since I'm frequently on the road visiting retailers, suppliers and distributors. But I can see how in a different business it could be boring or even lonely. That makes it easy to find distractions, or sometimes they find you: my kids find it very tempting to come and see me (constantly) when they come home from school, if they know I'm in the house.

If you're worried about giving the right impression, sometimes doing business at home can feel too personal. It's not always appropriate to invite business contacts into a home office and you wouldn't want to give out your address in the public domain. We also try to demonstrate that although we're a young, small, artisan producer, it's not a 'cottage industry': retailers need to know we are a serious business that is reliable, consistent and scalable.

And finally, when taking on staff, it can be unappealing not to be able to offer work space, except for a home study. Thinking about my team though, if everyone had to all be in the same office or even the same town, I simply wouldn't be able to work with the great bunch that I do.

Here are my tips for setting up a small business from home:

• If at all possible, set aside dedicated working space, whether it's in shed, office or spare bedroom, where important papers won't get lost. Ideally where you can physically shut the door on work after the day's hard slog

• Consider a second phone line. Noise-cancelling telephone headsets can also be a great help.

• There are many providers of meeting rooms by the hour; scout around so you have it in mind before you're asked for an appointment.

• You may also need to set up an internet-based virtual conferencing account. Although you can do this for free, you might choose to pay for better functionality, reliability and something that looks more professional.

• Make clear to other members of the household what your hours are and when work really has to mean work.

• Add daily tasks to your diary in set blocks of time with specific deadlines, with breaks built in - remember, nobody is there to remind you to take a lunch hour.

• My colleague swears by always "dressing for work", as it helps focus. But pyjama working might be your big working from home plus point!

 

http://www.theguardian.com/small-business-network/2013/may/27/home-based-food-business-starting-up

5 Steps To Starting A New Specialty Food Brand

How A Specialty Brand Usually Starts Up

Many young food manufacturing brands start with the same story-- perhaps yours is the same. It typically starts with a home or restaurant chef, who we will call Mr. Goodfooder. Here is his story of how his food (and his company) came to be.

Mr. Goodfooder first made his signature dressing for his family, and then for a few friends. After a few weeks, his food became renowned in his community. One day, someone said to Mr. Goodfooder in passing, “You should sell this! It is so good, it would really sell!”

And so, a spark was ignited in his entrepreneurial spirit, and Mr. Goodfooder began the journey of starting his own line of dressings. He’s decided that with his quality ingredients, he will sell to Whole Foods and a number of other natural and mainstream grocery stores. And he knows that his food will be a hit-- because it’s that good. And lucky Mr. Goodfooder… he is right!

But, for Mr. Goodfooder to start up his own brand, there’s still a number of things he’s going to have to learn. And if you’re looking to create your own line of products, you’ll need to learn the same things.

5 Steps To Starting Your New Specialty Food Brand

1. Learn How The Natural / Specialty Food Industry Works (In General)

This step is KEY, so listen up! If you’ve never been in the food business before, you’re not alone. Many great brands come from founders who used to work in a variety of other industries.

To really get your feet underneath you and make smart business plans for the future, you’ll need to get a firm grasp on how thing work in the specialty food world. The best place to find out answers to all of these questions is to attend the Fancy Food Show put on by the Specialty Food Association, and sign up for the Education Seminars. This is an association that provides guidance to young brands starting out, and will be a strong networking and selling platform for you as you continue to grow. First things first, attend a show and learn as much as you can about your industry. It will absolutely be worth the money.

This is the first step, the foundation, from which you’ll make all of your future business decisions. Through these seminars, you’ll get vital answers to questions like:

• Who will sell your products?
• Who will buy them?
• How will you go to market?
• How do you get a distributor to pick up your products?
• Where will you get your ingredients from?
• Will you manufacture them yourself or use a co-packer?
• How will you market your brand?

You will not be able to successfully move on to the next steps without knowing all of the background information that they can teach you. Even though you can move on to the next steps and just wing it, you will thank yourself later for taking the time to attend and learn everything you can.

2. Decide Who Will Be Making Your Products

Once you’ve attended the Fancy Food Show (and gotten a good dose of inspiration and business answers) you’ll need to begin working on your operations/manufacturing plan. When it comes to actually making your products, there are a number of ways that you can structure your business plan.

You can set up your own manufacturing plant, which you’ll have to scale as you continue to grow. You’ll be responsible for all of the production, sales, marketing, and business admin side of your new company. As you grow, you’ll need to hire employees, move into a larger space, set up a production line and more. This system requires capitol for investment, and will take a substantial amount of your time to actually produce the product (and/or oversee your facility and team).

You can work with a co-packer or co-manufacturer (which stands for contract packer or contact manufacturer). Their job will be to assemble your product exactly as you specify; using the packaging you choose, your design, your labels and your ingredients. They will also deliver the loads of finished products to the locations you specify. Sometimes co-packers are responsible for ordering raw ingredients, and sometimes you will be. Every co-packer will have their own minimum requirements to do a production run for you, and they will expect that you will continue to increase your sales.

The advantage to this co-packer system is that it takes production off of your plate, and utilizes their full scale production line that’s already been set up. This keeps your operations working at max-efficiency and allows you to spend your time actually selling the product and growing the brand.

A good co-packer can be hard to find though, and relationships take a long time to build. We suggest looking through the following listings for co-packers:

• Specialty Food Resource | Co-Packer Listing
• BBF Direct | Working With Co-Packers Article

If you work in a particular industry, you may contact a complimentary company to yours (but don’t try a direct competitor) and ask if they would be willing to work out a co-packing arrangement. Even if they don’t do this for their primary business, they might be willing to consider your proposal.

3. Create Your Brand

You’ll need a brand, a product name and a logo. You’ll at least want to create something basic, even as you start at the beginning stages of your business.

If this sort of work isn’t your forte, think about hiring a branding company before you take your final product to print. The labels on your product will have a large impact on your overall sales-- though remember, labels aren't everything.

Remember that in the long run, you’ll also need a website and line cards for each of your particular products. These line cards will give information to buyers about a particular product (or line of products), and will include photos, pricing information, nutrition, case layouts and sizes and more. You can work on these larger marketing pieces over time.

4. Get Your Business Details In Line

Think about everything you’ll need to answer, to be able to sell your products to grocery stores. Questions from buyers may be about your company or they may be about the logistics of the products. Putting answers together can be a complex process-- they’ll require making some larger business decisions and getting all of the pieces of the puzzle together for when you officially start making sales.

• What’s your retail and distributor price? To be able to answer that you’ll need to first be able to answer: what are your margins, your cost of ingredients and the co-packing or manufacturing costs?
• What distributor carries your products?
• What’s the minimum order?
• What makes your product different than others like it?
• What kind of customer is interested in your product?
• Why would our customers want to buy it?
• Do you have samples ready for buyers to taste?

5. Do Sales Presentations and Demos

To really complete the start-up process you’ll need to sell something. Even if you just produce a few sample runs of your product and you do some demos to buyers, this is a good way to start the process.

You’ll need to set up meetings with buyers as they’re analyzing your particular category once every year or two. It will require calls and presentations, as well as providing samples for them to try your products.

Once one grocery chain picks up your products, that will prompt a distributor to get your item set up in their system. From there, selling will get easier because you’ll already have one distribution channel in place. This means that companies who work with that same distributor can simply add your products to their current orders.

Unfortunately, These Steps Don’t Always Happen In Order

The process of starting your new specialty food company will not always follow these steps as outlined. This progression is not as clear and linear as it may appear on paper. It can be complex, with some steps taking months and then sometimes all of the pieces come into line at once and you’ll need to make all of your decisions immediately!

Starting your new brand will always be challenging. Your business decisions will not always be straight forward or outlined. But will it be worth it? I think you already know the answer to that.

http://www.centrafoods.com/blog/5-steps-to-starting-a-new-specialty-food-brand?utm_campaign=Small%20Business%20Advice&utm_content=5804077&utm_medium=social&utm_source=twitter