So, you’ve decided to take your home chef skills to the next level by starting a food business from home. Congratulations! It is always a big step and a leap of faith when you decided to start a business with limited resources, and you should be proud of your determination to take the chance.
Now it’s crucial that you learn everything you possibly can about the food industry and about running a business from home. Education in this regard is especially critical for home-based food businesses, as you’ll have to ensure you’re abiding by food safety regulations and other codes in addition to coming up with a good business plan.
Let’s take a look at what you need to know when you are starting a food business from home.
A Step-by-Step Guide to Start a Food Business From Home
Starting a food business from home can be fun and lucrative, but it can also be quite challenging. One way to lessen those challenges is to follow the steps in this guide so you can get your business off the ground more smoothly.
1. Pick a niche
The most successful businesses find a particular section of the industry and carve out a piece of the pie, so to speak, for themselves. The food industry is quite broad, covering a range of specialties.
What is the one specialty that you will focus on that will make you successful? Are you going to enter the catering business? Do you bake fantastic cookies that’ll you ship around the country? Do you want to focus on vegetarian or vegan foods?
By choosing a niche market you’ll give yourself a chance to separate yourself from others and give your at-home food business a better chance to succeed early on.
2. Research, research, research
Once you’ve decided on your niche — that combination of what you love to do and who will love your products — it’s time to conduct as much research on the market as possible.
The food industry is extremely competitive. What you want to find out is what other businesses, if any, will be your main competition — and, frankly, if the market is already oversaturated with other businesses like the one you’re starting.
For this step, you want to focus on your local market first. Don’t worry about the national market just yet. Even if your product can become the best in your niche over time, you aren’t likely to compete with worldwide conglomerates right from the get-go.
As such, you can conduct this local market research by attending local networking events put on by organizations such as SCORE, the Small Business Development Center and your local Chamber of Commerce. Meet people in business in your area, meet people in your industry, and pick their brains about what’s out there and how they became successful.
3. Prepare your business plan
After you have done your research, you are ready to create a formal business plan. Since you’ll most likely be starting your food business from home by yourself, there’s no need to be extremely formal with it, but you do want to have a clearly written business plan that you can refer to — and adjust — over time.
A business plan is not just a guide for you to refer to overtime, though. It will also serve as the blueprint for your business’ success that you will use as part of your pitch to financial institutions to obtain loans and lines of credit if needed, for example.
The business plan will include things such as your business name, a description of your activities, your plan of action and how you intend to get there. It will also include your market research to back up your claims and how well your business is capitalized from the start — and where that capital came from.
Take a look here to know how to create a business plan for a food truck. You are not there yet, we know, but your home-business plan won’t be much different, and by grasping this information you’ll be ready to take your business to the next level when the time is right.
You can also get free help in creating a business plan from the U.S. Small Business Administration or SCORE.
4. Register your business
You need to register your business, even if it’s a small and simple business from home. Registering a business is simply informing the local governments of the name of your business and where you are operating. This is usually simply to prevent multiple businesses from having the same name in the same state. It also is sometimes required for tax purposes. This is similar to filing for a “doing business as” (DBA) name that lets customers and governments know the name of your business. You can find here all you need to register your home-based food business.
5. Obtain the proper licenses and permits
Food businesses often require a lot of licenses and permits to run, even if you’re running the business from your home. This is because health authorities want to ensure that the food you are preparing is not only safe for consumption but includes the ingredients you say it includes in your packaging.
You’ll need to ensure you are up to snuff with local labeling standards. This includes not only labeling your packages with your business’ name, slogan and contact information but also the ingredients list and caloric information — if you’re required to do so.
Have in mind that misleading labeling or poor food preparation can lead to people getting sick, or worse.
On the other hand, the specific licenses and permits you will need will depend greatly on your niche and your location. First and foremost, you need to make sure that your local zoning laws allow you to run a food business from home. If they do, you’ll need to ensure you are able to meet all food cleanliness requirements, which are set by your state.
Generally speaking, you will need to have a business kitchen that is clearly and completely separated from your everyday personal kitchen. This means not only a separate cooktop, oven and working station, but also separate utensils.
To find out exactly what you need to be compliant, check with your state and local government regulators.
6. Purchase the equipment and supplies you need
Once you know what your local regulators require in terms of setup for your food business from home, you can purchase the necessary equipment to run your business. This may include an entirely new kitchen setup in a separate location.
In addition to the basic equipment, you’ll also need to source the best supplier for the ingredients you’ll need to make your food. You could open an account at a local bulk supplier or restaurant supplier for basic ingredients such as flour, salt, sugar, etc. You may even find a niche supplier for more specific items that are relevant to your business.
7. Market your business
Once you have completed steps one through six, you are finally ready to start making your food. Hooray! It has been a long journey to this point, but it has hopefully paid off well. You are all set up to start producing your product from your food business from home.
But before you start actually cooking and packaging your product, you want to make sure that you have a solid plan in place for how you’re going to promote your product and your business. Marketing and outreach should have been part of your business plan in Step 3. So, make sure you refer back to your business plan to help guide your efforts here.
If you are new to this field, we invite you to learn here the basics on marketing: you’ll soon realize is a key factor to the success of any business, regardless of its size.
After all, how successful can your food business from home be if no one knows about it?
Why a Food Business from Home?
There are many positive reasons for starting a food business from home, and you’ll quickly find these out after you start your business. Working for yourself gives you the flexibility of working the hours you want, on the days you want. It also puts your success completely in your hands, without the need to answer to anyone else.
Working from home in general also provides you with the wonderful benefits of not having to commute to and from work, as well as the opportunity to spend more time with your family on a daily basis.
Starting a food business from home also gives entrepreneurs who have limited resources the opportunity to start small and then scale up in the future. This could mean starting a small at-home baker now and eventually opening up your own storefront bakery in the future. The possibilities are truly endless.
If you have made the decision to start your food business from home, congratulations! You are in for a fun, challenging and rewarding ride. Follow the steps above, and you’ll be better prepared to run a successful business.
Check out other fun and profitable ideas to start a home business.