Starting a food business is a monumental endeavor for any business owner. For home cooks, the dream of seeing your products on store shelves can seem almost impossible. But there is a way for even the smallest businesses to dip into the food market without making a huge investment: cottage home businesses.
Here?s a quick look at what goes into starting a home food business.
Step 1: Cottage Laws
One of the most important things to do before starting your home food business is to find out what cottage food laws your state has in place.
What exactly are cottage food laws? They?re state-level laws that allow small-time manufacturers to produce low-risk foods for sale using within their home. Low-risk foods carry very little likelihood of causing food-based illnesses and include some baked goods, candy, jams and jellies (foods that do not require refrigeration).
To find out the specific laws for your state, check out Forrager.
Step 2: Know Your Competition
Once you know what restrictions you?re dealing with the next step is to decide on what you want to sell. Chances are if you?re interested in starting a business you already have a product in mind. But if your goal is to sell from a website or eventually expand your business to sell into stores, you?ll need to make sure that your idea is viable.
The easiest way to do that is to check out the competition. Are there any other brands selling something similar? Is there a big enough demand for your type of product? What could set your item apart from anything else on the market?
Knowing how your product could fit into the current food landscape will go a long way to ensuring your business?s success.
For a better idea of how to fill a gap in the market with your product check out this article.
Step 3: Business License
Cottage laws aren?t the only legal hurdles you?ll have to face when starting a small business. Depending on where you live (both state and city/town) you may be required to have a license to operate out of your home.
The good thing about business licenses is that they?re easy to obtain and don?t require a huge fee to get. Plus they?ll help you avoid any penalties or legal hassles that occur if the government finds out you?re operating without one.
The US Small Business Administration is the best place to start to find out more.
And don?t forget! If you are ever unsure about the legal side of things, look locally for business owners or legal experts who can help you make sure you?re operating on the right side of the law.
Step 4: Choose a Name
According to Inc., your business name is as important as what your business does. Not only does it help to dictate how the public perceives you, but it also has a critical impact on your marketing, branding, and internet presence.
Here are some essential tips on what to think about when picking your name:
? Choose something unique
?Make sure it?s easy to remember
?Shorter is better
?Avoid any crazy spellings
?Make sure the name is related to your business
And remember, it usually takes some time to think up the perfect name so don?t stress out! Instead, keep working on other areas of your business like perfecting your recipes or researching your local business requirements while you think.
Step 5: Branding
Once you?ve settled on a name, it?s time to tie everything together with branding. To present a professional image for your business, it?s a good idea to make sure that all of your elements (logo, website, packaging, etc.) are tied together cohesively.
An easy way to get a professional look is to use a designer to create your logo. Websites like Fiverr and Etsy are great places to get started when looking for reasonably priced graphic designers. Keep in mind though that the more customized your branding/logo is, the more it will cost.
And don?t worry about committing to a more reasonably priced but generic logo and branding design early on ? you can always rebrand later!
Step 6: Go legit
Starting a business is a big undertaking, even if you?re running it out of your home. Here are some other things you?ll need to consider:
Form an LLC or sole proprietorship to protect yourself legally. Here?s a great article on the difference between the two.
Register your business with the IRS (and get your tax number).
Open a business bank account to keep business funds separate (and make everything easier come tax time!)
Starting a home food business is a little more complicated than manufacturing your product and selling it online! But for individuals who are interested in making the transition into the world of food, it?s a great way to familiarize yourself with the industry and find out if your product can potentially be a success.