The number of home-based food-producing businesses continues to grow in America. This is primarily fueled by tough economic times and the public’s growing demand for organic, homemade, non-industrial foods such as jellies, baked goods, salsa, sauces, baby foods, and many more. To start a food-producing business there are a few extra hoops to jump through. If you are passionate about what you are doing, it can be very rewarding; however the truth is over 90% of entrepreneurs that start this type of business fail! This article explains why.
Basic Steps to Start a Home-Based Food Producing Business how to sell your business
1) Create your vision. What niche are you going to market in? What recipes do you think will sell and be profitable? How are they unique in the marketplace? Keep in mind, the cost of your ingredients, effort, and packaging. How long does it take you to create the product from start to shipping? How much do you need to make for that time?
2) Determine where you can get a regular supply of all the ingredients you need. Of course, you want to find the highest quality ingredients possible for the lowest price. I should mention a common pitfall is to be too optimistic with sales and purchase bulk products from the start. Many would-be entrepreneurs go out of business because of miscalculations of this type. Growing some of your ingredients is sometimes an option, or cutting an ongoing deal with a supplier.
3) Develop and purchase your packaging. Usually this includes packaging supplies, bags, jars, labeling items, and shipping materials such as boxes etc.
4) Make sure you have any necessary equipment for making regular needed quantities of your product. Much like buying in bulk, my advice is to be as frugal as possible until you see what your cash flow is going to look like.
5) It’s important to note that you will not be able to legally use your kitchen to prepare food for personal use. This basically means you’re going to have to tell the powers that be that you are not going to prepare your personal meals in the same kitchen as your commercial production. This is a big negative for some folks; however, it can also be a substantial tax write off. Some folks have remodeled their kitchen areas, added doors, a second stove etc to keep things separate.
6) Check with the health department to make sure you can legally produce and sell the items from your home. Check with Federal, state, and local authorities. Every state has a state health department that you will likely need to get a license from. It is also important to check with your city office. Some city zones might not allow a home based business. If that is the case you can usually apply for an exception. Your city will likely require you to get a permit. Most folks do not market under their full real name so you will need an assumed name certificate (DBA). Many businesses will require a food handling permit of some kind. If you are going to employ anyone you will likely need an employer identification number. All of these can be obtained from the state and local authorities.