Do enjoy cooking or baking? Perhaps the apple pie recipe your Grandmother handed down gets rave reviews every time you make it? Maybe your friends have suggested you consider selling your tasty delights and the idea intrigues you. Before long you start envisioning yourself as the next Mrs. Fields. But before you get too involved, it’s not as easy as whipping together some flour, sugar, butter and eggs. If you don’t do your homework, you may end up in hot water.
First, just like with any small business you need to take time to plan for the actual business and determine to whom and how you’re going to sell your goodies. Family and friends can only buy so much. Do you plan to sell by word of mouth? Will you set up shop on the Internet? If you choose to sell though retail stores you may find it difficult and sometimes costly to get shelf space.
Then, you need to know how much it is actually going to cost you to manufacture the product. You must consider not only the ingredients and your time, but also delivery costs, packaging and any special equipment or storage you may need. Oh and don’t forget to calculate returns and spoilage into the equation.
Armed with this information you can come up with a price for your product. Can you charge enough to make it a profitable venture? Take a look at your competition. What is their pricing structure? Can you compete?
Finally, ask yourself the most important question of all and that is: “Will my love of making Grandma’s apple pies sour when I turn it into a business?”
Once you’ve made the decision to move forward with your food-related business then there are more technicalities to consider. First, check the zoning laws. Can you have a home-based business where you live – particularly something in the food business? Most likely there will be licensing requirements too. You’ll need to check with your states’ agency dealing with food and agriculture to determine their requirements. Some states require you to have a separate kitchen for food preparation. That alone may make your new venture beyond your reach but it is better to know in the becoming than to start your business and get shut down along the way.
Don’t forget about food safety and sanitation laws. Most likely you’ll be subject to inspection. Check out the Food and Drug Administration’s web site for information on food safety.
Check your home-owners insurance policy to see if it covers home-based businesses. Many don’t. Plus, you’ll probably need to consider product liability insurance and business interruption insurance.
Standardization is another important ingredient for a food business. Can your recipes be standardized to produce consistent results? I make a scrumptious carrot cake with a family recipe that has been passed down for years. However, every time I make the cake it is just a little different. Customers expect consistency. Plus, if you employ others to assist you, you need to ensure they know precise measurements.
Shelf life is a consideration if you plan to sell through retail stores. Some companies require lengthy shelf lives and without the proper preservatives your products may not fit the bill. Packaging too needs to be considered. Food safety standards require foods to be securely wrapped and packaged, but you also want your products to be packaged in such a way as to entice the consumer.
The good news is there are many happy endings for neophyte food businesses that grow into significant brands. Just make sure you get the help you need and ask lots of questions along the way.