Starting a home-based food business has highs and lows – read on to find out if it’s the right decision for you.
**I know many of you aren’t able to start a food business out of your home. However, for those who can, it’s a great time to be your own boss**
Starting your home-based food business can be one of the most daunting times in your life. I’ve written about it before here.
If you’ve never started a business before, there’s a lot on your plate: coming up with a name, business licensing, finding time to produce your product, selling your products, doing the accounting – the list goes on.
Don’t let the laundry list of to-do’s scare you. Here’s 17 awesome reasons to get you excited about your venture.
Pros: 11 reasons to start a home-based food business
1. Low overhead costs
When you bake and produce at home, you have less costs: no rent, a slight rise in utilities, and no employees to manage. That saves you a ton of money when you’re up and running.
2. The kitchen is always open
Struggling to find kitchen time locally? That’s not a problem when you produce in your home. Whether you like to bake scones at 3am or do large BBQ sauce runs at 8:30pm, the choice is yours. Your home kitchen is always open.
3. You have no commute
A lot of food producers commute over 90 minutes to their shared-use kitchen. Not only do they spend a lot of money on gas, it’s hard to drive and grow your food business at the same time. Lucky for you, your commute from your bed to the mixer is probably 60 seconds (and you can pick up a fresh-baked scone along the way).
4. Plenty of storage
Unless you live in a studio or one-bedroom apartment, chances are you’ve got some extra space to store everything. In many commercial kitchens, pallet storage costs a lot of money. Thankfully, you’ve got a spare bedroom to store cases upon cases of your finished product. And your basement can become storage for your ingredients.
5. You know your way around your kitchen
Large commercial kitchens are daunting. Almost everything is stainless steel, you’re not familiar with the equipment, and you need to go through orientation just to learn the ropes. When you work in your own kitchen, you know where everything is. This means you make more product faster and cut down on your labor costs.
6. Get your kids involved
If you’re a stay-at-home Mom, you can get your little helpers involved in your food business. Maybe they can help get the sugar or drop cookies onto a baking sheet. Getting your kids’ hands dirty with cooking and baking is a great way to plant the foodie seed early and watch them develop into culinary super-heroes!
7. Have friends over for taste-testing parties
When you’re known as the cook or baker, friends ever-so-casually invite themselves over. Now, you have an opportunity to have them test your food products. (Of course, many of your taste-testers shouldn’t be friends and family).
8. Less legal red tape
Commercial kitchens have to go through a laundry lists of certifications – especially if they have to be certified gluten-free, kosher, or organic. (Plus, the certifications costs thousands of dollars). Producing in your home likely comes with a small license fee and a revenue cap you have to stay below. Call your local health department to find out more.
9. Get closer to your family
Starting your business is a great way to bring the whole family together. As I stated in reason 6, you’ve already got your kids involved. Take family time to sell your wares at farmer’s markets, craft fairs, and local retailers. Give each family member a job. That way you’ve truly got a family business!
10. Make what you love
I’m sure you’ve read a lot about doing what you love, but what about making what you love? For food business owners, loving what you’re making is an ingredient for success. The second you hate doing what you’re doing, it’s time to find another home-based business.
11. Opportunity to test the waters
Launch your food business – just do it. Today sounds good. The sum of these benefits is that there’s no better time to get started than right now. See what happens because you never know. Start selling your hot sauce. Bake your first batch of brownies. Get out there and build an amazing home-based food business.
There you have it. 11 reasons to fire up your oven, get the mixer out and start your company.
But it’s not all chocolate chip cookies and carrot cake. Let’s look at some of the reasons not to start your own business.
Cons: 5 reasons not to start a home-based food business
1. It’s a strain on your relationships
Just like it can help bring the family closer, a home-based food business can also tear the family apart. When your kitchen is full of 50# bags of oats, your spare bedroom has a gazillion plastic containers, and no longer have an air-hockey table in the basement, it can cause friction between your kids, spouse, and you. Make sure to set boundaries as to how your business impacts your family-life. Remember, work-life balance is important.
2. You think you make a great product
A lot of home-based chefs and food producers start companies because they want to. Unfortunately, they haven’t done their test marketing. People might not buy your product at the price you’re asking. This means you’ve got to do your research and make sure you’re setup for success.
3. You may not have the space
I know plenty of entrepreneurs who rent storage lockers to store finished product because they don’t have room in their homes. Plan out where everything is going to go and make sure you have the space. If not, you might want to scale back your empire.
4. Producing a recipe in larger quantities
Making one banana cream pie is a lot different than making twelve of them. Scaling your recipes can be a challenge and you might not get it right the first time (it’s happened to me plenty of times). Things like taste, texture, and appearance start to change when you produce a lot of product.
5. Time and energy demand
Let’s face it – it takes a lot of energy to keep pushing through the ups and downs of owning a food business. Do you have the time to devote to starting your own food business? Remember, you don’t just make the product – you package it, label it, sell it, do the accounting, clean the kitchen, etc. It’s a lot of work. Are you ready?
Starting a home-based food business can be a launching pad to something bigger. My first two food companies started in my parent’s house. There were ups and downs, of course, but it was a fun experience.
What would you add? Why do you enjoy running a home-based food business?
At the top of this post, we talked about the criteria for starting your food business – what’s in your heart.
Your criteria is different. My heart is not your heart. You’re motivated by different forces. Before you continue, make sure you’re heart is in it.
Remember, just because your parents, friends, and family think your spaghetti sauce is awesome doesn’t mean you should go into business.
You have to want to go into business.
You can’t stumble into business. It’s a choice. In fact, it’s your choice. And often times, you’ll be by yourself on this journey. Yes, you’ll have the support of family and friends, but ultimately you’re the one doing 99% of the work.
5 Things You Probably Didn’t Think About Before Saying YES to Your Food Business
1. You need more cash than you think
It’s possible to start your food business with just a couple hundred bucks, but as you produce more product, your cash demands increase. A couple hundred dollars turns into thousands in the blink of an eye. You’re going to learn more about startup costs in a later lesson.
2. You need to dedicate your life to the business – including weekends
For seven months out of year, you’re likely to never take a full weekend off. Why? Because store demos, farmer’s markets and festivals happen on the weekends. It’s a time when your customers are willing and able to purchase from you. This means you should be available!
3. You need to wear many hats
Chief cook and bottle washer isn’t just a funny saying. Running your own food business means you do everything: manufacturing, accounting, clean-up, distribution, packaging, sales calls, hiring, firing, etc. Not until you get a bit bigger are you able to off-responsibility to other vendors.
4. You need to make TONS of decisions
Not a big fan of making decisions? You better think about a new career path then. Owning a business is all about making decision. Just like #3, you’ve got to decide everything. While it’s good to have a mentor or someone to bounce ideas off of, you have the final say. Get used to picking ‘yes’ or ‘no’.
5. You need to learn business – not just food production
What are you costs? What’s your pricing model? How much do you make on a unit? What’s your break even? What about your income statement? You need to know all of this – and don’t just outsource it to an accountant. Get a grasp on your numbers.
Eye-opening, isn’t it?
It should be inspiring, too. Starting a small food business is no easy feat. It takes several tons of dedication, perseverance, and planning. Simply popping up shop isn’t recommended. I would imagine crashing and burning in a couple months isn’t on your to-do list.
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