Starting a Home-Based Food Production Business: Making Your Culinary Hobby Your Job
by Caron_Beesley, Community Moderator
- Created: July 28, 2009, 8:06 am
- Updated: December 5, 2011, 11:16 am
If it is your passion to reap the rewards of your culinary skills by starting an at-home catering or food business, you can find yourself at the center of a very rewarding form of business ownership.
In addition to providing the flexibility of a work-from-home business model, it can also offer a low risk entry into the competitive and ever-popular restaurant and food service business industry. And, it will allow you to learn the ropes at your own pace, in the familiar surroundings of your own kitchen! Take Martha Stewart, for example: She famously entered the food service business with a basement-based catering company in 1976. From there she quickly branched out and opened a gourmet food store, before entering the media industry and becoming one of the most successful lifestyle brands in the U.S.
Of course, before you start a home-based food business you will need to understand the rules and regulations that govern the production of food for public consumption in an at-home environment. For example do you need a separate kitchen? What about product labeling? And so on.
You'll also need to pay attention to the basic legal and regulatory requirements that all small business start-ups have to address (registering your business, getting a tax ID, e-commerce, etc.). And lastly, do you need financing for your venture?
All this can seem overwhelming, so here are five steps that you can follow that will help comply with the rules and regulations that govern home-based catering or food production businesses:
1. Ensure that You and Your Home Are Properly Equipped for the Business of Food Production
While this isn't necessarily your first step as a home-based food business owner, it is something you will need to consider before you kick-off your new venture.
If you already know what product(s) you intend to produce, ask yourself if you have the right equipment with which to adequately prepare, cook, store and transport your product. Will you need to invest in a separate kitchen or additional equipment to scale to your business needs (many states forbid the use of residential kitchens for commercial food production)? How do you intend to support the ebb and flow of production? Are you willing to hire employees? And, once you share control of food production, how will you ensure consistent quality standards?
Some local governments also restrict at-home commercial food production, so be sure to check out local zoning laws and contact your local Public Health Department.
2. Finance your Home-Based Food Business
While starting a home-based food business can be low risk, you may need to consider available financing options to help cover your start-up equipment or other asset costs. The government's Small Business Administration (SBA) offers a variety of loan programs - it won't lend you the money, but the government does provide a guaranty to banks and lenders for money lent to small businesses. A great option is the SBA's Microloan program, which guarantees loans up to $35,000 but typically averages $13,000. Find other loans using the government's Loans and Grants Search Tool.
3. Register and License Your Home-Based Business
Once you are ready to start your business venture, you will need to take the appropriate steps to 'register' your business with your state and county government; obtain appropriate food service and general business permits; as well as register with the IRS. The government (through SBA.gov) provides a lot of guidance on making sure your new business is operating legally; check out this guide on Steps to Registering a Business.
4. Understand the Regulations that Govern Food Production
Aside from ensuring that you can produce food for commercial purposes from your home, you will also need to understand and comply with a variety of laws that govern food preparation, food safety, product packaging and labeling, etc. At the local level, your county's Public Health Department is responsible for regulating commercial food production activities, and regulations vary from jurisdiction to jurisdiction.
If you produce a food product that is shipped across state boundaries then the FDA and Department of Agriculture both provide compliance guidelines. For an overview of federal regulations that affect this industry, check out the resources on Business.gov's Restaurant and Food Service Business Guide or visit www.foodsafety.gov.
5. Marketing Your Food Product or Services Online
If you intend to accept orders or even just advertise your food service business online via a Web site, there are a few government laws that you'll need to follow with regard to e-commerce, sales tax, truth in advertising, data privacy, and so on. Find out more at Business.gov's Online Business Compliance Guide.
So these are five basic steps you need to consider before embarking on a home-based commercial food production or catering business. Since much of the regulation is at the state level it's worth talking to a small business expert in your community to get practical advice. The SBA has local offices across the country; Small Business Development Centers and SCORE can also help you get started.
- *Food Entrepreneur Resources from Penn State University includes tips and guides to help you step back and understand some of the general business ins and outs of operating an at-home or small food production business.
- Home-Based Business Guide provides resources that will help you learn more about working out of your house, starting a home-based business, and managing your business within the law.
- Before You Start Your Home-Based Business: Do Some Due Diligence
- Doing Business in Your Town: Navigating the State and Local Government Maze
- *Women Business Owners - Finding the Right Loans, Grants and Financing
*Note - Hyperlink directs reader to non-government Web site.
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