The Industry Word

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Are you artful in the kitchen?  Have your friends praised your delectable tasty treats?  Perhaps you’ve been encouraged to turn your culinary skills into a business of your own.   

Before you start dreaming about becoming the next Mrs. Field’s, make sure you have the right recipe for success.  It’s not as simple as whipping together the flour, sugar, butter and eggs.  If you don’t do your homework, you can end up in hot water.  

First, just as with any business start-up you must carefully plan your business strategy.  Who are your customers going to be?  After you sell to all your family and friends, how are you going to define and reach your market?  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 determine how much it is actually going to cost you to manufacture the food product.  Include in your cost structure 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 establish a price point 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:  “Will my love of cooking turn in to an unpleasant chore once 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.  Business.gov has helpful information on zoning basics.  Can you have a home-based business where you live – particularly something in the food business?  Most likely there will be licensing requirements too.  Check with your state’s agency that regulates food and agriculture to determine their requirements.  Again, Business.gov is a good place to start.  Some states require a separate kitchen for food preparation.  That alone may make your new venture beyond your reach, but it is better to know in the beginning 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. 

 Insurance is another important consideration.  Check your home-owners policy to see if it covers home-based businesses.  Many don’t.  Product liability and business interruption insurance may also be smart to include for your business protection. 

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, when you add employees, you need to know the recipe can be easily followed by someone else.   

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 is another important consideration.  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.    

Additional Resources: 

Starting a Home-Based Food Production Business: Making Your Culinary Hobby Your Job.

   

Message Edited by suek on 01-14-2010 01:28 PM

Message Edited by suek on 01-14-2010 01:30 PM