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How to Start a Small Food Business. Is It a Good Time?

12 min read

Do you often get compliments about your secret family recipe? Or perhaps you’re famous for making the best cookies or homemade jam ever? If you answered yes to these questions, then you’ve come to the right place! Whatever it is that made you consider the idea of starting a small food business, we’re here to help you get started selling your sweet and savory treats. Continue reading as we walk you through the whole process and encourage you to set all fears aside and take the plunge!

Is It a Good Time to Start a Food Business?

According to most experts, the food industry and beverages market reached a value of nearly $5,943.6 billion in 2019 and is expected to grow and reach a value of $7,527.7 billion in 2023. Statistics like this seem to indicate now is a great time to start a food business and enter the market. Besides the expected growth, it also seems like the competition is relatively less compared to previous years. This is mainly due to aspiring entrepreneurs refraining from getting started as they wait for the economy to get back up. However, many see this as an opportunity to get ahead of the curve.

With a market that has successfully thrived in the past and that is expected to grow even more, and less competition to worry about, we don’t see a reason why not to get started.

Is It Legal to Start a Food Business From Home?

The reality is most small business owners start by selling homemade meals or products that are typically made using their own kitchen appliances; most of them lack a professional or certified kitchen. It’s very likely this is also your case, and you might be concerned about the regulations or permits required to get started. Fortunately, most homemade products typically fall within the cottage law, which allows entrepreneurs to sell homemade items or products without a permit or license. Just keep in mind this can vary depending on the country and state you live in and the items you plan to sell.

Cottage food laws

The cottage food laws are meant to allow small producers to use their own home appliances to bake, cook, pickle, dry, or candy certain low-risk foods for sale. Common and approved products that can be sold under Cottage Food Laws are:

Loaves of bread
Biscuits
Cakes & Pastries
Candles
Honey
Jams
Fruit pies
Dried pasta
Candy
Dried fruit

Make sure to determine the category your products fall under and whether or not they need a permit or registration. You can learn more about the FDA Cottage Foods Guidance. In the case that you are required to have a licensed kitchen, you can always look into renting a co-op kitchen… Co-op kitchens are already registered and equipped, minimizing the process and paperwork, and ultimately helping you avoid the need to certify your own.

Once you have everything straight regarding registration and have made sure to follow all the necessary food handling protocols, it’s very unlikely you’d come across any regulatory or legal problems.

Develop a Business Plan

After you have a clear idea of the products you’ll be selling and how likely they are to succeed, the next step is the creation of a business plan. A detailed business plan will guide you through the process and help you stay focused as you acquire a solid idea of the goals you wish to achieve and how you plan to execute them. Believe it or not, this could be the foundation of how successful your business is.

A successful business plan should specify factors like:

Product Niche. This is related to establishing your unique portion from a larger market. As you niche down, you’ll be able to find your specific

Yes, you’re in the food industry, but you’d want to niche down and choose a specific area of this market that will come with its unique preferences, interests, demographics, and more. Examples of popular niches in the industry can vary from a wedding appetizers business to an organic jam business. Think about what makes you unique and different.

Target Audience. This is who you are trying to appeal to. It’s impossible to try to sell your product to everyone. This is why having a clear understanding of who your audience is will help you save a lot of time and funds in the long run.

Market Research. This is the process of gathering information about your product market and consumers’ needs and preferences. With the proper market research, you’ll understand more about your specific industry, competitors, and consumers’ expectations of your products.

Food Business Concept. Do you plan to offer your products on a subscription basis or one-time purchases? Do you plan to sell in bulk? Is there a humanitarian purpose behind your business like raising money for a cause? Establishing your business concept makes it easier for you to create a proper marketing plan.

Brand Identity (Logo & Name). Even if you are a small business, and perhaps plan to sell your products as a hobby, you still want to add an identity to them. You can always choose to work with freelance designers and find a reasonable price for you, or opt for something more simple and create one yourself. This will help you set your business as an established and reputable one.

Marketing Strategies. At the end of it all, a successful business plan should be able to establish the different strategies needed to reach your audience. Make sure you understand the communication channels and key messages that work best for your audience and your product.

We highly recommend you don’t skip this step, and make sure to dedicate enough time to put together the best business plan for you and your goals.

Determine Your Budget

Part of getting started requires aspiring entrepreneurs to establish a reasonable budget. The last thing you want is to venture into a new business project without having a clear understanding of how much it will cost you to make it happen.

As you get started, you’ll notice that your budget will vary depending on whether your business is online or not, and whether you plan to offer delivery or local pick up.

Depending on your specific business concept and strategy, you’d want to take into consideration the following costs:

Ingredient sourcing
Cost of production
Website creation
Advertising
Logo
Packaging
Delivery system

When it comes to ingredient sourcing you can try to work with local farmers or buy in bulk for more affordable prices. If you are looking to create a website for your store you can check out how to build an ecommerce store from scratch and get a free ecommerce store with Ecwid’s beginner’s plan. There are no monthly fees or upfront costs under this plan.

Everybody’s Favorite—Packaging!

When it comes to packaging, it will all depend on the items or products you plan to sell. You can try to rely on a recyclable concept for your product packaging; this can make packing a lot more affordable and sometimes more appealing to your audience.

Last but not least, if you are selling locally, you can always take the local pick-up route instead of delivery. This simply means customers go to you to get their purchased products instead of having them delivered by you. In the case that you decide to offer delivery services, having your own vehicle makes it easier as you don’t have to rely on third parties to deliver customers’ orders. If anything, you can just add shipping costs to the price of your products to cover any third-party delivery services.

Starting a Small Food Business Checklist

As you can probably already see, starting a food business can be a rewarding and profitable experience. However, just like any other business, it’s important to recognize there will be challenges along the way. Whether you decide to start an online food delivery service business or simply find a way to sell a few batches of your homemade jam, keep in mind that it is possible to start without investing a fortune.

Here’s the truth!

It is more than possible to start a successful food business from home. Even if location and appliances make a difference, you don’t necessarily need all of these when starting. As you open for business and begin to grow, you’ll be able to slowly upgrade all of this and more.

As we get ready to close, here is a quick recap of what we consider necessary to start a small food business and start making a profit from the recipes you already love to make:

Determine your product and niche
Develop a solid business plan
Understand your audience and market
Determine your budget
Set up your delivery strategies
Launch your store and open for business!

We hope this quick guide was helpful and encouraged you to start your own food business. At Ecwid, we are proud of our thousands of sellers who’ve taken the plunge and continue to leave their mark in the industry. We encourage you to follow these steps and recommendations and get started today. Comment below and tell us how you plan to get rolling!

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Jul 2, 2021

About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.