If your jams and jellies are always a hit as a homemade holiday gift, or your salsa has guests doing the samba, consider turning creative cooking talents into cash. After deciding on a food product, get organized. Starting a food retail business requires planning, some cash and marketing skills.
Obtain the required licensing. Not only is a business license needed but also a food handler's license. Research county and state requirements to see whether your kitchen—or commissary—must pass a safety and health test and become certified. Don't forget to get a privilege license to collect sales tax for the state. Some cities require an additional taxes as well.
Clear out a portion of kitchen cabinets for storing the ingredients and materials needed for preparing the food product. (Check with local health regulations; in some areas, home kitchens cannot be used for commercial purposes. Some local health agencies don't even allow storage in homes.) Keep a running inventory in order to know exactly what is on-hand and what is needed. There's no sense starting to make salsa, for instance, only to find out enough canned chopped tomatoes are on hand to complete the recipe.
Take stock of the equipment needed. Depending on the food product, a bigger refrigerator, commercial grade stove, freezer and large capacity cooking vessels and utensils may be needed. The health department may require additional equipment as well, such as a high temperature dish washer, thermometers, disinfecting cleaners and safety equipment such as fire extinguishers and first-aid kits. Prepare an area to store the food product once it's completed.
Find wholesale sources for the ingredients and packaging materials. It's okay to pay full price for jelly jars if you're giving jelly away as presents but not when making a profit is the goal. The difference may seem small, perhaps only 25 cents per jar, but it adds up quickly for an order for 100 jars of jelly. Review the shipping charges as well as the prices of the wholesaler. Include the minimum purchase requirements. A gross (144) of lids may be needed but if that's the minimum requirement that's how many will have to be bought.
Develop a marketing plan. Determine who your customers are and how they'll be reached. Flyers, advertisements, participation in food shows, arts and crafts shows and farmers markets are potential methods for marketing and sales. Don't be shy about letting people know about a new business. Maybe a friend of a friend knows the producer of the local afternoon talk show and they'd love to have a demonstration on how the product is made.
Track all sales and expenses separately from the household budget. The grocery store may be where most of the perishable food stuffs are bought, but also look at restaurant supply stores. Separate those bills from regular grocery shopping. A profit or loss from the business will have to be declared on income tax forms. Make sure every expense is deducted that's entitled.
Start small with one or two food products then expand.
Claim the income from the food business on income taxes.
- " Start & Run a Home-Based Food Business"; Mimi Fix; 2009
- Start small with one or two food products then expand.
- Claim the income from the food business on income taxes.
Katie Jensen's first book was published in 2000. Since then she has written additional books as well as screenplays, website content and e-books. Rosehill holds a Master of Business Administration from Arizona State University. Her articles specialize in business and personal finance. Her passion includes cooking, eating and writing about food.