Start your own home cooking business using these helpful guidelines.
"Hundreds and hundreds of women are having the fun of running their own home cooking businesses and making a good profit from it. You can do it too!"
It's this kind of infectious enthusiasm that permeates Ona Evers's book, Sparetime Dollars From the Kitchen, from which the following selections have been excerpted. If you've long thought about using your culinary skills to generate additional income for yourself and your family — but have yet to act on the idea — maybe Ona's voice of experience will be just the encouragement you need to go ahead and make some money!
Where to Begin Your Home Cooking Business
If you want to sell something, you naturally have to be sure you have someone to sell it to. So your first step will be to find out just what markets or outlets are available. You won't be selling anything at this point, because you haven't made your product yet.
What you will be doing is looking around and "casing the joints." For instance, if you plan to work from home, making jams, jellies, or relishes for sale, who is likely to buy them? You want to have some firm ideas about this before you invest in jars and ingredients and the rest. The same goes for bakery goods or anything else.
Where to Look for Home Business Markets
This will depend on your product. If it's to be jams, relishes, preserves, and that sort of food, look in gourmet shops first to see if they carry anything like your products. (If they don't, it doesn't mean that they won't want yours. They may not have thought of local suppliers like you.) Try small grocery stores, gift shops, import stores (these often carry domestic products too,) delicatessens, and specialty food shops like cheese stores. If your product uses only natural ingredients, health food stores are a good bet.
You probably already know of many such stores in your area. For others, make a list from the Yellow Pages of your phone book.
Then look into the various kinds of fairs, flea markets, and club and church sales in your area. Laundromats, groceries, and many other such businesses are good places to put up notices or handmade posters if you want to sell to individual customers.
Finding Your First Business Market
Quite likely you're already acquainted with a store owner in your area. This is great. The best thing you can do is start with one good market. Some people never need more than that: one good outlet that's steady and dependable. If you know of such a store, and know the owner well enough, you might tell him of your project and see what he thinks of it.
Personally, though, I've found that it's better to wait until you have a sample of the product in hand, and can give the proprietor a taste of your marvelous wild blackberry jam, or whatever. But look his store over carefully first as a possible starting place.
Perishables Are Different in Food Businesses
Bakery goods — cakes, pies, breads, cookies, and the like — are handled differently from the processed foods like jams and relishes, because they must be fresh. That's one of your biggest selling points. Even if you have a freezer so that you can bake ahead, that good old fresh-out-of-the-oven smell, feel, and taste is one of the things that puts you out ahead of the mass-market product. (That, and the good quality of your ingredients.)
Here, too, I suggest you look over the possible markets before you start: locally owned restaurants, coffee shops, delicatessens, groceries, specialty food shops, health food stores (especially for good natural-ingredients breads). With outlets of this type, you'll probably be baking weekly for a set market.
On the other hand, through word-of-mouth advertising, many women have set up profitable home cooking businesses by just baking individual orders of specialty cakes and pies. You can start by lining up some customers who've shown interest in your baked goods at church or club sales.
How to Judge the Home Cooking Business Market
Be critical, that's how. There are several advantages to the critical approach. The main one is that it puts you in the driver's seat. You're not trying to sell anything, so you have no reason to feel nervous or uptight. You're just checking out the store. You're in charge. In fact, some places won't pass your inspection.
Here's how to do it: When you go into a store, look it over carefully, and ask yourself, "Do I want my product sold here?"
Is it cheerful, clean, and well-lighted? Or is it musty and understocked . . . the kind of place that looks as if it never pays its bills, so that you'd be kind of ashamed to display your delicious chutney there. Is it busy? How do the clerks and manager talk to the customers? Are they friendly?
You don't want to waste your goodies on a dud of a place. You want them where they'll be cherished, pointed out to customers by helpful clerks. You want the kind of place that handles enough business to give you lots of re-orders.
Sometimes people just starting out in small businesses (home businesses, especially) are so anxious to place their product with a store — and so lacking in confidence in the product or themselves — that they eagerly leave their jam or whatever in stores that are never going to have enough business to sell the jam, or anything else much. Or the store owner is the kind that just plops it on a shelf and forgets it, and lets it gather dust. Such a place is not for you.
Find Out About the Food Preparation Laws in Your Area
Finding out about the laws or rules is very simple. Fulfilling them is more difficult — but not impossible — if you live in a state with strict food preparation laws. Remember: There is always a way.
The simplest way to find out about applicable rules and regulations is to phone or write your county health department and ask to know the requirements for the preparation of food to be sold. If there are such laws in your state, don't try to sneak past them. You could find yourself faced with a stiff fine! The health department will probably send you a pamphlet called something like "Retail Food Production and Marketing Establishments Law."
Although you will most likely be selling "wholesale" (selling to a store which will then sell your products retail . . . that is, to the ultimate consumer, his customers), these laws still apply to you. So don't ignore them and hope no one will notice. The health officers are the watch dogs of the public's health, and always seem to find out.
California has the strictest set of regulations I've come across. Probably your own state doesn't quite have such tough laws. But find out!
Is a Home Cooking Business for You?
Whatever area you live in, the questions you must ask yourself are:
Can I fulfill my promises? When I find a market, can I be sure I can deliver on time and in the ordered quantities? Actually, you can do it easily, because your first orders won't be very big. By the time you've lived up to your promises on these, you'll have the hang of it.
Can I raise the cash to get started? It won't take much cash expenditure for your first small orders. Most of us are able to manage the start by using supplies we already have: some jars, maybe berries from a friend's garden, flour for baking, etc. It's okay to use these the first time around. But, as soon as possible, separate your business and your home expenses.
Why? One good reason is that you'll never know for sure if you're making a profit if you don't. Another good reason is that you can take your food business expenditures off your income tax as legitimate expenses.
Whatever means you use to start up your business, don't borrow money. A debt hanging over your head just as you're getting started makes you feel as if you're always running behind and will never catch up. It takes all the fun out of having your own spare time home business.
One way that many women have cut down on expenses is through barter . . . and that's fun too! Some have swapped their preserves for fresh fruits, or traded luscious bakery goods in return for eggs and milk. Think of activities like this before you think of borrowing money.
There are bound to be certain things you'll have to buy. For bakery goods, for instance, you'll probably need some of those flimsy boxes that are used for cakes, pies, and cookies. You'll want some labels made up for your jars (if your product comes in jars) and you'll need jars and lids, of course, and — for breads — plastic wrap.
Keep track of every expense, even the gas you use to deliver your goodies. If your initial business cash is coming from the household money (and it usually does), keep track and repay it from business profits as soon as possible.
How Much Profit Should You Make From Your Business?
You should make a profit of 40 percent over your expenses, at least. For every dollar you spend (that's counting everything, even a quarter teaspoon of cinnamon), you should make 40 cents, and probably more.
For fancy cakes and pies, closer to 80 percent is more in line. But for jams, relishes, and that sort of product, 40 percent or slightly over is good. Of course, you would be selling far more jars of preserved foods than you would fancy cakes, so the final profit evens out. You can only make so many fancy cakes or pies without lowering quality (if you have to do all the work yourself), but you can put up hundreds of jars of jam, all of the same goodness.
How Much Can You Earn From Your Business?
There's no way to guarantee any certain amount. How much you can earn depends on so many different things. For instance:
• How much do you want to earn? How big do you want your business to be? How much time do you have? You may be quite content to keep the business small. Many of us are. A nice steady little business can be a joy without taking too much time or energy from our other interests and duties. If you're more ambitious, that's fine too. It's up to you.
• What about prices in your area? There is an amazing difference in the prices for foods in different parts of the country, and this will make a difference in what you charge for your products.
• What will your expenses be? Some foods cost more to make, and the equipment will be different for each type of product. You may have a fruit orchard of your own, or have to buy your fruits. You may have to drive a distance to deliver your products, or just go down the street. No two of us have the same kinds of expenses.
• Your available markets may be many or few . . . especially at first, until people learn about your delicious products.
With a food business, if you didn't sell one single jar of jam or relish (which is practically impossible), you'd always end up with something, because you'd still have the food that your own family could use.
And you're too smart to invest in new equipment and large amounts of ingredients — or to make up more than a few samples of your product — until you have a market firmly lined up.
So, the risk in starting a food business is almost zero. You have nothing to lose, and everything to gain!
There have been women — we've all heard of them — who built a little home cooking business into a multi-million-dollar business. And remember, they all started out ladling jam or relishes into jars on the kitchen table, just like you. Or baking their homemade breads in a kitchen oven just as you breadmakers will be doing.
How To Choose A Profitable Product For Your Business
Unless you already know just what your product will be, you're probably juggling several ideas around. Here are some suggestions to help you decide.
1. What do you want to make for selling? If you hate putting up preserved foods — even though you have a hunch they might sell well — don't put them up. Instead, make that great fudge that every one likes so much, or something else that you like to make. Selling your product will depend a lot on your personal enthusiasm, and it's hard to be enthusiastic about something that you don't even like to make.
2. What can you afford to make and sell? Even if your grapefruit chutney is beloved by all, if you have to put out a lot of money for ingredients and then sell it at a low price because of competition or some other reason, you aren't going to make a decent profit.
3. Which brings up competition. Check this out when you're going the rounds of possible markets. Perhaps some other kitcheneer is already making the product you want to sell. Even if you think yours is better, it's a good idea to make something different.
It doesn't have to be very different. Often it takes just a couple of different ingredients, or a catchy kind of name . . . something that sets your product apart from the others and gives it a personal touch.
4. Are there enough available markets for your proposed product? If every woman in your community puts up her own jams and jellies, then obviously there isn't going to be much sale for yours. You'll do better with something that they don't ordinarily make, but wish they could.
One woman I know of, in a fruit-growing community, not only became well known but made herself buckets of dollars with her fresh tamales, delivered weekly to local groceries. Orders came in from all the towns around, and she had to take on a partner to keep up with them all.
But it doesn't have to be anything as drastically different as tamales! Perhaps an unusual combination of fruits, or vegetable preserves, intriguingly different relishes, chutneys, or pickles. Start with whatever markets you find, and others will soon turn up.
5. Do you have the equipment or kitchen setup to make your product in profitable quantity? You probably do. There's hardly any home cooking product that takes much room to make. A freezer is a big help, but many successful kitcheneers do well without one, and preserved foods can be stored easily in any cool, dark place until you take them to the stores.
6. Finally, be sure you can make your goods easily and cheaply. If you have to go three towns away for some expensive ingredients, or spend hours peeling or mincing something, you'll soon get tired of the whole idea. Remember, you won't be doing this just for a few Christmas presents, or a one-time cake sale at the church. You'll be making your product in fairly large quantities (or, in the case of bakery goods, doing it often).
How To Know if You're Really Making a Profit From Your Small Business
Unless you want to find out one day that you're paying for the privilege of making and selling your product — as I unhappily did the first time around — you must keep records — just simple records — but they must be accurate and up-to-date. And the price of every jar lid must be counted in. It's the only way you can figure out how much to ask for your product so as to make a profit, because those nickels and dimes add up, surprisingly.
Keeping careful records will help you keep expenses down. You'll soon see where certain things are costing more than they need to, and you'll learn to cut corners. But never cut the quality of your product. Quality is your biggest selling point.
Careful records will show you where you have to change products, or cut out unprofitable ones. And records of your markets will show which are not worth the trouble of supplying them and which pay highest profit over cost.
Don't forget about hidden costs — the ones we hardly think of as expenses of our home cooking businesses — like the gas it took to deliver your product, the electricity you used to make it, the labels, the doilies under the cakes, the parking meter while you ran into the store with a box of your jams, the baby-sitter the day somebody had a cold and you had to deliver eight cakes to Miller's Market.
These are all important expenses, and not just for knowing if you're making a profit. Some are reportable legal expenses. Take advantage of the tax breaks that are possible when you're in business for yourself.
Should You Take a Partner in Business?
This depends on how much food you plan to sell, and on the partner. A lazy or bossy type can soon take the joy out of the adventure. If you saw — when you were looking over possible markets — that there would be more business than you could handle alone, or if your spare time is limited so that you'll be hard put to fulfill orders, then by all means take a partner. But choose one with the greatest of care.
The division of labor and profits must be clearly understood, and preferably in writing. Be sure to pick someone whose ideas on personal responsibility match your own.
There's one situation where I strongly recommend that you take on, not partners exactly, but sharers. This is for those of you who live in areas where the health laws are very strict, so that you must set up a kitchen that can be inspected and meet certain standards. For you people, the sharing of expenses — that is, the initial expenses of the kitchen — can sometimes make the difference between being able to start a profitable business cheaply and not being able to start at all.
What About Employees?
People are often tempted to hire someone to help out when they've got a lot of orders, and things get ahead of them. For the sparetime kitcheneer, this is just asking for complications: insurance, social security, and all the rest of it.
If you can't manage alone at some point, and don't want to take on a full partner, go shares (an informal partnership with the understanding that it's temporary). Or farm the work out, with the firm understanding that the other worker is self-employed and responsible to herself for reporting her income, etc.
How to Skip the Middleman in a Small Business
Yes, you can skip the middleman — the storekeeper — and make more profit per unit. (That is, you get the whole amount the ultimate customer pays, not just the percentage of it that you get when selling to stores.)
Here's how other people do it:
1. Simple posters on store, laundromat, and other bulletin boards, telling customers where they can order your product. (If you don't want customers dropping by the house, just give your phone number, but you'll have to deliver in that case.)
2. Church, club, school, and other sales. These groups are usually glad to have more goodies to sell and will sell your products for a percentage of the profit, or let you sell them yourself for a small fee.
3. County, state, and other fairs. Even large cities have fairs of various sorts, and smaller cities have many of them in summer and early fall. You may have to pay for a booth, or for space to put up a card table, but lots of people go in with a friend who's also selling things.
4. Flea markets. In this country there are many weekend flea markets, which can be pleasant places to put your products up for sale. Most will charge a small "space" rental fee.
5. An ad in the classifieds of your local paper, giving your phone number.
6. Word-of-mouth advertising. Tell your friends! Once you have some pleased consumers praising your product, you'll pick up other customers. (This is a slow way of getting going, but moves well once underway.)
All of the above ideas will work especially well if you emphasize the gift idea, or the holiday idea. There's always a holiday of some kind — May Day, Apple Week, etc. — to say nothing of the better known ones.
Do You Need a Seller's Permit?
The seller's permit is not a business license, but has to do with sales taxes, which vary widely from state to state in just what is taxed and how the monies are paid. You may not need one. Check with the nearest state board of equalization to be sure. If your state collects sales taxes, you'll probably need the permit number of the markets you sell to. (This is to prove that you don't need to pay a sales tax. Get us coming and going, don't they!)
The permit itself usually doesn't cost anything, but some states require a "good faith" deposit that is returned to you in a few years. (I almost wept when I discovered that California regulations required me to put up a $100 "good faith" deposit. But you get it back at the end of five years, plus the regular compounded bank interest, and — who knows? — I may be especially glad to get that hundred-plus about that time.)
Now that I have my permit tacked up on the wall, it makes me feel much more businesslike. Don't try to get away with not getting one if it's required, 'cause they'll catch up with you for sure.
What About Home Business Licenses?
There are states, counties, and cities that require a license for any sort of business, no matter how small. These vary even more than seller's permits and health regulations. Check this out first with other people in small home businesses. If you don't know a friendly sparetime kitcheneer, then find a handicrafter, someone who makes and sells quilts, picture frames, or pottery, or teaches knitting.
The reason for checking with them first is that there are so many confusing laws these days that even the people in government offices aren't always sure what's what. Sometimes they'll insist that you need licenses and permits when you really don't. So check it with small business people who are already making it before you let the red tape tangle you up.
Also, if you're in a city, check zoning laws. It may be easier to share a kitchen with a friend who lives outside a zoned area.
Should You Leave Things on Consignment?
No, I don't advise it.
Here's what consignment is: You leave your product with the store, but they don't buy it. You just leave it to see if it will sell. The understanding is that if anything does sell, the store will pay you when you next come in.
In other words, the store has your product and the money. You have nothing.
Because the product isn't the storekeeper's, he has no real motivation to sell it. Of course, if he should sell it, he'll get the usual percentage. But consignment products often end up out of sight in back corners.
Or (and I hate to say this, but there are dishonest storekeepers) you might go in and find that three of the six jars of relish you left are gone. When you try to collect from the manager, you're told that the store didn't sell them. "Shoplifters must've taken them." We-e-e-ll, maybe they did. But wherever the jars are, you're not going to get paid for them, and you have no way to prove anything. The store's not out anything. The only person who's out is you.
Getting Paid for Your Food Products
Find out at what times the manager is in and make your deliveries then, because you must be paid when you deliver the products. Make that your firm company rule. In some stores, a cashier or bookkeeper will do the paying. Just make sure that someone authorized to give out the money or check will be there.
When you deliver your products, have whoever accepts them sign for them, right in your order book.
And don't give credit. The smaller companies, like ours, are always the last to be paid. It takes time and paper work — and makes for bad feelings — when you have to be a collection agency on top of everything else. That's not the business you're in. You're in the business of manufacturing and selling food products.
From Sparetime Dollars From the Kitchen: How to Start and Run a Successful Home Kitchen Business — Inexpensively, Legally, and Profitably by Ona Evers, copyright 1978 by the author. Reprinted with permission.