The Benefits Of Having a Home-Based Food Business
The Benefits Of Having a Home-Based Food Business
Are you thinking of taking your culinary creations into edible commerce? But perhaps think that starting a food business is for “other people”? A home-based food business is a perfect way to start your journey and comes with tremendous benefits. Starting small can help you decide if being a foodpreneur is something you want to chase and turn into your legacy.
Setting up a commercial food business in your home may seem a daunting task at first. However, you may be surprised by just how easy state Cottage Food Business Acts have made getting into the commercial food industry without the full-scale start-up responsibilities restaurants require.
Below we will break down the best perks of realizing your culinary dreams from home.
The Advantages of Starting A Cottage Food Business
Low Barrier To Entry
Every home-based food business must comply with their state’s cottage food laws. This includes licensing, permitting, and hygiene regulations. These are generally straightforward and can be less rigorous for a home-based business depending on the area. Fewer start-up costs and legal requirements make a cottage food business an equal opportunity starting point for most foodpreneurs.
Less Capital Intensive
Setting up a full-scale restaurant requires a tremendous amount of start-up capital and potentially the involvement of investors. Instead, using space you already have can help save precious funds that can be reinvested into your growth instead of a landlord.
Additionally, you’ll be spending less on utilities, maintenance, and staffing required to run a brick-and-mortar operation. Items like utensils and cooking equipment can also be cross purposed.
Lower Liability
A home-based food operation allows you to operate with much less stress than a traditional commercial kitchen. For example, you likely won’t need to worry about employee insurance, costly maintenance, or risk an unexpected closure tanking your profits for the month.
Since your investment remains comparatively low, the risk quotient decreases compared to a stand-alone commercial food business. If something unexpected happens and you decide to take a break, you won’t have employees to lay off or a landlord banging at your door either.
Low Overhead and Operating Costs
Compared to the stand-alone commercial kitchen, the day-to-day operational costs of a home-based kitchen are appreciably lower. From utilities to rent, you’ll have less overhead to cover, and more profit can be made. Not only is the overhead reduced, but you also won’t have operating costs like POS systems, employee management software, or the wages of admin staff (like accountants and human resources) to cover.
You Can Scale As You Grow
As far as pressure goes, the ability to scale as you grow in a home-based food business is possibly one of the best advantages of running your commercial kitchen in-house. While starting a full-scale restaurant will mean that you need to be more or less fully stocked on opening day, a home-based kitchen means that you can scale as you grow.
You can level up your kitchen equipment and staffing needs as profits allow rather than spending money upfront. In addition, you won’t have to front the expenses of large volumes of packaging and ingredients until your customer base grows. It is a perfect solution for those with a food dream but without a millionaire’s bank account.
Tax Advantages
While you should consult your accountant, it is logical that you can claim many of your home-based business expenses on your taxes. For example, if your in-house commercial kitchen takes up 20% of your house, you should be able to make a write-off on your income taxes.
You can also receive tax deductions for expenses related to licensure and permitting. The same goes for marketing materials, website hosting, online courses, and vehicle expenses.
Flexibility In Concept
One of the best advantages of starting your foodpreneur journey with a home-based kitchen is that you can test the waters and modify your offerings with feedback. Instead, a stand-alone restaurant has a very slim margin of versatility as menus need to be printed with set offerings and ingredients need to be purchased ahead in large quantities. In addition, staff are trained to make specific recipes. Throwing new products into the mix will cause inconsistency, increased costs, and instability.
In a cottage food business, you have the benefit of testing products and friends, family, and even the local farmer’s market before you commit to a menu or product. Take advantage of this flexibility by hosting tasting events in your neighborhood or popping up at festivals to try out creations.
Finding a balance between your business and family can be easier in a cottage food business model.
Flexible Hours, Flexible Life
Finally, one of the most difficult tasks as a foodpreneur is establishing a work-life balance. Establishing a routine inside the comfort of your home and doing so early in the process will help you stay happy, passionate, and motivated.
Too often, entrepreneurs get sucked into the hustle. A busy week can turn into months that can turn into years where you’ve missed important life events and holidays to stay open as a brick-and-mortar business. Because, hey, the landlord, employees, and vendors still need to get paid.
A home-based commercial kitchen offers a somewhat more flexible routine with less impact if you need to take a day off. You can set your own hours, take feedback and make adjustments to offerings relatively easily, and every day is casual Friday. You also won’t lose precious time driving to the restaurant each day when you can just roll up to your in-house kitchen instead.
Conclusion
While there are also disadvantages to running a home-based business (you are essentially never able to leave your workplace after all!), we believe the pros outweigh the cons. Starting your foodpreneur journey in your home allows for a massive amount of flexibility and a faster approach to begin.
If you are still unsure if taking on a home-based food business is the right choice, consider touching base with fellow home-based food business entrepreneurs. Additionally, community forums are helpful to learn from those who have gone before you. If you want to make sure you are on the right path you can also connect with a consultant who specializes in helping home-based food businesses get licensed and comply with regulations.