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How to Start an Online Food Business

If you’re thinking of launching a business to sell the delicious homemade food you make, you’re in the right place. Today, more consumers are buying from their local small home-based or cottage food businesses. According to recent data, American consumers spent almost $20 billion in 2020 on independent restaurants and retailers. As a result, it could be the perfect time for you to jump into the market and begin selling your own homemade goods.

In this guide, we’ll discuss how to sell homemade food right out of your kitchen, the laws you need to abide by, and the best practices for setting your business up for success. You can think of this article as both your “starting a food business checklist” and a launching pad for your dream to become a reality.

Define Your Business

As your first step in how to start a small food business at home, you’ll need to define your business. If you have many different culinary delights in your repertoire, you should settle on your focus. Begin by brainstorming all of your small food business ideas and then narrow them down based on what best aligns with your interests and skills. Another factor to keep in mind is convenience; some kinds of homemade food to sell require equipment, so it’s a good idea to start small and expand in the future.

Next, do some market research: what kind of homemade food to sell are people in your target market looking to buy? Consider what businesses do well at local farmers’ markets or at places near you. What niche in the market can you occupy?

Write a Business Plan

After you’ve honed in on your business idea, it’s time to formalize your expectations using a business plan. A well-designed business plan will help you prepare for the risks of launching a small business and ensure that your cottage food business is ready to succeed.

So what are the components of a business plan? Your plan doesn’t have to follow this exact structure, but these are the main parts many business plans include:

To help you draft your winning plan, there are many business plan templates available to you online.

Meeting Legal Requirements

Next, it’s time to make sure your food business launch checks all the important legal boxes. This is important in ensuring that your prospective clients receive the highest-quality goods and that you can rest assured your business is fully above board and compliant.

First, you may be wondering if your business will require licensing. Jurisdictions vary so you can find your local requirements on your city and state website.

Generally, you will likely need to get both a business license and a home-based certificate, which verifies that you sell safe, well-prepared homemade goods.

Let’s look in more depth at the laws you must follow to safely prepare and sell food at home.

Rules on Selling Food From Home

Knowing the laws around cottage food sales is key to your business’s success.

Laws around selling home cooked food to the public vary depending on where you plan to sell. For example, in an urban area, the law governs whether you can have signage in front of your home or have people visit your home for your goods or services. Each state in the U.S. has its own approach. For example, New Jersey is the only state that doesn’t allow small business owners to sell low-risk foods from their kitchen. In contrast, states like Maine and Utah have adopted “food freedom” laws that make it easier for business owners with different standards for cottage food and restaurant food.

The FDA establishes standards at the federal level, which all small business owners must follow. For instance, they offer guidance on how to package your goods, which includes whether you must have a nutrition label on your products. Thankfully, the Small Business Nutrition Labeling Exemption exempts small businesses from providing a nutrition label on their goods.

In summary, to avoid legal hot water and keep your customers safe, plan to learn about food safety laws, how to best source your food supplies, test your products, and get liability insurance in case the worst happens and someone gets sick.

How to Start an Online Food Business

To meet the needs of the modern customer, it’s a good idea to consider taking your business online. Begin by setting up a website. This is crucial in helping customers reach you and regard you as a professional, legitimate business. Next, selling food online requires setting up an online storefront which you can do with the help of an eCommerce expert. Make sure to follow all online food sales laws as well.

Before you begin selling homemade food online, take some well-lit photos of your delicious goods. To help market your online business, consider a plan that includes social media, physical advertising, and a referral program as well.

All in all, selling cottage food can be a profitable and rewarding adventure. By following these best practices, you can set your business up for success, and deliver your tasty treats to many happy customers.

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