Starting a Home-Based Business

Tips and tricks for making a profit with a home-based business.
By Karen K. Will
2013 Capper's Farmer Winter

Turn a passion for baking into a home-based business.
Photo By Karen K. Will
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The homesteading life is centered around the home: producing things at home, finding entertainment at home, living off the land. With life being centered on the home and farm, we’re reluctant to be employed away from it. Therefore, it makes perfect sense to expand your skills into some kind of home-based business. It wasn’t that long ago that farm women always earned a little side cash (remember “egg money”?) from their home-based endeavors. A few hours a day or week can turn into the week’s grocery money, or easily pay some or all of the utility bills. Working from home also allows you the luxury of not completely detaching from other home-based duties, such as homeschooling, tending to livestock or pets, cleaning, cooking, laundry or other jobs. It’s possible and quite simple to make some cash doing something you love from home.

If this idea appeals to you, take inventory of your talents, interests and limitations to determine which skills could be turned into a business. Also ask yourself how much money you want (or are able) to put into starting a small business, as well as how much you’d like to reasonably make. Look around — what are you doing already that others might pay to acquire?

If your small flock of chickens lays good eggs, perhaps you could expand the flock and sell the extras. If you have a green thumb and produce bushels of garden vegetables every year, perhaps you could plant even more and start up a roadside stand, a booth at the farmers’ market, or even a small CSA. If you make your own soap or sew your own drapes, maybe one of those skills could be developed into a marketable business.

Homesteaders are remarkably talented, handy people, and others who are not, or who don’t have the time or interest to do these things for themselves, will spend money or barter to obtain a piece of that handmade ingenuity. If your product is high quality, reliable, and packaged well, chances are folks will line up to get it. 

Organization

One of the most important factors in running any successful home-based business is organization. Without the structure of a boss, fellow employees, an office schedule, and a time clock, an unorganized individual will soon falter. You must be self-motivated, detail oriented, and have the ability to stay organized. Keeping track of necessary inventory and projecting needs far enough in advance are very important. Running a business from home requires you to make optimal use of your time since you’ll need to juggle multiple priorities (business and personal) at once — there are no paid vacations or holidays here!

Baking as a Model

When it comes to home-based businesses, baking for profit is age-old. It also happens to be the business that I’m in, so therein lies my experience. However, it isn’t hard to extrapolate the following concepts to other areas, especially those that rely on the farm or homestead aspect for success.

In this day and age of busyness, home baking has gone utterly by the wayside. Boxed mixes are now the norm, and the concept of baking from scratch is not even in many folks’ realm of consciousness. Even competent home cooks often shy away from baking, believing it’s a complicated science (well, it is) and that it requires lots of practice to get good results. If you already bake from scratch, this is where you come in. Your customers will be those people who desire a high-quality, home-baked product, yet are unable or unwilling to devote the time to baking it themselves.

These people will include working folks; those who don’t like to cook; men and women involved in multiple community events, and thus don’t have ample time to spend in the kitchen; single people who don’t want to cook for one, yet crave a homemade meal; and foodies from all walks of life. 

The tenet of your business should be quality. That high-quality, homemade product can only be obtained from — you got it — a home, not a factory. Make a serious commitment to handling each order individually, and baking everything from scratch with only the best ingredients.

Sure, boxed mixes are convenient, but they can’t compare to a genuine product. The same goes for store-bought and frozen cakes, cookies and bread; they’re made in factories by machines with artificial flavorings, fillers and preservatives in order to withstand days and weeks on the shelves, waiting to be purchased. When your customers taste your fresh, unadulterated home-baked goodies, they’ll know the difference and will gladly pay to taste it week after week. Most people are gourmets at heart when it comes to baked goods — they reminisce fondly of “how Grandma used to make it,” and they’ll more than likely develop a similar fondness for your products. 

Working From the Home Kitchen

Having a suitable home kitchen for baking is one of the first considerations when starting a food business. Even if your kitchen isn’t entirely up to the task of high-volume baking, you can certainly begin your business before thinking about remodeling.

Also, before remodeling your kitchen, investigate all your state and county regulations for home-based food businesses. Some states don’t allow a kitchen to be used for dual purpose, so you would have to convert another area of your home for business use.

Cleanliness Is Next to Godliness

When operating a home-based food business, your kitchen is the face of that business. Would you show up at the office with uncombed hair, last night’s makeup, and wrinkled clothes? Not if you wanted to remain employed. Keep in mind that the kitchen should be neat and tidy at all times, not just when you’re baking for customers. Wash dirty dishes and put them away promptly, change dish towels and sponges often, wipe down surfaces several times a day, scrub the sink with cleanser, and sweep and mop the floor regularly. When baking, tie your hair up or back in a bandanna, put on a clean apron, and make sure your hands and nails are scrubbed clean.

If you’ll have customers picking up their orders, all of this is even more important; food can seem quite unappealing in the midst of a dirty kitchen. So, let me repeat, remove all suspicion of uncleanliness by always keeping the kitchen clean. Also, if you live in a state or county that requires health department inspection, make sure you’re aware of the requirements so you don’t get caught unprepared.

Storage and Work Space

It’s important to store your ingredients properly. Never store food in unsanitary conditions or places (like a bathroom), near moisture, or directly on the floor — a health code violation just about everywhere.

It’s ideal to have a dedicated space to store all your ingredients for baking so that when you’re ready, you only have to look in one place, which also makes it easy to keep inventory. If that’s not possible, label everything you use for your business and keep it all together in one area of the pantry.

Store sacks of white flour in rodent- and moth-proof containers, such as a new, small metal garbage can with a tight-fitting lid. Always store whole-wheat and other whole-grain flours in the refrigerator or freezer if they aren’t being used up within a few weeks.

Work space is critical. If you don’t have cleared, clean spaces on which to work, you’ll soon become frustrated. Take over the kitchen island and counters for food preparation, and clear off the dining room table for the cooling and packaging station. If you need more space than you have, get out a long folding table to handle the overflow. Take the time to clear everything off your work surfaces, wipe the areas down, and commence baking with a clean slate every week.

Food Safety and Prep

Some states or counties require that you take a food-handling certification course, while others don’t have such requirements. If you’ve never worked in food service, make sure you understand food safety and abide by those rules — that means no dipping your finger into the batter; that’s fine when preparing food for yourself, but not when operating a food business. All it takes is one sick customer to put you out of business, so remain vigilant all the time. If you suspect, even remotely, that milk, an egg, or any other ingredient has gone bad, err on the side of caution and discard it.

Product Offerings

When planning your product offerings, begin with what you know. What are you particularly good at making? What have people raved about? Start there, and then think strategically about what products might be needed by your target market. Is there a shortage or absence of good bakeries in your area? Then perhaps focusing on artisan-style bread would be welcomed. What are your regional specialties and favorites? Offer products that people want (sugar cookies at Christmas and Valentine’s Day, rosemary rolls at Thanksgiving and Christmas), but seem too complicated or time consuming to do themselves.

In the beginning, limit your product offerings to just one or a few items that you make well. This will give you time to learn the business (inventory control, packaging, bookkeeping, etc.) and gauge feedback before getting overwhelmed or heading off in the wrong direction.

Before deciding on what type of food to offer, research the market, even if just casually. Peruse specialty food offerings at grocery stores, farmers’ markets, health food stores and the like, and examine pricing and packaging. Purchase anything you want to emulate or learn from. Prepare a few of your specialties and ask testers for feedback — seek those who will be honest with you rather than telling you what you want to hear.

Evaluate recipes with an eye on two factors: price of ingredients, and ease of preparation. Recipes that call for exotic ingredients that are difficult to find in your area will create an inventory problem, and expensive ingredients, such as whole vanilla beans or pine nuts, for example, won’t bring a return on your investment.

Focus on offering items that aren’t too fussy, aren’t too expensive to make, and that can be packaged easily. For example, think about making a carrot cake. It involves peeling and shredding carrots; vast and varied ingredients from dairy products to spices, nuts and raisins; baking and assembling a layer cake; frosting the cake; plus a packaging and delivery nightmare. There are so many ways this could go wrong, so it doesn’t make sense to offer something like that, plus you could never charge a fair amount for the time and resources you spent. Instead, you could focus on high-quality muffins with the best ingredients, or cookies and cupcakes that are less work and easier to package and deliver. Avoid offering products that require refrigeration, especially those that would take up lots of space — there are only so many cakes and goodies that can be stored in a household unit.

Equipment and Packaging

The equipment you’ll need to begin your food business may already be in your kitchen. Don’t feel the need to go out and purchase all-new machines and tools before you have the customers and cash flow to justify it. However, if there are a few key items, such as a stand mixer or a handheld electric mixer, that would make the business venture more efficient, by all means purchase them — and they can be itemized on your tax return.

Packaging is a key to your business success. Without professional-looking packaging, your product will resemble offerings from a child’s bake sale. Forget plastic baggies and curly ribbon; think up something unique and appealing. I use plain paper bags (white for bread, brown for baguettes and some baked goods), wrapped up with just twine for a natural look. Using rubber stamps and brown ink, I stamp the name of the bread variety on the outside of the bag.

Clear cellophane food bags are used for cookies, and brown Kraft bakery boxes with windows (sourced online) are used for muffins, cupcakes and delicate cookies. All items are affixed with a tag — a professional business card on one side and an ingredients list on the other (printed on my home computer), which satisfies my state’s requirements for selling baked goods.

Pricing

To determine pricing for your products, several factors must be taken into account. First will be the actual cost of the ingredients; next, the electricity, gas, or other power necessary to make it; packaging; and finally, your time, and an allowance for profit. Figure these things carefully before arriving at a price because customers are sensitive to price changes (particularly price hikes) and don’t like it when the number is constantly fluctuating.

Simply comparing prices of similar goods at the markets isn’t a great gauge of what your price should be. Unless you have a wholesaler’s license and shop at Costco or Sam’s Club, you’ll be paying retail prices for your ingredients — far more than a factory that is mass-producing baked goods.

The first deciding piece of information you’ll need is exactly how much the particular item costs to make. Do a cost analysis for each item by breaking down the ingredients, and then doing some simple arithmetic. For example, a 5-pound bag of flour costs $2.89; that breaks down to 57 cents per pound (4 cups per pound), or 14 cents per cup. Figure out the cost for each ingredient in a recipe, including packaging, and then add sums for power and labor (I add the rate of minimum wage for the time it takes to make that particular item), and an allowance for profit.

Marketing

In my experience, it’s not profitable, or even possible to break even, trying to sell your products wholesale to retailers for resale. Businesses like restaurants, cafés, gourmet food stores, caterers and the like are used to purchasing from food-service companies, such as Sysco, where a loaf of bread costs 50 cents, and their budgets depend on these low costs. If you approach retail businesses and expect to get $5 for a loaf of bread, you’ll come away disappointed; there’s simply “no meat left on the bone” for the merchant to make a profit. Instead, focus on direct marketing your products.

If you don’t already have some kind of desktop publishing program, such as Microsoft Publisher, on your computer, it might well be worth the investment to buy one. With such a program, along with a Dummies book, you can create your own flyers, brochures, business cards and menus — all the marketing materials you’ll need to promote your business.

Without desktop publishing, go ahead and create simple materials in any program you know. If this isn’t your forte, recruit a friend, your child or someone else — do what you need  to make sure the materials are professional looking and free of misspellings and typos. Think about the last restaurant menu you read that was full of bad grammar and typos. Did it inspire your confidence in the food?

Flyers or brochures should contain a sentence or two about your business, descriptions of your products, a price list, and the ordering and delivery protocol. Coupons or special offers entice hesitant customers, so think about offering an initial or weekly special that won’t cut into your profits too much.

Other ideas for self-promotion include offering demonstrations at fairs and retail establishments that offer cooking classes; you’ll get face time with many interested people who may wind up being your customers. A simple website with your basic product offerings will legitimize your business in the eyes of potential customers, and a weekly or monthly newsletter highlighting specials and recipes can be sent out when you gather customers’ email addresses.

Direct Marketing Avenues

Farmers’ Markets and Fairs

Food vendors are always welcomed and needed at farmers’ markets, street fairs, food and craft fairs, and church and school bazaars. Call the organizers and inquire about becoming a vendor at such events.

Office Buildings

Offices — including banks, schools, doctors offices and hospitals — are a great source of customers. Folks with full-time jobs often desire homemade products but don’t have the time to bake or cook — and it seems they’re always needing special items for office parties and lunches. Offices also provide the convenience of one location to deliver to and collect money from, and your customers will be there all day, so scheduling delivery is flexible. It’s helpful to know someone at the particular office you’re targeting who can vouch for you and your products, and possibly even handle the deliveries and money collection. If you don’t know anyone on the inside, inquire at your bank, your child’s school or the beauty shop about their need or desire for your services.

Your Neighborhood

Your surrounding neighborhood, or the closest concentration of houses and apartment buildings, is also a good source of potential customers. Take your flyers or brochures to residential areas or apartment buildings, and place one in each mailbox.

Community Groups (master gardeners, Toastmasters, church groups, etc.)

Groups of people who gather on a regular basis are another perfect customer base. Everyone will be in one location (easy delivery and collection), and members are usually busy and socially connected, and can refer other interested friends and associates to your business.

Kitchen Sales

If you’re comfortable with customers coming into your home, you could offer the option of pick up. If your customer base is composed of friends and acquaintances, this may be perfectly safe; however, I don’t recommend opening up your home to complete strangers, especially if you’re home alone during pick-up times.

Managing Finances

For tax purposes, it’s important to keep a log of all your business purchases and sales. A simple ledger book or lined notebook will suffice, or a spreadsheet on your computer (make sure to back it up in case of a computer meltdown). Record weekly sales figures, and keep receipts for all ingredients and equipment purchased for the business. Depending on how analytical you want to get, you could keep multiple spreadsheets to track profit and loss, expenses, popularity of items, weekly sales by year to determine busy periods, etc. It’s up to you!


This article was excerpted from Plowing With Pigs and Other Creative, Low-Budget Homesteading Solutions by Oscar H. Will III and Karen K. Will (New Society Publishers 2013). To order your copy of the book, visit the GRIT store: Plowing With Pigs.


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Post a comment below.

 

respect1953
11/1/2013 7:21:53 AM
Also, any ideas on the lowest investment business possible. Any ideas welcome. Sharon

respect1953
11/1/2013 7:18:34 AM
I am a beginner. I have an income of 469./month. With that kind of income I can't imagine what one could do. Also considering the govt fees involved with starting anything. I considered candle and soap making because there are no restrictions on food products. I have never done it before and wonder if the field is saturated. Being on SSI I imagine if I made a dollar I would lose my healthcare and I am disabled. Thank You, Sharon respect1953@gmail.com








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