So, you’ve done everything you need to do to get up and running with your new cottage food business. You’ve familiarized yourself with the legal codes; located a manufacturing facility; and put some thought into your packaging. Now it’s time to get down to the nitty-gritty: actually pricing, selling, and shipping your products. Below are five more essential steps to starting a home food business.
Run the numbers
Unfortunately, running a cottage food business does not just entail happily making jam/cookies/hot sauce all day. If that were the case, everyone in the world would probably start doing it, including us. The truth is, in order to create a successful business, you will have to do math at some point. You will also need to hone some basic business skills, which many artists and makers tend to struggle with.
With all that said, many a butcher, baker, and hot sauce maker has become a successful business owner, and there’s no reason why you shouldn’t be able to, too. Your first step in conquering this challenge is calculating how much everything will cost you. Try to account for:
- Packaging/labeling supplies
- Marketing/website creation
If you decide to start vending your wares at farmer’s markets and craft fairs, you will also have additional costs to consider, like registration fees. Once you have a good ballpark estimate of where you stand, you’ll be ready to tackle the next step: pricing.
Price your products
Pricing is hard. Everyone, across all industries, seem to agree on this. It’s very difficult—nigh impossible—to predict what ingredients and materials will actually cost, or how many products you’ll be able to sell. With that said, two basic rules apply when pricing your products:
- Do your research. Market research, that is. Take a look at your competitors’ prices, both online and in your local area. Unless your product is extremely unique, you will probably not want to set your prices higher than the highest price you see. You can also ask members of various online communities, like Reddit, to help out by completing an anonymous survey about how much they’d be willing to pay for a certain item. Unlike your friends and family members, Internet strangers have no need to spare your feelings, and will be better able to give you an honest answer.
- Price what you’re worth. Small-batch goods will always be slightly more expensive than big box store alternatives. If you believe in the value of your product, don’t undersell yourself. Instead of slashing your prices, increase the quality of your marketing and advertising materials. Try to explain—or hire someone who can help you explain—why your product is worth the extra cost.
Mark & manage your inventory
Once you’ve started creating your product, it’s very important to mark and code each item with an expiration date. While doing this is not required by U.S. law—except in the case of baby formula—it’s a common best practice that can help prevent spoilage. It’s also a good idea to give each product a unique serial number, so that you can keep track of which batches were made and when. If, for instance, you taste-test a cookie and discover that you accidentally used way too much salt, it will be easy to find all the cookies from that batch and toss them.
Once you’ve marked each item with an expiration date and serial number, your next step is entering that information into a spreadsheet. Boom—just like that, you’ve got an inventory! Whether you decide to invest in a digital inventory tool, or stick with a humble Microsoft Excel sheet, make sure to always keep track of every item you produce. If your brother stops by and swipes one of your homemade beers off the shelf, or if you decide to give your kids some of your handmade candy for Christmas, document where those items ended up. Doing so takes very little effort and can help you enormously in the long run.
Launch your marketing initiatives
We could fill a whole book—perhaps several books—with marketing and branding advice, but we’ll try to keep it as brief as possible. The most important thing to keep in mind while building your marketing strategy is to think about your value proposition—the precise, specific reason why you’re better than the rest. Does your product have more nutritional value? A better taste? Is it better for the planet or the local community? Write down the answers to these questions, and keep them front and center when creating your marketing materials.
With so many marketing and advertising channels available these days, you may be completely overwhelmed with the prospect of where to start. Let us help you out: the number one thing you’ll need to promote your food business is a website. Consider this your digital storefront; the central hub that your business image revolves around. Many small business owners start with a Facebook page, but a website is much more professional, and cultivating an image of professionalism will help encourage people to spend more on your products.
Consider shipping your food products
When you’re just starting your business, the bulk of your profits will likely come from in-person events, like farmer’s markets, where buyers can sample your products and get to know you. From events like these, you will hopefully be able to build a small, but loyal following—and then, you’ll have the opportunity to ship your wares straight to your customers’ doors. You might also be able to build relationships with local shops and businesses, who can display your products in exchange for a percentage of profits.
Whether you end up selling your products to individuals or retailers, you will have to ensure they arrive in good condition, which means you will have to package them carefully. Make sure to invest in sturdy, high-quality boxes that don’t collapse or break, and protective materials like bubble wrap, packing peanuts, or packing paper. You might also need to invest in cold packs or silica beads to preserve freshness. Last but not least, try to consider small additions, like handwritten notes, that can help you create a great unboxing experience.
Final tip: Manage your expectations
As you can see, starting a homemade food business is not for the faint of heart! Creating the perfect batch of product is only the start of the challenge that lies before you; you’ll also have to be a salesperson, an accountant, a quality control tester, a marketing strategist, and much more. As you tackle each step of this list, try to keep your eye on the big picture. You’re sharing something you’re proud of with the world, on your own schedule, and that’s a dream worth striving for.
SSI Packaging is a packaging company based in Richmond, VA, dedicated to helping small business owners succeed. We offer everything you might need to package, label, and ship your inventory. To explore our catalog of products, click here.