Home Kitchens in California
California created over 1000 new businesses by legalizing food made at home recently when they passed The California Homemade Food Act also known as Assembly Bill 1616. Prior to the passage of this law it was illegal to sell foods that had been made at home. This is great news for entrepreneurs who want to take their homemade hobby to the next level, and for the State Health Department who won’t have to crack down on home made food vendors and shut down folks who are trying to make a living by producing food products in home kitchens.
If you live in California, this is great news. Cottage industries are growing with a grassroots movement away from factory farming and towards more farm-to-table, sustainable food production. There has been a recent resurgence of farmers markets, gardening and food sharing cooperatives, even in urban areas. The vendors who sell their homemade goods at these farmers markets are part of this rapidly growing movement.
These cottage industries are governed by a variety of state specific laws. There are laws on both the positive and negative ends of the spectrum, with some states making it increasingly difficult to sell homemade goods and others that support homemade food businesses. Surprisingly there are still states with no cottage laws such as Connecticut, Hawaii and New Jersey (who currently has some potential laws being reviewed).
These laws aren’t just at the state level either, cities often enact laws that require vendors to pay extra fees for participating in street fairs and farmers market such as a recent 5% tax in the city of Ashland, Oregon that was levied on vendors of prepared food and beverages. Oregon does have excellent homemade food laws requiring only a certified kitchen in most cases at the state level, but there was a decidedly negative reaction to the new tax from vendors who felt that they shouldn’t have to pay the same tax as a sit-down restaurant just to sell their one item. Much of the reaction had to do with the increase in cost to the consumer that needed to take place to cover the cost of the new tax.
If you’re a producer of a homemade food item and are wondering if you should take that step into becoming a legal home-based business where do you begin? Here are a few suggestions:
Perfect Your Product
If you’re considering a home-based business, the first thing you want to do is make sure you have a product that will sell. Many hobbyist will spend years in the development phase perfecting their recipe and getting feedback from friends and family before taking that momentous step into legitimate business. You are the best judge of the quality of your product, and you want to keep the integrity of that as you plan to increase production.
The next step in creating your home-based business is coming up with a solid business plan. If you have no business experience, it would be wise to enlist the help of a business or legal consultant to assist you in navigating the legalities of small business, including licensing, financial planning, tax laws and a well-thought-out marketing strategy.
Some of the legalities involved relate to the state specific cottage laws where live and plan to sell your homemade food item. Many states only require a certified kitchen, and still others, like California, require different levels of permits. A Class A permit allows you direct sales without inspections form a certified kitchen. A Class B permit allows you to sell through a 3rd party retailer and required regular health inspections of the kitchen. Both permits allow the products to be sold indirectly throughout the state while direct sales are limited to the county of origin for holders of Class B permits. Make sure you are educated as to the requirements in your state.
Production and Sales
The next step in going from hobby to small business is to create your production and sales goals. You need to market your product and find outlets to sell it. Make sure that your production can meet the demand. You don’t want to get in over your head with orders you can’t fill.
You might want to start small with trade shows, street fairs, farmers markets and similar venues. Most of these outlets require a fee to join a cooperative or space rental fees. The advantage here is that you are part of an event that is taking care of advertising and bringing in the public to buy your product without any additional effort on your part. As word of mouth spreads, you can expand to larger markets, mail order, Internet sales,etc.
Marketing and Branding
You are creating a brand for yourself by your packaging and advertising. Create a logo that is simple, clear and memorable to create brand awareness and a positive association to your product. Remember that whatever logo you create is going to represent you and your company, so it has to be something that you can live with forever. You want it to stick with the customer, so that they seek you out when it’s time to buy again.
Marketing in the Internet age is tailor- made for the small businessperson. You can use social media, email, newsletter, and desktop publishing to market your product to the public. All it takes is a little know-how to create a marketing campaign that in the past would have required a costly contract with an ad agency.
PBFY Can Help!
When you’re ready to mass produce your product, PBFY can help you to create packaging and custom label design and printing that will take your home-based business to the next level. Our staff of artists and designers knows what you need to market your product like a pro. Request free samples or get a quote today.