So, what about licensing?

This is probably one of the most common questions we get…what licensing do I need and how do I get it?

First training that ALL of these licenses require is the Food Safety Manager’s Training. Always start with that. Several companies do it, we use the ServSafe curriculum. Do NOT mistake this for the Handler’s certification…Manager’s is more involved.

There are 3 agencies that regulate companies that make food for sale. The health department, the Department of Agriculture and the US Department of Agriculture. Which one you need depends on how you intend to sell your product and what you are making.

The health department—run by your state or local authorities—regulates direct to consumer food. This is any food that is made by you and sold directly to a customer. Food trucks, restaurants, farmer’s market vendors, etc usually fall under health department’s jurisdiction. As a general rule (but not ALWAYS true) a health department license is quicker to get.

The state-level Department of Agriculture regulates and inspects packaged goods intended to be resold (wholesale products) that do not contain meat. They do this on behalf of the FDA, which means once you get this license you may sell across state lines. In most cases, the process of getting this license usually takes 2-6 months from the time it is turned in. You need to have your labels created, your packaging ready, your HACCP plan (Hazardous Analysis Critical Control Point Plan) for each product and, if applicable, your product tested for bacterial growth and shelf life standards. Some products require specialized training (like acidified products or cold press juice, for example). While very small businesses ARE NOT required to have nutrition labels, they are a good idea and can either be tested by the lab or can be made by putting in your ingredients into a software program (we often use recipal.com).

The federal United States Department of Agriculture regulates all wholesale products containing meat. Those frozen meals in a grocery store? USDA. The USDA issues something called a Grant of Inspection for these types of products and it is involved. The certification requires you to be separated from all other products by time and space (shared spaces have to have allocated kitchens for this, for example) you to notify your inspector each time you are going to produce (they will usually be onsite for production). You will require HACCP plans, recall plans, manufacturing training and more, depending on your product. This is a significant investment for food producers.

For the new entrepreneur, this should be a step process as you put your business together. You can hold ALL of these licenses you want. Start with direct to consumer sales and, as your customer base grows, spend more and go through more processes.

Oh, and one last thing to remember. In all cases your products have to be approved AND your production kitchen has to be approved. You will need new licensing if you move kitchens.

How do I start a food business as a side hustle?

So you want to start a food business.

You know you have a good product or idea, but you still have bills to pay.  That’s great…we get it. But how do you do it?

Most new entrepreneurs start their companies while working another job, however there are some major questions to consider if that is what you are thinking about.

·         How much time do I have time for this?

o   The hardest part about a side gig is being honest about the amount of time you have to dedicate to it, because your success is a result of the time and effort you put in. If you have a job you are working 80 hours a week and raising a family, it could be very difficult for you to start a successful business, too. We go more in depth on this topic in our “Starting Your Food Business” course.

·         How can I sell my food part-time and can I make money?

o   Absolutely! Making money in food depends on the business model you decide on---wholesale vs retail, catering/made to order vs. premade, etc. Check out this free guide to lay out the options for you to decide on which type of business will be best for you. 
Once you make that decision, you want to think about how to best find your target customer. Most new entrepreneurs don’t know who their target customer is yet and need to figure that out. This is why we advise many of our new entrepreneurs to try out local farmer’s markets—it is an opportunity to understand and interact with the people who buy your food. This interaction is one of the most integral lessons you can learn in business and will determine if you are successful in your business. Check out the “Early Sales” course for methods and best practices to make money while learning.

·         Can I make enough money to cover my overhead if I’m not full time?

o   Sure you can! Much of this will depend on what your overhead is—and whether the type of food you are making, how you intend to sell it and whether it even requires substantial overhead.  Some items—especially bakery items—can be made from your home and sold directly to customers, other types of food, like catering, have to be made in commercial kitchens and other products rely on “it depends”.  We go in-depth with these topics in both our “Learning How to Make a Profit” course and our “Licensing Your New Food Company” Course.

One of the first goal posts for most new entrepreneurs is when their company can finally support their life and family and you can make this side hustle into a full-time gig. Whether or not this is your objective, having a food business as a profitable side hustle is very possible but depends entirely on how you get started.

Where to Make My Food: Types of shared spaces

So, as a new entrepreneur, you want to make your product but you do not want to make it out of your house (either due to food code requirements or just logistics). Here are some options you may want to explore.

1.    Church or Community Center. If you are a very active member in your community or church, this could be an option.

a.    Pros:

                                          i.    It is usually inexpensive or by the hour. Flexible terms (one event at a time)

                                        ii.    You will usually be the only one using it at a time.

b.    Cons:

                                          i.    Equipment is unmonitored and may not work correctly or may be old and not useable for what you need.

                                        ii.    Hourly agreements can go wrong quickly. For example, if a person before you doesn’t properly clean, you will need to do that (and pay for it) before you get started. (See hourly kitchens below)

                                       iii.    You are by yourself; there is no one to help you (all entrepreneurs need teams).

                                       iv.    You have to work around other people’s schedules and bookings for the venue.  Access hours likely limited.

                                        v.    No storage capacity

2.    Restaurant or Catering Kitchen off hours. This is usually using their unused space or allowing you to be in the kitchen when they are not present (like night time/ early mornings).

a.    Pros:

                                          i.    Has more equipment for your use

                                        ii.    Has people around for assistance that are in the industry.

                                       iii.    Models to follow and mentors to talk to

                                       iv.    May allow month to month agreements

                                        v.    May allow “virtual” restaurant models out the back of the kitchen

b.    Cons

                                          i.    Your space could be very limited in the kitchen, especially during service and/or events

                                        ii.    Equipment will likely be heavily used or being used when you need it.

                                       iii.    Storage is likely limited to non-existent

                                       iv.    Busy and crowded

                                        v.    Access hours limited

3.    Unmanaged/ minimally managed Shared Kitchen. This is a shared kitchen setup that does not have staff present regularly. They may have a weekly cleaning service and you usually have to book your time on a workstation.

a.    Pros:

                                          i.    Reliable times (usually).

                                        ii.    Storage capacity.

                                       iii.    Some community (depending on the number of workstations in the kitchen being used at once).

                                       iv.    Hourly rates can be less expensive when business is slow

b.    Cons:

                                          i.    May be difficult to take last minute jobs if you have to schedule time

                                        ii.    May have to clean up after others in order to start working (and pay for that time).

                                       iii.    If you have a long cook product, may be expensive (like stocks).

                                       iv.    Scheduling cooking can be challenging if something goes wrong (i.e. you burn the cookies and have to start over).

4.    Fully Managed/Fully Shared Kitchen/ Food Business Incubator

a.    Pros

                                          i.    Reliable location (usually available for you 24/7)

                                        ii.    Storage

                                       iii.    Deliveries taken

                                       iv.    Business consultants onsite (usually part of membership)

                                        v.    Full community to help you grow your business

                                       vi.    Trading/collaboration on jobs helps your business grow faster

b.    Cons

                                          i.    Sharing equipment with other people may require you to wait/plan for waiting to use equipment

                                        ii.    Equipment sharing also may mean cleaning up another person’s mess.

                                       iii.    Interpersonal skill development is important (and everyone is at different levels).

5 Things to Prepare to Start Your Business

So you love to cook and want to start a business? You’ve come to the right place.

Making the decision to start a business is exciting.  You KNOW it is going to work!  Your friends love it, your family is supportive, your food is DELICIOUS. 

But off in the horizon is a dark cloud that you are trying hard to ignore.  Doubt.  Fear. 

You are smart.  You know the statistics.  The vast majority of new businesses fail.  In the food industry, that number is even higher. 

When I started my bakery business, I had these same doubts.  I’m an analyst, so I made a plan. I researched all my questions. I was motivated and my family was supportive.  Unfortunately, there were things I had no idea I didn’t know…and they sunk my business.  I closed it within two years.

Well, THAT’S not motivational!

But YOU can be different, you tell yourself. 

And you are right.  You can be.  But boy, is there a STEEP learning curve.

Since then, I co-founded Frontier Kitchen, learned from my mistakes and the mistakes of hundreds of other successful (and not successful) entrepreneurs and businesses. I’m going to try and share some of those lessons with you.

Unfortunately no one can tell you exactly how it is going to go. Some information you simply aren’t ready for—and that’s ok, you will get there. Other parts will be unique to your journey. Anyone who tells you they have all the answers is selling something.

However, you can prepare. Here are 5 steps to getting physically and mentally ready for this journey.

1. Complete your business set up before you EVER mix an ingredient. This means get your LLC, your EIN, your insurance and your food safety managers training.

2. Set up your business bank account and your accounting software. NEVER, NEVER, NEVER mix your business money and your personal money! You will watch your personal accounts be SUCKED DRY—that’s bad! (side note, skipping the accounting software takes out 50% of ALL new companies. Your company lives and dies on its accounting.) Related, set aside time each week to do your backend paperwork or hire someone to do it for you—many businesses go out of business because they never find the time to collect their money.

3. Find your support team. Go to Frontier Kitchen, SCORE, your local Small Business Development Center or Chamber of Commerce. Your friends and family are probably great, but surround yourself with people who have done what you are trying to do and those that are going through it with you.

4. Be ready to fail, but do it quickly. Do NOT wait a year to find out you aren’t making any money. NEVER say “about” when talking about your profit—you need to know to the penny what your food and overhead costs are every month. This is hard. Get help.

5. Be prepared to create processes and procedures. As the business owner, that is your primary job. It is great fun to create a delish chicken dish. Cooking 1000 chickens—less so. But this is your business. You are the creator, other people do for you (eventually). Make sure you are thinking about it that way.