March 13, 2014

Food Entrepreneurs Use Home Kitchens To Get Their Businesses Cooking

cottage food businessIt’s not uncommon for food lovers to dream of giving up their corporate careers to start a food business.  That’s exactly what motivated Hope Lawrence of Hudson Henry Baking Co, maker of Good News Granola, to leave her finance career and, with her family, move to Virginia.   Originally she had been looking to open up a brick-and-mortar bakery but with two small boys, Lawrence realized that she’d end up spending all her time in the bakery away from her children.  “That wasn’t why we made this move,” she says.

So, instead, she started her company out of her home.  Under Virginia law, food producers who make products that they sell at farmers’ markets or directly to the customer may legally work out of their home kitchens.

Virginia is not alone in this.  Commonly referred to as Cottage Food Laws, currently all but 5 states in the US allow for some form of home-based food business.  These laws are written on a state-by-state basis and each state has different requirements and permitting regulations.   These laws, which are new in many states in the last few years, are proving popular with food artisans who want to try their hand at running a food business.   While there is no national count on how many home food businesses are in operation, Virginia Department of Agriculture and Consumer Services reports that they have close to 1000 registered home food businesses while in the state of Washington, where the cottage food laws just went into effect in June of 2012, there are nearly 100 registered home food entrepreneurs.

Shana Fischer, of Phoenix, AZ, had dreamt of starting up a bakery for many years but found the costs associated with starting a food business in a commercial kitchen were cost prohibitive.  Time constraints were also a major concern for her as she already runs her own production company and needed kitchen time that would be flexible with her busy schedule.

After talking about how she wanted to start a food business for many years, it was ultimately the death of a close friend that gave her the impetus to get started.  “She told me that every year I needed to do something fearless in her honor,” Fischer says of her friend who died at 39.   In December 2012, Fischer decided that her fearless thing would be to start Brilliant Sky Bakery and she dedicated it to the memory of her friend.

As a business owner, Fischer understands the need to watch costs carefully so she determined that it made the most sense for her to start her business from her home kitchen as permitted under Arizona’s food laws.  “It’s significantly less expensive for a small producer like myself rather than renting a commercial kitchen space,” Fischer says, “and [the kitchen] available when I need it.”

In Virginia, Lawrence was in a unique position in that the home she and her husband purchased had a commercial kitchen in it that is separate from the home kitchen.  Her kitchen has been inspected by state officials which enables her to sell wholesale to stores just like other commercially-produced products. Lawrence also finds support from the State of Virginia through the Virginia Finest program that is focused on helping small food entrepreneurs network and build their businesses.

“Our agency is unique in that we’re tasked with making sure these companies are off to a great start,” says Sarah Pennington, Public Relations Specialist for the Virginia Department of Agriculture and Consumer Services.   Included in this is providing food artisans with the resources they need to ensure their products are being made in a safe manner as well as marketing and sales opportunities that bring food artisans and store buyers together.  “We want these businesses to expand and grow,” Ryan Davis, Program Manager for Virginia Department of Agriculture and Consumer Services’ Office of Dairy and Foods, adds. “Ultimately it’s good for Virginia to help them become successful.”

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8 comments on “Food Entrepreneurs Use Home Kitchens To Get Their Businesses Cooking

  • Malia Foley on said:

    I am curious to know if customers ask where their product is made, and if this has any implications on customers purchasing product?

    • Jennifer on said:

      I asked this question to several home-based entrepreneurs and most said that if asked they answer honestly but then they explain more about the rules in their state so that customers can feel comfortable with the oversight that is in place. In every case I was told that after they explain more about the rules it eases any concern consumers may have had.

  • Shana on said:

    Malia– When people ask us, we always tell them we are a home-based bakery. In fact, Arizona law requires our food label to state the item was prepared in a home. It has never been a problem for us. People understand we have proper licensing, liability insurance, Food Handler’s cards and we take the same necessary health and safety precautions as a bricks and mortar bakery.
    Brilliant Sky Bakery

      • Malia on said:

        Thanks Shana-

        I am curious also to know how you account for your business using the home. Do you have the ability to use a percentage of your rent or mortgage of the home to act as expenses for the business?

        What is also the threshold you use to move to a commercial or commissary kitchen?

        Do you find it hard to concentrate at home? I have small ones and I just think my home environment would not be so conducive.

        Thanks for the information.

        • Shana on said:

          Hi Malia,

          You should consult a tax expert/CPA in your area, but you should be able to take off a percentage of utilities.
          I have not thought about moving to commercial kitchen. We are small batch so it’s just perfect still.
          It’s not hard to concentrate at home. You have to be disciplined and set aside time. We bake every order as it comes in so you do need to be flexible. I actually find it relaxing to bake from home. Truth be told, I put on the SVU Marathon on USA Network and bake away!
          Good luck…