Doing what you love and earning a sustainable income from it is something most entrepreneurs work towards.
If you have a passion for cooking or baking, then starting a food business from home may be a business venture you want to pursue – whether it be part-time or full-time. But can you start a food business from home? Do you have enough professional experience? What regulations do you need to know? Will customers love your product?
We’re here to provide helpful answers to all your questions, so you can start your food business from home with confidence!
In this guide, we’ll discuss the following:
- Can you make money starting a food business from home?
- Why should you start a food business from home?
- How much does it cost to start a food business from home?
- Setting up a home food business
- Rules on selling food from your home
- How To Advertise Your Home Food Business
- Other business opportunities you can consider
Let’s get started.
Is starting a food business from home profitable?
A home catering business can generate high profits, but these profits will depend on several factors: your ongoing costs, the size of your customer base, your location, waste management, and much more.
It’s difficult to give you an exact answer to how much money you’ll make running a food business from home, because your profit margin will depend on your individual expenses and operating costs. However, food businesses from home can thrive as they require relatively low start-up costs and there is space in this market to flourish.
Of course, inflation and the cost-of-living crises are risks you’ll need to factor into your running costs. You will need to find ways to reduce your energy expenses, increase your prices without losing customers, and set a firm budget.
Find out more: Need funding? Check out our guide on small business grants.
Why should you start a food business from home?
Starting a home food business can be a rewarding and exciting experience. It also has advantages over starting a traditional restaurant. It’s important that we give you a comprehensive and pragmatic analysis of starting a business like this, so let’s list the benefits and risks of starting your own home food business.
Benefits of starting a food business from home
- Low start-up costs: minimal start-up investment is required for this business, as a culinary artist likely has all the equipment they need.
- Creative freedom: you’ll have creative autonomy to design your menu, tailor your products, and experiment with new recipes based on consumer trends.
- Flexibility: you’ll have the ability to operate your business on your own terms, in the comfort of your own home.
- Tax advantages: if you operate a business from home, you may have the ability to claim back some of your costs. However, we strongly encourage you to conduct research on this, and always keep detailed records of your expenses.
Risks of starting a food business from home
- Dealing with administration: setting up a food business from home can be overwhelming. There are multiple regulatory hoops you need to jump through. We’ll get to these later.
- Distractions: you’ll be working from your own home, so it can be difficult to effectively separate your work life from your home life, particularly if you have children, pets or other tenants.
- Contamination risks: there is a high risk of cross-contamination, and you need to follow multiple steps to ensure it doesn’t happen.
- High marketing budget: the only way you’ll acquire new customers is through marketing, so your marketing expenses will be hefty.
While it’s up to you to weigh up these benefits and risks, it’s also important that you ensure to set up certain qualities. A passion for cooking food or baking goods is an obvious one. You will also need:
- Strong organisational skills
- Effective time management
- Budget recording and record keeping
- Determination and resilience
- Patience
Start-up costs and funding opportunities
You may be wondering how much it costs to start a food business from your home. As we said before, start-up costs are relatively low for this type of business. If you have all your equipment, start-up costs can be anywhere between £1,000 - £5,000. If you need to purchase equipment, your initial investment will be higher.
If you’re concerned about funding the start of your food business, we have a helpful guide on small business grants in the UK that you can read. It explains what grants are, and where you can find them.
Small business loans are another way that you can fund the start and growth of your business. We have a helpful guide on small business loans too. While this guide does focus on funding to buy a business, it still offers helpful links to funding options, regardless of which business venture you are pursuing.
How do you start a food business from home?
This section of the guide will go through how to start and set up your food business from home step-by-step. We’ll begin with the most important step: your business plan.
Create your business plan
As an entrepreneur, you know that a business plan is integral to the survival and growth of your new business. You’ll need to provide answers to the following questions:
Who is your target market?
Will you make large, nutritious meals to dual-income families who don’t have time to cook, or will you sell cakes for special occasions?
What will your unique selling proposition be?
Will you create imaginative marketing efforts to promote your products, or will you create secret recipes, interesting dietary differentiators or innovative menus?
How will you sell and deliver your product?
What platforms will you use to generate awareness of your products? Will you personally deliver your products, or will you use online delivery apps (we’ll offer some options later).
Will you scale your food business from home?
Do you have a five-year plan to scale your business, or are you happy keeping it small with the same product line? Do you want to become an international brand, or do you just want to focus on generating national awareness of your products?
The primary legal requirements to sell food from your own home
There are quite a few legal requirements to abide by when starting a food business from home. The primary requirements you need to know before you begin trading are:
- Registering as a food business from home at least 28 days before you begin trading
- Understand food hygiene and obtain a food hygiene certificate. This will assist you in getting a food hygiene rating at home.
There are other procedures you’ll need to follow to start your home food business safely, but we’ll get to those in the next section.
How do you set up a food business from home?
If you’re feeling overwhelmed with what you’re legally required to do to start a food business from home, this section will clearly outline the steps you need to take to start your new business, whether your selling food, baked goods, or chocolate!
Step one – register as self-employed, so you can alert HMRC that you will be filing a self-assessment tax return.
Step two – understand what permissions you need, and from whom, when running a business from home. For example, you may need permission from your mortgage provider/landlord.
Step three – ensure you set up procedures to manage food safety. You can base these off the HACCP.
Step four – understand safe hygiene practices for food and obtain training on food allergens.
Step five – Make sure your premises is safe to conduct business in. We also recommend carrying out a risk assessment as an extra safety precaution.
Step six – it’s crucial that you keep track of where you purchase your food, and who you send your products to. This will help you trace your products through the supply chain in case an inspection is needed. Likewise, it’s important that you manage your food waste correctly and securely.
How to advertise your home food business
Marketing your new home food business to the right audience is crucial to your success. In this section, we’ll offer some valuable tips and ideas on how to effectively advertise your home food business.
Designing a logo and packaging
Designing a logo that represents your brand’s values and personality is vital, as you want people to remember who you are. The way you package your food is also crucial. Appropriate food-grade packaging and clear allergen information is very important! Most online platforms that you’ll sell your products through will require correct labelling and packaging.
Selling your products online
Apart from delivering the food yourself, selling your food on delivery platforms is a great way to get your new business venture up and running. Platforms like UberEats, Deliveroo, Shopify, or Amazon are great ways to sell food online.
Social media marketing
Social media platforms will be your business’s lifeline. This is how you will acquire, communicate and engage with your consumers.
Visual platforms like TikTok, Instragram and Pinterest are effective platforms we recommend using. TikTok, for example, is all about trends and quick visual snippets. This platform is a great way to generate brand awareness and set yourself apart from competitors.
It is crucial that you have a social media strategy in place before you begin trading.
Customer reviews
We’ve all sat on food delivery apps trying to decide which brand is the best choice. Undoubtedly, an element that influences that decision is the reviews that customers leave.
User-generated content will increase the credibility of your brand. As a new, small business, building brand advocacy will be a goal you’ll want to achieve, so positive customer reviews are something you’ll need to work towards.
Food markets
Another way you can get your products in front of potential customers is by attending food markets. This will allow you to naturally increase awareness of your brand, showcase your products, and connect with your local community.
Find out more: Need more advice on this sector? Read our sector-specific articles.
Other Routes Into Business Ownership
Before we wrap up this guide, it’s important that we offer you a holistic analysis of business ownership. While we strongly encourage you to start your own business, it’s important to understand that starting a business brings significant risks. It requires extensive planning, time, and dedication, and your first year will be the most difficult.
Buying an existing business is another route you can consider. While you won’t be able to buy an existing home food business, we do have a plethora of catering businesses for sale on our site.
Investing in a food-related franchise is another route you can consider, which is often much safer and less time-consuming than starting a business.
If you think buying an existing business or franchise is something you want to consider, then we recommend reading our buying a business guide to understand what the process will look like.
If you’re still set on starting a food business at home, here is a helpful checklist on setting up your home food business:
- Ensure you have enough funding in place to start your new venture
- Create a detailed business plan
- Register as a food business and obtain a food hygiene certificate
- Register as self-employed with HMRC
- Gain permissions from local authorities to run your business from home
- Set up procedures to manage your food safely
- Understand food hygiene practices and food allergens
- Make sure your premises is safe by carrying out a risk assessment
- Keep track of your expenses and invoices and manage your food waste correctly
- Design your logo and packaging
- Find a platform to sell your products online
- Consistently working on your marketing strategies to promote brand awareness and sales
We understand that starting any business can be a stressful process. If you have questions or need advice, please feel free to contact us, and we’ll do our best to support you!
We wish you an abundance of success on your new entrepreneurial journey. Good luck!