Q: I want to start a business making organic baked goods
from my home. Will I have any problems with legal authorities?
A: Your sense of the market is right on--organic food is
one of the fastest--growing segments in the food industry. A 2004
study by Synovate, commissioned by Whole Foods Market, found that
27 percent of Americans are using more organic foods than they did
the year before. And baked goods, right after organic produce, are
the second-largest type of organic food purchased.
But producing and selling food for human consumption at home
means you must surmount more legal hurdles than most homebased
businesses. First, like all homebased businesses, your business
needs to be permitted by your city or county zoning. What one
community permits to be done in a home may be completely different
than what's allowed in an adjacent community. If you live in a
common-interest development, chances are you're out of luck for
home baking--but to be sure, check your homeowners
association's covenants, codes and restrictions. An exception
from a prohibition in a zoning ordinance, called a variance or a
conditional use permit, is easier to get than a waiver or a
variance from a homeowners association.
Content Continues Below
Your next hurdle is determining whether state law allows the
commercial sale of food made in a home. This varies from state to
state. If you plan to sell your baked goods retail, you'll be
dealing with your city or county board of health. However, if you
plan to sell your organic food products wholesale, chances are,
what you produce will need to be inspected by your state Department
of Health.
You'll need to have a commercial kitchen, unless you're
in a state like Iowa that allows food prepared in residential
kitchens to be sold when gross sales are below a certain dollar
amount. We've seen people put commercial kitchens in their
basements or in additions to their homes.
Commercial kitchens are expensive, so first determine if the
business you plan to develop will justify the investment of
remodeling your home. Meanwhile, you can rent a commercial kitchen
in a church, state park, campground or fire station that
doesn't use its commercial-grade kitchen in off-hours or
off-season. Some states even fund incubator kitchens that can be
shared to encourage startups. Check out your state's
small-business resources to see if this is an option for you.
Still another option is to use a mobile kitchen, such as one
manufactured by Carlin Manufacturing, which makes fully equipped
catering kitchens capable of serving 200 to 750 people. However,
this is not a suitable solution unless you have no neighbors
nearby.
While food provided by catering services is subject to the same
restrictions as food produced for sale--retail or wholesale--the
fact is, many catering services start by cooking in residential
kitchens at home, taking the chance they won't get caught. Keep
in mind, the problem for a business like yours--one that will be
selling baked goods wholesale, as you probably will--is that when
you take your baked goods to a retail store or a restaurant, they
are apt to insist you produce a state or local health department
license.
Since you'll be selling baked goods, chances are you'll
be selling locally and won't be shipping via interstate
commerce. This is good, because the FDA regulates goods made in
home kitchens and requires compliance with all food safety and
nutrition labeling laws. You also probably won't be able to
count on institutional buyers, like colleges, as potential
customers because they typically have their own policies
prohibiting the sale or use of food prepared or stored in private
homes in their facilities.
It is feasible to make organic baked goods for sale at home.
There's a ready market, but to tap into it, you will first have
to do some homework and probably surmount some hurdles.
Authors and career coaches Paul and Sarah Edwards' new
book is The Best Home Business for People 50+.Send
them your questions at www.workingfromhome.com or in care of
Entrepreneur.