Think your culinary skills are a cut above? Do your friends often tell you that you could be the next Gordon, Jamie or Nigella? How about turning your passion for food into a full-time business you can run from home?
Starting a food business from home could be the beginning of a satisfying new career. And a very lucrative one at that.
The UK catering sector is worth £1 billion. But, more to the point, it’s one of the very few industries that isn’t dominated by a handful of big companies. This makes it one of the best small business ideas you could try in 2019 because getting a foothold in the market isn’t as hard as it can be in other industries.
Here’s a look at how to get started setting up a food business from home in the UK.
What do I need to run a food business from home in the UK?
To start a food business from home in the UK, you need four things:
A strong idea
A business plan
The right licences
The right equipment
How do you pick the right idea for your food business?
Many successful entrepreneurs recommend specialising or niching down to succeed. And, with 5.7 million small businesses currently active in the UK — 186,000 of which are in the food business — it’s not hard to see why. The idea is that if you build your business around a specific theme, it’ll be easier to become known.
It not only applies to food businesses but for any business. Entrepreneur Judge Graham puts it this way: “...only by homing in on a niche can you be unique and stand out within your industry. You simply cannot be a generalist anymore.”
The question is, what should you focus on? How do you find the right niche for your food business?
Here are a few tips to get you started:
Play to your strengths. What do you excel at in the kitchen? Do your dinner guests always want second helpings of your Sunday roast? Or are they constantly raving about your cupcakes?
What kind of food do you enjoy cooking most? You’ll soon be making it 8 to 10 hours a day, every day. So better pick wisely.
Do you have any connections that could help you kickstart your business? Perhaps a friend who is looking for an event caterer? Or someone who works at a hotel?
What’s the market in your area like? For best results, try finding an unfulfilled need. So, if no one is offering corporate lunches, there could be an opportunity for you there. But if you can’t find something new, that’s fine too. You could still gain an edge by narrowing your niche. Lots of wedding caterers around? Why not specialise specifically in casual weddings?
Putting a business plan together for your food business
Thinking of asking your bank for a loan to finance your business? You’re going to need a business plan. Outline of your vision will show the bank how you’re going to make it profitable. Which is crucial if you want to convince them lending you money is a sensible decision.
That said, it’s still worth writing a business plan even if you’re going to pay startup costs out of your own pocket. Your strategy will probably change over time as your business evolves. But having one in place from the outset will help you:
Get clarity on your idea and check that it makes sense
Spot potential problems and work out how to get around them
Set out how you’re going to achieve those goals
The Prince’s Trust has business plan templates and a business-plan pack — complete with financial tables — that you can download for free. It’s also worth looking at a few business plan examples to get a feel for how they’re written. Bplans has over 500 free business plan samples.
Does your product address those needs and preferences?
HOW does your product address those needs and preferences?
Understand your competition. Who are they? What are their strengths? What about their weaknesses? And, most importantly, how could you exploit those weaknesses to your advantage?
Be realistic. It’s great to be ambitious. But if your goals aren’t feasible, they won’t do you any good. When setting business goals, you should always think SMART — specific, measurable, achievable, relevant, time-bound. So, for instance, your goal could be to reach a turnover of £10,000 within your first year.
Be concise. Your plan should give enough detail on important points, such as how you plan to market your business. But it doesn’t have to turn into War and Peace.
Do you need a special licence to run a food business from home?
Yes. You have to apply for food premises approval if you carry out food operations at home. This is also known as food business registration.
Food operations include:
Handling and storing
You’ll need to get a licence for any premises where you carry out food operations, even if they’re temporary. So, if you prepare food at home and sell it from a stall at the local market, you’ll need a licence for your home and a licence for your booth.
By law, you must be able to show the authorities that you know how to handle food safely. But a formal qualification isn’t the only way to do this. You can also satisfy this requirement by showing you’ve had on-the-job training or learned through previous work experience.
If you enjoy spending time in the kitchen, you’re probably already aware of food hygiene standards such as the 4Cs. The 4Cs are:
Cleaning — keeping your kitchen and Equipment spotless and disinfecting areas between tasks. Your hands and clothes should also be clean.
Cooking — meat, in particular, can contain harmful bacteria such as salmonella. If your food’s undercooked, it could give your customers food poisoning.
Chilling — storing food at the right temperature prevents it from going bad and making your customers sick.
Cross-contamination — bacteria can spread quickly in the kitchen. Raw food should never come into contact with cooked food or surfaces that’ll come into contact with cooked food.
That said, the best way to make sure you’re in line with the law is to take a formal training course. Most people who work in professional kitchens opt to take a Level 2 food hygiene course. This covers:
You can do an accredited course in one in a day for as little as £10 plus VAT. And while you’re at it, you should also brush up on food law in the UK. The Food Standards Agency has a guide that covers general food law basics.
How do you register your business?
Alongside your special licence, you’ll also need to register your business with HMRC.
Limited liability companies have certain tax and legal benefits, but they’re also more expensive to set up and run. For most new businesses, registering as a sole trader is easier, quicker and cheaper. You can always incorporate at a later stage.
To register as a sole trader:
Decide whether you’re going to trade using your name or a trade name. Your business’ legal name must be your name and surname. But you can trade under a different name as long as you display your real one on official documents such as invoices. So, if you’re Celine Andrews and you trade as Bodacious Bakery, you’d write Celine Andrews T/a Bodacious Bakery
Log on to HMRC’s website and register for self assessment. You have up to 5 October of your business’ second tax year to register. So, if you start your business on 8 April 2019, you have up to 5 October 2020.
You’ll have to register for VAT once your annual turnover reaches £85,000 in a 12-month period.
What equipment do you need to start a food business from home?
Well, this depends on what type of food you’ll be making.
If you spend a lot of time in your kitchen, chances are you already have the necessary equipment you need to get started. That said, do keep in mind that, as a business, you’ll be cooking a lot more than you do now. For this reason, it’s worth doubling down on the tools you’ll be using most often, such as:
Pots and pans
Basic utensils such as knives, spatulas tongs and ladles
As your business grows, you’ll want to invest in professional-grade equipment that’ll help you meet the increased demand for your goods more efficiently. You may be able to deduct some or all of the money you spend on this Equipment from your tax bill by claiming capital allowances.
Alongside kitchen equipment, you’ll also need tools to handle the business side of things. In particular, you might want to look into:
Accounting software. This will help you keep track of your incomings and outgoings and keep better records. This will make things easier come tax time.
Mileage tracking. If you make deliveries, you can claim tax back on your mileage. But you’ll need to keep a record of all your business drives. Apps like MileIQ make this quick and effortless.
Website builders such as Wordpress, Wix or Squarespace. You ARE getting a website for your business, right? These platforms make setting one up quick and easy. They also have plugins you can use to sell your food online.
Social media tools, such as Buffer and Hootsuite. These save you time by allowing you to schedule social media posts in advance
And there you have it. With a good idea, a solid business plan, the right licences and the right equipment, you’ll be well on your way to setting up a successful food business you can run from home.