Homemade for Sale

How to Set Up and Market a Food Business from Your Home Kitchen

Lisa Kivirist, John Ivanko

• Publisher: New Society Publishers
• Year: 2015
• Print ISBN: 9780865717862
• eBook ISBN: 9781550925821
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

The authoritative guide for launching a successful home-based food enterprise, from idea and recipe to final product.

From farm-to-fork and "Buy Local" to slow food and hand-made artisan breads, more people than ever are demanding real food made with real ingredients by real people. Widely known as "cottage food legislation," over forty-two states and many Canadian provinces have enacted recent legislation that encourages home cooks to create and sell a variety of "non-hazardous" food items, often defined as those that are high-acid, like pickles, or low moisture, like breads or cookies. Finally, "homemade" and "fresh from the oven" on the package can mean exactly what it says.

Homemade for Sale is the first authoritative guide to conceiving and launching your own home-based food start-up. Packed with profiles of successful cottage food entrepreneurs, this comprehensive and accessible resource covers everything you need to get cooking for your customers, creating items that by their very nature are specialized and unique. Topics covered include:

• Product development and testing
• Marketing and developing your niche
• Structuring your business and planning for the future
• Managing liability, risk, and government regulations

You can join a growing movement of entrepreneurs starting small food businesses from their home. No capital needed, just good recipes, enthusiasm, and commitment, plus enough know-how to turn fresh ingredients into sought-after treats for your local community. Everything required is probably already in your home kitchen. Best of all, you can start tomorrow!

Lisa Kivirist and John D. Ivanko are co-authors of Farmstead Chef , ECOpreneuring , and Rural Renaissance , and are innkeepers of the award-winning Inn Serendipity Bed & Breakfast (innserendipity.com).

SECTION 2

Selling Your Story: Marketing

4

Product Development: Design, Name, Logo and Packaging

A WIDE RANGE OF DIFFERENT ELEMENTS go into defining a great product, including the uniqueness of your recipe, the quality of the ingredients, the packaging, perhaps the specific process of its artisanal, small-batch production and, even, the messaging you’ve created around your product.

As we touched on earlier, marketing is a term that covers a wide range of considerations associated with selling your homemade item. Most business schools cover the 4 Ps of marketing: Product, Price, Place (how you distribute your item) and Promotion, both in the form of paid advertising and “free” public relations.

We explore three additional Ps in our ECOpreneuring book, in part because marketing has become so pervasive and integrated into day-to-day routines, often in subtle or clever ways. It permeates our life through product placement in movies, naming rights for stadiums or campus buildings, Facebook updates or reviews on Yelp. These additional 3 extra Ps of marketing — People, Partnerships and Purpose — reflect our values and belief systems and connect us to our community.

Because marketing plays such a pivotal role in the success of any product, we’ve broken the 7 Ps of marketing down into several chapters. Realize, however, that the most effective marketing efforts are those that combine all seven elements into one cohesive, integrated and clear plan that can be effectively implemented.

Niche, Target and Positioning

Before getting into the product aspect of marketing, we’ll touch on three very important concepts first: finding your niche, defining your target market and positioning your product.

Finding a Niche with Potential

Nearly all food businesses, large and small, assess potential markets, carving out a niche that seems most likely to earn enough money by selling a product to make it worth pursuing. If you don’t make some profit, at least three out of five years, you’re not in business, according to the IRS; you’re just a hobby. We’ll cover this more in Chapter 12.

A niche is a segment of a broader market where you believe your product can do well. Because of your product’s unique characteristics, better quality or because it faces little competition, you may find greater flexibility in terms of how you market and sell it. Remember, if you define your niche too narrowly, or if there aren’t enough customers who want what you make at the price for which you’re selling it, then this niche doesn’t have the market potential to make your business viable. Don’t throw in the towel, just re-evaluate your goals and examine ways to expand your market without being everything to everyone.

Defining Your Target Market

While a niche is often product-focused, your target market is the audience or potential customers you want to reach, serve and satisfy with your products. The 7 Ps of marketing are guided or defined by who you select as the target market. In other words, the customers most likely to purchase your products in a large enough quantity at the price you’ve determined will allow your business to prosper.

There are a number of ways you can define your target market:

• By demographics: age, gender, geography and income level, among many other variables

Example: ages 30–40, female, living in Smalltown, New York, earning $50,000 to $100,000/year

• By psychographics: attitudes, beliefs and value systems

Example: a Cultural Creative “locavore” who loves artisanal food products, especially those that are organic and made without preservatives. Different from Traditionals and Moderns, Cultural Creatives are more attuned to environmental and social issues.

You’ll need to define and understand your customers in both demographic and psychographic ways. Think about it this way: demographics help you understand who your customers are while psychographics help determine why your customers buy what they do. Keep in mind that the needs of your customers may not even be real; they could just be perceived. In other words, your customers may not even know they need your product, even if they do. Think: impulse purchases. From this information, you can then develop your marketing strategy, and from that, a marketing plan that addresses those 7 Ps.

Due to your familiarity with and assessment of the marketplace, you may already have a solid grasp of who would buy your products. You’ll probably start by selling to neighbors, family or friends already clamoring for your products. Maybe they attend the same church, work in the same office or school, serve in the same civic organizations or attend the same youth soccer games. This works great until you find yourself wanting to sell more products and ramp up your operations to reach customers beyond your immediate network. At that point, you’ll need to flush out the target market more thoroughly if your marketing efforts are to be effective.

“Homemade” is the buzzword that CFOs celebrate with authenticity and pride. JOHN D. IVANKO

Positioning Your Product

In marketing jargon, the expression of differentiation is called positioning: the combination of marketing elements that go into defining your product. Defining exactly how your product might appeal to your customers in terms of their needs or desires and the benefits it provides can be tricky. While you may believe you have the most unique and tasty fruit-flavored graham crackers ever, in the end, your potential customers need to share this perception and feel that it meets their needs as a healthy snack (assuming that’s one of the benefits of your product). Product development research and a market feasibility study, covered in Chapter 9, guide this process.

Positioning can consider all 7 Ps of marketing, plus how your product might be used or the solution to a problem it addresses. Often, positioning can involve a combination of several variables. For example, your sugar-free sweet rolls could be a solution as a breakfast item for customers seeking ways to cut back on their sugar. Or that same sugar-free roll could be a delicious and healthier way to savor a snack, perhaps with a cup or coffee or tea.

Keep in mind that there’s a big difference between being product-focused and market-focused, especially if your aim might be to scale up your operations. The market — your customers — are the ones telling you what they want, what benefits they perceive, what problem is being solved, or what needs are being met with your product. Are gluten-free breads absent in your community? Is a well-attended local arts show missing a food vendor, with hungry art shoppers with no place to go for a snack?

With positioning, you’re conveying what your product is, how it’s different from the competition and why a customer should buy it from you. One route to success may be to come up with a “signature” product, something unique. Perhaps it’s your uncommonly good approach to a common recipe. Bonus points for being clever, creative or distinctive in describing it. Even when you have no competition for your product, its taste will ultimately determine whether customers come back for more.

What you’re actually selling could be much more than just the taste, flavor, texture, size or appearance of your food product. If you package or distribute it as a gift for tourists or the holiday season, your approach will be far different than if it was a product offered at a farmers’ market. Depending on your item, you may even offer some form of service, like a guarantee of satisfaction.

For example, a Swiss-style cookie sold in a Swiss community with lots of tourist traffic might be positioned as an edible gift or a souvenir. The name, packaging, price and label should aid in this by eliciting a clear and prompt “I should try this now!” thought in a potential customer’s mind while they’re browsing the arts and crafts fair where you’ve set up a small stand.

Price can appeal to a customer on a limited budget, or deter an upscale clientele who might happily pay a premium for an item with high-quality ingredients or fresh from the oven. For many impulse purchases, convenience, comfort or hunger may drive the exchange; customers may pay a premium for any one of these qualities. How your product is different can take interesting forms; perhaps you deliver by bicycle. For example, Domino’s Pizza, the national pizza chain, is famously known for being in the delivery business, not the pizza business. That’s how they do pizza different.

Depending on your marketing strategy, you m...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Contents
• Acknowledgments
• Foreword
• Introduction: Cottage Food Freedom
• Section I: What’s Cooking?
• Section 2: Selling Your Story: Marketing
• Section 3: Organizing, Planning and Managing the Business
• Section 4: Scaling Up
• Epilogue: Icing on the Cake
• Index
• About the Authors