Ideas in the Oven: Identify Your Business Goals
BEFORE JUMPING INTO A BUSINESS, even a small, home kitchen-based one, you’ll want to sort out your personal goals for the enterprise and set forth some realistic expectations. By default of the cottage food laws, your enterprise will not suddenly make you rich, though a few of you reading this book might discover a path to personal wealth based on a combination of your culinary ideas, talents and adept business decisions made along the way.
This chapter explores what it might mean to operate a business out of your home, helps you assess your current skills sets and talents and completes a few “quick checks” to make sure you don’t put the food cart before the horse.
For many food entrepreneurs, one of the best parts of running your business is calling the shots. Everything is on your terms, within the parameters set forth by your state’s cottage food law, of course. The law defines what you sell, how you sell it, to whom and when. You answer these questions yourself, perhaps with a little input from others you trust, respect and admire.
Before starting, however, you’ll want to have a clear idea as to what you want to achieve with your business. Here are some of the many reasons CFOs open their operation:
• Income to go out for a fancy dinner with your spouse or pay the bills
Thanks to the cottage food laws, created, in part, as a reaction to the recent trying economic times, turning a home kitchen into an income-generating profit center may allow you to splurge on a dinner out more often. Or it may be the difference between being able to pay the bills or not. Most enterprises will never be a full-time endeavor; they can, however, add supplemental cash flow where it never existed before.
• Enjoyment and fulfilling a dream passion
When money is not the object, many people would choose to do something radically different than what they do now. They have a dream of being a baker, making canned preserves from a favorite family recipe or just running their own business. We started our Inn Serendipity Bed & Breakfast based on our vision; now we want to start a small bakery enterprise in our kitchen for the same reason.
Following your dreams and passion can be empowering, satisfying, enjoyable and meaningful in ways that no paycheck — even a big paycheck — could ever be. In the world of human psychology, such self-driven motivation is referred to as intrinsic. The extrinsic motivation for most jobs is money, a health insurance plan, a corner office or a gold watch; many of us have found that there never seem to be enough extrinsic rewards if you hate what you do or who you do it for.
“I didn’t want the 9-to-5 rat race. I wanted to do something I’d enjoy.”
— ANGELA BROOKS-VAN NIEL, OF REDLANDS, CALIFORNIA, HOME-BASED OWNER OF SIMPLY FANCY CUISINE
• Building community connections
A hundred years ago, people were interconnected and interwoven in their community in ways no Facebook group could ever be. Their survival, in some ways, depended on the support, kindness and companionship of their neighbors. Citizens patronized their butcher, baker and candlestick maker, who in turn supported their business. Money recirculated in the community. The Made-in-China revolution sold by Wal-Mart and made possible by relatively cheap fossil fuels was a century away.
Now “cheap” energy isn’t cheap any more, and food costs are rising faster than our incomes. Plus more of us are wondering just how what we eat is made and by whom, and questioning its safety. Some call this a food security issue. To reclaim our food supply, cottage food laws are expanding the reach to community supported farms, food cooperatives and farmers’ markets, essaying a return — or at least a community option — to a time when we can buy from our neighbors again, legally.
• Promoting local food
We now have a name for someone who loves growing, eating and preserving food that’s as close to home as possible: locavore. Thanks to Michael Pollan, author of The Omnivore’s Dilemma. While he penned his tome from an ivory tower — in his case UC Berkeley, where fresh, local food is available year-round — this idea of local food appeals to anyone aware that what we find in most grocery stores and supermarkets today has more frequent flier miles than Warren Buffet. Thanks to the cottage food laws, as food entrepreneurs, we can close the local food loop with our value-added products, expanding the fresh selection of what’s already available at more than eight thousand farmers’ markets in the US.
Name: Isa Lunsford
Business: Sweet Pick Me Ups Bakery LLC (Lake Worth, Florida)
Website: sweetpickmeups.com
Products: specialty custom-order cakes, cupcakes and cookies
Sales Venue: direct orders from customers
Annual Sales: $15,000
Lunsford taught herself how to create one-of-a-kind cakes with colorful fondant. COURTESY OF ROSALIA SCALICI-BOU
A Food Network–inspired Baker
“I live with a bunch of foodies in my family who religiously watch the Food Network. We gave into the Cupcake Wars craze and started watching that show too,” confesses Isa Lunsford of Lake Worth, Florida. Lunsford is no television-watching couch potato. While most viewers are content to live out their baking fantasies passively, Lunsford harnessed it as the inspiration to launch her business: “I can do that,” she said, and the vision behind Sweet Pick Me Ups Bakery came to life in 2011.
As a lifelong baker, Lunsford came to the cottage food business table with a strong skill set in the kitchen — and business pragmatics. As a veteran certified public accountant (CPA) practicing for twelve years, she knows her way around income statements, balance sheets and complicated tax codes.
“While I never see my bakery as our family’s sole source of income, I do understand and appreciate the fact that a business needs to be a smart investment,” explains Lunsford. She set up Sweet Pick Me Ups Bakery as an LLC but chose to be taxed as an S corporation to create a liability shield between the business and her personal assets should any food safety or resulting lawsuit situation come up. The S corporation offered more asset protection and tax savings than a single-member LLC.
When she started Sweet Pick Me Ups in 2011, Lunsford still spent most of her time working in the debits and credits of the accounting world Monday through Thursday. But on Fridays, you found her baking for eight hours, selling a variety of items for a local farmers’ market.
That schedule taught her two things. First, she realized she loved baking more than accounting. When her firm downsized in 2012, she had an opportunity to take an early retirement and jumped at the chance to devote more time to baking, leaving the stressful world of accounting behind. Second, while the farmers’ market proved to be a great way to build name recognition and sample, the scene didn’t add up to efficient, profitable sales, as she always ended up with things left over at the end of the day and found it hard to predict what would sell. Lunsford then decided the custom-order route worked better for her, focusing on direct, individual orders for specialty cakes, cupcakes and other bakery items. She could set her own schedule and never ended up eating leftover banana bread all week from the last market.
“Today I mostly do fondant cakes in customized themes. That’s where the demand is, and I love to keep my creative juices flowing,” Lunsford says. She has earned a reputation for working with and delivering what a customer wants. Her cakes average two hundred dollars and she’s willing to create things out-of-the-box for customers, such as flirty risqué cakes for bachelor and bachelorette parties in the shape of breasts or even Chippendale dancers. She found a wealth of tutorials with cake and fondant information online, as well as talking to seasoned bakers for additional tips. “There is always something to learn or a different way to do the same thing.”
“I love creating new shapes and designs because I’m always learning something new,” adds Lunsford. She improved her stacking of uneven cake shapes with practice over time and still finds dealing with Florida humidity a challenge. The icing can bubble and start to discolor. Cooling down the car prior to transporting the cake helps. For cookies, Lunsford recommends not bagging them until the last minute and also transporting in a cooled car.
Most of her business comes from referrals and word-of-mouth advertising. “I regularly post photos of my finished work to the website and Facebook page because this really helps folks visualize ideas and give me concrete direction in what they want.”
“Challenges will come up and when they do, remember you always have alternatives and options,” Lunsford advises. Living in a private community with a homeowners association, she realized the rules stated you could not conduct actual business transactions in your home with people stopping by. “I worked around this by simply delivering all my products. I build the delivery fee into my pricing along with any taxes. This works well with my customers as I keep things simple with one total cost for their order and no hidden extra charges.” First-time customers get 10 percent off their order.
Not all people appreciate or are willing to pay a premium for her custom, high-quality products. “People sometimes expect the same pricing they’d pay at the local supermarket bakery. I now require 50 percent payment when placing an order to ensure commitment,” Lunsford shares. She processes payment via check or uses Square for credit card processing.
“Setting my own hours and having flexibility to work around my family’s schedules are priorities, so I’ve turned people away when things get too busy,” Lunsford adds. Keeping things in balance and that fun factor high remain core priorities for her. “Remain small, fun and enjoyable, that’s my advice.”
Akin to fathers fishing with their sons or mothers baking cookies with their daughters, going into business with a spouse, sibling or the proverbial Uncle Joe resonates in ways that no shopping excursion to the mall could ever do. Working with your family in a culinary operation provides a way to connect and build a relationship in an entirely new way. If you have older kids, what better way for them to learn about how to start a business and cook in the kitchen?
• Needing a project
Perhaps the kids have fledged the nest, off to college or life as a young adult. Or maybe you’re among the roughly seventy-five million retirees in America, looking for something to do besides another round of golf or cruise. There’s no shortage of research that shows that staying active and engaged is an essential part of staying healthy. But sometimes we just need a project. Starting a small business built around a passion for cooking and favorite recipe can be exactly what the doctor might prescribe (if they weren’t so focused on prescription drugs, that is). For some, a cottage food business can act as a drug, providing a life focus and fostering interactions with other people and their community.
Got Recipes?
What if you don’t have any family recipes or personal favorites? Time to hit the cookbooks and Internet for ideas. Have fun with the research! Keep your receipts for your cookbooks and ingredients used for testing recipes; both can be legitimate “start-up” business expenses (a subject we cover in Chapter 12). You can also find a selection of recipes from our Farmstead Chef cookbook on the website for this book, including recipes for sugar cookies, crackers, pickles, jam, jelly, salsa and marmalade.
The reason you open your business may be one of the above, or a combination of several. It’s important not to lose sight of why you started, since everything may not go as planned. Life can toss us curveballs and open a few trapdoors when we least expect them. Our goal in writing this book is to help you steer a course that’s true to your goals and guide you on your journey to success, however you define it, missing as many of these trapdoors as possible.
For many people, success has come to be defined by the size of their bank account, the square feet of their house or the profitability of their business. Too often, the quality of your product, the satisfaction of your career or your general level of happiness is trivialized or marginalized. It becomes an afterthought.
So when it comes to your cottage food business, how you define success will determine, to a large extent, whether you achieve it. Here are a few ways some food entrepreneurs have defined their success:
• Perfecting a great family recipe and sharing it with others;
• Creating a unique product;
• Celebrating a passion for cooking;
• Launching a small business and making a little profit, every year;
• Enabling someone with a food allergy to enjoy something they couldn’t before;
• Being part of the celebratory process of a customer’s special event, like a birthday party, wedding or fiftieth anniversary.
When you define what you mean by success, you’ve put it in your terms. This perspective will lend itself well to putting your ideas down on paper in the form of a simple plan. Plus it will help silence snarky people who drift into your life or deflect the negativism, criticism or cynicism you may encounter when you follow your dreams while others fail to realize theirs. Your vision, determination and perseverance will transform your intent and actions into success, on your terms.
Do you have what it takes to be a CFO, a cottage food operator? More than an idea, recipe or home kitchen filled with appliances, becoming a small food business owner will require a level of knowledge, skill and talent, each addressed below.
1. Food Knowledge
What’s your culinary know-how? Having a degree in food science, years working at a bakery or a stint at a delicatessen would help you achieve the goals you’ve set for your business from the perspective of what you can accomplish in the kitchen. But don’t underestimate the “on-the-job” experience of raising a family of four if you prepared most of the meals at home. Perhaps you’re the legendary birthday cake maker of the family. Perhaps you already can enough food products to keep your family, friends and a few neighbors stocked up each winter. Every product you make reflects your cumulative knowledge of cooking skills, techniques, recipes and ingredient selection.
When deciding what products you want to make for sale, go with what you love and feel there’s a market for. We’ll cover the feasibility testing of your product in Chapter 9. Do you love baking, making pickles or mixing spices together? Is kneading dough a passion, or something you procrastinate doing? Would a call for a large-batch production of fifteen dozen muffins for a corporate retreat be stressful or a fun challenge?
Intelligent Fast Failure: It’s How We Learn What Works!
Civil and environmental professor and inventor Jack V. Matson, PhD, dedicates his life to practicing “intelligent fast failure,” an expression he coined to capture the essence of innovation. It’s captured in his irreverently titled book, Innovate or Die: A Personal Perspective on the Art of Innovation.
In his book, Matson suggests that the goal with intelligent fast failure is to move as quickly as possible from new ideas to new knowledge by making small and manageable mistakes — intelligent failures. By moving quickly, we can determine what works and what doesn’t, without draining the bank account or the energy devoted to developing the idea. When you come out with new products, some will catch on and some will fail. While you may love the taste of pickled radishes, there many not be enough other people that do too. Cottage food enterprises fit perfectly into this fast-failure mode. Everything you do is small batch and experimental. Not sure which dry candy-combo harbors the most customer appeal? Make a tray of each and bring them all to market to see which sell best.
The key is to keep learning and try to avoid letting your intelligent fast failures negatively influence your emotions or self-esteem. And by all means, fail falling forward.
When arriving at the burgeoning cottage food industry, you may be drawn by an interest in learning a new craft or doing something you’ve always wanted to do but just never had the chance to tackle. Until now.
If you need to pick up some skills or hone a few you already possess, a wide range of workshops offered by non-profit or private for-profit organizations and university or community college-level courses could get you chopping, dicing, canning and baking like a professional. From learning about artisan-style yeast-raised breads with recipes and techniques from around the world to cakes, cookies and pies, these programs may open your eyes to what might be possible in your kitchen.
Some states, eager to help get people to work, have created programs or resources to support new home cooks and their businesses. That’s helpful, because these programs aren’t cheap. Keep in mind, however, that you may be able to deduct these courses as a legitimate business expense; more on this in Chapter 12.
The following shortlist of programs designed to help people jump-start their culinary careers may be worth a look. Be mindful, however, of your goals and aspirations, perhaps avoiding those programs or degrees that might push you in the direction of working at a restaurant, institutional kitchen or similar operation. A good question to ask: How many of their students go off to start their home-based food enterprise? For the most practical experience, avoid classes or workshops heavy on food samples and light on educational content. Remember, you’re not a recreational or hobby baker or cook. You’re operating a business.
• Michaels
This national arts and crafts store chain offers introductory through advanced decorating classes through the Wilton Method of Cake Decorating, covering cakes, cookies, cupcakes and brownies. Workshops often cover topics like gum paste and fondant flowers.
• Chopping Block, Chicago
Their “Boot Camps” dive into the fundamentals and nuances of the culinary arts, and reveal tricks of the trade. The challenge might be finding a course specific to your interests.
• Williams-Sonoma
Check out their free Technique Classes, hour-long sessions that focus on a specific culinary skill, sometimes with a seasonal theme, such as Easter baking. They also offer longer, fee-based cooking classes.
• Sur La Table
Introductory hands-on classes showcase different dishes and techniques.
• Food Craft Institute
The Food Craft Institute, based in Oakland, California, works to create and improve the viability of small- and medium-scale value-added food businesses in rural and urban America. Courses combine classroom and hands-on education to teach traditional food-making techniques alongside the entrepreneurship skills needed to turn those skills into viable businesses.
• The Culinary Institute of America (CIA)
enthusiasts.ciachef.edu
With campuses in New York, California and Texas, the CIA offers culinary education programs in the form of “Boot Camps” designed around baking, pastry, specialty and hearth breads, and basic skills.
• Carlos Bakery
How can you go wrong with hands-on cake decorating classes at Carlo’s Bakery in Hoboken, New Jersey, or at other Carlo’s Bakeries, owned by “Cake Boss” Buddy Valastro?
Be realistic and honest in your self-assessment, but don’t sell yourself short when it comes to your cumulative knowledge. Experience is the best teacher of all. When your recipes turn out the same every time you make them, that’s a good sign.
If you like the idea of being a home baker but struggle because your recipes don’t turn out as tasty or look as attractive as they appear to be on the Food Network, recognize that you might want to learn some new skills (which can be fun, too) or cultivate your existing talents further. Practice really does make perfect. Many food entrepreneurs have spent months, if not an entire year, tweaking, modifying and perfecting their customized, decorated sugar cookies that they now sell for two to five dollars each.
Beyond the accredited and non-accredited programs, workshops and short courses, you may also pick up some quick experience in your area of interest by working at a bakery, restaurant or catering business. If you love baking but want to see how another company does it, consider working part-time for a while at bakery or one of those fancy cupcake-making places; you wouldn’t be able to use their secret, proprietary recipes, but you could walk away with practical knowledge about the industry you want to break into.
Another way to get in some experience might be as a volunteer at your church for events that involve food preparation; maybe you could handle the dessert or bread baking and test out your recipes. A non-profit organization that regularly offers some food at their events could be another route to go. For example, our Monroe Arts Center in Wisconsin sets out various nibbles during all their gallery openings; this could be a place for us to try out recipes and garner feedback without spending a cent of our money.
Exercising your “mind muscle,” repeating over and over again the techniques needed for kneading dough or twisting croissants, translates to a more consistent, higher-quality product. The more practice you put in, the better the results. According to Malcolm Gladwell’s book Outliers and based on a study by Anders Ericsson, consider adopting the “10,000-hour rule,” which states that it takes approximately this amount of focused practice time to perfect a skill. That’s twenty years, practicing an hour and a half a day. For many of you home cooks, you’re already there!
2. Business Knowledge
What other talents or attributes do you possess that can help drive your enterprise? Can you write well? Are you a people person or someone with a knack for selling? Do you never grow tired of social media, always chattering on Facebook or tweeting? Are you comfortable enough with software on your computer to make brochures, flyers, invoices and receipts?
While you may bake a blue-ribbon-winning torte for the state fair, how much of the business skills do you have to help propel your business along? Even on a small scale, any skills with planning, marketing and managing the financial aspects of your business can go a long way in helping you achieve your goals. The more you can do yourself, the less you will need to contract out for a graphic design service for your labels, a freelance editor to help write the copy describing your product, a designer for your website or a bookkeeper to manage the money.
3. General Knowledge or Talents
How strong are your community networks? Would it be easy to share what you’re doing, word of mouth, and then sit back and start filling orders, or are your community connections more limited to church, school or place of employment? Are you an organized or tidy person? Both organizational skills and cleanliness are extremely valuable to any food enterprise. Can you manage multiple projects at the same time, or do you find you like to do things one at a time? While balancing your work and life, having the ability to multi-task may make operating a home-based business less overwhelming.
Now you’ve clarified your goals, completed a CFO self-assessment and gained a better understanding of what you might be in for. In the next section and a series of chapters on marketing, we’ll turn your “half-baked” ideas and recipes into products ready for market.
Whatever you do, remember to savor what you create. It’s okay to cut a piece of pie for yourself. JOHN D. IVANKO