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How to start a home cooking business
The ultimate recipe for starting a successful home cooking business.
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Are you a passionate home cook who wants to turn your love of food into a business? Or do you want to use your experience in restaurant kitchens to start your own food-based business?
From market research to business insurance, there's quite a bit to consider when setting up any new venture. Keep reading for a simple guide on how to give your new home cooking business the best chance of success.
What's in this guide?
What is a home cooking business?
"Home cooking business" is a broad term that can refer to a number of different businesses.
These include:
- Catering business. You could start a home-based catering business to prepare food for birthday parties and other small events.
- Cooking instructor. As a cooking instructor, you can give lessons teaching people how to cook in your home kitchen. You can focus on specific cuisines or cooking styles, or on certain target markets (such as beginners).
- Personal chef. Personal chefs cook food for people who are too busy or don't have the skills or desire to cook their own. The cooking is usually done in the client's kitchen, but can be done in your own kitchen in some cases.
- Making baked goods. Got a cupcake recipe that your friends and family all rave about? You could start selling your sweet treats at markets and festivals, or specialise in baking specialty cakes for birthday celebrations.
- Making specialty goods. Are you great at making jams and preserves? Is your homemade chili sauce better than anything you can get in a store? You could sell your specialty goods at markets, local shops and through your own online store.
- Food blogger. If you're a passionate foodie, you could consider setting up your own blog where you try out new recipes or show everyday cooks how to cook complicated dishes.
- Other options. You could also be preparing food for a home-based childcare facility, or operating a bed and breakfast and providing some cooking services to your guests.
How to start a home cooking business
If you're dreaming of creating a home cooking business but don't know where to start, following these steps will help you get up and running.
- Research the market. The first step is to research what other similar home-based cooking businesses are operating in your area. Is there a market for your business? Is it a highly competitive sector? At this stage, it's also important to check whether any permits are required to operate a home-based food business in your area.
- Choose your niche. Once you understand the local food business market and the relevant regulations, decide on your target market. What food will you be making or what cooking services will you provide? Who is your target audience?
- Register your business. Decide on your business structure, choose your business name and register for an Australian Business Number (ABN). Make sure any name you choose isn't already in use and that a suitable web domain name is available. You can also check with the Australian Business Licence and Information Service (ABLIS) to find out if you need any licences to run your business.
- Develop a business plan. If your home cooking business is just a hobby to help you make a few extra dollars, putting together a business plan may be overkill. But if you're going to be running the business full-time, or if you're applying for finance, a well-thought-out business plan is a must.
- Invest in equipment. Do you need to purchase any extra cooking equipment or appliances for your business? If so, you may need to apply for a business loan.
- Consider legal and tax requirements. Check all licensing and food safety requirements for home-based food businesses where you live. You'll also need to consider your tax obligations and whether you need business insurance.
- Work out pricing. Now it's time to work out how you will price your goods or services. Your pricing structure and rates will vary depending on the type of home cooking business you're running, but you'll need to research the market and calculate your business overheads to work out suitable prices.
- Build an online presence. Every business can benefit from a professionally designed and informative website. Using search engine optimisation techniques will also help you rank higher in Internet searches.
- Grow your business. From cooking for friends and family to social media marketing, online advertising and good old-fashioned word of mouth, there are plenty of simple things you can do to find new customers and grow your business.
What you need to get started
There are several factors you'll need to consider in order to run your home cooking business safely and effectively. Let's look at some of the most important factors one by one.
Food safety
Just like any other food business, you'll need to satisfy certain food safety requirements in order to legally run your home cooking business. This means you'll need to comply with relevant parts of the Food Standards Code, including:
- Standard 3.2.2 – Food Safety Practices and General Requirements
- Standard 3.2.3 – Food Premises and Equipment
- Part 1.2 – Labelling and Other Information Requirements
One of the first steps you'll need to take is to notify your local council of your intention to start a home cooking business. You'll need council approval and may also need to obtain a licence in some cases. Depending on where you live and the exact nature of your business, the council may require you (or someone else in your business) to undergo training to become a certified Food Safety Supervisor.
According to Food Standards Australia New Zealand (FSANZ), your business will need to satisfy criteria across a range of categories. These include:
- Food safety knowledge. You must know how to properly handle food so that it's safe to eat and may need to train as a Food Safety Supervisor.
- Premises design. Your home cooking business premises must have a design and layout that allows you to prepare food safely. For example, you'll need enough fridge space to keep food at 5°C or colder, plus have a conveniently located basin (or basins) where you can wash your hands with warm running water.
You'll also need to familiarise yourself with, and follow, best food safety practices to prevent contamination. This includes things like:
- Washing your hands thoroughly before handling food
- Never handling food if you are ill
- Keeping your premises and food contact surfaces clean
- Keeping records of your suppliers and customers
- Cooking food to safe temperatures
- Storing potentially hazardous foods at appropriate temperatures
You'll find plenty of useful details about these requirements on the FSANZ website, while you can also contact your local council or the food authority in your state for more information.
Courses and qualifications
From a cooking point of view, you don't necessarily need any formal qualifications to start your home food business. Completing a vocational course can equip you with the skills and knowledge you need to be a successful cook. Options include certificates in Commercial Cookery, Baking and Patisserie.
There are also many other training organisations, culinary institutes and cooking schools that offer courses teaching essential skills. Consider the available options to decide whether completing further training will help you broaden your cooking knowledge.
You'll also need to consider training requirements from a food safety point of view. For example, if you're required by law to appoint a Food Safety Supervisor, they may be required to undergo some sort of formal training. The Australian Institute of Food Safety also offers a number of courses that deal with food safety laws and responsibilities, how to maintain a clean workplace and food safety programs.
Training.com.au
Training.com.au offer a wide range of courses to master your culinary prowess.
Equipment and software
The tools and equipment you require for your home cooking business will depend on your niche. For example, if you're selling cakes, you'll need cake decorating tools, cake and cupcake tins, and a large oven. If you're starting a catering business, you'll need to consider factors such as serving dishes, beverage dispensers and even having enough refrigeration space to keep food fresh. If you're delivering food items yourself, will you need transport with refrigeration?
The home food business sector is so diverse and the list of essential items can vary greatly from one niche to the next. Take some time to think about all the equipment you need and how much it will cost.
Regarding software, an inventory management app will keep track of your incoming and outgoing supplies. Some available apps are Sage, MYOB, BevSpot, Zoho Inventory, GoCanvas, Kounta and MarketMan. Accounting software, such as Xero or QuickBooks, can also assist with managing your finances and keeping records for tax purposes.
If you're selling online, you'll also need to set up an ecommerce store using a platform like Shopify.
Compare inventory management software
How to structure your business
Once you have decided on your market, decide on your business structure. In most cases, home cooking businesses will use one of the following structures:
- Sole Traders. If you want to be the owner and in control of your business, register as a Sole Trader. You can employ workers and you have sole responsibility for all aspects of the business, including any debts.
- Partnerships. Register as a Partnership if you want to start up a business with one or more other people. This structure allows you to share business income and debts with your partners.
Companies and Trusts are the two other main business structures in Australia. Check out our guide to structuring your business for more information on how each option works.
Legal requirements
It is critical to have all the necessary licences, permits and qualifications in place before opening up your business. However, the exact requirements vary depending on where you live and the type of home cooking business you want to run. You can research rules and regulations yourself, or seek online legal advice to make sure you've ticked all the essential boxes.
A lawyer can also help you draw up any important legal documents, or you may be able to take advantage of free online templates. Some of the documents you may need include:
- A Catering Agreement that outlines the services you provide and the cost
- An Employment Agreement if you'll be hiring a new employee
- A Partnership Agreement if you're forming a Partnership
- A Website Disclaimer to protect your business against legal liability
Get access to legal documents and services online
Does your company belong in this list?
Tax requirements
Whether your home cooking business is a side hustle or your main gig, you'll need to report all business income to the Australian Taxation Office (ATO). If you're a Sole Trader, you can use your existing tax file number (TFN), but Partnerships will need their own TFN.
Tax requirements can also vary depending on your business structure, and you'll need to register for goods and services tax (GST) if you have an annual turnover of $75,000 or more (or expect to exceed this limit in your first year in business).
If you're confused about any aspect of your business's tax obligations, seek advice from an accountant or registered tax agent.
Business insurance
You'll also need to consider taking out business insurance to protect yourself and your business.
The first types of cover you need to think about are Public Liability and Product Liability Insurance. They can ensure that you're protected if you cause injury or property damage to a third party, such as if an item you prepare gives someone food poisoning.
Next, consider what cover you need for your business equipment. For example, do you need to cover any items for theft and damage? What about machinery breakdown cover if your refrigerator breaks down? And if you deliver the food yourself or drive a special refrigerated vehicle, be sure to research your car insurance options too.
Finally, don't forget about policies that protect you when something goes wrong, such as Business Interruption Insurance and Income Protection Insurance.
How to calculate pricing
Pricing structures can vary depending on the services you offer. For example, if you offer a home-based catering business, you'll need to consider whether you'll offer your services for a fixed price or an hourly rate. If you're baking cupcakes to sell at markets and festivals, how much should you charge for each item to make it worth your while? And if you're running cooking classes, how many people will you have per class and how much will you charge each person?
To work out your rate you will need to determine the cost of serving of each ingredient that goes into your dish. Include the condiments, seasoning, cooking oil and garnishes as well.
Then, calculate the cost of all your overhead charges. These include everything from equipment leasing, electricity and water costs, the time and effort you put in, plus the expenses associated with marketing your business.
You should also analyse your competitors. How much do they charge for a vegetarian meal or a snack? What are their delivery costs? Once you've researched the market, you can adjust your prices accordingly.
Ready to get set up with Square?
Accept payments from your customers in person and online with Square's card readers, payment terminals, digital invoicing and e-commerce tools.How to find customers
Marketing is an important consideration for any small business. When you're starting out, you might rely on your personal network of friends and family plus word of mouth to help build your business.
As your business grows, you may need to change and evolve your marketing strategy. There are several ways you can market and promote your products and services, including:
- Email marketing
- Maintaining a social media presence (high-quality images of your food can be a very effective marketing tool)
- Advertising on social networks
- Developing a professional website and improving your search engine optimisation (SEO) ranking
- Networking with vendors
- Renting a booth or pop up at a market or shopping centre
- Establishing retail partnerships
- Hosting a tasting event
- Providing meal tutorials on YouTube
- Providing discounts to repeat customers
- Listing your services on sites like Airtasker and Gumtree
Frequently asked questions
Do I need a Food Safety Supervisor for my home cooking business?
Whether or not you need a Food Safety Supervisor depends on where you live and the food you'll be cooking and selling. Contact your local council to find out about the requirements in your area.
What should I include in my cooking business website?
Your website should provide customers with all the essential information about your business – who you are, what you do, your training and experience, your pricing and more. Include photos of your food to give customers a taste of what you offer and use SEO techniques to ensure that your site ranks highly in search results.
Do I need insurance for my cooking business?
Yes, insurance is something every business owner should consider. Public Liability and Product Liability Insurance both offer important cover, while insuring key equipment and protecting yourself against loss of income are just a couple of other important considerations.
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