Lesson 1: Cottage Food Basics
A cottage food operation, where you operate your business from your home kitchen, has its distinct advantages and disadvantages.
This lesson will look at what it takes to start a home-based cottage food business.
Cottage Food Basics
What happens next?
Once your application has been received and reviewed, a Washington State Department of Agriculture representative will schedule a home visit. This inspection will be scheduled during normal business hours or at other reasonable times before a permit is issued. The inspector will examine all the areas that fall under the permit, including your kitchen, packaging area, restroom and storage areas for raw ingredients and finished products.
You want to take the time necessary to follow the Department of Agriculture’s checklist and guidance as you prepare for a home visit.
Assuming things go smoothly, you will receive an inspection report and a Cottage Food Permit with your permit number. The permit must be renewed every two years. If you come up short on some issues, a re-inspection may be required, which will incur an additional $125 fee.
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- Your kitchen must contain one or more stoves or ovens approved for residential use. The kitchen must be in your primary residence. You can’t use a vacation or second home, motor home, outbuildings or a rented kitchen with a Cottage Food Permit.
- All surfaces that come into contact with food must be smooth and easy to clean.
- Floors cannot be carpeted or have rugs. Linoleum, tile, vinyl or wood is the order of the day. Fatigue mats that can be cleaned are allowed.
- A three-compartment sink is not required for washing, rinsing and sanitizing. You can use dedicated tubs to create the three separate stations or add a third station to a double basin sink. A dishwasher may be used in place of a third sink to sanitize items used in food preparation.
- Only residential-style kitchen equipment and utensils may be used to produce cottage food products, including ordinary, non-commercial kitchen appliances.
- A separate refrigerator or freezer is not required. However, products for home consumption must be kept separate from those used for Cottage Food production. Depending on the refrigerator or freezer, this could be as simple as a separate, dedicated shelf for personal and professional use.
- Your home kitchen must be connected to an approved water source, such as a properly constructed on-site well or municipal water system. If a well is used, the water should be tested annually for coliform bacteria. Local health departments can provide you with consultation on drinking water quality and well construction. If a city or municipal water system is used, no testing is required.
- Before you get too far in the permitting process, be sure to research your local zoning codes and other laws that may affect your operation. Local governments are empowered to limit or ban home food production in areas not zoned for business. Additionally, if you live in a community with a Home Owner’s Association (HOA), be sure to check with the association and its bylaws to make sure your Cottage Food business is allowed.
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Courses
Introduction
1. Cottage Food Basics
2. The Business Plan
3. Pricing
4. Marketing
5. Food Booths
6. Food Trucks
7. Pop-Ups
8. Brick & Mortar
9. Exit Strategy
If you are thinking about branching into catering, be sure to research city and county regulations. Making a cake for a wedding or dozens of cookies for a birthday party can easily fall within a Cottage Food operation, but full-fledged catering may require the use of a commercial kitchen or for the home to have two separate kitchens. The second one would have to be dedicated entirely to the catering business and would need to meet all the requirements of any commercial kitchen.
Since every jurisdiction is different, we can’t include all the parameters and regulations in the academy.
Cottage Kitchen vs. Commercial Kitchen
There is often confusion about which is which and when you need to move from one to the other. The Cottage Food Permit allows you to run a kitchen out of your home as long as you are selling products allowed under the law, have a permit, pass inspection, and don’t grow too big.
If you want to sell products that are on the “do not sell” list of a Cottage Food kitchen, generate more than $35,000 in revenue in a given year, or you have simply outgrown the space you have in your home, you will want to look at renting a commercial kitchen.
A commercial kitchen was built specifically for food preparation and cooking. It has commercial-grade equipment and is used by restaurants, ghost kitchens, catering businesses and other food-related activities.
If you end up running a highly successful Cottage Food operation, a time may come when you see its limitations. There are simply too many orders to fill, and you need more ovens, prep space, and specialized equipment.
Of course, you may also be looking to expand what you offer and sell. Cottage operations are restricted to low-risk foods, partly because home kitchens can’t store items and ingredients at the required temperatures and lack the necessary safeguards to ensure that food items don’t become contaminated or carry bacteria and other agents that can harm the consuming public.
Commercial kitchens may be a dedicated operation, while others may be a restaurant kitchen that you can rent after hours. If this is the path you want or need to take, be sure to do your research first. A commercial kitchen will allow you to expand your business, but it will also increase costs.
Selling your products
Congratulations! You’ve become a Cottage Food business in Washington State.
Now you need to find an audience for your products. The good news is that products you make can be sold through a lot of channels, including farmers markets, craft fairs, public gatherings or direct sales from your home.
You can’t sell wholesale, ship orders, put them on consignment at shops around town or sell out of state. This requires a WSDA Food Processor’s License See Chapter 16.149.040(2) WAC.
If you happen to own a retail shop in town that sells non-food products, you can sell your own food products as long as the products follow the labeling standards and list all the allergens. You can even take orders online, as long as you deliver the goods personally or the customer picks up the order from your home.
Feel free to advertise like crazy. Traditional marketing and advertising strategies should all be put to work. Remember, you can have an online store. You just have to deliver directly or have the person pick up their order. As long as the sale is completed through a person-to-person, producer-to-end user transaction, you’re good. We’ll cover more about marketing in Lesson 4.
If you haven’t run a business before and need to learn more about which business structure is best for you, how to make sure your books are in order, how to protect your recipes as intellectual property and more, visit our Entrepreneur Academy.
If financials are mystery to you, you may also want to visit our Mastering Financials course to learn about cash flow, recordkeeping, building a relationship with a bank, doing projections and running reports.