If you have gotten countless compliments on your bibingka, siomai, or cassava cake, or you find yourself with requests from your friends to be their personal chef for special occasions, a home-based food business might be a great way to earn extra money while doing something you enjoy. Even though baking cakes or bottling your own peanut butter may seem more fun than work, a home-made business is still a business, and this entails planning and research. Here are 12 things you should know before opening a home-based food business:

Decide on what you want to sell. You have to decide which type of food you want to sell and how. A variety of food-related business options include catering, meal delivery services, and baked goods. You can focus on specific niche markets, such as catering weddings, or selling different type of products through food kiosks or food stalls.

There has to be a market for your business to be successful. You could have the best bibingka or puto-bumbong mixes on the planet or the tastiest gravy mixture ever invented, but if there is no market for your product, revenues will be elusive. One must first study the target markets and conduct focus group discussions, and making small batches will also be key especially when you want to test your product out first in the market before fully investing on it.

Learn the regulations and requirements of your City government. You should carefully understand the underlying rules and regulations when it comes to establishing a food business in your area. It is also essential to acquire the necessary permits and abide by the laws on food safety, and what not, depending on the product served. At the end of the day, failure to do so may jeopardize or hamper your ability to produce and sell products.

Conduct your business as a legal entity. Since home-based food businesses are often built out of a hobby, many entrepreneurs in the industry make the mistake of continuing to run their business in a casual way. It is important to conduct your business as a legal-entity since this will also aid in the easy discernment between company liabilities and the owner’s personal assets. Furthermore, this will result to a more professional environment which can ultimately aid you when scaling up your business.

Carefully purchase your food processing equipment and supplies. This is dictated by the type of food you’ll be making. Items to be acquired can include equipment such as mixers, jacketed cooking kettles, ice shavers, deck ovens, and the like. Always remember to buy from trusted suppliers. Also, do not forget to properly store the equipment and supplies, and refrain from mixing them with personal items inside the house.

Hire people when needed. You cannot always be a one-man team. You may have been able to efficiently produce an unbelievable amount of cassava cake or pitchi-pitchi in a given period of time, but hiring people may not be that bad, especially for repetitive tasks. Furthermore, this move may help you give more time with planning on how to grow and further improve your business.

Put everything in writing.  In order to shield yourself and your company in the future, you need to put all relationships and work-for-hire provisions in writing. This is especially true if friends and family have helped with the capital investment to get your business off the ground, or if they are employed within your company. Furthermore, provided that everything is in writing, you will now be able to clearly discern the assigned positions and tasks of the personnel inside the company, may it be friend or family.

Having a professional image goes a long way. One of the key to a successful and scalable business is professionalism, may it be inside or outside the workplace. Even if you bake your goods wearing your pajamas while your children do homework in the next room, you want to look like an established and polished company. Take the time to have a professional looking website, brochure, and business cards. Be sure that all of your product packaging reflects the image of your company and is professional.

Always remember that your phone will not just magically ring with orders.  Many food-based entrepreneurs assume that since everyone loves their products, that people will be clamoring to buy it. Always keep in mind that it is vital to spread the word about your business. Make samples of your food items and take pictures to use on your marketing materials, such as portfolio, website, or brochures. Match your food items to seasonal events. For example, if you make cookies and candies, have promotional events for Valentine’s Day or Mother’s Day. If you are a caterer, create marketing materials to target June weddings or summer family reunions. Furthermore, place promotional materials or advertising in places your target market will find, such as magazines or websites.

Pricing can mean the difference between success and failure. Spend time researching comparable products and determining your costs before setting prices. You cannot make a profit if you charge Php100 for a baking or cooking job which takes you eight hours to complete, on top of the price of ingredients. However, if you price things too high, you risk alienating your customer-base. You really have to learn how to carefully weigh out all factors before pricing any type of product you wish to sell.

Realize that your materials price can and will fluctuate. Prices for the items that you will use on a daily basis, such as flour, butter and eggs, are not static and will change based on events in the economy and industry. It is ultimately essential to take good note of possible fluctuations before pricing out your products. This will in turn help you weather out he increases in raw material prices. For updating purposes, it is recommended to revisit your pricing on a semiannual basis.

Plan ahead. Buying in bulk can save considerable money.  It is quite common to see entrepreneurs try to save money on expenses by buying only what is needed for the week’s order. Later on would they realize that while the financial outlay was clearer and more up-front, they should have saved considerable amounts of money by planning ahead and buying common items in bulk.