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How to Start an Artisan Cottage Food Business

 

Whenever Tanya Gradet attended a party, she'd bring along a batch of homemade dessert bars made with her mom's secret recipe. And wherever she brought them, people went crazy for them. So nuts, in fact, that two years ago she decided to put her television and film production career on hold to start her own small business.

Thus began Square Treat.

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A year and change into being an official business, Gradet's been able to develop a roster of returning clients, sell the dessert at L.A.-area events, and even managed an appearance on Food Network's "Food Fortunes" show. I chatted with Tanya -- who, full disclosure, is a friend! -- about the process of opening her own cottage food business in Los Angeles.

What was the biggest hurdle before you opened?

Tanya Gradet: When I first started, I was thinking, I can't afford a commercial kitchen. And the first really positive push into the possibility of it being a potential reality was when I realized that California passed its Cottage Food Act. That's huge. That's made it possible for so many small food-oriented businesses to start without having that huge influx of capital. A commercial kitchen can cost over $1,000 a month to rent, but now that you can get a certified home kitchen, it takes away a huge barrier.

What's the certification process like?

Tanya: Basically, you apply to the Health Department. What they do is, much like with a restaurant, literally a human comes to your house with a flashlight and notepad and they go through your kitchen and make sure you meet criteria. It's pretty basic stuff. You have to make sure you pass a food handler's test to show you know what you're doing. You need to have hot and cold water. You need to have a bathroom facility. You need to have the bathroom facility not in your kitchen, and your food needs to be stored a certain way.

Was the inspection nerve-wracking?

Tanya: Extremely. Absolutely. Especially because my house is older so I was worried there was some weird thing I didn't know about. Some stupid little detail. And it really depends on the person you get. I had some friends who started a food business a few months before I did, and their inspector literally came in, looked around, chatted, and left. He was the easiest, most laid-back guy. I had someone who inspected like her life depended on it.

What was the next step after certification?

Tanya: A huge event I was trying to prepare for, Unique L.A. It was a trial by fire. They get about 700 applications, is my understanding, and they take 350. I sort of applied as kind of a lark and, for whatever reason, they thought what I had was different enough, so they were interested. That was a huge motivator, a feeling that maybe what I'm doing is not crazy. Because I think that when you're first getting started that's the biggest challenge, the voice in your head. Like, am I an idiot for doing this? Does anyone really need another fill-in-the-blank-whatever-your-product-is?

What was your first event with Unique L.A. like?

Tanya: It was a little nerve-wracking, because again, that voice in your head is like, are people going to try it and be like, 'why would you make this?' But once I got it up and running, it was really encouraging because the response was so positive. Although, because I had no concept of this event and didn't know anybody who had participated in it, I way over-made. Way. I had to throw sheets and sheets away. But that was a really valuable lesson too.

When you're working an event, do you have a sales method?

Tanya: I try to appeal to everybody's desire for free things. My biggest promotional tool is the sampling. Because it's sort of different from stuff that's out there, that gets people to stop. They don't always buy, but they'll stop and comment or ask about it, and that's the entry way to a conversation, or at least having them remember the product.

Do you shoo people away if they take too many samples?

Tanya: [laughs] No. I'm okay with people trying all the flavors. Also, samples don't really cost me anything because I use edge trimmings. That's an advantage. Other people with cupcakes or whatever, it's a loss for them to give out samples.

You've done a few other events over the year. How has your strategy changed as you've gotten more accustomed to working them?

Tanya: I've learned to go into them without the expectation of making a ton of money. I usually break even. Once you factor in every expense -- I need to hire someone to help, the design, the product, there's parking, lunch -- I don't walk away with much extra. But it's successful from a PR point of view, meeting people and getting orders from there. The first show I went into it thinking, I'm going to make a ton of money. Now I go into it with, I hope I break even and meet a lot of people that are helpful.

Have you delved into the world of farmers' markets?

Tanya: The one thing I learned is that doing farmers' markets or one-off events doesn't really make sense for me. I thought -- and this was a hole in my research -- that once I had a certified home kitchen I could do farmers' markets. I didn't realize that every day I did it I would need a $101 permit from the Health Department. When you factor in the short number of hours, and the audience that goes to farmers' markets, and then the markets either charge you a fee or take a percentage, it doesn't make sense. It's prohibitively expensive to do that. It's more challenging than doing these bigger events where you pay more up-front but you get way more exposure. Ask me again next year and I might change my mind, but it doesn't make sense now.

What are you trying to do to expand this year?

Tanya: I want to increase my wholesale customers, because that's a steady amount I can count on each week. Also, do a lot of online PR. I've really let that slide. I hear the kids today are on the Twitter and the Instagram. [laughs] I need to work out a media strategy. And I need to do promotions and customer outreach. I've managed to build a fairly decent customer list, but I need to utilize that, and not just have it sitting on my computer.

So, if I have a family recipe and want to start a business out of it, what would you warn me about?

Tanya: The first thing is to make sure it's not already out there. And if it is, what makes it stand out. If you're selling jam, and there are already three other people selling jam, you're not going to get into these events unless there's something unique about it. And really try to find somebody who's already done it. My friend hooked me up with someone who was three months ahead of me in starting, and we had dinner, and she forwarded me a bunch of information that took her days and weeks to track down. Also, don't get caught up in the bureaucracy. There's a whole process, these little things you have to do. You have to drive to downtown, drive somewhere else, run around to different offices, wait around. I found myself delaying that, so I just finally said, I'll pay someone to do it. So, know your weak spots. If that kind of stuff slows you down, just go to Legal Zoom or something, and pay someone to do it for you. So, to answer your question: Find help, outsource where it makes sense, and know the market.

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