New Business Startup Questions - Business from home

SJE89

I’m in the process of setting up my small business which is home based baking and catering for small events.

It’s an idea I have been brewing for a few years now and I have practiced with baking various things (always enjoyed and been good at basic baking) and have been practicing cake decorating techniques and taking my products into work and gathered feedback and used it to improve where necessary.

I struggle with self confidence and motivation (hence this has taken a couple of years), it yesterday I registered my intention to begin trading with my local authority.

But I don’t know what I need to do next. A lot of things feel a bit chicken and egg in a way that it feels like some things can't be done before others, and annoyingly vice versa.

I made an application for a business bank account, but they’re asking for certain documents as part of the business which I don’t have yet.

I have a basic understanding of what I generally need to do, but the best order is what gets me stressed out.

I.e. I’ve already tried sorting an account out, but need other things first, and this is why I often don’t end up following through with my ideas.

I have a full list from an Environmental health officer who contacted me today to work through.

But I have also had pointed out to me that I need to inform my mortgage provider (Halifax)?

Are they likely to have a problem with this? I won't need to make any changes the structure of my house as I have everything I need here, and I am not intending to have customers in the house. I will likely be transporting everything myself and not having collections, where possible.

Are they likely to see any issue?

Savvy_Sue

I believe some mortgage providers make it a condition of lending that there isn't a business run from the home. Whether this is rigorously enforced might depend on the business, so I'm afraid you'll have to ask. (My only experience is from working for a Housing Association, where all tenancy agreements had that clause, BUT if you asked for permission it wouldn't be unreasonably refused - depending on what kind of business it was.)

The other people you need to notify are your insurers: even if you are not having customers coming to the house, you may have additional (and expensive) equipment, and significant stocks of ingredients. Also do you need public liability, in case a dodgy cake (I'm sure yours are lovely and that your food hygiene training makes this unlikely) makes someone ill. Perhaps you've already done this?

Good luck!

BridgetTheCat

Contact your local council environmental health department and ask about food hygiene training and certification. This is mandatory for food businesses.

lincroft1710

A few years there were loads of threads from people deciding that because friends and relatives liked their cakes, they were going to start a home baking business. I don't think any returned to say their business was a success.

How will you advertise your business? Go down the wrong route and it can be costly and unproductive. Sites such as NextDoor will be inexpensive (if not free), but, depending on the area may not have reach many people.

Another thing to remember is car insurance. If you are using your car to transport your cakes, you will need business use insurance.

Savvy_Sue

https://forums.moneysavingexpert.com/discussion/comment/81956276#Comment_81956276

Indeed, I meant to add what you said about car insurance myself …

SJE89

https://forums.moneysavingexpert.com/discussion/comment/81955416#Comment_81955416

I work in housing myself and am aware of the conditions within tenancy agreements regarding running businesses from the properties. The emphasis is on informing and not conducting without permission. It would be unreasonable to refuse someone permission to do so, especially if that is the only way they could mak money/pay rent.

I have contacted Halifax today via chat and they asked me to write a letter to them. I have produced the following;

Dear Sir or Madam,

I am writing to request permission to operate a small business from my home, in accordance with the conditions of my mortgage which I hold with Halifax PLC.  I have held the mortgage with Halifax PLC for the past 3 full calendar years. The proposed business is a home-based bakery, specialising in the production of cakes, biscuits, cookies, brownies, and similar baked goods. In addition, I intend to provide buffet food and catering services for small events.

All food preparation and production will take place within my home, and I wish to assure you that there will be no customers visiting the premises. Furthermore, I do not plan to make any alterations to the property to accommodate the business, as the premises are already equipped for the needs of said business. The operation will be conducted in a manner that maintains the residential nature of the property and complies fully with all relevant regulations and will be registered with the Local Authority and HMRC.

The property will be the registered address of the business for correspondence and tax purposes. I am not relinquishing my current paid full-time employment, and this business will be conducted in my free time to provide myself and my family with additional income. 

I kindly ask for your written consent to proceed with this business activity so that I may remain compliant with my mortgage agreement. If you require any further information or documentation, please do not hesitate to contact me.

Thank you for considering my request. I look forward to your response.

Yours faithfully,

Does that sound ok? I want to be sure I do I properly for the best chance of a positive response.

https://forums.moneysavingexpert.com/discussion/comment/81956276#Comment_81956276

How many people would return to say they were successful? Past experience of forum sites where people come other ask for advice are doing so really only for that reason, and to return once they have got what they wanted isn't going to be high on their list of priorates form personal experience. I assume this is referring to covid times, when a significant portion of the population was stuck at home?

I have an Instagram set up where I share posts of what I produce, and will probably start a TikTok, also (but this depends, as it is a much wider audience on there, where I will want to focus on local relationships to start), and a Facebook page and sharing these within my local community groups on FB, which I have checked and accept people promoting small businesses.

I am in the process of looking at public liability insurance and my car is already insured for business use, as I have always had as I use it for work and claim mileage.

Savvy_Sue

Your letter sounds very comprehensive. Sounds like you've already had good thoughts and advice.

Advertising: NextDoor may prove useful if it's lively in your area. And I'm in the process of organising a Flower and Craft Show where we always need stalls: quite a few local 'makers' seem to do the rounds of these. But bear in mind that would take up a day, which would be a day you couldn't spend making the goods you're selling …

lincroft1710

https://forums.moneysavingexpert.com/discussion/comment/81956630#Comment_81956630

At the time there was a lot of doubt from Forum members, more knowledgeable about this type of business than myself, that they would succeed. But it transpires that you will be doing more than just "baking cakes". If you are successful then why not pop back in a year or so and let us know.

MyRealNameToo

Have conversations with your local council, they vary singificantly… our neighbouring one allows you to run an occasional food business without a formal inspection etc. Ours won't allow you to do anything until they have inspected your property.

Have you worked in a food business before and understand requirements? Assuming you arent proposing to have separate fridges etc for your family food and catering food etc then everything will need to comply to standard like labelling, separation etc. A friend tried to open a business but got shut down by the council before it even started as they had no clue about having different cutting boards for different materials, different sink for handwashing etc etc.

Your insurers, are likely to be a sticking point, most won't be happy with you running a catering business from home. Obviously many do and many dont think to tell anyone but I know at least 1 family who lost over £500k of home and contents with the insurer not paying out as it transpired they were using a spare bedroom as a storage for their shop.

You will probably want to seriously consider at least liability insurance for the business, dont want to be sued when someone has an allergic reaction to one of your products and end up being ambulanced to hospital.