Lots of people enjoy baking as a pastime, making treats for friends, family, and local events. For some, this pastime becomes a passion and can evolve into a dream to run their very own baking business. Being able to make delicious goodies which bring joy to others is hugely rewarding and being able to make money in the process is the cherry on top. However, if you are considering starting your own baking business, it is important to realize that it is not as simple as baking cakes and exchanging them for money. Here are six steps to starting a home baking business.
- Conduct market research - If you are hoping to earn a living through your baking business, you need to conduct market research. This means finding out which businesses you would be competing against in the local area, which baked goods people are buying, average prices, and how your business could stand out from the crowd. You may want to target your business towards a particular demographic, e.g. families, young people, local businesses, weddings, or older people.
- Write a business plan - With your market research under your belt, you can write your business plan. Your business plan should summarize how you will run the business, i.e. what you will make and in what quantities, where you will buy your supplies and equipment, how you will market your business to maximize sales, how much you will charge, and your projected profits. It can also be helpful to write a mission statement which summarizes your ambition for the business.
- Create a sales and marketing strategy - Before you start baking, you need to plan how you will market the business, i.e. how will you advertise your baked goods to find and keep customers. For example, you might want to contact local cafés or restaurants which might want to sell your products. You will need to set up a website and a social media presence, but traditional marketing materials like business cards and flyers may also be useful. If you will be taking online orders, you will need to consider how you will ship your products to customers. There are food PR companies who can support and guide you through the marketing minefield and help you build a noticeable brand.
- Name and register your business - Naming your business is a wonderful task, but it can be difficult to make the final decision. The name of your business needs to be unique and memorable, and you may want it to feature your name in some way. The best bakery names are quirky and bring a smile to people’s faces but remember not to be so obscure that people cannot instantly recognize that it is a bakery. When you have a name, register it in your state and get your federal tax ID number. You will need to decide how to set up the business, e.g. as an LLC, a partnership, or sole proprietorship. Click here to find out the difference between an LLC and a sole proprietorship.
- Apply for license and permits - You will need to apply for the relevant licenses and permits to run a baking business in your city, county, and state. This might include a sales tax permit, home occupation permit, health and safety permits, and you will need to ensure that you are complying with health codes and regulations. In some states, you are not allowed to use your home kitchen and equipment for commercial purposes, and the fire department may need to assess your kitchen for safety.
- Set up your kitchen - Now your business is set up, and your marketing campaigns are out there, the orders should start rolling in. Even if it is not a legal requirement in your state, you will probably want to invest in more professional baking equipment such as dough mixers and ovens, which will enable you to increase productivity. You will need to consider how you will store your raw ingredients and the finished products in line with regulations.