What have you been doing while staying safe at home all this time? Maybe you’ve been catching up on your baking shows? Or perfecting family recipes? Finding the right balance between dough and chips for classic chocolate chip cookies? And perhaps all of that has got you wondering… how to start a baking business from home!
If you have been considering it, then perhaps now is the time to make a living out of your passion.
Working from home was already a growing trend before the pandemic and has now become a hard-times mainstay for many families. However, dreaming is only the first step, and to help you actually do it, we’ve put together some tips on how to start a baking business from home.
First, know the business
Before running headlong into the baking industry, take the time to look into what you’ll need, what you’ll sell, who you’ll sell to, and how you’ll sell your products, as well as the taxes and restrictions in your area.
What do you need?
For a home-based startup, you can make do with what you currently have in terms of an oven, baking trays, mixers, and the like. You’ll need to buy ingredients for each batch of products you intend to bake.
The equipment and ingredients you’ll need both depend on what you want to sell and who you want to sell to. Once you have determined those two factors, you’ll have a better idea of what ingredients you need to start baking. In terms of equipment there are some basics you will require:
- An electric mixer — A commercial-size one would be best for larger batches of baked goods, but for smaller batches, a home mixer will work just as well.
- An oven — A countertop convection oven is a great choice because it spreads heat more evenly than other kinds of ovens and tends to be more cost-effective for a young business.
- A refrigerator — This is a must-have in order to keep ingredients fresh. Spoiled ingredients that can’t be used mean profit loss.
- Baking trays – Which ones you need will depend on the products that you will sell: muffin or cupcake trays, cake pans, or flat trays for pastries.
Who will you sell to and how?
An essential step to starting a baking business from home is defining your target market and your sales process.
If you plan on selling your goods from home, the kind of area in which your home is situated is an important factor. If your home is close to a school, an office district, or a frequented park, selling your baked goods directly out of your home is a viable plan.
Keep in mind, however, that each of these clusters of potential customers will have their own product needs. For a school, you can focus more on cupcakes and sweet treats, while in an office district savory goods will also be appealing to your target market.
If you do not live near your target market, or while staying home under quarantine, you can take your business online. This gives you more freedom in terms of what you want to bake, but you will have to carefully consider your distribution plan, as the shipping of edible goods comes with restrictions, depending on where you live. Also, if you are looking at this option, getting some inspiration on how to photograph and advertise your products is a must; you can browse Pinterest, Instagram, and other platforms or for ideas.
Another option is to sell your products through someone else — for instance, a shop or a café situated in the area where you want to sell. When selling through a third party you will have to batch bake, then deliver before peak selling hours. In most cases, your profit will be a bit less than if you sell the product yourself.
Taxes and other legal restrictions
The procedures of getting a permit will vary according to where you live. You may also need to deal with inspections once in a while or to create a separate working area for the business.
For example, in California you can have either a permit that allows you to produce and sell products directly to customers (known as a Type A permit), or to produce and sell to customers, retailers, cafés, and restaurants (Type B — which comes with inspections).
On the other side of the Atlantic in the United Kingdom, you’ll need to invest in a hygiene certificate following the Food Standards Agency’s regulation lists before registering your home as a business premise, which must be done 28 days before you can begin working.
As for taxes, it is always best to consult a professional who can help you register your business for your country’s tax law and ensure that you do not suffer in the long run.
Some good startup advice is to avoid starting as a sole proprietor. If something goes wrong, having a business entity with limited liability will protect you and your family’s private properties.
What will you sell?
As we discussed above, where you live and how you sell or distribute will have an impact on what you sell. However, so do your skills. If you’ve only ever baked cakes and cupcakes, starting a business where you have to sell pastries might not work out well.
Start with what you know best and consider an order-based business until you have established a solid customer base. The only downfall with this plan might be getting stuck in a routine; baking only what you already know will limit your creativity as well as your profit margin.
Your home bakery needs to be unique, and finding out what your competition is and what they offer is key to positioning yourself. Experiment in your spare time to create new products that can elevate your business.
Another thing to be aware of is that customers sometimes have special needs, allergies, and preferences. If you use dairy products and nuts you must have them listed on your website and on product packaging so that customers with allergies do not order a product that can harm them. And there will, of course, be customers who do not like what you offer, but this should not hinder you. Find what works best for your potential customer base and stick with it.
Some baked goods that you can consider selling include:
- Vegan cakes and treats, using dairy replacements such as avocado or soy milk
- Cute cupcakes, if you have decent decorating skills
- Pastries, both savory and sweet, will bring in profits
- Nut-free brownies, for clients with nut allergies
- Funky-flavored muffins for the adventurous foodies out there
Recipes for any sort of baked goods can be learned or created in your kitchen. Any time you try something new, it’s a potential new product for your baking business. And the more products you have on your menu, the more customers you will be able to attract.
Reading this article on how to start a baking business from home is just the beginning. The next step is to let IdeaBuddy help you develop your idea and make it a reality!