Six Things to Consider Before Starting a Home Bakery Business
Updated: Feb 10
Have people told you that you should sell your baked goods? Have you dreamt of one day opening a bakery? If this sounds like you, you’ve probably considered the possibility of starting a baking business.
For many, home bakeries are a good way to dip a toe into the bakery business waters. You’re not committing to renting a storefront and there’s no need to ensure a daily inventory of assorted baked goods to keep your cases full. It gives you a bit more freedom to do things on your own terms, which can be appealing for many bakers.
If you’ve been teetering on the fence about starting your own home bakery business, here are a few things to consider that may help you decide whether or not you’re ready to take that leap!
1. Do you have the patience to research and complete the tasks associated with starting a business?
Depending on which state you live in, there may be a number of tasks you have to complete to start a legitimate business, including, but not limited to:
Registering your business by creating an LLC or something similar
Obtaining a tax ID
Registering for a sales tax certificate of authority
Registering for an Employer Identification Number (EIN)
Completing a certificate of attestation of exemption (exemption from the requirement to provide workers’ compensation and other benefits)
Setting up a business banking account
Filing a home processor or cottage food law request with the state
Determining food labeling requirements
2. How will you market your business and do you have the funds to purchase marketing material ahead of time?
You may decide to run a low key home bakery or you may have your sights set on a much larger operation. Either way, unless you’re depending completely on word of mouth, you’ll need to have materials ahead of time to help market your business and give it a professional touch. Some inexpensive, but great items to consider when first marketing your home bakery are:
Social media pages
Stickers or labels
If you’re planning to sell your baked goods at events, farmers markets, craft fairs, etc., consider the following as well:
Pop up tent (don’t forget something to weigh the legs down!)
My farmers market tent had the bare minimum. It wasn't fancy and I didn't invest a whole lot into it because I was JUST starting out. But I had the essentials. My signage wasn't anything to write home about either; leftover chalkboards from my wedding and some handwritten pricing signs. I didn't invest a lot of money here, but I definitely invested a lot of time!
3. How will you package your baked goods and do you have the funds to purchase packaging ahead of time
Whether you make cookies, cupcakes, bread, muffins, cakes, pastries or any other number of baked goods or desserts out there, you are going to need packaging for these products. It has to be something that’s sturdy, travel-friendly and size appropriate for the item or items going in it. You’ll want to think of how you’ll package everything ahead of time, including:
Cake boxes - assorted sizes
Cupcake/muffin packaging - ½ dozen and dozen
Individual packaging - cookies, cupcakes, muffins, etc.
Wax or parchment paper for handling baked goods or lining boxes
Labels for packaging - logo sticker, ingredients label, pricing labels, product label
Depending on the variety of baked goods you're offering, you'll need a lot of packaging options specific to the product and the quantity. For me, pie boxes doubled as cookie boxes. Cake boxes did, too. Cookie platters were used for special holiday offerings and these cupcake containers were life changing.
4. Are you prepared to work with the general public and different customer personalities?
It can be challenging working with different personalities, especially when there’s money involved. People have different ideologies about customer service (i.e. the customer is always right, I demand a refund, can you throw in X for free?, etc.). Handling difficult or awkward situations can be challenging, so it helps to have policies in effect before they arise. That way, you can reference them if an issue comes up. It’s helpful to have these policies on the invoice you provide to customers, as well as somewhere online, so there’s no mistaking where you stand.
Setting and meeting expectations is also extremely important for any business owner. Check out My Biggest Piece of Advice to Home Bakers for tips on how to ensure you and the customer have the same expectations for an order.
5. How will you organize your orders, inventory, etc.?
Staying organized is imperative when it comes to taking orders, especially if they are a few weeks or even months in advance. It can be easy to be lulled into a false sense of security that you have everything you need, but you don’t want to find out at the last minute that you don’t have the right sized packaging, you're out of piping bags or you don’t have the right food coloring.
It’s good to have a system ahead of time to ensure that you’ll have everything you need for a specific order or event. This isn’t a one size fits all solution, so take some time to figure out what works best for you.
6. Do you have the time to dedicate to determining your pricing?
In all honesty, figuring out pricing was a pretty big undertaking when I first started my home bakery, but pricing your goods is absolutely necessary, so it’s worth doing your research and pricing everything fairly. It will take some time to build up your list, but once you’ve done it, each new item gets easier to price from there.
To get started, use a spreadsheet to record prices for the items you use most, and in which amounts. This may include:
1 cup flour
1 tsp vanilla extract
1 tsp baking powder
1 tsp baking soda
1 stick of butter
1 cup granulated sugar
1 cup brown sugar
1 cup milk
1 cup heavy cream
1 cup buttermilk
And on and on…
Getting measurements like this may take some converting from grams, fl. oz., etc. to make it consistent, but once you’ve got it figured out, it’s easy to quarter, halve, double, triple, etc. the ingredients to determine the pricing from whatever recipe you’re using. It’s not a bad idea to make a note to check any changes in pricing on these items from retailers once or twice a year to make sure your costs aren’t creeping up on you.
These are a snippet of how I determined pricing per ingredient, and then used those calculations to price out whole recipes.
Each of these tasks takes time, energy and money. These are valuable resources and you need to think long and hard about whether or not you’re willing to devote these resources to a new business. There’s a big difference between baking for fun and baking to meet someone else’s needs. If you’re hesitant, give it a good think and decide what your priorities are. If you’re ready and more excited than ever, take this as a sign to take the leap!
Think of something I missed? Would you be interested in a deeper dive into any of these topics? Let me know in the comments, or of course, send an email to email@example.com.