Bakery Business Plan Template [Updated 2023]

Is starting a cake business still right for you?

If you’re not set on starting a cake business, there are plenty more creative business ideas you can start from home. Why not think about:

Read our guide to the best small business ideas in the UK to see the latest trends.

The baker in you wants to spend your days making chewy cookies and decadent cakes. The entrepreneur in you wants to be your own boss and call the shots. But the realist in you knows that you may not have the resources or the time to start your own retail bakery.

The solution could be a home-based bakery!

This type of small business lets you bake to your heart’s content, be your own boss, and work from home, instead of leasing an expensive storefront and hiring a squad of employees.

If you’re trying to figure out how to start a bakery business from home, you’re in the right place. Here’s a step-by-step guide to turning your home kitchen into a small-batch production powerhouse.

How to Start a Cake Business on Instagram

As a future specialty baker, you will want to reach as many people as possible with as many beautiful shots of your cakes as possible. Just realize that every post for your cake business reveals something about your business to your competition.

Not Sure If You’ve Got the Skills to Start a Home Baking Business?

A home bakery is a business, just like a retail bakery. While it has its own set of rules and regulations, it must still abide by the same principles of great baking, customer service, cost control, and marketing.

5 Steps to Starting a Bakery Business From Home

  • Create your business entity and acquire the proper licenses.
  • Plan the bakery menu.
  • Get the right equipment and supplies.
  • Review your overhead costs and price your products accordingly.
  • Start baking!

If you’re not sure if you have all of these skills, it may be time to invest in an education by attending pastry school to help you with both the pastry and business skills. With Escoffier’s online program in baking and pastry, you can earn a diploma or an associate degree—from home—in less than 60 weeks!

*Information may not reflect every student’s experience. Results and outcomes may be based on several factors, such as geographical region or previous experience.

Are you a talented baker looking to start or grow your business? A bakery business plan is a great place to start. A good business plan will help you outline all the steps necessary to make your bakery successful – like hiring a talented management team, building an effective marketing plan, and securing the technology you need to boost sales, like a bakery POS.

After you’ve decided on the type of bakery you want to open – whether that’s a bakery cafe, food truck, specialty bakery, or another type – it’s time to get into all the fine details.

Your business plan is a crucial part of starting your new restaurant because it will help you structure your ideas and goals, what types of products you will sell, what your marketing strategy will be, how your business will operate, and so much more.

In this article, we will cover:

  • Why you need a bakery business plan
  • How to write a bakery business plan
  • 7 bakery business plan sample sections

Bakery Business Plan Template

Bring your bakery concept to life with this customizable bakery business plan template.

How Much Does it Cost to Start a Cake Business?

When you are thinking about how to start a bakery business from home, or maybe even how to open a bakery with no money, you have to answer one question for yourself:

Really, how much does it cost to start a bakery from home?

The good news is that the answer usually is, “Not a whole lot more than you have already invested in your cake-making hobby.”

You already have the basic equipment needed to start a cake business. Remember, your concern is how to start a bakery business from home, how to start selling baked goods from home that you make at home.

Setting up a full-scale bakery will cost $10,000 to $50,000 at a minimum. But depending on where you live, your incremental costs of starting a cake business from home may be as little as the $10 you spend on an online food handler course in Texas to about $230 to apply for a home food producer’s license in Washington State.

Just be aware that when you are considering how to start selling baked goods from home, you need to consider not just how to make money selling baked goods from home, but also how to keep money from selling baked goods from home. Right up front, consider:

  • Taking out liability insurance to cover any claims made against you for harmful results of your baking. The mere fact that your cakes don’t cause harm is not enough to protect you from legal claims that they did. Affordable liability insurance is available from Insure My Food and the Timmons Insurance Agency in Austin, Texas.
  • Operating your business as a Limited Liability Company (LLC0)protects your personal assets (your house, your car, your retirement accounts) against legal claims that come up in the course of your home baking business. Setting up an LLC can cost as little as $50 and as much as $850, if you use an online legal service instead of seeing a lawyer in person.

Almost no homemade cake businesses get going for less than $500. But anyone can start their business for less than $5,000.

Bakery Business Plan

If you want to start a bakery or expand your current bakery, you need a business plan.

You can download the bakery business plan template (including a full, customizable financial model) to your computer here.

Bakery Business Plan Sample

Below are links to each of the key sections of a business plan template for a bakery to help you write your bakery business plan:

Having a business plan is one of those things that everyone starting their cake business stresses out about.  It seems like one of those things you simply have to have if you want to be taken serious in your business.  However, unless it’s something you have been asked to produce to receive funding, or other help for your business, I don’t believe it’s some huge document that you have to slave over.

When you Google business plan template you will be faced with hundreds of multipage documents that cover every inch of your business.  This will obviously take a lot of time, but it can become a distraction from just getting on with running your business. They are also often quite generic, and not geared specifically towards cake decorating businesses, bakeries or home baking businesses.

With all that in mind, it can be useful to have some kind of guide to keep you on track, focussed on meeting goals and growing your business.

A one page document, noting down some important figures, targets and goals will help you to learn from what you’ve done already in your business and make decisions about how best to move forward.  I’ve created a template for your and I’m going to run through all of the headings and explain why I think they are the only important bits of information you need to track on your business plan.

Your bakery mission statement

This is one of two sentences that define your business and your overarching goal for it.  For example – ‘To support myself full time by created the best tasting wedding cakes in my area’.  This type of statement is good because it not only focuses on the business side, and how your target is to go full time and pay your bills with your business, but also explains very simply what you want your business to be known for – delicious wedding cakes.  Having this written out very simply at the top of your business plan will allow you to keep it in the forefront of your mind whenever you have an important decision to make, and wonder if that move will keep in line with your mission statement.

What has worked well in the last 12 months

Look back at the last year in your business and track what you think has worked well for you.  Maybe you had a really successful farmers market, or maybe one wedding you did had brilliant reviews.  By looking back at your successes, big or small, you will feel motivated to continue to grow your cake business and be even more successful in the year ahead.  It will also help you to start thinking about what areas you should be focusing on in the future.

Your 3 main sources of income

As with the above section, this section is all about tracking where you currently are, to create a plan of action for the months ahead.  Look back at your sales for the last year, or however long your baking business has been running, and tally up where you have made the most money.  Has it been bespoke birthday cake orders, farmers markets, weddings, wholesale to local businesses. Note these down and these will be the areas to focus on this year.

Top 3 order sources

Again, as above we are focusing on your areas of success.  Where do you find you gain most orders, and where does most of your business come from.  If something is working there is no need to go and reinvent the wheel. Double down on these areas and you will see even more growth in the future.

Top 3 goals for the next 12 months

Now we’ve reviewed where you are at, you can jot down your top three goals for the next 12 months.  These goals may require lots of mini goals to be met before you get there, but by writing down the three main things you want to achieve they will become tangible and you will be more inclined to actually stay on track to meet them.  My plan is that this business plan will be printed out and frequently referred to by you, this constant reminder of your top goals will make achieving them easier.

Bakery income goals

Sometimes in business we can tend to live order to order, and rarely sit down and tally everything up.  If you don’t add up how much money you are actually bringing in, how can you know if you are growing? It can also flag up areas where you are not doing so good, but until you see in in black and white you won’t really be aware.  Add up all of your sales from the last year, or if you don’t have a full year in business, however long you have. Write that down. Are you happy with that figure? Do you want to improve? By having this figure, next you your target figure, you will be able to be more specific about how much you need to earn every month/week.

Projected income

Get more specific about where your income is going to be coming from, and this will help you to plan where to focus your energies in your business.  I’ve populated a couple of examples but these should be edited to suit your baking businesses specific products.

Marketing goals for your bakery

So there you have it!  Not much to it, but you should be feeling pretty well informed about the state of your business currently and where you plan to take it over the next few months to a year.  Good luck and if you have any questions about the business plan or the download, please in touch via the links below.

How to start a cake business from home – a 10-step guide

When you’re starting your home baking business you need to tell HMRC you’re self-employed so that they know you need to pay tax through the Self Assessment system. You need to do this even if you’re going to be running your home baking business as a side hustle, part-time or if you have another job.

Follow selling cakes from home legal requirements in the UK

Complying with the rules can seem scary initially but they’re quite simple to get to grips with.

Home businesses are also subject to a food hygiene inspection, where you’ll be awarded a hygiene rating from one to five. Your local authority will arrange to visit your home after you’ve registered your business.

Rules for food preparation areas

  • floors and walls – should be in good condition, well-maintained, disinfected, and in a good state of repair
  • ceilings – should be in good condition, easy to clean, and free from mould, condensation and flaking paint and plaster
  • windows and doors – should be easy to clean and disinfect, and built so dirt can’t build up. There should be insect-proof screens that can be easily removed for cleaning
  • facilities for cleaning equipment – you should have good facilities for cleaning, disinfecting and storing utensils, including equipment, with a supply of hot and cold water
  • facilities for washing food – you need a sink for washing food and cleaning equipment, and a separate sink for washing hands (if you have a downstairs toilet, this should be fine as long as it’s not too far away – all of these facilities should be kept clean and disinfected)

Ideally you need a separate fridge for your personal food, but if this isn’t possible you should be clear about which foods are for your business and make sure there’s no cross-contamination.

Pets should be kept out of the kitchen and food preparation areas. Children shouldn’t be allowed in the kitchen while food is being prepared.

Allergens and food labelling

Finally, make sure you’re up to speed on food labelling regulations and Natasha’s Law when it comes to giving allergen information.

The Food Standards Agency has lots of resources that you can use for your home baking business, including the Safer food, better business pack, which is based on hazard analysis and critical control point (HACCP) principles.

We also have a guide to health and safety for restaurants, catering and hospitality businesses, which might be useful for your cake business.

Photograph: Africa Studio/

Register your premises

Another regulation when you’re starting your cake business is that you’re required to register your premises with the local authority’s environmental health service at least 28 days before you start trading. This doesn’t cost you anything and your registration can’t be refused. Someone will come to your home and check your food preparation area. To get contact details for your local authority, use the food business registration tool.

Keep in mind regulations we’ve listed in this article are a guide. It’s always best to get advice from your local environmental health authority if there’s anything you’re not sure about.

Sort your home baking insurance

It’s important to think about business insurance when you’re setting up your baking business. Public liability insurance and product liability insurance (usually sold together) can cover you if you’re sued by a member of the public for injury or damage.

For example, you might have a claim made against you if someone falls ill after eating one of your cakes, or if you knock over an expensive vase when you’re delivering a cake to a customer’s home.

There’s also stock insurance and tools insurance, plus employers’ liability insurance if your home baking business will have any employees. Go to our home baker insurance page to get started.

Tell your landlord or mortgage lender

If your home is rented, you need to get permission from your landlord to run your business. However, the law says that your landlord can’t unreasonably withhold or delay their permission. If you own your home, you may need to get permission from your mortgage lender to run your home-based baking business.

Think about standing out

There’s a large number of baking businesses out there, so you need to think about how you’re going to differentiate yourself. You could specialise in vegan or gluten-free bakes, for instance, or concentrate on children’s party cupcakes or wedding cakes.

Since cakes are difficult to transport, you need to have a good sense of your local market, as most of your customers need to be close enough for in-person delivery or collection.

Develop an online presence

You make a product that looks beautiful, so photographs are key.

Set up a simple website

Your website should include important details like what you do, where you’re based, and how people can place an order, and add plenty of mouth-watering photos.

There are tons of website builders to choose from, including WordPress, Squarespace and Wix.

Show up on Google

A Google Business Profile is an important part of any local advertising strategy. This means your business will appear in Google search and Google Maps when people are looking for cake businesses in their local area. If customers can’t visit your home to buy your cakes, you can hide your home address on your listing and still appear in the local area as a delivery business.

Get out and about with your baking business

Although you’re setting up your baking business from home, it’s a good idea to get out and tell people about your business and develop a reputation locally.

Consider applying for a stall at local events, including food markets and fetes. You can offer people free samples, sell cakes, and give out flyers and leaflets to promote your cake business.

Keep track of your ingoings and outgoings

Since you’re running your own business, you need to keep track of your income and your business expenses so that you can enter this information when you complete your tax return.

Our guide to tax-deductible expenses should help you figure out which expenses you can subtract. Remember that you need to keep your receipts as HMRC may ask you to produce evidence of your expenditure.

There’s lots of small business accounting software available that can help you to manage your business finances.

You’ll also want to use a budget calculator and choose the best business bank account, so you can keep your personal finances separate.

Market your business

People need to discover your wonderful cakes, so it’s important to think about marketing strategies. As well as going to local events with your cakes and using social media to reach potential customers, think of other ways.

If you’re specialising in wedding cakes, you may be able to put flyers in a wedding dress shop, or develop a relationship with a local wedding venue, for example.

If you’re making vegan cakes, perhaps you can get permission to put flyers in a local vegetarian restaurant, or write a guest post for a popular vegan blog.

Download our free business plan template to map out everything from your initial idea and financial investment to your marketing strategy and plans for growth.

Why You Need a Bakery Business Plan

There are many benefits to writing a bakery business plan. First, it helps you better evaluate your business ideas and goals through research and documentation. Second, a bakery plan helps you build a structure for identifying next steps to bring your vision to life. You can always refer to your business plan to stay on track to achieve the goals you’ve set out.

Writing a business plan for a bakery will also help you figure out what you need to grow your company. You’ll gain a clear understanding of the equipment, supplies, and capital you will need to make your dreams a reality. By making a strong and well-thought-out plan, you’ll be more likely to secure funding from banks, potential investors, and lenders.

Look at any bakery business plan sample, and you will see how much information can be conveyed to your reader in an easy-to-understand manner. You might be surprised by all the components you overlooked! Now’s the time to think about improving your bakery.

Writing a business plan for a bakery is no easy feat. You have to think about all the various aspects of your business – like how often you need to order ingredients, how you will market your business to reach new customers, and the amount of staff you will need to hire. Essentially, you’re putting together a manual for your bakery’s success, and it needs to convince investors and new business partners to support your business.

To help you get started, we put together a free bakery business plan template. Acting as a roadmap, our template provides step-by-step instructions for how to think through all of the key elements of a bakery business – including a market analysis, operations plan, marketing and PR plan, financial analysis and projections, and more. You can use the tips in each section to learn how to write a bakery business plan.

More useful guides for small businesses

Have you got any more questions about setting up your home baking business? Ask them in the comments below.

Your Homemade Cake Business Plan

Now that you have an idea of how much or how little you will need to spend to start your at-home cake business, it’s time to make some very clear decisions about money in the form of your business plan.

We don’t usually like to talk about it, but money is what makes or breaks a home cake baking business. You don’t want to launch your online cake baking business with a splash and build up an enthusiastic clientele only to find that you can’t pay yourself a dime because you owe all those dimes to your suppliers.

These are the basic parts of your homemade cake business plan. Don’t bother looking for some boilerplate homemade cake business description, or a cake business plan pdf, or a small bakery business plan sample, or even a homemade cake business description, before you go through these steps:

Make sure you know how you will pay for your new business and your monthly living expenses before you start. Have a way to keep going while your homemade cake business is beginning to make money. Don’t put yourself in the position of, say, canceling your family’s vacation so you can make the payments on your new oven.

Make sure you know why you want to have a home cake baking business, instead of just baking and decorating cakes for fun. Consider what you can do differently.

Then, plan for these 10 essential elements of any successful home cake baking business:

  • Equipment. Just don’t get carried away.
  • Registrations. If you need a business license or a fictitious name (a “doing business as” or DBA) registration, make sure you have it.
  • Education. Even if you make amazing cakes, chances are that you can still benefit from seminars that expand your knowledge of how to run your business.
  • Insurance. You need insurance both for your home and for your business. We all hope we never have to use it, but insurance is a basic operating expense.
  • Financial advice and a good accountant. Numbers don’t lie, but if you don’t know how to calculate them, you need the help of a professional who can.
  • Legal advice. You need an established relationship with an attorney, so you won’t have to search for one if the need for legal advice comes up.
  • Staff. As your business grows, you will need help. Find or educate great staff to help you keep expanding.
  • Business cards. If you make great cakes, the people your customers serve them to will want to know where they can get them, too. Business cards with your phone, website, and other information are a must.
  • Advertising. You can do that on the Internet, right? Let’s consider that point in more detail.

Promote Your Home Baking Business

Showing up with baked goods ready to sell is a start. But with some marketing and promotion, you can get people excited about finding your stand at the local farmer’s market.

Bakery Business Plan Sample Sections

To help you fill in your own business plan, here we’ll cover what you need to include in each section.

Executive Summary

You will describe your bakery’s mission statement, proposed concept, your target market, and explain how the uniqueness of your bakery will ensure your success. For example, you can explain any special traits of your team that will help your bakery grow, like exceptional customer service or attention to detail when preparing pastries for guests.

Additionally, you will offer financial highlights of how you plan to use funding from potential investors. Perhaps you will spend money on the design of your bakery, purchasing initial inventory, or covering overhead expenses. You can also include a chart to show how potential funding will help increase your bakery’s revenue over time.

While this section is important, remember to keep it to the point. Aim for around 600 words to entice the reader to keep reading the rest of your business plan. You can also check out a bakery business plan sample for inspiration.

Company Overview

Your company overview section presents a summary of your bakery’s history and why you opened it in the first place. For example, you can write about how your bakery is different from your competitors – such as your team’s impressive credentials, or how you’re the only business in your area selling gluten-free and vegan baked goods.

You should also include important details like your bakery’s legal structure, founding team members, location, and milestones to date. Milestones are goals that you met, like opening your first bakery location, launching a website, or hiring your first head baker.

Lastly, mention the type of bakery you plan to run. Your service type will be important as you write your bakery plan, helping define the space and equipment you need, and how you’ll interact with guests. For example, if you run a bakery cafe, you’ll need a sit-down area, as well as a front-of-house and back-of-house area. If you operate a food truck bakery, you’ll need to buy or rent a truck so your bakery will be able to move around.

Market Analysis

This section focuses on the customers that you plan to serve. For example, do you plan to bake cakes and pastries for weddings? What about school events, birthday parties, or private events? Maybe you’re a neighborhood bakery that relies on foot traffic from your regular customers?

If you rely on grocery stores, farmer’s markets, or restaurants to sell your baked goods, you can mention that too. Supplying products like breads, biscottis, brownies, bagels, or other baked pastries to restaurants will also help you grow your customer base faster.

After you’ve defined your target market, you can go into more detail by describing your customer personas:

  • Is your target market working professionals or students?
  • Are they thrifty or willing to spend on a specialty drink?
  • Does the quality of ingredients matter to them?

Once you’ve outlined your target market’s unique requirements, make sure you write how you will meet each of their needs.

Business Offerings and Menu

The Business Offerings and Menu section focuses on what type of baked goods you will offer customers. Whether you offer fresh bread, cookies, or cakes, discuss every detail about what you plan to sell. Make sure to provide an explanation for why you sell these products, and how your delicious goods will drive foot traffic to your bakery.

Remember to always write in layman’s terms so even if someone is unfamiliar with your bakery, they can still get excited about your products. To do so, avoid industry jargon, buzzwords, or technical knowledge that might not be common knowledge to investors.

Here are a few questions you can answer when writing out your business offerings:

  • Will you be reinventing recipes, or creating brand new products?
  • Will you include specialty items like nut-free or custom-made products?
  • Where will you source and buy your ingredients and equipment from?
  • How do your baked goods compare to others currently on the market?

Operations Plan

This section is where you expand on your business goals, including what the management team will look like and what technology you’ll need.

For your team, you should provide details like whether you will be hiring full-time or part-time staff, what their roles will be, and at what hours your bakery will be open. For technology, you can list restaurant equipment that will help you get your job done well every day. For example, you might need mixers for blending batter, a stone deck oven for making bread, and a refrigerator for storing eggs, milk, and other important items.

You can also list operational milestones that you want to achieve over the coming months to ensure your bakery operates successfully. For example, you can mention when you want to finalize your lease agreement, begin construction for a bakery redesign, or mark the date of your bakery’s grand opening.

Marketing and PR Plan

You’ll need a solid marketing and PR strategy to enter your target market and attract new customers. In this section, you will explain the steps you plan to take to reach potential guests.

Aside from coming up with a catchy bakery name, there are many ways you can draw in an audience.

Social Media

Asking customers to leave a review and spread the word is an effective way to market your bakery. If your baked goods speak for themselves, you will likely benefit from this marketing strategy.

SEO Marketing

For the last section of your bakery business plan, you will focus on the financial projections for your business. You’ll outline the potential costs for ingredients, equipment, technology, bills, and salaries that will keep your bakery running. For example, costs might include pastry products, like flour, sugar, butter, and cream. They may also include baking materials like cake pans, stand mixers, rolling pins, and measuring cups.

You’ll also include several documents in your financial analysis, such as an income statement, balance sheet, and a cash flow statement. After listing all of the costs of your bakery design, inventory, and other working expenses, you will then project the time it will take to achieve a profit. Remember to keep your numbers realistic, so you can let investors know how you could actually use their support to grow your business.

A bakery business plan is the best way to start or grow your business – it helps finetune your business concept and identify your target market. If you look at any bakery business plan sample, you will see many important sections that help guide a bakery to achieve success.

Once you have finished writing your bakery plan, you can refer back to it on a regular basis to make sure you are keeping up with the goals you set. Remember, that you’ll need to update your document if your market should change. For example, if customers start demanding more gluten-free products, you can update your plan on how your bakery will meet this requirement.

While writing a bakery business plan can feel tedious at times, remember to think of it as a fun and creative project. There are so many ways to open or expand your bakery business! If you need inspiration, use our bakery business plan template that can be customized to meet your specific business needs.

Debra Weinryb

Debra is the Content Marketing Specialist at TouchBistro, where she writes about the latest food and restaurant industry trends. In her spare time, Debra enjoys baking and eating together with family and friends. Her favorite creations include chocolate cake with Italian meringue buttercream, mile-high lemon meringue pie, and fresh naan with tahini sauce.

Make Sure You’re Legally Set Before Doing Anything Else

A home-based bakery is a business, which means it’s still subject to state and local laws around food, business licensing, and taxes. Additionally, there are nuanced laws surrounding the sale of food items from one’s home.

Here are some general guidelines, but since laws vary from location to location, make sure to consult your local food and business regulatory agencies before moving forward!

Learn Your Local Cottage Food Laws

Home bakeries are generally covered by a section of law called cottage food. This classification separates home-based bakeries from commercial or retail operations that have designated storefronts or production kitchens. Commercial bakeries have to meet certain requirements for equipment and sanitation, while cottage-food operations are exempt from many of those rules.

To make sure these home-based food businesses don’t get too large (in order to prevent large-scale operations from skirting the regulations of a retail bakery), cottage bakeries usually have a sales limitation. They also have rules regarding who you can sell to. A cottage bakery is generally for direct-to-consumer sales only, so you couldn’t sell to a local grocery store or bakery.

The first step in the process is to assess the rules where you live. Your state and local health departments should be able to provide additional information on your area’s cottage food laws.

Create a Business Entity and Get Licensed

When you start a home baking business, there are other legal issues to consider before you tie on your apron. Some states require you to carry a business license to operate your home bakery. You may need a food manager license from the health department as well, depending on your state.

You should also set up a business entity, like a limited liability company (LLC). Setting up a company, versus operating your business as an individual or sole proprietor, protects your personal assets from legal liability in the event of a lawsuit. You may also need an insurance policy. Make sure you check with a cottage food expert and/or an attorney for advice on the best way to proceed.

Organize Your Finances and Plan for Taxes

One of the cardinal rules in business is to always keep your business banking separate from your personal banking. This means setting up a separate business bank account, which you can do once you’ve created your company.

You may also have to charge sales tax and/or food tax on the items you sell. You’ll need to keep careful track of your sales and document their breakdowns so you can ensure you pay the proper amount of local and state taxes.

Build your cake business online

The Best Fit for Your Food Business

Food entrepreneurs, this is your moment. Your community is more and more conscious about what they buy and where it is from. They want food made with love. With ingredients they can pronounce. And they want to support their community while doing it.

Castiron is the best fit for your food business because we’re not a one-size-fits-all tool. Selling local food is different from pre-packaged warehouse products. Whether you sell cooking classes, need local pick up, utilize pre-sales to plan inventory, or need a fully custom order form — we got you.

Build a Customized Store

Make Buying Painless

Never track down a payment or oversell products again. Real-time inventory tracking and secure payment processing make life easier for you and your customers, and our order form builder makes managing custom requests a breeze.

Promote Without the Effort

With our marketing tools, your email marketing can go on autopilot. We make it easy to promote your latest products, announce custom order availability, and stay connected with customers.

Are you a great baker whose friends are always asking you to “bake just one little cake, please?”

Are you the cake decorator that makes everyone ooh and ah with your beautiful cake designs?

Or maybe you don’t do cakes, but you understand cake business ideas inside out making you a natural expert in how to start a baking business from scratch, as long as you don’t have to do the actual baking.

In this article, we will go over the essentials of how to start a cake business from home. But before we go any further, we need to remind you of a common theme of all successful cake business stories:

Successful cake businesses make money.

Is the cake business profitable? It absolutely is! But you have to treat the hobby you love as an opportunity to make more money than you spend if your cake business is going to sustain you to reach more people with your scrumptious, eye-popping cakes.

We have to add one more principle to our rule for success in the cake business:

You must take rules and regulations seriously.

Even if you don’t like them.

Nothing sabotages more cake businesses than trying to run a cake business from home with pets. Keep Fluffy, Fido, and Izzy the Iguana separate from your cake kitchen. Many states won’t make you get a license. They won’t make you get a permit. They won’t make you get a kitchen inspection or send in samples of your cakes to the health department.

You don’t want one dog hair or cat whisker or whatever it is that other pets could contribute to your cakes to take down your business after a lot of hard work.

Now let’s consider how much money you need to get into the cake business.

Ready, Set, Bake!

Bake plenty of your best treats, package them nicely, and head out to sell! Most home bakers sell their goods onsite at events like farmers markets and county fairs. Check your local and state regulations for where you can and can’t sell home-based bakery goods.

You may (depending on state regulations) also be able to sell your baked goods online. If this applies to you, a simple website can let customers place orders throughout the week that you can deliver whenever it’s convenient for them. Be sure to include a disclaimer about how far in advance customers need to place orders to ensure they’re delivered on time.

Price Your Baked Goods to Ensure Profitability

Pricing your baked goods takes much more than simply looking at what your competitors charge and doing the same. Your baked goods must cover your costs of ingredients, labor, and additional overhead like business fees and farmers market fees, with some still left over for profit. But how do you figure out all of those numbers?

Calculate Your Food Costs

Build a spreadsheet of each ingredient that you use, plus the cost of each in common denominations. For example, you could list the costs of:

  • a pound of flour
  • a pound of sugar
  • a dozen eggs
  • a stick of butter
  • a tin of baking soda
  • and so on.

Then, use that information to calculate the food cost of each recipe.

Maybe you plan to sell cupcakes. Based on your spreadsheet, you can calculate the cost of the flour, sugar, baking soda, vanilla, eggs, etc. that go into your recipe for a single batch. If a dozen eggs cost $3 and you use two eggs in your recipe, you’ll know that the cost of those two eggs is $.50.

Let’s estimate that your cost per batch of cupcakes is $5.00. Then, divide that total batch cost by the number of cupcakes in a batch. For a $5.00 batch that yields 24 cupcakes, your cost per cupcake would be $0.21 $5.00/24 cupcakes = $0.21 per cupcake. Remember, this is only the cost of the ingredients required to make the goods.

Calculate Your Labor Cost

Next, assess how long it takes you to make a batch of those cupcakes. Perhaps it takes you two total hours to mix the batter, bake, decorate, and package two dozen cupcakes.

How much could you expect to be paid hourly if you worked in a bakery? Let’s say you would be paid $15 per hour. So a total batch of your cupcakes is worth $30 of your time.

Now, we can figure out the labor per cupcake. Divide the total dollar value of your time by the number of cupcakes. $30/24 cupcakes = $1.25 labor per cupcake.

Calculate Your Overhead Costs

Consider what other expenses you’ll incur for your business. This could include fixed costs like farmers market fees and a monthly website. It also includes variable fees that change based on how much you sell (like labels and packaging costs) plus cooking needs (think parchment paper and cupcake liners.)

These values can be hard to estimate before you have some experience and know approximately how many items you’ll sell per month, but do your best to estimate a total monthly overhead, and divide it by the number of items you expect to sell per month. When getting your start, you may want to under-estimate your sales so you don’t dig yourself into a hole from the get-go.

For easy math, let’s say your monthly costs are $100, and you sell 400 items per month, for an overhead cost of $0.25/item. $100 overhead/400 items = $0.25 per item.

Assess Your Cost of Goods Sold

Cost of goods sold (referred to in the industry as COGS) is the total cost of producing all the items you plan to sell. Add each of these individual costs up to get your cost of goods for a single cupcake!

In our example: $0.21 food cost + $1.25 labor cost + $0.25 overhead costs = $1.71 per cupcake.

Now you have an absolute baseline for your sales price. Anything under $1.71 and you’ll lose money on every cupcake. Anything over $1.71 and you’ll make money on every cupcake.

To get your shop’s COGS, repeat this process for each item you sell.

Kitchen Requirements For Home Baking Business

Once you have made your business plan and you are committed to starting your new home baking business, there is just one more hurdle to completing your plans. You need to know your city, county, and state kitchen requirements for home baking businesses.

Do you need a license to sell baked goods from home?

Once you know what you’ll be making, you can get what you need to execute your offerings. Whether that’s assorted cake or muffin tins, bread tins, cupcake wrappers, piping bags and tips—make sure you have everything ready to go and a place to store it all.

Some states’ cottage food laws require that you keep your bakery equipment separate from your personal kitchen equipment, so keep those extra space needs in mind. Make sure to track the cost of all of your supplies, so you can account for them when you price your menu and do your taxes.

Plan Your Bakery Menu

Once you understand the rules and regulations and have your company set up, you can start the fun part!

Many home-based bakeries make cookies, breads, muffins, cupcakes, or cakes. As your own boss, you can choose to make whatever you like best (and choose not to make anything that you don’t enjoy). Auguste Escoffier School of Culinary Arts baking and pastry student Katie Sualog makes legendary biscotti in her home-based bakery!

Make sure to keep local laws in mind while planning your menu! Remember, in most cases the end-product must be shelf-stable, so anything that requires refrigeration is usually not an option.

One of the best things about a home bakery is that they’re flexible. Let’s say you go to the farmers market one weekend to sell pre-cut slices of banana bread. You hear from a few people that they love your banana bread, and wish they could buy a whole loaf! Well that’s easy for you—next weekend, you can offer both slices and whole loaves for those who want them, versus having to stick to a predetermined menu. You can also switch things up whenever you like, experimenting with different ingredients or scaling back when things get a bit too busy.

Not sure what to bake? An education in Baking & Pastry Arts from Escoffier introduces students to many different types of baked goods. And with the online program, students can practice their techniques right in their home kitchens—perfect for the aspiring home-based baker.

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