How to Start a Baking Business
Whether you’re passionate about creating decoratively frosted cakes or artisan sourdough loaves, you must create an action plan for turning your passion for baking into a business. Discover the steps of opening a bakery below.
Do you dream of quitting your day job and starting a home-based baking business? Have your friends been telling you to start charging for your treats? Consider this your sign. It’s time to think about starting your home-based bakery!
In this article, I’m going to go over everything you need to know to help you decide if starting a home bakery business is right for you.
How much does it cost to start a baking business from home
SELLING FOOD ON SHOPIFY
The majority of pies (check your jurisdiction’s regulations! Florida allows apple pies but not pumpkin pies.
Pastries, including bar cookies such as brownies and cookies in general
Cakes, cupcakes, breads, pastries, and other baked goods can all be made with dry ingredients.
If you wish to sell things online, you should look into what is offered in the area online. If such is the objective, then you should go to several different stands at the nearby farmer’s market. Determine who you want to buy your baked goods from your home-based bakery.
Coming up with a name is one thing that doesn’t cost anything. That might be the most enjoyable experience of them all.
Examine The Penny Hoarder’s Guide to Beginning a Business for further information.
Take modest measures.Start Your Blenders Right Away
Because there is so much to take into consideration, you might find that your thoughts are as disorganized as one of your cake mixes. You are a baker, aren’t you? If you use a logical approach, you will be able to master each stage in the process.
We are here to assist you in starting a full-time enterprise or simply producing enough baked goods to make a little bit of extra money on the side.
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.
Whether you dream of opening a donut shop or a boulangerie, starting a bakery allows you to serve niche markets and express culinary creativity without taking on the financial burden of opening a restaurant. You can even start your bakery business from home before investing in a commercial space. While bakeries are comparatively accessible foodservice businesses, they present unique challenges. From writing a bakery business plan to getting funding and filing for permits, we walk you through each step of opening a bakery.
Shop All Bakery Supplies
Jump to a specific step of opening a bakery:
Do I need a business license to start a home-based baking business?
Selling homemade goods without a license is not recommended! If you get caught selling without the required licenses, you risk getting fined, or even shut down! You should find out how to legalize your home baking business before making any other plans. Being a licensed, legal cottage foods bakery is important. It will help you stand out from the other bakers and ensure that you can continue doing what you love for years to come!
If you’re not ready to get a licensed kitchen you should not sell your baked goods. You can still bake for fun and practice but give your treats away to friends and family for feedback.
What is the total cost for starting home bakeries?
Everybody has a different start-up experience. Starting a home bakery is far less expensive than you might think.
Some home bakery start-up expenses you may have are:
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If you are a baker, you may increase your income while doing something you enjoy by beginning a baking business in your own home. What exactly is required? In order to get your bakery off the ground, you will need to make an initial investment in equipment, packaging, and baking essentials, in addition to developing a marketing strategy. There is a good chance that you already possess some machinery, but as your company expands, you might find that you require additional tools.
It is anticipated that it will cost between $5,000 and $10,000 to get a home baking business up and running with a monthly income from $1,000 to $2,000. Obviously, these figures are dependent on a wide range of factors, such as the size and scope of the business you intend to run, the location of your home, the amount of hours per week you plan to put in, and many more.
10 STEPS TO BAKING BUSINESS
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.
In no more than five words, please describe the home bakery business you run. What kind of baked goods do your loved ones and close friends enjoy eating the most? How can you most effectively communicate with the people who make up your target market
Develop a strategy for your company.
It’s possible that writing a business plan will make your stomach turn, but there are templates available for you to use. The available levels of specificity can vary depending on the strategy. Here is a list of 16 tools that will assist you in starting and running a small business.
Some of the factors to take into mind
You are going to need some time to shop, arrange, bake, package, deliver, and market your sweets and treats. Determine the number of hours per week that you are able to devote to working on your baking business.
You will also be required to keep records of both your income and your expenses. It is necessary to create labels for the food. There might be some contracts and there will definitely be some license information that needs to be filed.
You have the option of taking payments in cash, checks, or by setting up an online payment provider such as PayPal or Venmo. These can likewise be created for no cost, however there are payments associated with their use. Your home baking business can get off the ground with almost no investment on your part other than the materials for the baked goods you intend to sell. Continue to the top
Rules for Running a Bakery Out of Your Home
The regulations governing “Cottage Food” determine what kinds of food products can be legally produced by home-based food businesses and how those businesses can sell their wares. The kinds of meals that can be manufactured at home and sold to customers have increased as a result of changes in state regulations.
There is a significant amount of legal diversity. According to the Institute of Justice, which studies what they call “food freedom laws,” 21 states allow food to be sold in grocery stores, while 37 states permit home bakers to sell food online. It is common for states to prohibit the wholesale sale of home-baked items, which means that restaurants and food trucks are prohibited from using those products.
There are a number of states that do not require licensing or inspections. Earlier on in this year, the laws that required major kitchen upgrades in New Mexico were altered, which will save individuals who wish to start a home bakery thousands of dollars.
SELL BAKED GOODS ONLINE Find a network of people you can lean on first. Choose your area of expertise. Carry out the necessary market research. Develop a strategy for your company. Rules for Running a Bakery Out of Your Home Create a strategy for your market. Bakery operations require certain pieces of machinery and a well-developed supply chain.
Making the decision to turn your passion for baking into a successful business can feel very much like riding a roller coaster. It is exhilarating in addition to being horrifying all at the same time. Some of your clients are so impressed with your business that they want you to host their large office luncheon. Yay! After that, there are tasks of a more difficult nature. Like taxes. or licensing concerns.
The good news is that there are a number of services available to assist.
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.
Do You Need a Culinary Degree to Open a Bakery?
You don’t have to have a culinary degree or a bachelor’s degree in business to own a bakery. However, having hands-on experience or academic knowledge of both the baking and business management aspects of owning a bakery will help you succeed. Having a formal education may help you attract investors and banks to garner the startup capital you need to open your bakery. Consider getting a certification from the Retail Bakers of America (RBA). The RBA certification verifies your knowledge, skills, and abilities without the hefty time and financial commitment of culinary school.
Get Your Equipment and Supplies
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.
Choose a Bakery Style
While there are many bakery business models, they all fall under one of two umbrella categories: retail and wholesale. Retail and wholesale bakeries make similar products, but they have different needs and customer bases.
Opening and Operating a Retail Bakery
Retail bakeries are the most common type of bakery; they sell baked goods and loaves of bread directly to customers. Retail bakeries come in many different forms, and they often specialize in a particular type of baked good. They require both front- and back-of-house space.
Types of Retail Bakeries
Discover the most popular retail bakery business models below:
- Bakery Cafe – This type of bakery is a combination of a bakery and cafe, and they typically sell baked goods like bread, pastries, and cookies. They also pair their baked goods with coffee and tea. Bakery cafes typically have a dining space where customers can sit and eat.
- Counter Service – While counter service bakeries have a front-of-house, most do not have a dining space. Instead, they have a counter where guests can order freshly baked goods to take home.
- Bakery Food Trucks – Rather than using a brick-and-mortar store, food truck bakeries sell their products from a mobile truck. Due to the small space, many bakery food trucks do not bake in their truck, instead opting to bake their products ahead of time in a commissary kitchen or home bakery.
- Specialty Bakeries – A specialty bakery typically focuses on one type of baked good, such as wedding cakes, cupcakes, or gluten-free items. This type of bakery can excel because they offer niche products that customers either cannot find elsewhere or that are better than the products offered at less-specialized bakeries.
- Home Bakeries – This type of bakery is becoming more common, especially because you don’t need a lot of startup capital or culinary experience to open a home bakery. Home bakeries typically market their products online and then ship them to customers. Many home bakeries are also very niche or offer twists on classic baked goods.
Opening and Operating a Wholesale Bakery
The other main type of bakery is a wholesale bakery. Rather than selling their products directly to customers, wholesale bakeries market their baked goods to businesses like grocery stores, restaurants, delis, and cafes.
Because wholesale bakeries have to meet the demands of commercial customers, they are typically larger than retail bakeries. Wholesale bakeries don’t need to have a front-of-house or a desirable, high-traffic location. However, wholesale bakeries must produce high volumes of baked goods. This requires a large space and lots of baking equipment, resulting in higher startup costs.
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Obtain Bakery Licenses and Permits
The foodservice industry is heavily regulated on a federal, state, and local level, and there are some bakery licenses and permits you need to start your baking business. The types of permits you’ll need will vary depending on your location, so be sure to check your local laws and regulations to see if there are any specific laws that apply to your new business.
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.
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.
How should I price my home-baked goods?
While it may be tempting to guess at your prices, don’t! Setting your prices can make or break your bakery business. Learning how to price your home-baked goods is important. Your goal should be to have a baking business that pays you money each month.
To price baked goods, follow these simple steps
Your costs are things like how much the ingredients cost, the cost of packaging, and your labels. You’ll need to save your receipts and add up how much it costs you to make each of your menu items.
The time it takes you to prepare and package your baked goods is your labor. Include your labor costs in the selling price. This reflects the true costs that it takes to prepare your items.
Keep track of your home bakery overhead expenses
Overhead expenses are the bills that you pay to run your business. Overhead for home bakers includes things like:
Your overhead expenses are part of your prices. Every time you sell something, you make a little money for your monthly overhead costs.
Mark up your prices for profit
I encourage you to take the time to learn to cost your recipes and make sure that you are charging enough.
Want to learn the basics of pricing home-baked goods? You can sign up for my next pricing workshop here.
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.
Order Bakery Equipment
The equipment that your bakery will need depends on what type of baked goods you will be preparing. For example, you may need specific pastry supplies to create French pastries. While the specific equipment may change depending on the size and type of your bakery, there are several purposes you need to fill:
- Dough Preparation – This includes equipment like commercial mixers, work tables for kneading, dough dividers, dough sheeters, and dough scales. You may also need holding cabinets, proofing cabinets, retarder/proofer combos, and refrigerators to prepare your dough.
- Storage – Storage is important for keeping your kitchen organized. Your bakery will require shelving and storage racks. If you’re working with bulky bags of flour and sugar, you should invest in trucks, dollies, and carts to move large bags around your kitchen.
- Baking Equipment – Convection ovens are a great all-purpose piece of bakery equipment because they provide dry heat and bake evenly. If you’re preparing a lot of artisan bread, you may want to choose a deck oven to give your products a crispy base. Wholesale bakeries may be looking for high-output ovens, such as roll-in rack ovens or revolving ovens.
- Display and Sales Equipment – Choosing the right display cases for your baked goods can help boost your sales. You can choose self-service or full-service cases, and there are refrigerated and unrefrigerated options, depending on your needs. In addition to your display cases, be sure to also choose stylish boxes and packaging for your baked goods.
- Cleaning and Warewashing Supplies – A 3-compartment sink is the centerpiece of any cleaning station. You must also order hand washing stations for your employees, disposable gloves, cleaning chemicals, sponges, scrubbers, and other essential cleaning items.
In addition to your large equipment, you must stock your bakery with smallwares, such as mixing bowls, storage boxes, whisks, bread knives, and aprons. We compiled a list of essential bakery equipment to ensure you don’t forget anything.
You can download the opening a bakery checklist PDF below:
Download Baker Smallwares Checklist PDF
What is the best way to accept payments for a home-based baking business?
Let’s get you ready to accept payments for your products. There are plenty of ways to accept payments. You’ll need to choose the method(s) that will be the most convenient for you and your customers.
Which form of payment is right for me?
- Cash– Cash is always the best because it has no fees associated with it!
- Digital Payments– When a customer transfer funds from their bank account into yours. There is often a fee for you to accept digital payments.
The form of payment that you choose will depend on where and how you plan to sell. You may find it helpful to accept a few different payment methods.
Here is how payments can vary depending on where and how you sell
For many people, the answer to this question depends on your state’s regulations. A sole proprietorship is someone who owns an unincorporated business by themselves. As a sole proprietor, you are responsible for your business debts and liabilities. An LLC or limited liability company is another option. It is a business structure that shields members from the responsibility of the LLC. For me, I was able to form my home bakery LLC for only $49 plus state fees.
Market and Advertise Your Bakery
Before you open your bakery to the public, you must conduct some marketing and advertising campaigns to get the word out and create buzz. You can break your bakery marketing strategy into five general steps:
- Write a market analysis. Your market analysis is a summary of your market research, and it should go in your bakery’s business plan. It should include information such as the average income level in your area, discretionary spending among your target market, and your competitor’s prices.
- Determine how you want to advertise your business. There are many ways you can advertise your bakery and each has its benefits. If you’re in an urban area, using signs is a great and affordable option. Consider traditional advertising tactics, such as newspaper advertisements and flyers.
- Create a social media presence. Social media marketing is a great way to interact with your customers, create buzz, and advertise your grand opening and other events. Additionally, many people will look for your bakery’s website and social media accounts before deciding if they want to visit, so make sure that you have an active online presence.
Many of these tactics apply to retail bakeries, but marketing tactics differ for wholesale bakeries. Wholesale bakeries should focus on competitor analysis and research where local restaurants and grocery stores source their baked goods. Then, they can reach out and try to make a deal.
Which products should I be offerings?
Planning a bakery is fun because you get to think about all the stuff you love to bake. I’m going to ask you to do something hard now. Think about the baked goods that your future customer wants and needs.
This is the first shift from a hobby baker to a business owner. The customer’s needs are your highest priority. What can you bake that will be in high demand?
The best items for your menu are items that your customers want, priced to make you a profit.
Best things to sell in your home-based baking business
The best things to sell are menu items that solve a problem for your customers. The more you learn about what your clients need the better you can solve a problem for them. When you specialize in something specific it’s called a niche. Bakers that have a niche often have faster success with their baking businesses.
Here are some business ideas for a home bakery niche
Home bakers, usually make between $200-$1000 per week. The amount that you make depends on several things. How many days per week will you bake? How much marketing will you do to promote yourself?
Do you only want to sell part-time? Would you like to avoid in-person events, pop-ups, and farmers’ markets? Bakers who are selling a few items weekly are making about $200 per week.
Would you like to operate full-time and have customers who buy from you on a regular basis? Home bakeries who bake full-time can earn about $1000 per week.
It takes time to grow your business. One thing that helps is to find a niche. Finding your niche will lead to sales, but it doesn’t happen overnight. With a little work, you can build a business that you love.
Here are a few more questions from bakers about the home-based baking business
Don’t worry that there are already too many home bakers in your area. Home baking is more than providing treats to someone. It is about the connections you will make and the community of people who want to support you. There is nobody who does things the way that you do and your baking is perfect for the right customer.
Should I offer free samples?
Free samples work really well at farmer’s markets. They bring in foot traffic and help new customers try your baking. Do it if you can afford to!
What is the right equipment for my kitchen?
It depends on what you want to bake. Most bakers start with a stand mixer, several baking pans, multiple sizes of mixing bowls, doubles of all utensils, and plenty of measuring spoons and cups. It also helps to have a deep freezer and plenty of counter space.
I get a lot of people asking for my recipes, should I share them?
Naming your bakery is a big undertaking and only you will know the best name for your baking business. Here are a few tips to help you land the perfect business name:
- Make it easy to spell– online search is how many people will find you so your name needs to be easy to spell.
- Don’t be too specific- remember that things change as you grow your business.
- Make it unique– your name will be more memorable if it is different from other home bakeries out there.
- Make it easy to pronounce– If your name is hard to pronounce customers won’t be able to refer you.
Once you find the perfect bakery business name, you’ll need to make sure someone else isn’t already using it. Check out this blog post for links to register your name and check for any existing trademarks.
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.
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.
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.
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.
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.
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?
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.
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.
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 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.
Where is the best place to sell my home-baked goods?
Home-based bakers have several options when it comes to selling their baked goods. Make sure you are familiar with state regulations for where you can sell.
The most common places to sell your baked goods are
Once you’ve secured funding, you can start looking for a commercial space for your bakery. The type of commercial space you need depends on the type of bakery you’re opening. For example, if you’re opening a food truck bakery, you’ll need to purchase the truck and you may want to look into renting space in a commissary kitchen.
Retail bakeries will want to look for a space in a central location close to their target demographic that also has a front-of-house area. Because wholesale bakeries sell their products to businesses rather than customers, they can be located farther from the city center or populated areas.
Best Place to Open a Bakery
- Proximity to Suppliers
- Size and Space Requirements
- Health Regulations and Zoning
- Safety and Crime Rates
Once you’ve found a suitable location for your business, you can hire a lawyer to draw up and negotiate a lease with the landlord. To protect yourself from any potential issues when negotiating a lease, be sure to specify the length of the lease, any raises in rent that might be included, who will pay for potential renovations, and any utilities that are covered.
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.
Do home-based bakeries need a business plan?
A business plan will help you have direction with your new business. It will guide you through the stages of starting your new business and steer you in the right direction.
It’s a great way to think through the details and key elements of how you want your business to go.
Writing a business plan is not as hard as you think. It will need you to do a bit of planning and research. You will use that research to stand out in your market and gain more customers once you are up and running.
There is no “wrong” way to write a business plan. Think about what your business will be like in the future and fill in the details of how you plan to make that happen.
What is the best way to sell home-baked goods?
Have you noticed how many bakers are selling homemade treats right now? You can start a business selling all types of baked goods, from cakes and bread to brownies and cookies.
The first thing to do is start planning, and that’s what I’m going to help you with today.
Owning your own business can be a fun side hustle or a rewarding full-time job. Let’s take some time now to learn as much as you can about the entire process so that you can decide if it’s right for you. I’ve helped hundreds of bakers start a home bakery business they love. In this article, I’ll be answering some of their most asked questions.
Layout Your Bakery
After securing a location and deciding what equipment is needed to start your new bakery, you can plan your bakery kitchen organization. If your bakery has a front-of-house area, you will need to design a floor plan. Learn how to lay out your bakery kitchen and storefront below.
Commercial Bakery Kitchen Layout
Every bakery kitchen requires four sections: cleaning, storage, food preparation, and meal cooking. Bakery cafes and bakeries with a front-of-house area will also have a service station, where they deliver food to customers. The ideal bakery kitchen layout is determined by the space and the placement of water and gas lines. Organize your bakery kitchen so the four sections flow together and measure your space to make sure you have enough room for your bakery equipment before finalizing your kitchen plan.
You will want to lay out your kitchen based on the logical flow of food through the baking process. This starts with the storage area and then goes to the food preparation and meal cooking sections. Once you’ve prepared your baked goods, you can serve them to your customers, package them for display, or ship them to online customers. Finally, your dirty dishes, pots, and pans will end up at the cleaning station.
Commercial Bakery Storefront Layout
Some bakeries will have a front-of-house area where customers can browse their selection of baked goods. Optimizing your bakery floor plan for ideal product placement and customer comfort prompts purchases.
There are four main bakery layouts, each with its own unique benefits.
- Straight Bakery Floor Plan – Your bakery display cases are organized in straight lines to make it easy for customers to browse.
- Angular Bakery Floor Plan – This floor plan uses curved displays to create an upscale presentation.
- Diagonal Bakery Floor Plan – A diagonal floor plan allows customers to flow through your bakery.
- Mixed Bakery Floor Plan – Maximize your space by using a combination of all the bakery floor plans.
How will I get potential customers for my home bakery business?
Once you’re ready to start selling you’ll need to have customers who want to buy from you. Attracting new customers can be one of the biggest challenges for home bakers. You can find your customers in person, or online.
Here are a few ideas for connecting with customers in person
What type of events can home bakers sell at?
- Farmer’s market
- Vendor events
- Pop up shops
Here are a few ideas for connecting with customers online
What are the best platforms to find customers for my baking business?
- A business website
- Esty (if your state allows shipping)
How important is social media for home bakers
The first step in opening your new establishment should be to write a bakery business plan. The business plan is an integral part of starting a bakery business because it lays out what type of bakery you want to open, how it’s going to be structured, what sort of products you’re going to sell, marketing strategies, and financial projections. There are seven main sections to a bakery business plan:
- Executive Summary
- Company Overview and Description
- Market Analysis
- Business Offerings
- Management Plan and Ownership Structure
- Marketing and Advertising Strategy
- Financial Projections
Your business plan serves as the foundation for your business, and a strong plan can help you get funding and make the process of opening a new bakery easy.
Selling from your home kitchen is a cottage foods business
Each state has different rules for operating a cottage foods business. They tell you where you can sell and what ingredients you can use. They also tell you how you need to label your ingredients. Some states even limit how much you can earn as a cottage food business.
Understand your state’s hazardous food list
Hazardous foods are those that can make someone sick. They require temperature control to be safe. Cottage bakers are not allowed to use ingredients that could make someone sick.
Some examples of hazardous foods are:
Taking the time to get your home bakery license is a must if you are serious about owning your own bakery business.
How can I build my home bakery customer base?
Attracting new customers is a big part of running a successful home bakery business. As the old saying goes, it’s easier to keep a customer than to get a new one. Once you get a customer, you should work hard to make sure they are happy, so that they will continue to order from you for a long time to come.
A few ways to build your customer base are:
- Ask for reviews and testimonials from your current customers (this helps new customers to feel confident ordering from you)
- Get your business listed and verified on Google
Hire and Train Bakery Staff
The size of your staff will depend on the scale and style of your bakery. A locally owned and operated bakery with just one location is likely to have a short chain of command. Retail bakeries must hire and train front-of-house staff to take orders and work the cash register. However, most of your bakery staff will work in the back-of-house, preparing your baked goods.
Your bakery should have at least one or two employees that have formal training or bakery experience to oversee the actual baking process. You may also want to hire unskilled workers for washing dishes, mixing ingredients, packaging products, and doing other tasks that don’t require previous experience or expertise.
Some bakeries will also need professional pastry chefs and personnel to complete delicate and specialized tasks. For example, bakeries that bake wedding cakes should look for experienced cake decorators. Bakeries that offer artisan breads should consider hiring someone who specializes in bread baking.
Host a Grand Opening
The final step in opening a bakery is to host your grand opening and welcome customers to your business. A successful grand opening can get your new bakery off to a good start and help generate loyal customers. You should advertise your grand opening to create interest and alert your target audience that your bakery is open for business.
One great way to get customers in your bakery for your grand opening is to offer discounts and specials. For example, you can offer discounts for the first 100 people to visit. Another option is to give customers who order a dozen cupcakes one cupcake for free. You can also offer free samples to encourage customers to make purchases and expose them to more of your products.
In conclusion, there are some great reasons to start a home-based baking business!
There has never been a better time than now to start your own baking business. The start-up cost is low, and you can create your own business doing what you love. There are so many different ways that you can have a successful home bakery. Full-time or part-time, a home bakery can fit into your lifestyle.
Just be sure to take the time and learn about your state’s cottage foods laws and take care of all the permits and licenses needed to be a legally operating home bakery.
Learn to price your home baked goods so that you can pay yourself for your hard work. Once you find out what your customers need, write a menu that is specific to your niche and market yourself as the solution to their problems. A combination of in-person selling events and pre-order selling works well when you are just starting out.
The very best part is that you get to be your own boss and do what you love.
Are you thinking of starting your own bakery? Be sure to grab my ULTIMATE Checklist to see if you have what it takes to start your home bakery business. Let me know in the comments below what you are thinking of selling in your home bakery!