How to Start a Baking Business from Your Home in 2021
Are you known for making the most delicious cakes and making everyone smile with each bite? If so, we have good news for you. Your baking skill can be turned into a profitable business. Want to find out how? Then read till the end of this article. Shalooka Blog has put together an effective, to-the-point, and concise baking business guide for people who want to work from home and love making people smile with baking.
Starting your own baking business isn’t as difficult as people think. It is one of the most demanding and profitable businesses nowadays. You can start a successful home bakery venture with a little investment. A lot of people who want to start the baking business, tend to be confused about the steps and investment required on how to start a baking business. In order to simplify this process for you, we have prepared an ultimate guide on how to start a baking business from your home. After reading these baking business tips, you will have a better understanding of how to start your own bakery business.
Pros & Cons of Starting a Baking Business from Home
Pros of Starting a Home Based Bakery Business
- You can start small and reduce your capital cost.
- You can express your craft creatively. You can give as much creative twist to your cakes and cupcakes as you want.
- The business is easy to start, you probably have all the equipment you need in your home if you already love to bake as a hobby.
- Baking industry is booming and building a sustainable business is possible.
- You can choose your own method of selling, be it locally or online. The selling capability depends on your baked goods and how long they can stay fresh.
Cons of Starting a Home Based Bakery Business
Like any business, there are downsides to doing it. There are some things that can cause problems in starting a home based bakery.
- Food based businesses are usually under inspection from the state’s health board. You’ll need to do some research about the state’s health regulations and follow every single one of them to start your business.
- Most state regulations require your baking equipment (mixers & spoons) to be different from your personal use equipment. In some special cases, you may even be required to set up a separate kitchen. If that’s not the case then you’ll absolutely need different equipment.
- You will need to spend a lot of time making baked goods and earn money. To meet your income goals and generate enough profit, you’ll need to spend more time baking goods.
- If not prepared right, your food can give people allergy, headaches, and even food poisoning
- It may take some time to find the right audience for your baked goods.
- You may have to fight a lot of competition in your area. Going against the competitors may require you to spend extra time baking.
Tools Required to Starting a Baking Business
There is a wide range of tools you need other tools to start a baking business. Lacking any one of them can reduce your efficiency.
- Your oven
- Digital kitchen scale (battery-powered)
- Plastic mixing bowls
- Sieve
- Large chef’s knife
- Flat silicone spatula
- Strong balloon whisk
- Electric hand mixer
- Piping bags which can be reused
- Stainless steel piping tips
- Muffin/Cupcakes tins
- Learn about the laws and regulations regarding the food business.
- Acquire licenses and permits to start your business. Your city or county officials will have this information about your business.
- Find out if you need to collect a food tax, some states collect additional tax over sales tax.
- Create an LLC or any other business entity to protect your business from unwanted lawsuits.
- Create a business plan.
- Packaging labels
- Packaging material
- Label makers for printing the ingredients for customers
How Much Does It Costs to Set Up a Home Based Bakery?
Regardless of how much it costs to start a bakery business at home, you need to have enough working capital to keep your business afloat. To start your home based bakery and keep it going long enough to generate profits, you need at least 6 months of working capital.
If you want to start a bakery shop counter or sweet shop restaurant with seating then the average starting cost is $70,000, if your dream is to start a wholesale commercial bakery then the average cost is $87,200. Online bakeries that revolve around E-Commerce sales require an average starting cost of $28,000. Home-based bakery businesses are the cheapest out of all, it can be set up with $1,000-$2,000.
The cost can be changed because of multiple additional factors such as the state you live in or the cost of equipment. If you want to get inexpensive bakery restaurant equipment then you should look at places like:
- Restaurants going out of business
- Auctions
- Damaged appliance sellers
- Garage sales
- Resale stores
- Craigslist
- Kitchen remodelers
- Apartment property manager
Importance of Doing Market Research for Bakery Business
The bakery market is a growing business sector so before jumping straight in, you will need to do some market research. Jumping in without doing adequate market research would be a big mistake. Market research is a crucial step for every entrepreneur to keep their business going. Here are all the things you will need to do research about:
- Keeping an eye on all the latest trends in baking industry
- What do the customers expect from a bakery?
- Analysing the demand for bakeries in your area.
- Figuring out your direct and indirect competitors.
- Choosing what kind of products you actually need to sell to grow your business.
After successfully completing all the steps of market research, you will need to build a solid business plan according to the results you got during market research.
Step by Step Guide- How to Start a Baking Business
1. Choose A Bakery Type.
Starting a successful bakery business starts with choosing the right type of bakery to open. There are several options available to you. Your decision on which bakery to select depends on your budget, your goals, and the resources you have available. Following are the major options available to you-
- Online Bakery Website –The first option is to open an online bakery website through which you can receive the orders. It lowers the start-up cost of your bakery business. Online bakery websites give you the ability to reach your potential customers through advanced digital marketing techniques. You can expand your bakery business beyond the local market as well.
- Offline Bakery- Offline bakery is another good option if you want to target the local customers in your area. You can attract new customers through pamphlets (you can distribute and paste these pamphlets in schools, local shops, get them to spread in newspapers), new offers, discounts, and home delivery options.
- Bakery shop with dining option- If you have a good budget to invest in your bakery business then this option is best for you. Customers prefer those places more which have dining options available. It will increase your business reach and help you get new customers.
- Prepare A Business Plan
A detailed business plan is vital to the success of any business because without one a business is less likely to be successful. The business plan serves as a road map to success for your business. It helps you efficiently achieve your business goals. The first thing you should do is conduct thorough research about the market. This will allow you to know more about your competitors and how they are making profits. By doing in-depth market research, you can identify the threats and opportunities that are present and help you prepare your business goals. An effective business plan includes the choice of a brand name, items list you want to sell, advertising strategy, creating promotional materials, listing the costs, establishing business goals etc.
- Your Brand Registration & FSSAI License
Food and Health regulations may differ from place to place. For example, you must have a FSSAI license to operate a food business in India. FSSAI stands for Food Safety and Standard Authority of India. Also, you must have a GST number registered for your brand. Additionally, you will need a health license which you can get with the help of a local Municipal Health inspector, and a fire license after installing the fire extinguisher cylinders. It helps the customers to trust your brand when you are registered and are working with the license. In the USA, licenses and regulations depend on state laws, you will need to do your research before investing in the business.
- Prepare Your Home Bakery Kitchen
Having a proper cooking space is important when running a bakery from your home as it helps you to prepare the bread and bakery products in the most efficient way without any disruption. You need to customize your normal home kitchen into a well-equipped kitchen because then you will be able to meet your deadlines and fulfil orders without delay. By customizing we do not mean that you need to put a lot of money into expensive equipment, but rather, you need to manage your kitchen so that you can fulfil big orders, too.
- Choose the types of cakes you want to sell.
When you start a bakery business, you should choose a specific collection of cakes you wish to sell. Cakes can be chosen based on customer preferences and market research, or you can sell only the cakes you make best. You don’t have to worry if you don’t have many varieties of cakes when you first start. Just focus more on quality. You can easily make decent profits by selling small varieties of cake as well.
- Deciding Price for Your Items
A baking business can succeed or fail based on the pricing structure of its products, and the pricing strategy it follows. Every person has a budget and tries to find things that are in his budget. In order to get ahead of your competition, you need to check the rates of your competitors since it will directly affect your business. Keeping your rates lower than your competitors will give you an extra edge in the market. Choose whether you want to target high-end customers, middle-class customers, or both.
- Arranging the Equipment
Having the right equipment lets you make the mouth-watering cakes that your customers will surely love. Some of the common equipment is oven, mixer, baking tray, refrigerator, measuring spoons & fryer. Additional equipment can be added as per your budget, cake varieties, and requirements. Create an ideal set up for your bakery with the proper equipment to make fabulous cakes.
- Always Use Best Quality Ingredients.
Ingredients are the heart of every meal. It doesn’t matter if you are just starting out or if you have an established bakery brand, ingredients quality should never be compromised. If you are offering different flavours and types of cakes then you have to arrange the different types of ingredients as per the requirements. Also don’t stay stuck to a single type designing. Try to make changes in your own dishes especially in the cakes. Avail the trending cakes and pastry options for your customers as it is always work for profit making when you open the gate of options for the customers.
- Design Your Menu
If you are going to start a food business then having an attractive menu is a mandatory thing. The menu should clearly define the products available to help the customer make the best choice. It enhances the customer experience. As we are talking about a home bakery, you ought to make a menu that gives your customers a pleasant feeling. After all, cake always makes people happy.
Mention all items & flavours you are offering. Additionally, you can create meals by combining 2-3 items, which boosts your sales.
- Packaging & Labels for Your Brand
It is equally important to give an elegant and attractive touch to the packing and labels design of your brand. You can search for many label designs options over the internet. You need to select the right packaging which will securely carry your bakery products specially cakes to the customers. The right packaging possesses a little information about the brand, the brand logo, and also prevents the products from tampering. Also, the label of your brand should be creative and should be understandable at the same time.
- Marketing
It is again a very important part for the business to grow. Marketing works as the fuel for any business and hence should be done with manners. Your business, especially the bakery business needs the right marketing strategies. You have to promote your cake business by uploading baking videos over some famous social media platforms such as Instagram, Facebook, and YouTube. You can also design pamphlets for offline advertising which you can distribute around the city on around your desired locations. At last, you need to work on the networking part to strategize your marketing policies.
- Stock Management & Planning Your Inventory
Since you are running a bakery and offering huge varieties of cake you need different types of cake ingredients in bulk. By doing your research on the market, you need to find a vendor who can supply the highest quality ingredients at the most affordable price. Also, you need an inventory management sheet that allows you to keep track of what stock is available and what is going to run out soon. This will also help you keep track of your expenses and profits.
Final Take- How To Start a Baking Business
Bakery products are getting popular day by day. In this time of the pandemic, people are saying a yes to the in-house bakeries to get hygienic and safe products. People are getting themselves trained as a baker and are earning well from this industry.
It is an enjoyable and profit-earning medium you can invest your money and efforts in. You can enjoy your life as an entrepreneur and can set up your team when you start getting maximum orders or start getting the right profit. Also, strategies first before investing your money and efforts in any business. Follow our baking business tips, learn from your competitors, learn about the interest of people in the area you are starting your bakery, learn the innovative and attractive themes of bakery and bakery products. Proper planning and the right efforts will help you to earn maximum profits for a lifetime. It is surely a growing industry that can work as a lifetime income source for you. So, give your plan of starting a baking business from your home, a big yes and start putting your efforts into the right things. We hope our guide on “how to start a baking business from home in 2021” helps you achieve your baking business goals easily. Stay connected with us for more such updates as we love to help you explore the world of business in the right manner.