Craving a career change? Turn your love for baking into a profitable home business. Learn how to start a home bakery business now!

Home-baked goods have always been popular and these days, consumers can find home-baked cakes, muffins, breads and the like everywhere. So, if you like baking and are good at it, this is a business idea with real potential. Let’s face it, for something sweet, you’ll always have customers.

Starting a home bakery business is not straightforward. Because you are working with food that people will ingest, your business has to comply with a number of safety regulations. 

On the other hand, opening a small, home-based bakery business doesn’t require much equity and is fairly easy to start. Home bakeries can differentiate themselves from commercial bakeries by providing specialty products and fostering a community of loyal local customers.

The basic requirements for starting a home-based baking business

• Above averaged baking skills.
• Proven safe food preparation knowledge and skills.
• Adequate storage for supplies.
• A separate and properly equipped kitchen or baking area.
• The necessary licenses and permits applicable to the area where you will be operating. 

Steps to starting a home-based baking business

1. Comply with Legal Requirements

Find out about the laws in your state or city that govern food businesses and food sales. Find out what body regulates the food industry and visit their website to find out about the rules and regulations applicable to home baking businesses. There usually are rules about keeping a separate kitchen or at least keeping equipment and ingredients separate.

These laws may limit what you can make to sell and where you can sell your goods. Some states allow many venues where you can sell your wares, and others are very restrictive. Before you decide on a venue to sell your goods, first find out if you are allowed to sell there. 

Also, pay attention to zoning laws. Baking businesses may be legal in a certain state, but local zoning laws may prohibit baking businesses in certain areas. Make sure you check your local zoning laws.

2. Certifications and Licenses

Find out what certifications and licenses you need and do what you have to do to qualify for the necessary licenses and permits you need to operate.

You might be required to make adjustments to your kitchen, including installing more sinks, food preparation areas, and a larger storage area. You’ll need a proper ventilation system.

You will be required to have a food safety certificate. This certificate certifies that you are versed in how to handling, storing and preparing food safely. 

3. Health Inspections

When you work with food that other people are going to consume, you can expect that your business will be required to pass health inspections. These inspections are comprehensive and will include the nature of your equipment, the general cleanliness of the environment, your storage facility, employment practices and sanitation practices. 

4. Tax Requirements

Make sure about tax requirements. You might need a sales tax permit to state when and how you should pay sales tax. In some states, you might also be required to collect food tax. You can obtain the necessary information from business startup websites set up by local authorities.

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5. Come up with a Name for your Bakery Business

While it’s fun to have a catchy name, if the business name doesn’t include the word “bakery” or some word that clearly says the business is about baked goods, consumers won’t know what your business is about and you might miss out on potential customers. Bakeries and baked goods are inherently popular, so make sure your business name makes it clear that you are baking delicious goodies.

6. Set Up your Business Structure

It’s necessary to decide what type of business structure you want. Among other things it will affect how you pay taxes. Generally, people who start a home bakery business settle for operating as a sole proprietor. This is the least complicated business structure making it easy to set up. However, this business structure does not protect your personal assets. Should a customer get sick from something you made and sues you, your personal assets like your home or car will be at risk. A single-person limited liability corporation (LLC) is a better option. It will cost you more effort and money, but provide better protection.

7. Devise a Business Plan

A business plan is essential. It helps you to assess the feasibility of your venture by forcing you to consider the current market opportunity, refine your revenue model, and determine your financial requirements. Your home bakery business plan should contain the following sections:

An executive summary detailing what makes your company different and why that will make your business successful.

A company overview that describes your niche, target audience, strategic differentiation, long-term and short-term goals, and more.

Market analysis that discusses the local bakery market, proposed target market, your competitors and what they are doing, etc.

Business products, detailing what type of baked goods you intend to make and sell, and your reasons for believing that these specific products will be successful.

Operations, describing how you plan to operate your business, whether you’ll employ staff, whether you will make all the business decisions, and so forth.

Marketing strategies, explaining your plans for entering the market and finding and retaining customers.

Financial projections, outlining your costs and giving an estimation of your projected profits. 

8. Factor in the Cost of Separate Cooking Equipment and Supplies

This is a requirement that warrants special attention. You will be required by state rules to acquire separate equipment and supplies for your business, but it’s, in any case, good practice for tax purposes. 

Naturally, the costs of outfitting a kitchen for a home bakery business will vary from business to business, but it can be a considerable expense.

For instance, if you plan to bake bread, you’ll need an industrial dough proofer and warmer, which can cost $1,200. Industrial bakery dough mixers can cost $1,200 and more. You’ll also need large dough mixers, ovens, sheet pan racks for cooling your baked goods, etc.

9. Establishing your Target Market

Your target market is a crucial aspect to figure out before you start baking. There will already be several baking businesses in your area that consumers are familiar with and are already supporting. In addition to a unique product range, it will prime your business for success if you can hone in on specific market segments.

Target markets for home bakery businesses

1. Offices 

There is nothing like a doughnut or a Chelsea bun to get a meeting off to a good start. If you make sweet treats that go well with morning coffee, you can sell your products to office workers. 

Products that are ideal for offices

• Doughnuts
• Bagels
• Chelsea buns
• Muffins
• Assorted pastries

2. Schools

Schools always have events that require fundraising items, or you can bake for PTA meetings, sporting events, debate evenings, and staff events.

Products that are ideal for schools

• Brownies
• Cookies
• Cupcakes

3. Coffee shops

Coffee shops specialize in different coffee beverages with a choice of something sweet. If a coffee shop has a large clientele, it may not be able to provide a big enough range of cakes and pastries. Coffee shops are an ideal opportunity for home business owners who can bake a perfect cake every day.

Products that are ideal for coffee shops

• Various cheesecakes
• Cakes
• Fancy pastries 
• Scones
• Biscotti
• Danish pastries

4. Customers with special requirements

Many people have switched to plant-based diets, which means if you sell to them, your products can’t contain any eggs or dairy. You may consider baking for people who have to avoid sugar and carbs. There is also a large proportion of the population that requires gluten-free products. These groups offer an opportunity for home bakers to develop unique products that are healthy for everyone.

Products that are ideal for people who have special requirements

• Flourless cakes
• Seed crackers
• Low-carb cookies
• Gluten-free breads and rolls
• Sugar-free muffins

Marketing your home bakery

Start by sharing your delicious baked goods for free. If people enjoy them, word-of-mouth will be your best advertising and help you get your bakery business off the ground. By introducing yourself and your goods to the local community, you’ll be marketing yourself as a business owner and start building relationships with potential customers. Your first customers are gold – if they are happy with your products and services, you’re off to a good start.

Become a welcome presence at local events and markets

If you become a fixture at local events and markets, people become used to what you sell, and if they like it, they will come back again and again. You can sell your goods at local events, food markets and fetes. In the beginning, when people are getting to know your products, you can offer free samples. These venues are also an opportunity to distribute flyers and leaflets to promote your bakery.

Develop an online presence

You make a product that looks delicious, so well-styled photographs are your best promotion tool. Find a graphic designer to create a beautiful website for you, or use one of the many website building software options like WordPress, Squarespace, and Wix to create it yourself. Your website should introduce you and your products in an appealing way and include all your contact details, payment options, and shipping information if you plan to ship some of your offerings.

You will also need other social media accounts like a Facebook page, a Twitter account and an Instagram account, all of which you need to keep updated with enticing photos and posts. Don’t forget to follow other businesses as well and respond to comments by your followers. 

Also, set up a Twitter account, a Facebook page, and an Instagram account for your business, and keep them updated with posts and photographs. It’s important to interact with other people on social media, so spend a few minutes each day liking and commenting on other people’s posts and following relevant accounts.

If you have an Instagram account, you can open a shop on the platform. You can use real-time videos showing you busy in your bakery, or you can post pre-planned videos of your mouth-watering treats. The Instagram Shopping feature allows consumers to find your brand’s photos and videos on Instagram and shop for something delicious to eat.

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10. Figure out What Makes you Stand Out

Although this point is listed at the bottom of the list of steps to starting a baking business, it’s not the least important. On the contrary, if you can’t find a way to stand out among all the bakers and sweet treats already available and loved by locals, it may be difficult to get a home bakery business off the ground. 

Make sure you know your target market and build your brand around that. An indispensable aspect of branding is a striking logo that you can feature on your packaging, website, emails, and all social media accounts. Make sure it’s something simple and striking that communicates something about your business. Also, figure out what you do better than anyone else in terms of baking. If you can’t think of anything, decide on something and practice it until you can declare with confidence that yours is the best. Then market that as your specialty.

Final Thoughts

A home bakery is a great business to start. Baked goods are intrinsically popular, so you have a promising product that puts you off to a good start. People love something sweet and if you create delicious baked goods and sell them at a reasonable price with a smile that shows you enjoy what you’re doing, your home bakery can only be a success. 

However, this is not a business you can start in a day just because you love baking. You need to be aware of and comply with the rules and regulations regarding food preparation and distribution in your local area.