Starting your own baking business is truly amazing; and yummy! You get to bake amazing cookies and cakes and, as an entrepreneur, you get to be your own boss. However, with all that freedom do come responsibilities as starting any business has its steps and formalities.
Make Sure To Take Care of the Legal Stuff
No matter where your bakery is, it is still a business. This means that it is still subject to state and local laws regarding food, and subject to licensing and taxes. Plus, there are some nuanced laws regarding selling food from home. So, the first step is to make sure to get all the legal stuff done.
To get started, you can consult with the local food and business regulatory agencies in your area. Also, get familiar with your local cottage food laws. This law is valid in some states, while in others it is not as nuanced. All home bakeries are generally covered by the cottage food law and it is the classification that separates home-based bakeries from commercial ones. So, make sure you research this in your state to get started.
The next step is to create a business entity and acquire a license. Most home bakeries set up their business entity as a limited liability company (LLC), but you can look into other types if you wish. Once you’ve decided on the entity, you can go to acquire your working license.
Lastly, you have to organize your finances and apply for taxes. You want to keep your business and personal banking separate, so make sure to set up a business bank account. Research sales/food taxes and how much you have to charge to sell your items, and make sure to keep neat books and keep track of your sales, so you can know how much you have to pay in taxes.
Plan Your Menu
Now that the legal stuff is out of the way, it’s time to start planning your menus. This is an essential part because it will help you figure out how much funding you need, what ingredients you have to always have, and which equipment you should get to start your business. Most home bakeries focus on cookies, bread, cakes, and muffins, but you can get as creative as you’d like. Just make sure to keep in mind the end product and if it is shelf-stable because that’s the most important part of the cottage food law.
Get the Equipment
Once your menu is all figured out, it’s time to get supplies and equipment. No matter what you are going to make, you will certainly have to get all the ingredients and a bunch of baking supplies. So, think about pans, baking paper, spatulas, piping bags, and even a cake decorating airbrush. These supplies will help you create almost anything as well as decorate it.
According to cottage food laws in some states, you might even have to keep your business equipment separate from your personal kitchen equipment. So, make sure to plan that storage space. Also, don’t forget about professional-grade freezers and fridges and even some bigger ovens.
Calculate the Prices
If you plan on selling your goods, you have to establish the prices. The easiest way to figure this out is to research your competition and do the same. Just remember, when calculating your prices, you have to cover your costs of ingredients, labor, and additional overhead fees, such as business fees, farmers’ markets fees, etc. Lastly, add some for your profit. You can even create a spreadsheet to keep track of the costs of your ingredients to help you figure out the prices. Enter each and every ingredient with their respective prices and calculate that on the whole and how many goods you can get from them.
Once you’ve covered all the legal stuff and registered your business, as well as got all the equipment and ingredients, it’s time to start baking. Your menu is your guide for everything – products, prices, costs, equipment and so much more. Now that all of that is planned and in order, it is simply time to start baking your favorites to make your dream come true! Lastly, don’t forget to do a bit of marketing and remember that the word of mouth is the best marketing tool when it comes to baked goods.
