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More states than ever are starting to allow home-based bakery businesses and there’s never been a better time to get your cook on.
Starting a successful home bakery business is exciting. It’s tempting to think about how much fun it’s going to be and spend time thinking about what you’re going to name your bakery. It’s nice to dream about all those cakes you can’t wait to make and the expression on your customers’ faces as they bite happily into your latest creations.
But, just as with starting any business, it comes with a giant, never-ending ‘to do’ list and so many things to think about.
It’s not just about how to start a bakery from home, it’s about the practical side of how to make money selling baked goods from home and how to make your home-based bakery successful. You need to think about how to bring in repeat business that ensures your business continues for years to come.
If you’ve never done this before, and you have no idea how to start a bakery business from home, then you’re in the right place.
We’re going to talk you through where to start, how to decide what sort of bakery you want to run, and how to stand out from every other bakery in your area.
We’ll cover choosing what items to make and pricing your baked goods so you make a profit. We’ll also look at how to market your new bakery business and, most importantly, how to ensure what you’re doing is legal with a deep dive into licensing and permits.
If you follow the steps in our article, you’ll come out with a good idea of whether a home bakery business is right for you and the start of a solid plan.
You have your awesome bakery idea, you’re practically dreaming about cake and baked goods every night but, before you take the leap, here’s how to start selling baked goods from home:
Even for a business you’re running from home, you will need a home bakery business plan. Look at your competition, do a SWOT analysis, and think about set up and running costs, along with how you are going to market your new bakery.
You’ll want to look at what insurance you might need, including professional liability insurance and general liability insurance.
Once you’ve picked a name, you’ll need to register as your Doing Business As name (DBA) and get a federal tax ID number.
Depending on what state you live in, you may need a license and a permit. Take a look at the next section for a detailed look at those.
This is important both for your enjoyment of your new bakery business, and for profit and marketing.
What do you most enjoy baking, and what can you see yourself still enjoying once you’ve been doing it day after day as a business?
You’ll spend a lot of hours in your kitchen once you start your business and it doesn’t have to be boring or feel like hard work.
You might make beautiful wedding cakes, but if you hate doing the fine detail work that’s needed, why put yourself through it every day? Maybe cupcakes or brownies are more your idea of fun.
Pick something you’re still going to love in three, or five, or even twenty years’ time.
The other aspect to consider is how you market as a home-based baker when you may be competing against many other bakeries in your county. No-one can be everything to everybody and, if you try, not only will you wear yourself out, but you also won’t stand out.
The best way to do that is to pick a niche and specialize. Maybe you want to make birthday cakes for children, offer an allergy-free range of cookies, or make vegan, organic cupcakes.
Whatever you choose, it’s much easier to market a specialist bakery, with a targeted, clear market, than it is to market to everyone.
You also want your business to make money and be profitable, so look at what the best baked goods to sell from home are and carefully cost each item, to be sure you’re making a profit.
Now you know what kind of bakery you’re starting, think carefully about what products you’ll have regularly on your menu and what specials or limited edition items you might create, and why. Everything you choose should fit in with your business brand and style.
This will change and develop as you go. You may find that some items don’t sell well and that others are so popular it’s hard to make enough each day. With trial and error, you’ll start to work out the best items for your menu.
Limited edition items are a great way to test new products and get feedback on flavor combinations and textures. You can also test price points and see what your customers are willing to pay for.
Ingredients are also important and it’s a good idea to buy the best quality ingredients you can afford, while balancing costs against your profit margin and what you can charge for your items, without pricing yourself out of the market.
With a bakery business, the biggest thing you have going for you is how good everything looks, so the best way to market yourself is with visual marketing. You can take top quality photographs of your baked goods and share them on Instagram and Pinterest.
You could also make videos for TikTok, YouTube, Instagram and Facebook, showing cakes oozing with delicious filling and happy customers biting into their chocolate-filled donuts.
Or why not provide baking tips, simple decorating techniques and recipes? You could add affiliate links to the equipment and ingredients you use and make extra money that way.
Once you are established, a cookbook with your own recipes could be a hit that keeps money coming in even when you aren’t baking.
You will need a home-based bakery website, whether you’re doing online orders or in-person events, such as farmers' markets and fairs.
Again, use great photos, descriptive copy that practically makes people smell and taste the goods, and have an easy way for customers to place orders, find out about your events, and contact you.
So, that’s a look at how to start a cake baking business from home, or any other type of bakery.
Next, we’ll cover permits and licensing.
Before we get to specific permits and your license to sell baked goods from home, let’s start with general home business licenses, tax and zoning.
While you may be home-based, Uncle Sam will want his share of your profits. You may also need a zoning permit if you have customers visiting your home, or a waiver if your business has no impact on your neighborhood.
The Balance Small Business has a great article on how to register a home business, including everything from registering your business name to zoning.
Moving on to do you need a license to sell baked goods from home? The answer is both ‘yes’ and ‘no,’ depending on where you live. Every state has different legislation, which sometimes even varies from county to county. Before you start your home bakery business, contact your state’s Department of Health and find out what home bakery permit or home bakery license you need.
Another great place to start is to check the Forager Cottage Food Community website. You can filter by the type of goods, how you are selling, and even labelling to see where you can legally sell your baked goods. They also have an online directory where you can list your business to help market it.
Most states don’t have these laws. In fact, only five states in the whole of the USA have food freedom laws; North Dakota, Utah, Wyoming, Oklahoma and Montana.
In these states, you can sell more or less any type of homemade food without licenses or inspections. You also don’t need a permit or certification, and there’s no need to follow any labelling or packaging regulations.
If you want to set up your home-based bakery business in any of those states, then that’s at least a couple of items off the ‘to do’ list.
New Jersey is the only state that doesn’t have cottage food laws. Everywhere else, as long as you refer to your own state’s laws for what you can and can’t do with your bakery business, then you will be able to start selling home-based bakery items.
The cottage food laws give clear guidelines on what you can sell, where you are allowed to sell your goods, and how much you can earn.
You will need a food license, or a permit, and you will have to label your items to include a list of ingredients, along with your name, address and a statement that your goods have not been inspected.
You also won’t be able to sell anything that needs refrigerating, because of the risk of food poisoning. That means no cream cakes, ice cream, cheesecakes, or similar items, but there are still plenty of options left to choose from.
Some states also limit what you can earn from your home-based bakery business without having to start complying with food manufacturing laws.
In some states, you can’t sell to restaurants or commercial companies, such as grocery stores, and, in other states, you are limited to selling at bake sales and farmers markets. Generally, you will only be able to sell in your state, even if you have a website.
These regulations are very complex and what you need to do for your new bakery business can vary state to state, so again, check with your Department of Health or your Department of Agriculture before going ahead.
You may need to make changes to your kitchen to use it for your home-based bakery business.
Next, we’re going to look at the licensing and permit requirements for two states to give you an idea of what you might need:
You will need to contact your county health department in California to get either a Type A or Type B permit.
With a Type A permit, you won’t need a kitchen inspection to be able to sell your baked goods straight to customers. You’ll be able to sell from your home (check if you need a zoning permit), at farmers markets, and festivals.
A Type B permit will also let you sell direct to customers, but you can also sell to cafes, restaurants and grocery stores. The Type B permit does cost slightly more than a Type A permit and there are some hoops to jump through first.
If you just want to make a few more dollars from home, then a Type A permit is probably all you need, but it’s worth thinking about a Type B permit later on, as your business grows.
Check out the quick start guide from the California Business Portal.
To set up your New York State home-based business, you won’t need a license or a permit if you qualify under the Cottage Food Law (NY Home Processor Exemption). However, you can only sell certain permitted foods, including bread, cakes, brownies, cookies, cupcakes, candy and peanut brittle.
If you were considering selling handmade chocolates or special occasion cakes, then these aren’t permitted under the Home Processor Exemption and you will need to speak to your health department. The home bakery license NY that you’ll need is a food service establishment permit.
If you qualify under the Home Processor Exemption for your home bakery NYC, then you can sell your baked goods at farmers markets, craft fairs, green markets, farms, flea markets, and farm stands. You can also sell by direct delivery within New York State.
Even comparing only the two states, you can see there are a lot of differences. Wherever you live, get in touch with your Department of Health or Agriculture for the latest guidelines and regulations.
Happy home baking!
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