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How to Start a Bakery From Home

So many people dream of starting their own home bakery business, but there is a lot of work to do to create a successful business and keep it running. But if you’re wondering how to start selling baked goods from home, then you’re in the right place. Read on for our seven-point checklist on how to start an online bakery.

1. Home Bakery Business Plan

Before you can begin selling your home-baked goods, it’s a good idea to write a business plan. While it might not be the most exciting part of running a business, it will stand you in good stead and help you prepare better for working for yourself.

You’ll need to include sections on what you’re going to sell, how you’re going to market your business, pricing, budgeting, and finance, what you’ll need to begin, including equipment, and whether you need to prepare your home kitchen for professional baking, licensing, and strengths and weaknesses.

Don’t get too hung up on this. Unless you’re applying for funding or asking for a bank loan, this is basically a plan for you. It’s there to get you to think things through, fill in any gaps in your knowledge, and ensure you have a clear plan for moving forward. You don’t have to write it in formal language, just get your ideas down and work out how you’re going to budget for everything.

2. Legal Requirements of Selling Baked Goods from Home

Depending on your state, you may need a home bakery license before you can start selling your goods from home. Check with your Department of Health or your Department of Agriculture as legalities vary from state to state, and sometimes from county to county.

In some states you don’t need a license at all and in others, there are various criteria you need to meet to get a license and open your business. You may need to change your kitchen set up, do a food hygiene course, provide information on your floor plan, your equipment, your recipes, and more. It all depends on where you live.

Take the extra step and check this out before you start selling food to people as you could face a fine if you get caught.

3. Business Insurance

No matter where you live, you will need business insurance. Check with your insurance provider and tell them what you will be selling and how you will be selling it so they can advise you on the types of insurance you might need. Get some quotes from different providers to get a good price and ensure you have the right cover.

For a home bakery business, you may need general liability insurance and professional liability insurance. Castiron can help you with this as we have looked at the best insurers for home bakers and negotiated discounts on your behalf.

4. Register an LLC

While you might only want to sell home-baked items on a part-time basis and run things closer to a hobby than to a business, you still need to cover yourself legally. If you set up a limited liability company (LLC), this gives you liability protection where, if your business goes into debt, you are not required to sell your house or any other personal possessions to cover the debt. You are also protected in a lawsuit. Be safe and create an LLC for your bakery business.

5. Check the Tax Regulations for Your State

Unfortunately, paying tax is a part of running a business, and you need to be sure you track everything so you can pay Uncle Sam his cut. You may also find that you need to pay tax on goods and collect sales tax. Keep track of all your receipts and put money aside every month so that, when you get your annual sales tax bill, you’ll have the money to cover it. You’ll also find it far easier to do your business tax return each year if you properly file and track your income and expenses.

6. Decide on Your Baking Niche

Now comes the fun part! You get to play around with home baking business ideas and choose the best baked goods to sell from home. This decision is partly based on your own skills and preferences. You’re going to spend a lot of hours baking and you need to do something you enjoy.

However, an equally large consideration is looking at what your competition is doing and whether there is space in the area for your type of bakery. You don’t want to set up a childrens’ birthday cake bakery three doors down from a similar company. Find something you enjoy but pick a good niche where you can stand out and attract enough custom to make your business work.

7. How to Start Selling Baked Goods from Home

Will you have customers coming to your door to pick up your goodies or will you deliver? Will you sell at farmers’ markets and fairs or just online? Some of these decisions will be out of your hands as your state may have rules on how you can sell your goods, but again, it’s also down to your preferences. If you enjoy driving and hand-delivering goods, then great! If not, maybe you want to find a way to package your goods and post them to customers.

In addition to that, you need to decide how to market your home bakery. You need repeat customers who return regularly as well as new customers to keep your bakery going and ensure you make enough money. Create a marketing plan as part of your business plan and set out how you’re going to reach your customers.

You can set up an email list, post on social media, pay for ads online, hand out flyers at in-person events, and more. And it’s a good idea to have a home-based bakery website. In some states, you can sell your baked goods online, and it’s easy to set up a tailored online bakery website with Castiron. You can be up and running and easily taking payments online quickly with our home food business software.

Make a plan and you’ll feel more confident that you can make your home bakery business a success.

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