How to Start a Baking Business: Step-by-Step Guide
Have you been dreaming of starting a baking business?
Are you looking for a way to monetize your baking passion into a baking business, but have literally NO idea where to start?!
I hear you.
How to start a bakery business, from square one, is one of the top questions I see in my Bakery Business School Facebook Group.
Starting a business of any kind comes with a ton of questions and concerns, and that’s where we come in. Please join the group above, as the very FIRST thing you do!
There is already tons of help in there for you.
Starting a business is no joke, and if you know anything about me, you know I DO NOT like fluff. So although this article is lengthy, this information is realistic, useful and compiled all in one place for your convenience. No one has time to search the internet for tiny bits of information scattered all over the place.
You may want to bookmark this bad boy!
Below, I put together a truly comprehensive overview of the most efficient steps you can take, to get a baking business up and going. But I want to warn you before you head into the article…
Baking businesses are NOT easy. They take a lot of time, effort, physical ability and passion. You are going to have some late nights and stressful events. Still game?! Read on.
I understand you may already have your business going and may be on step 9, BUT you skipped steps 2 and 3 in your process of business building. I highly recommend going back to any steps and getting them taken care of, because they are all important! Pinky swear to that?!
You are going to need to gather data and get realistic about your life and what you have to work with, before you get serious about a business. Take a deep breath and grab a pen/paper to make sure you can keep your thoughts together, throughout the guide.
Take it one step at a time. A little progress every day will get you to your goal!
YOU CAN DO THIS!!
Let’s dive in…
How to Start a Baking Business: Step-by-Step GuidE
Check Your Schedule
First things first, do you even have TIME to start a business?!
—> Let’s find out.
Get yourself a blank calendar for this month and next month.
Map out all the time slots you DO NOT have available: school, work, driving, sleeping, appointments, dinner and bedtime routine, kid care, etc.
THEN look at the time you DO have available, and write those times out for each day, and see what your available time averages are, for the week and month.
Each small to medium sized bakery order (one tier of cake, 1-2 dozen cookies or cupcakes) will take you 5-8 hours MINIMUM. This includes from the consultation to the pick up. So if you normally have 25 hours a week available to work, and each order takes 5-8 hours, you can take about 3-4 orders (comfortably) a week.
This information will help you visualize the amount of time needed and how much income you have the potential to generate with your time. You may need to secure different childcare, change a current work schedule or drop a class to find time for this new business.
This number of available hours will also help you determine your pricing needs later on.
Now that you know if you can fit a business into your schedule, you should…
2. Look at Your Local Laws
Although being lawful is not the top priority for some home bakers, I will encourage you to do the work NOW and see what the laws say about selling baked goods in your local area. Most bakers start working from home to get a feel for the business, and may or may not move to a storefront.
There have been issues with lawful bakers “turning in” or “blowing the horn” on bakers selling under the radar, and you don’t want to be the one getting in trouble!
Almost all US states have something called “cottage laws”. They are different for each state, and their main purpose is to outline how and where bakers can produce and sell their goods. These laws can be very vague or very specific. Some laws say no butter in the icing, some laws say no dairy heavy items like cheesecakes, some say everything is okay, some say you CAN do vendor events, some say NO vendor events, etc,
Take a moment and check online, for your locations cottage laws here.
You may also want to talk to your local State Department or Agricultural Department, to find out the most current laws in effect.
Now that you know what is required in your location to be a legal business, you should…
3. Look at Local Licences, Registrations, or Fees
Depending on where you decide to have your bakery, you may be subject to needing special documentation required by your location. This cottage law article does go over this for you, but again, you will need to check locally to get the most current information.
Now that you know what other legal items you will need to get your business set up, you should…
4. Consider WHERE You Want to Run Your Baking Business From
Home based, storefront based, shared vendor area, farmer’s market, wholesale, traveling food truck, online… the options are plentiful.
Take a GOOD look at your life, and think deeply about what would make you the most happy.
Storefront - No matter how you spin it (unless it’s being gifted to you), starting a storefront on your own is by far the most money and time intensive. Overhead and fees in a storefront will be much higher than any other location. Getting commercial clearance, local licences, and keeping up with the building codes can be a pain. But storefronts offer the most space, great visibility and trust factor, and have the ability to grow a team rapidly. Make sure your storefront choice has good parking, places to unload in front, and is in an area with foot traffic (if you plan to sell grab-and-go). Keep in mind the neighbors and what type of traffic they will pull in. Try to find a location that is close to being ready to go (already set up for food or a bakery), has good lighting and space, has reasonable landlords with reasonable leasing terms, and is in a safe area you feel comfortable arriving and leaving in the dark.
Home - Working from home is more flexible than a storefront and has a possibility for higher profits for a single owner because of lower running costs, but does have a cap on growth, reach and space. Unless you have a separate commercial kitchen on your property for your business, working from your family kitchen can be quite challenging at times. Working from home is great for people with small children or smaller amounts of time to dedicate to the business, knowing they want to keep it on the smaller scale. (Working from home was always the best bet for me, as a military spouse.)
Vendor Events and Markets - Vendor events and markets are fun and exciting, but also a gamble because you have to make things BEFORE they are paid for. You could find yourself with a lot of product that didn’t sell, if you overmade or there were other issues. The time and energy needed to set-up and tear down can be hard on a person doing it alone. On the positive side, the reach to your ideal client is fantastic because they see you and your face on a regular basis, and collecting customer feedback is much easier. The feeling of community and overall customer satisfaction is high at these types of events. Planning is crucial.
Food trucks - Traveling food trucks are flexible and sexy, but you have to deal with stocking the truck, keeping the truck running properly, and zoning issues while selling. You will probably be required to bake out of a commercial kitchen in this scenario. The biggest plus here is when it’s time to move to a new city, you get to take the whole thing with you!
Online Sales - Selling online can be lucrative, but is realistically for more tech savvy people who have money to pour into production, shipping and marketing. You would have to be selling shelf-stable products, shipping in a very particular way, have a full running website with tech support and high-end marketing, and a generous refund policy. On a positive note, in this scenario, sales and reach are the highest possible, since you are selling to a world audience.
ALL options are WONDERFUL! They simply have pros and cons, like all choices in life.
NOTE: It is possible, due to your local laws, that you may be required to use a commercial kitchen to sell goods the way you want to (vendor events, wholesale, etc). If this is the case, you may need to rent or purchase commercial kitchen space. Some food businesses or established rentals will allow you to rent time in their kitchens, so you can stay lawfully compliant. Contact your local Agriculture Board, who sometimes has a kitchen for public use.
Now that you know where you want your business homebase to be, you should…
5. Choose and Set Up Your Location
When organizing your work space or business area, set it up for maximum organization and space.
Do not clutter this area.
Use clear, marked bins for storage.
Use a food safe table to work on, my favorite style is stainless food prep tables.
Get yourself some dedicated shelving and/or bakery racks to hold finished cakes, boxed goods, pans, tools, etc.
Make sure the area is up to health codes (if it needs to be inspected). The golden rule is that nothing is to be sitting on the floor besides table and shelf legs, floor mixer base, rolling bins, etc. You want to be able to clean under everything and mop.
Find an area free of air currents with a bright light, for decorating and photography purposes.
Purchase or gather all the basic tools to begin baking and decorating your products (start with good quality tools)
—> Depending on what you already have to use, you may or may not need to order things for you business. PLEASE promise me you won’t go overboard here! It can be easy to do, and I don’t want you to dig a financial hole, right off the bat.
You can get some free guidance from me here, including:
On the free supply list, there is a section for Basic Decorating Tools and all other bakery items. Look through the list to see all my recommendations, complete with live Amazon links.
Basic Baking and Decorating Tools
—> To create simple cakes, cookies or cupcakes, you are going to need:
an icing scraper or credit card
mixer of some kind (I prefer the KitchenAid bowl-lift 13 cup countertop mixer)
commercial baking pans (this is going to be one of your larger purchases, I use Magic Line) rounds, squares, sheet cake pans, cupcake pans and flat cookie pans (at least 2 of each size on the rounds and squares)
(cookies) a rolling pin, simple shaped cookie cutters
consumable things like cake drums, boxes, parchment, spray, non-skid, Americolor gels, plastic wrap, cupcake liners, etc.
Now that your business area is set up and organized, you should…
6. Find or Create Reliable Recipes
Although it may seem easier to collect recipes from other bakers and/or cookbooks, my opinion is that it may hinder your business positioning in your community if and when someone else starts using the same exact recipe as you.
I suggest that you take some time to experiment and come up with some signature recipes (recipes no one else has), so that you can use this as a positioning point and selling point in the future.
It’s totally okay to start with a base recipe you like, and change or tweak it a bit, to make it your own. I started my signature recipes by looking at the Swan’s Down Cake Flour 1-2-3-4 Vanilla Cake and the Hershey’s Cocoa Chocolate Cake recipes, and making them more southern style by adding things like buttermilk and sour cream.
Look through your current recipes and see if and how you could change them a bit to make them signature (if they aren’t already). You can look at the information in this article, to help you add or subtract ingredients and end up with a successful recipe, by following the “baker’s formula”.
Online forums, groups or sites like www.allrecipes.com are great places to start to research well made recipes, that work for you and your business. Don’t forget to ask family members for their recipes too!
—> I would shoot to have at least 3 go-to cake recipes, 1 good icing recipe, and at least 1 cut out cookie recipe, to start.
Now that you know what products you want to offer, using great recipes, you can…
7. Choose Your Bakery Name and Ideal Client Group
Get some tips on choosing a name here, as it can make or break your business future growth.
If you are tired of messing around, and need a name that is memorable, expandable, brandable and available NOW, go ahead and jump into our affordable “The Perfect Name Mini Course HERE!
You will want to check the local DBA (Doing Business As) names so that you know you can use your chosen name locally. You can register your name as a DBA with your city/county so you can acquire a business banking account.
—> Figure out who your ideal client is now, so you know how to focus your menu, offers and packages to best suit them.
Some ideal client group examples are: busy moms, families, high-end customers, corporate events, weddings, grab-and-go.
To help you choose an ideal client group, first ask yourself:
WHO do you want to work with on a daily basis
HOW does your work help to support your ideal client
WHAT themes and vibes do you focus on
WHY does your ideal client need to work with you
(Answering these questions will help you formulate your marketing wording for your ads, since you now know who you are talking to and how you can help them get what they need.)
Choosing your ideal client is just one part of PLANNING your business for success.
Successful planning involves clearing your head, honing in on ideas, investigating and researching your local area so you can position yourself for an awesome business platform.
You will soon be making some of the large decisions that will determine the health and longevity of your business.
Do your future self a favor, and consider investing in our comprehensive course, devoted to the baking business planning process.
The Bakery Business Guide: Part 1 - Plan for Success
This course is online, self-guided and will help define what a successful bakery business path looks like, for your unique business. Create goals and direction while filling out a bakery specific business plan. Clear your mind, construct solid plans and make those hard decisions, when you go through the signature course exercises and questionnaires. Learn all about how to network and begin selling your bakery products to clients, and how to create consistency and customer satisfaction, right from the beginning.
Enjoy lifetime access and high video and audio quality, plus numerous printable resources such as a baking business plan template (with video walk through!).
Now that you know what your bakery will be called and who you will be serving, you should…
8. Protect Yourself (…before you get burned)
It’s true that not every customer you work with will be nice, or caring, towards you and your business.
It is MUCH easier to enforce boundaries and rules on how you and your business are to be treated, if guidelines are written and shared before any order is placed.
It is YOUR responsibility, as the business owner, to offer policies and boundaries for customers to follow.
This will save you a lot of heartache!
—> CONTRACT
You will need a comprehensive contract set up to protect everyone involved, and this will be the cornerstone of your business information, containing all important policies.
Ideally, this contract will contain some of the most used policies, like:
refund policy
deposit/retainer policy
pick up policy
liability
etc
I’ve already done the hard work for you, and put together the most comprehensive professional contract for cake, cookie and cupcake bakers, below.
It’s downloadable and customizable, easy peasy.
If you want me to personally walk you through the contract and how to customize it, jump into the mini course and get your contract AND expert video walk through, all in one place.
—> INSURANCE
It is always a good idea to look into business insurance.
There are quite a few reasons why you may need to use your insurance, like:
illness after consuming items
injury while unboxing or consuming items
customers falling or injuring themselves while placing or picking up their orders
any damages you are responsible for on a customer’s property, while working your business
etc
Many bakers in the US have had good experiences using FLIP insurance. Others simply use a variation on their personal insurance.
—> LLC
It may be a good idea for you to file your business as an LLC.
One of the best protective benefits to this is that you will protect your personal assets if any legal issues arise. Your business and personal life will be considered separate, while filed as an LLC.
This usually requires extra paperwork and fees to get set up. Check with your state on signing up as an LLC.
Now that you know how to protect yourself and your business, you should…
9. Figure Out Your Pricing
Many people skip over the math in this step because they imagine it as being too much work, but let me tell you, PRICING will make or break your business!
Wouldn’t it just smash your passion to pieces if you found out you had been “selling” cakes for years and making no real profit?! OUCH!!
Or even worse, you find out you have actually been PAYING for these orders because you haven’t noticed all the background costs eating up your “profit”.
You simply can not run a business without knowing your personal data and numbers. You CAN NOT estimate costs or get pricing advice from other people. It just doesn’t work that way, and unfortunately, it’s one of the main reasons bakery businesses fail. Don’t let it happen to you!
The old advice of “materials times 3” isn’t sufficient, as it doesn’t include many factors, and frankly, it’s just lazy. PLEASE do yourself a favor and actually calculate your business pricing correctly.
You will need to take the following categories into account:
materials
depreciation
overhead
labor/wages
business growth profit
If you are currently using a formula that does not include one or some of these categories, I GUARANTEE THAT YOU ARE LOSING MONEY SOMEWHERE, and the only place you can lose it is directly from your INCOME.
Want some help getting your pricing figured out, so you can quote with ease and confidence, knowing all your bills are paid AND you are making an income?!
Click the button below to check out our most popular online course.
Pricing for Profit
This course is online, self-guided and will show you EXACTLY what to do, to create and begin using your unique pricing chart, that makes your life as a business owner so much easier.
Generate quotes in just a few moments with minimal thought and math, know that your bills are being paid in full AND that your income is what is should be, with each and every order.
Have the ability to grow your business easily with an added “business growth percentage” feature, perfect for those who love to add new items or opportunities to their businesses.
Cover your costs in full, as you grow and replace business items, with an extra special “depreciation” feature. Have confidence in your quoting and pricing, when you understand your unique numbers, and take your bakery business to the next level.
Enjoy lifetime access and high video and audio quality, plus tons of printable resources.
Now that you know all about how pricing works in the bakery industry, you can…
10. Start Selling to Your Warm Circle
What is a "warm circle", anyway?!
When you begin selling your bakery products, it is smart to begin with your warm circle of clients, people who already KNOW and TRUST you.
Your warm circle of clients could include:
spouse’s/partner’s friends and coworkers
your coworkers
neighbors
friends or family of current friends
family members (be careful here and make sure you are charging them for at least materials, in the beginning of your business)
community members you see often or are in groups with
businesses that your friends work for
Use this warm circle opportunity to create orders that you can photograph for a portfolio, test out how long certain items take you to make, find out which items you like/don’t like to make, and get experience with customer service.
I HIGHLY suggest getting a contract in place before selling, even to your warm clients. Setting boundaries on the fly with your warm clients will be harder than cold clients, as you already have pre-set relationships and expectations.
You may find yourself being frustrated or hurt within these transactions if you do not have a clear procedure for everyone to follow. Simply post your contract or show it to them before they order, so they know how your business operates.
I have a comprehensive, professional contract right in the Shop, if you want to grab it.
How do I sell to my warm circle without feeling weird or pushy?!
Another great question.
When selling to our warm circles, we often get this feeling that we shouldn't be charging, or that we shouldn't be telling them our offers because it might seem "pushy".
This is a common feeling and avoidable, if you keep certain ideas about selling in mind, and respect the other person's boundaries and choices.
Selling is Love. When you are trying to share your offers with others, it's because you LOVE what you do. And you think they will love it too! There is nothing pushy about simply reminding people of what you do and what you love.
Your family and friends may forget about your business if you LITERALLY never bring it up or chat about it. If you don't want to chat, simply hand them a business card or brochure and let them know that they can refer their friends to you for your services. (This allows them to see the offer without feeling pressured).
If you mention your services to a warm circle client and they aren't interested, RESPECT THAT! You never know why someone doesn't buy from you. It could have literally NOTHING to do with you or your products. Try not to take this personally. If you find a warm circle client who used to order and stopped, it may be worthwhile to send a no-pressure, curious message asking if there is anything you could improve to gain their business back.
Something like, “Hey Kelly, I noticed that you used to order cookies from me every month, but I haven’t seen an order from you in a while. I was wondering if there was anything I could improve to get you interested in ordering regularly again? Looking forward to chatting soon! ”
And then, YOU have to be ready for some constructive criticism. It may be something you can’t change (like pricing or availability), or maybe it’s something like a new flavor or different ingredients, which can be changed!
But sometimes, people just aren't your target market, and that is A-OKAY!
Just because a person is in your warm circle DOES NOT mean they HAVE to buy from you. If they already have another favorite baker, let that be acceptable and move on.
If you are too shy about your business, and never mention it, do not expect people to magically know what you are doing.
You have to TELL them, so they have the choice to buy or not. Otherwise, they may not even realize you are in business!Warm circle clients can be easier AND harder to deal with. Make sure your boundaries are consistent and that all customers are treated with the same manner of professionalism. Hint… contracts and no special discounts!
DO NOT bake or provide services for free UNLESS it was 100% your idea. Otherwise, warm circle clients get the same pricing as everyone else. If they aren't willing to pay what you are asking, they are trying to bully or guilt you, and that is NOT okay.
Once you have been working with warm clients for a while (6 months or more), you will have collected a good number of photos, reviews/testimonials or loyal customers who can help you advertise (by referring others to your business)!
—> Further information on moving from hobby to business baker.
Now that you have gotten some orders and reviews to build up a social page, plus some consistent clients, you can…
11. Get Your Social Business Page Set Up and Running
Currently, Facebook has proven to be the most efficient and useful place to be seen and generate orders, for local bakery businesses.
Most of your clients are current Facebook users, and are already actively searching for local products on the platform. Easy peasy.
READ THIS ARTICLE FIRST so you know what to do, the first time around!
Now that you have an informative and nice looking social page to send your new clients and collect reviews, you can…
12. Start Selling to Your Cold Circle
After you get a feel for making items and selling them to your warm circle, and you have created a social presence to direct new customers to, you will begin selling to your cold audience. These are people who do not know you, but are possibly interested in purchasing your product.
Your cold circle of clients includes:
Facebook peeps
local businesses
random people asking where to find bakery goods
venues or businesses that cater to people who order your products
customers of other businesses that may see your signs or cards out
basically anyone you don’t already know, but you want to inform them about what you do and possibly sell to them
To get to the cold circle clients interested in what you do, you will HAVE to put yourself out there and get visible in your community. People will not just magically find you because you made a business page. They will not magically start calling you because you left a business card at the dental office. YOU have to do the work to get yourself out and in front of potential customers.
Marketing is not always easy, and can be quite intimidating. Thankfully, most people LOVE sweets and don’t normally get offended if you talk to them about your bakery business and your goodies.
I have put together another blog called Bakery Business Marketing 101- for Beginners, you should check it out to get a bunch of tips on how to market to your cold clients! Clarity and consistency is KEY here!
Now that you know how to sell your products, you can keep the following tips in mind…
13. Consistency, Flexibility and Vulnerability
From here on out, you are going to stick to it, and keep moving forward.
Businesses are constantly changing and growing as you learn about what you want to achieve and what opportunities you can take, for your business.
Consistency is very important. You will be utilizing a consistent advertising plan, may it be sending out a weekly email to your email list, posting a free ad on your local Facebook groups each day or visiting a new business every week, to introduce and drop off business cards. Each person will have their own ideas about what works for them, or what doesn’t.
Read up on consistency strategies here.
Flexibility is going to serve you well as you grow. You have to be able to cut products that aren’t selling, raise prices when you know it is necessary, change a business name that isn’t working, come up with a new recipe that works better for you, etc. Always keep in mind that you have the ability to change any part of your business, if it’s not running smoothly. Additionally, as the old saying goes, “If it ain’t broken, don’t fix it!” Don’t waste your time on anything that isn’t creating revenue for your business.
Vulnerability will allow you to see flaws or mistakes, confront them with grace, and make things right. Sometimes as business owners, we make mistakes. Keep in mind to confront them professionally and logically, and know that every action you take will reflect directly onto your business.
Vulnerability will also allow you to jump in and experience things that may scare you, but could be a wonderful opportunity. Such as vendor events or bridal shows. Get in there, give it a go, learn and be a better business owner!!
Well…. THAT was a lot of info!!
I commend you for getting all the way through, and hopefully, you are making a plan to work through the steps and grow your business.
Want more help getting through the beginning stages of your business building? I have a course for that!
Click HERE to check out The Bakery Business Guide Part 1: Plan for Success.
Maybe you want more help from me directly?
Check out the Elite Mentorship Program, our signature group program, helping bakers monetize their baking passion and grow healthy businesses.
We enroll once a month, click here to discover if we have what you are looking for.
