If you are amazing at baking and make treats that people fawn over, then you may be thinking about opening your own baking business.
If you are, then you may look at a storefront bakery option which could actually end up scaring you away from ever attempting your dreams.
If opening an entire storefront is just too much for you to take on right now, then starting out with a home bakery business may be a great alternative for you to consider.
If you start a bakery from home then this will allow you to start with a smaller scale then you would if you were to start a wholesale bakery.
When you start a home bakery business you also have a bigger opportunity to sell goodies and creations that you come up with, that people can only get from you, and that is unique from anything that anyone else has seen.
Running your own bakery business out of your home can be a great option and definitely a fun way to chase your dreams, however, it takes a lot of hard work to start a home bakery business and the work is a lot more than pushing out as many cookies as you can.
Below is a detailed guide that will tell you what it takes to start a bakery from home that is successful and does not burn you out.
1. Can you start a baking business from home?
It is definitely possible to start your own baking business straight out of the kitchen in your own home.
This can be easier than a storefront in some respects as it does not cost any rent or extra overhead, and you bake and turn out goodies at a pace that is comfortable and manageable for you.
However, before you open your home bakery there are some things that you will have to consider.
The first thing you will have to think about is the home bakery laws that will apply to you. You will need to do research for your state in particular and make sure that a home bakery is legal to open.
You will then need to look up the Department of Health laws that are specific for your state and find what is known as the Cottage Food Laws. These laws and regulations will tell you what types of baked goods, candies, dry goods, and other baked products you can make out of your home safely. The Cottage food laws will also put a cap on how much you can make out of your home legally.
These laws will limit what types of foods you can make out of your kitchen, as well as how much you can sell and where you can sell it. Once you know what laws are specific for your state, then you will need to look into what type of certifications, licenses, and health code requirements you will need for your jurisdiction.
Some states or jurisdictions do not require home bakeries to be licensed while others require the owner to have a certification and business licenses before you can open up for business.
2. How much does it cost to open your home bakery business?
Once you do your research and find out what it takes to open up your bakery straight out of your kitchen, the next logical question is going to be how much this process is going to cost you.
As you can see from the information above, it takes a lot more work than just getting out your rolling pin and mixing up some dough or cake batter to start your business. A recent article in an entrepreneur magazine stated that the average cost to start a bakery out of your home is going to be between $5,000 to $10,000 dollars.
While this cost certainly seems steep, there are some considerations to consider. On average, it is estimated that most home based bakeries can bring in about $1,500-$2,000 in income.
If you are able to get a small business loan in order to get the funds you need to start your business, then you can pay back the loan in almost no time as long as you work hard and meet that marker or more every month.
Most entrepreneur experts say that with this type of monthly income, you should be able to pay off a business loan and start making a profit in as little as a year. Budgeting for your supplies properly and pricing your products at a good price will help ensure that you can operate with money leftover without turning loyal and potential customers away due to the high prices of your baked goods.
3. How much does a bakery business owner make?
How much a home bakery business owner brings in for a salary will be largely dependant on several different factors. Their take home amount will depend on how much experience they have, how they price their baked goods, and how much of their earnings they will need to set aside to buy essential ingredients and tools that they need to continue baking their products.
As a home bakery business owner you will also find that there will come a day when you will notice that how much you make is going to vary widely based on what season you are going into.
For example, when the holiday season hits, there will be a huge influx of customers who need baked goods for holiday parties and to use as presents for people that they love; another time of the year when most home based bakers experience more customers is in the summer when weddings are the most popular.
These fluctuations will happen all throughout the year, there will be times when you get to keep more of what you make and times when you are selling less so you do not bring home as much of a profit.
According to most entrepreneur experts, however, studies have shown that most established home based bakers will bring home an average of about $30,000 dollars. This means that some bakers can earn more during the year while others are going to earn less.
However, the amount that the owner of a home bakery earns will wildly vary based on how long they have been in business, the type of tasty goodies that they have chosen to sell, how large they are able to scale up their business on their own, etc.
It is true that bakery owners who have a storefront and an entire staff working under them will be able to grow the business to a larger scale and therefore make more yearly income. Though a home based baker may not make as much in terms of money, but they could bring home more than others in terms of passion and love of what they are able to do on a daily basis.
4. How do you price homemade baked goods?
Once you have everything in place and are almost ready to open your home bakery, it is time to do one of the most important parts of your business, and that is to put a price on all of your baked goods.
This part of getting your business ready to open can be a truly exciting part as it means that you are right on the threshold of starting the business of your dreams, but in order to get this side of your business done right you need to know the proper way to price your baked goods.
The best way to price your baked goods so that they sell well is to gather data from all around you. Visit several local bakeries in your area and take note of how much they charge for their treats and pastries and make a mental note of how well their business is doing or whether or not their prices drive customers to choose them over other competitors.
Use this cake pricing calculator to find out the real price you should charge. Including delivery cost, overhead and your hourly rate.
You then need to look at how much it will cost to buy all of your ingredients and tools. Calculate the cost for each item, then add in how much you will need to make in order to make a profit.
Once you do your calculations and your cost comparisons with local competitors, you will take the number that you came up with and compare it to the market price of the same goodies that you are selling. If you find that your number is equal too or can compete with the average market price of other baked goods, then you have found your magic number and are ready to set your price.
5. What is some essential equipment needed for a home based bakery?
There is nothing like being able to go in the kitchen and start whipping up some batter for a beautiful cake or mix up the dough for several batches of cookies that kids will absolutely fawn over.
The things you make are not just tasty treats, they are part of what makes events special; for example a wedding just is not complete without a wedding cake to go with it, a birthday party needs cake and cookies for the child to feel like the party is just right, and the possibilities go on.
In order to be the bakery that everyone goes too for treats for their special occasion, you need to make sure that your kitchen has all of the right tools you need to make your sweet treats so that they taste the way they are supposed to taste and look beautiful as well.
Below is a list of the most important tools you need in your kitchen bakery in order to be set up for success:
Mixers: you will need a large dough mixer, at least one counter-top mixer, and an emulsion blender with whisk attachments
Ovens: If you have a large enough kitchen and the money to do it, consider installing a stone deck oven which can bake the most amazing bread you will ever taste. Otherwise, a typical convection oven will do a great job for baking cakes, cookies, and pastries. It is recommended to have a double oven so you can push out as many at a time as you can.
Dough proofer to help make uniform dough every time and streamline the production process
Smallware such as pastry knives, icing tips, sifters, spoons, etc.
Dough sheeter so you do not have to roll out the dough by hand
Bread slicer if you plan to sell fresh bread
Storage space for all of your dried goods
Large refrigerator for cold ingredients and storage so finished products stay safe.
Wooden work table is the best surface for bakers to prep their ingredients.
6. Can you sell baked goods on Etsy?
Once you become well established in your home, you may have a great stream of loyal and new customers coming in to buy your baked goods which is great, however, you may be looking for an additional way to get your name out there and grow your business through online outlets.
An easy way to do this is by advertising your business on Etsy and making it possible for people to buy your baked goods straight from that platform. There are some government regulations you will have to follow when it comes to making and packaging the items, but as long as you follow these rules, you can find yourself selling out of baked goods thanks to this one-of-a-kind online community.
When you set out to start your home baking business, there will be a lot of work and research that you will have to do before the dream can start forming and taking place.
Once you find your niche, have all of the moving financial parts taken care of and legal matters sorted out, you will see your home bakery quickly starting to come together.
With a little bit of research, hard work, and a lot of motivation, your home based bakery will open and your dreams will become a reality in no time.