Do you know why we call money “dough”?
Because we all knead it…
Didn’t crack you up? Well, here’s something else that’ll get those eyebrows raised:
More than half of the U.S. population consumed at least one package of bread per week in 2018. That’s a whopping 167.98 million people who ate the same number of packages of bread in one week. Some 11.44 million even enjoyed five or more packs of these goodies a week!
So, no wonder that bread production in the country is now a $50-billion industry.
And by starting a home baking business, you can become part of that very profitable market.
The question is, how and where do you even begin? Keep reading as we’ll show you exactly what to do!
1. Know Your Area’s Home Baking Business Laws
Before you start selling baked goods from home, get to know your local Cottage Food laws first. Each state implements its own strict regulations on these low-risk foods.
By knowing your area’s laws, you can determine what types of baked goods you can sell. You’ll also know where exactly you can sell those goods and them.
Be sure to check if your state requires a separate kitchen for your home bakery. If not, you likely still need to use separate baking appliances, supplies, and tools.
Also, check the requirements for business registration and licensing. In some states, authorized government agencies perform visual inspections of home bakeries. For example, in California, the Department of Public Health carries out these inspections.
Knowing what the laws are early on also gives you an idea of your needed budget. Especially if you need to or have a separate one for your bakery. You’ll also be able to avoid these mistakes that can turn your bakery into a disaster.
2. Define Your Target Market
To start a baking business on the right foot, you need to know if your baked goods will sell. So, determine who exactly you’ll bake for so you can narrow down your potential menu.
Are you targeting daily sandwich eaters who consist half of the U.S. adult population? If so, then it’s best to come up with the finest selection of bread like loaves, baguettes, bagels, and buns. This way, you can offer your customers a wide variety of sandwich bread options.
If you’re more into sweets like cookies, cakes, pies, and pastries, then you have a much bigger target market. Almost everyone, from kids to baby boomers, loves these sweets.
Donuts are on a whole other level though. Americans spend more than half a billion dollars on them each year. If you’re going to go (do)nuts, then you may want to stick to offering only these fried goodies.
What’s important is to nail down who your audience is, as your menu will revolve around them. From there, you can think of ways to make them stand out from the competition.
3. Plan Your Budget
The biggest part of your budget will go towards appliances, especially the oven. New ovens cost an average of $2,000, but if you’ll make bread, you’ll also need a dough proofer. You also need to get an industry mixer and other baking tools like bowls and baking and cooking pans.
You should also invest in a good fridge, as your bakery is a perishable food business. Include shelving and cabinets for proper ingredient and products storage. Don’t forget to budget your ongoing monthly supplies too, including ingredients and packaging.
4. Name Your Bakery (And Get It Legalized)
Aside from product taste testing, naming your shop is one of the most fun parts of starting a bakery from home. Think of a name that’ll immediately conjure images of heavenly baked goodness. And make sure that you’ll want to stick to that name in the long run.
Whatever you decide on, it’s vital to ensure your bakery’s name makes it clear that it sells baked goods. It may be tempting to use a unique and catchy name, but if it doesn’t convey what your shop is about, you won’t get customers.
As soon as you make your final decision, get your business name registered! The last thing you want is to be super happy with the name only to find out someone else registered it. Also, don’t forget your federal tax ID number.
5. Price Your Products Right
When you’re starting a baking business, your initial pricing will be a deal-breaker. Your prices can either make customers buy loads of your goodies or walk away because they’re too high. Plus, your customers will expect the same prices in the long run.
Costing is a crucial step on how to sell baked goods, and it starts with the total cost to make the product. From there, you add in your “professional baking fee”, including your time and skills.
A good way to find the right price is to check with other similar bakeries. This’ll give you an idea of how much you should charge for your own products. Charging similar prices can help your bakery stay competitive.
6. Go for a Dry Run
Once you’re all registered and licensed and you have everything you need, get testing! Organize a dry run with family, friends, and colleagues who you can rely on to give you solid and honest feedback. While we all need to believe in our own skills, more eyes (and extra tongues) will ensure your goods are good to go.
Time to Get the Word Out
While starting a home baking business isn’t as hard as one in a commercial complex, it still takes time and effort. But so long as you follow the steps we’ve outlined, then you can start off on the right foot.
And once you’re all set to sell your goods and open up shop, be sure your marketing plan is ready for action too. Unsure what it takes to market a bakery? Then check out this list of that’ll point you in the right direction!
