While you might be hard-pressed to find someone who doesn’t love to eat baked goods, finding someone who loves doing the baking is another story. But for some people, not only is baking a creative outlet and a great stress reliever, it’s also a great business opportunity.
Although the traditional brick-and-mortar bakery has its merits, starting at home is a good way to get rolling, as there’s a low barrier to entry. You can launch your business faster by using your home kitchen and all its baking utensils.
There are also fewer expenses required to start. Without the need to rent a property or build a bakery, the bulk of your budget can go toward buying quality ingredients and marketing your business.
Just so you know
Ovenly founders Agatha Kulaga and Erin Patinkin started in their Brooklyn home before growing to a company with over 70 employees. They are proof that learning how to start selling baked goods from home can be profitable if you have the blueprint for success.
In this piece, we’ll explain the steps you need to take to start a home-based baked goods business.
How to start selling baked goods from home
Selling cookies to your friends and neighbors is a good start, but it isn’t the foundation of a sustainable business. For that, you’ll need a solid plan. Follow the seven steps below to get your home-baked goods business up and running successfully.
How to start selling baked goods from home
- Create a business plan
- Know the legal requirements of running a home business
- Get business insurance
- Register an LLC
- Check the tax regulations
- Choose your baking niche
- Determine how you will sell your products
1. Create a business plan
If you’re serious about baking more than a few buns on the weekend, you should create a business plan that details how you’ll manage your time, finances, and inventory, and how you’ll market and sell your products. This plan will serve as a guide you can refer to as you scale, making it easier to keep operations on track.
2. Know the legal requirements of running a home business
Overlooking the laws and regulations on home businesses is a recipe for disaster, especially when it comes to food service, as you could incur huge fines. You may need a permit or license to sell homemade food, so check with your local government and state health department before proceeding.
3. Get business insurance
While you’re working from home, it’s crucial to have a business insurance policy to safeguard against potential mishaps. Whether it’s a fire in the kitchen or an angry customer claiming ill effects from a bad batch, having insurance will give you financial protection and peace of mind.
4. Register an LLC
A limited liability company (LLC) is a business structure that offers business owners limited liability protection and pass-through taxation, which enables the owners to declare business taxes on their personal tax returns. However, if a limited liability company goes into debt, the debtors cannot lay claim to the owners’ personal possessions.
This venture into baking might start as a hobby for spare cash, but it’s best to do things by the book so you don’t lose your home in a lawsuit. Set up a limited liability company to protect your personal assets.
5. Check the tax regulations
A sales tax permit is often free, but you may need to pay taxes on sales or food items. Refer to local business information websites or your state government to determine what tax you need to pay. By putting money aside each month, you can collect enough to cover your annual sales tax bill when the time comes to file your business tax return.
6. Choose your baking niche
While you may be tempted to offer as many items as possible, it’s better to limit your offerings in the beginning. Focus on one or two items that are your specialty, and make them better than any of your competitors’ similar offerings.
Finding a niche — like gluten-free bagels or vegan cookies, for example — allows you to stand out as a specialist and makes it easier to make a name for yourself among a small, dedicated customer group.
7. Determine how you will sell your products
Will you take your tasty treats to the local farmer’s market and rely on word of mouth from your friends and family? Or will you accept online orders? Jotform’s easy-to-use order forms can help you sell your goods online and reach a much wider customer base.
A solid marketing strategy is the icing on the cake
Once you’re up and running, think about ways to spread the word so you can share your products with more people. With a well-devised marketing strategy, you can stir up interest with enticing photos and memorable branding that will help your business grow and thrive.