If you enjoy baking sweet treats for friends and family, then the idea of how to start a bakery business from home might have crossed your mind more than a few times.
An at-home bakery business can be a lucrative way to make money from home. After all, there’s hardly an occasion that doesn’t call for a cake, cupcake or some beautifully decorated cookies – think baby showers, weddings, birthday parties, graduation parties – the list goes on.
Melissa Fryer, owner of Build a Better Bakery, has been making a living in the baking industry for over a decade. She’s managed to build a lucrative business that allows her to set up a “shop” wherever she finds herself living, which is an important factor given she’s married to an active duty soldier, which means frequent moves.
Below, Melissa shares her top tips and advice for anyone interested in learning how to start a bakery business from home.
Tell Us About Yourself and How You Got Into the Home Bakery Business
My bakery journey started over 10 years ago, while I was still in college. I was pursuing two Fine Art Degrees in Printmaking and Ceramics, and landed a job as the local grocery store cake decorator.
I was thrilled for two main reasons: this job was highly sought after (because cakes are cool) and I got to make money being artistic, which is amazing in itself.
Long story short, over the next 6 years, I applied and received positions at bakeries in every city/town we moved to. The bakeries were all very different, including a big city million dollar bakery and a tiny rural town bakery.
I worked for both women and men, working alone and with other decorators, but I was almost always the lead designer, and often consulted about large business decisions the owners were facing.
Moving is common every 2-3 years because I am a military spouse, and after having to leave multiple bakeries due to Army moves, I decided that starting my own bakery from home would be easier and more lucrative.
I started off my own business by working as the lead designer at the premier local bakery in town, while also building my own home business on the side. This allowed me to still bring in a reliable income while learning the entrepreneurial ropes and figuring out what I wanted to offer and how to market myself.
Then eventually, after yet another move, I decided to just concentrate on my personal bakery business full time from home.
I spent close to 8 years working inside bakeries of all kinds, watching business operations, supply issues, big business owner decisions, hiring and firing of employees, payroll issues, storefront stocking, product choices, customer service, etc.
I truly believe that working inside a successful bakery before ever starting my own bakery was the main reason I had immediate success with my home business. I realize that not everyone will have the opportunity to work in a running bakery before starting their own, and overcoming that hurdle is where I am focusing my current attention.
Due to conditions outside of my power, I can not actively run my home bakery.
I am combining my talents of teaching and bakery skills, to guide others towards the freedom of owning a successful and profitable bakery business, without the hassle of learning entrepreneurship the hard way.
How Much Does it Cost to Start a Cake Business?
Starting a home cake business is going to be dependent on what you want to offer.
If you decide to only offer cakes, your tool cost may be lower because you won’t be needing tools for other types of baked goods.
If you happen to want to start a business like mine (specializing in multi-size high-end cakes, decorated cookies and cupcakes), you’ll need around $800-$1000 to get started with the quality basics.
Your tools and gear are going to be your bigger purchases up front, followed by consumable goods like packaging and materials (which you’ll want to buy in bulk), then lastly you will need to consider any start-up costs for your location (like licenses, registration and insurance).
If you plan to start a storefront bakery, you are going to run into quite a bit more cost to start up.
Not only will you need larger tool items, like commercial ovens, large refrigeration systems, larger or multiple mixers, racks and more, you will also need more bakery furniture and things like signage.
You will be subject to many more local fees and of course, you will need to be handing over your monthly rent and utilities for your storefront.
How Do You Price Homemade Baked Goods?
Pricing your bakery goods isn’t as simple as materials times three, which is what many people will tell you to do.
This is an enormous misconception in the bakery world, which leads many bakers to ultimately give up on their businesses because they simply aren’t making any money, and they don’t know why.
Their businesses failed because the actual pricing formula is more complicated than that, and they weren’t taking into account crucial costs a real business needs to consider.
In my inclusive pricing course, I teach you how to ensure that your past, present and future costs are all covered, using a formula with your very own unique data.
You simply do a bit of research, plug your numbers into the formula, and generate a highly transparent and useful chart to price your products for profit. A baker can not get pricing information anywhere other than their own data, and no one else’s prices are going to work for you.
I created this pricing course to make coming up with your prices as easy and straight forward as possible, while also allowing you to discover an understanding for how bakery pricing really works.
You’ll be given each tiny step and chart you’ll need to create your very own average pricing chart, making quotes seamless and making sure all your costs are covered 100%.
Average pricing is a wonderful aspect to add to any bakery business, to make customer ordering more enjoyable and allow you the ease of knowing overall, your costs are being covered and you are making a profit!
If you’d like to see what NOT to do when pricing your baked goods, check out the video in this article. I know many bakers who have made these common mistakes. Pinpointing these issues will save you a lot of heartache.
What Equipment Do You Need to Start a Home Bakery Business?
Simply put, you are going to need equipment to mix up your recipes, items to bake and cool in, storage, things to decorate with and things to package up goods.
Each individual bakery product you offer is going to require a different set of tools. Cakes, cupcakes, cookies, pasteries, breads, etc all require some different tools. Below, you can see the basics I would suggest for a business where you create mainly cakes, cookies and cupcakes.
Basic Baking and Decorating Tools
—> To create simple buttercream iced cakes, decorated sugar cookies or cupcakes, you are going to need:
- an icing scraper or credit card (lol)
- 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
- (for cookies) a rolling pin, simple shaped cookie cutters
- consumable things like cake drums, boxes, parchment, spray, non-skid, Americolor gels, plastic wrap, cupcake liners, toothpicks, etc
What Types of Baked Goods Sell Best?
The popularity of your bakery goods is going to be highly dependent on your location, your specialties and other local bakers.
You’ll find that if you have a signature recipe or specialty item (ethnic, old school recipe, etc), those tend to stand out and get you known in your community.
For me, cakes were my main source of income. I concentrated on high-end orders, with high detail and larger sizes. And because these are normally more “artsy”, you can charge higher prices for them.
Decorated sugar cookies and high-end cupcakes can also be big sellers when sold in large quantities or to the perfect clients.
Look for a hole in the market where you are, and see if your specialties can help fill the need for your particular location. In my Bakery Business Guide: Part 1-Plan for Success Course, we go over how to position yourself for success in your community. I provide a list of prompt questions and a business plan, to make sure you get your positioning correct, right from the start.
Do You Need a License to Sell Baked Goods from Home?
Every state and country is different, so you will need to look at your local laws. Most US states have something called “cottage laws” which dictate rules to and protect home bakers. These laws and state laws may or may not require you to have a license.
Similarly, in each location you will have different laws dictating if you need to be charging sales tax on your baked goods, if you can sell over state lines, what ingredients you can use, if you can sell at a farmer’s market, how much you can sell in an year, etc.
You can check out this FLPC Cottage Foods PDF to get more information on your US State and what they require.
Is a Home Bakery Profitable? How Much Money Could I Expect to Make After a Year?
Your home bakery can be profitable if you have the right items in motion and put in the work to get noticed by your local community.
Since a bakery is a food business, and you are trading your time for money, there is a monetary ceiling.
You probably won’t become a millionaire running a home bakery, but life isn’t all about money, all of the time. There are so many people who HATE their jobs, and home bakers usually aren’t in that group! They are some of the most passionate people in the world.
Bakery work takes time and good amount of physical work, but it is also one of the most rewarding jobs I have ever had.
Not only do you get to CREATE on a daily basis, you also get to deliver JOY and AMAZEMENT to so many of your clients. Customers LOVE to see bakery items, so your ads and photos normally get attention and people just love to see what you’ve been up to.
It’s not too shabby to get paid to do something as fun as being a cake maker.
If you look at profit realistically, you can expect to make the industry standard of 45-60% in profit on your orders. That means the bigger the order, the more profit you stand to make.
If you work at it long enough and get your niche perfected, you could expect to raise that percentage into the 70% profit arena. Usually these prices go higher for those in wealthier cities who have a more pronounced artistic ability.
Routine wise, you have to think about how much time you have to offer to your business. Each and every order will take you approximately 5-8 hours from start to finish. So if you only have 25 hours to devote to your business, you may expect to only be making 4-5 orders per week (if fully booked).
Let’s do a quick example of a week of orders with about 25 hours to work:
- 2 dozen decorated cookies at $5 each = $120 → 60% profit = $72 → 6 hours
- 10” fondant cake with decor = $155 → 60% profit = $93 → 8 hours
- 6” buttercream dessert cake = $70 → 60% profit = $42 → 5 hours
- 2 dozen buttercream cupcakes at $4 each = $96 → 60% profit = $57 → 5 hours
From this scenario, you are fully booked and made $264 in profit on 4 orders for the week. All bills are paid, including your overhead, depreciation and business growth (if you use the pricing formula from my course).
If this was a common schedule of orders each week, you could be bringing in over $1000 IN PURE PROFIT a month, working part time from home, doing a really fun job that you can accomplish while staying home with kids.
I have the example set at 60% profit. If you are new to baking and designing, your profit will be lower over the first year or so, until your skill level has improved. And because the baking industry is order based, your number of orders and amount of income over the first year will be highly dependent on the needs and ability of your community to purchase homemade baked goods.
I will say that baking and designing with kids awake and around IS challenging. It may work out better for you to do most of your designing in the earlier morning or evening, when they kids are occupied or asleep.
How Can I Learn How to Start a Home Based Bakery?
Whenever you start any kind of business, the first thing you should do is find an industry specific business guide or mentor to help you avoid costly mistakes, and make it much easier to get started generating income.
It’s smart to find full courses that include video, downloadable tools and assignments to keep you engaged and on track as you learn the ins and outs of your new business.
The Bakery Business Guide: Part 1 – Plan for Success is the course you’ll need to look at as your first step to starting a bakery business.
The course is highly comprehensive and takes into account many of the most important aspects of creating a clear and strong path to bakery success.
All the information you’ll need is in one place, inside the course. You won’t have to waste your time searching the internet for answers to all the small questions you’ll come across when starting your small business home bakery.
After you figure out your plan and get some of the most solid structure in place, you’ll need to figure out your pricing, so that your business is actually sustainable and making money.
The Bakery Business Guide: Part 2 – Pricing for Profit will take you step-by-step towards creating your very own, unique, bakery pricing chart. We will utilize the average pricing method, making it an easy and enjoyable process for customers to order and for you to quote custom baked goods.
You can jump on my email list here to get the FREE Bakery Business Starter Pack, plus weekly bakery business motivational emails. I often send tidbits of information to help you learn how to start a home based bakery business.
If you are looking for a push in the right direction, and ready to move your bakery business dreams forward, I host a mentorship program built specifically for open-minded people who are interested in growing their business with less stress and more success. You can read all about the Elite Mentorship Program, offered by Build a Better Bakery, here.