Baking is your love language; you get a creative rush looking for unique and fun ways to decorate a cake and have cake shows DVR’d to the max. More and more you are being asked to make someone else’s cake so you start to wonder…could I have my own cake business? How or where would I even start? Well, friends, we are here to help! We’ve put together a few simple suggestions that will help you to begin to put together a business and set yourself up for success before you turn on your oven.
First, let’s start with the biggest question...what you will make?
All of these questions will lead you to your next big question... where will you make and sell your baked goods?
What you choose to sell can actually be determined by where you choose to make/sell it.
Like most cake makers, you may be looking to start selling cake from home. In the United States, state and county regulations can heavily weigh on what you can and can not sell from home.
Most states now have Cottage Food Laws or something similar which allows bakers to sell baked goods from their homes. However, each state (and sometimes each county within the state) will have different limitations on what you can and cannot legally sell. Some are very strict and do not allow any dairy (butter, milk, heavy cream) while others are more lenient and only restrict potentially hazardous foods like cream cheese, cheesecakes, and meringues which need to be temperature controlled. While still, other states may allow you to send in samples or recipes to be tested by state labs to see if the recipe is considered shelf-stable for sale.
If you love Grandma Nona’s cheesecake but cannot sell it from your home – you still have options!
Renting a commercial kitchen to bake in or a brick-and-mortar storefront of your own would be two possible solutions around restrictive laws. So, before you start making out your menu, do a little detour to your state’s Department of Health or Department of Agriculture to find out what restrictions there may be. Don’t forget to contact your local county health department too! Some local health departments have additional requirements to the state requirements – make sure to find all of them out!
Now that you have found out what you can sell, it’s time to talk equipment and storage. Will you be renting a storefront location or working from your home? How will you store finished products and how much space do you have to dedicate to cakes? This will determine what types of equipment you need to invest in for your business. A commercial mixer may not be the best decision if you have a small space in your home to dedicate to cakes. You may have to get creative with storage for pans, mixers and bowls, cooling racks, and all those fabulous cake toys that seem to multiply like hangars in the closet. Once you decide on your space, do you purchase new or used? Some brands have certified used equipment which still comes with a manufacturer’s warranty but a fraction of the cost of new.
TIP: Look for restaurant equipment auctions where you can buy commercial equipment-make sure to verify if you have to pay in cash and that you have a way to transport large equipment, as well as some heavy lifting pals you can bribe with cupcakes to help you load up your purchases!
You know what you CAN sell, you know WHERE you are going to sell it from, now it’s time to start on the behind-the-scenes business stuff and choosing a business name. You will need to check at the state level and federal level to make sure any names you like are not either trademarked or already registered. Failing to complete these steps could lead to costly rebranding if the other business finds out you are using part or all of their name. When you are choosing a business name, think about the products you offer now, what you WANT to be offering in 5 years and how a potential client will find you. Changing the spelling of a name may be fun, but it could also make it harder for clients to find you if you are Kelly’s Krazzzy Treatzzz you may not pop up in searches for Kelly’s Crazy Treats. If you want to eventually add weddings or corporate events to your client list, Betty’s Birthday Bites may hinder the expansion into those areas because clients might overlook you by thinking you only made birthday treats. Using your name is always a good bet for name recognition, if you decide to teach classes in the future or if you think you may want to expand into other areas one day. Maybe you start out solely offering cakes, but know you want to add in cookies, pies, and dessert bars eventually. Daisy’s Desserts would capture all those areas and clientele.
Once you have decided on a business name, I highly recommend speaking with an accountant to decide if you will register your business as an LLC, Sole Proprietorship or other option. Next, register your business with your state, get your sale tax certificate to collect sales taxes and purchase a website/social media account in your business name. Once you are registered with your state, head over to the IRS for your EIN number. Not only is registering for your EIN number required by federal law, but your EIN number will allow you to purchase bulk goods at a lower cost from restaurant warehouses and depots to cut down on your expenses.
Finally, purchase liability insurance to cover yourself and your business and create a contract for each sale. If you are working from home, check with your homeowner’s policy to see if you can add onto your existing insurance. There are also several options from independent companies that will cover you for about $300/yr. You can make your own contract, and have it looked over by an attorney or there are multiple options available online, so you don’t have to write it yourself. I always advise to look over your contract once a year and see if there is anything you need to add or amend. It is a living, breathing document so it can be amended to your needs!
Take a deep breath, it may seem like there is so much to do that you never thought about when you just wanted to make pretty cakes! It can seem overwhelming in the beginning when you are getting everything set up. The time you spend on all this paperwork/registration/legalese is definitely more work and more time-consuming at the beginning. I remember when I first started my business, I was frustrated that it seemed like I was spending more time on the “business” than on actual baking and decorating! But if you take these steps at the beginning, it will save you time and gray hair when you are busy booking cakes.
We've put together this easy-to-follow PDF checklist with all the steps need, plus some bonus resources and tips! You can access the downloadable Checklist here and you'll also receive future emails with more cake business blogs and tips!
We've compiled all the steps into an organized checklist for your to download for free! We've also added bonus tips and resources to help your new business succeed!
Still not sure how to proceed? That’s ok too! Contact your local Chamber of Commerce and find out if they have recommendations for businesses needing a Business Plan mentor. A lot of times, communities will have a mentoring program where an existing (or retired) businessperson will sit down with you and help you make a business plan either for free or for purchase. Check into local business networking groups where you’ll meet up with other business owners. These groups are a great start with networking your business as well. If you can’t find anyone local to help, there are companies online that you can hire to help you write a business plan.
These are some of the first building blocks to creating a cake business, however, there is of course quite a bit more that goes into it becoming a successful cake business. You may find Michelle Honeman's experience of owning a bakery and the blog 10 things she wishes she knew before opening her bakery super helpful in dodging some of those common (and not-so-common) mistakes.
Last modified on October 1st, 2021
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