Hey Besties! If you’ve been here long enough, you likely know this blog was born on the 7th floor of a Children’s Hospital. Specifically, the pediatric oncology floor, as I looked for an uplifting distraction and way to help others. Baking has been a lifelong passion and one that my daughter fell in love with too. I helped her start her cottage bakery business when she was 13 and it’s still going strong today! But sitting in a hospital, I needed to still be of service to others. Combining all my passions, coupled with how hard I know it can be for home bakeries to thrive, Your Baking Bestie was born.
To help, teach, support, promote and most of all, inspire other bakers to follow their passion. Life is short and you never know when it can be turned upside down. So, whether you’re a hobby baker trying a new skill, a home baker starting a business or someone baking up big dreams, I’m here for you, to help in every way I can. Think of me as well…your baking bestie!
But today we’re going to get REAL. Maybe you’re thinking of starting a home bakery business? Or you are already a home bakery biz owner? Or maybe just exploring what having a home bakery biz is like. In true besties fashion, we’re going to cover the fun parts and the not-so-fun parts, candidly. It’s critical that you know the ins-and-outs and can make informed decisions appropriately. No one starts (or should start) a business willy-nilly and that includes bakeries. Let’s dig into everything you need to know!
Having a Home Bakery Would Be Fun…
So you like baking? Maybe decorating cakes, cupcakes or cookies? And surely a family member or friend has said, “You should sell these!” And let’s be honest, a cookie or cake business does sound fun! Compared to many other careers or businesses, baking all day does sound great. Colors, flavors, sprinkles, all the things!
How about taxes, business expenses, regulations, marketing and making 500 of the same cookie? Does that still sound like fun? If you shouted “YES”, then you are ready for a home bakery business! 😉 I told you we were going to get REAL, and it was no joke, bestie!
Owning and operating a home bakery business can be very fun, successful and rewarding, but there is a difference between a hobby and a business. If you like all the fun stuff but you’re not interested in all the business stuff, then please keeping baking as a hobby. Trying to turn a hobby into a business is a fantastic way to RUIN that hobby for you. I’ve seen it happen countless times and I don’t want that for you because that is no fun and can also be expensive.
However, if you have the true entrepreneurial spirit and get excited by the business side of running a business, a home bakery business may be an amazing opportunity for you to marry your creative passion and career desires. Let’s start by better understanding how you can start a home bakery business from your home.
Cottage Baking Laws
Did you know that selling home baked goods has not always been legal? It’s true! Fortunately, state laws slowly started adopted what are known as “Cottage laws” or “Cottage Food Operation” laws. These allow individuals to legally sell homemade goods. These laws have provided a huge opportunity for people to establish small businesses. We saw a big boom in the tough economic years of 2008-2010 and then again when Covid arrived as people look for creative ways to make an income, specifically from home.
It took until 2021, but all 50 states have some sort of cottage laws allowing the sale of food made at home. The tricky part is that the laws and regulations state-to-state vary WIDELY. Some are quite lenient and give home bakers a lot of freedom and some are quite the opposite. So, if you are considering start a home bakery business, your first step should be looking into your state’s cottage laws.
If you’re not sure where to start, I suggest searching your state and “cottage food laws” after it, which usually gives you the results you need. Different states have varying agencies who govern these laws so while in MN, it is the Department of Agriculture, that will not be the case for all. Additionally, some states may have county or city regulations as well.
Another helpful resource is searching for state-specific Facebook groups. These can serve as a wealth of information and to bounce questions off of others who comply with your same rules. I can tell you right now, if you ask, “What do I need to sell my cookies?” in a general cookie group, the immediate response you will hear is, “It depends on your state”. So do yourself a favor and familiarize yourself with your local regulations and local resources.
Home Bakery Regulations
Your local regulations will cover things like which foods are allowed for you to sell, where you can sell, labeling requirements, whether or not you can ship and more. This is where states can vary widely, and you’ll really want to dig in to see if your business could thrive in your state based on your specialty or how you’d like to operate. For example, some states have very tight restrictions around buttercream, cream cheese frosting and even meringue powder. If your specialty uses these ingredients heavily, you may need to look into alternatives.
Another regulation that varies widely is sales limits. For example, in Michigan, a home baker can only sell $25,000 in gross sales per year. Whereas a Florda home baker can sell $250,000 a year. Obviously, this can have huge impacts on the scale of your home bakery business.
These laws are also something you really need to look into when considering a move across state lines! An established and thriving home bakery business in one state may not even be possible in another.
Once you have familiarized yourself with your local cottage bakery laws, you can start taking steps to set up your business. In some states, you don’t require any kind of licensing, but in others, you may need proof of certain certifications, training classes or other requirements. Being a baker with integrity, you’ll want to set your business up for compliance from the start. It can be overwhelming, but it’s much easier to go the legwork in the beginning for smooth sailing. And to help you stay on track and make sure you don’t miss anything, I’ve created this downloadable checklist for you to stay organized.
Let’s Talk Bakery Business Expenses
This is a topic that does not get enough discussion and also one that bakers struggle with the most. And for that reason, it’s critical to understand before starting a home bakery business. Starting a home bakery business generally has a low barrier for entry and can be started for a pretty small investment, compared to most other businesses. That said, there are A LOT of expenses, and many bakers don’t realize the extent until they are in the thick of it.
Like any product-based business, you need to buy or make something in order to sell it. At a minimum, in the case of a bakery business, this requires ingredients, supplies, packaging, labeling. These items only can add up very quickly and you will constantly be repurchasing. If you want to have a successful bakery business, you need to watch every penny on these items. You can’t simply go buy bakery boxes at Walmart or Michaels where they may cost you at least a couple dollars per box. You’re going to need to find sources for your favorite items at the best price possible and ideally, order in bulk, to save. The difference in profit between using a box that costs $2 and one that costs 50 cents can be HUGE over the course of a year.
In order to be successful in business, you need to source all your expenses well in order to increase your profit margin, or what you get to keep. Now, I’m not saying you should buy the cheapest products out there…definitely not. If you buy the cheapest, it will be reflected in your quality. You need to find the best prices on the ingredients, supplies and packaging that allows you to maintain the quality, aesthetic and professionalism you’re going for. Remember, this is a business, not a hobby, and it must be treated like one.
If you follow along on my blog, I’m regularly providing recommendations on products, packaging and other ways for you to keep more of your dough!
And don’t forget about your TIME which is also not free! You will need to determine an appropriate rate to pay yourself based on skills, market and your values. There are also indirect expenses such as gas, electricity and others that add up as well. It will pay off (literally) to do a thorough analysis of all your costs when establishing your prices.
Marketing
I hate to break it to you, bestie, but marketing isn’t free either. Don’t hate me, I’m just being honest. Here’s the reality: If you have a large, local social media following, you may be able to scale your business faster. But if you don’t, your business will grow very slow, if at all, without some marketing. Once again, this is a business now and every business has to market. After everything you’ve already done to set up your business, it would be great if you could just say, “I’m open!” and for the orders to start rolling in. Unfortunately, you’re operating a business from your home, which means it takes marketing for people to know it exists since they can’t see it.
Now, does marketing have to be super expensive? Heck no! In fact, THIS guide provides a ton of ideas on how you can launch and grow your business on a tight budget. But that is the key…you need to have a marketing budget, even if it’s a small one. Like any business, once there is brand awareness, people know about your business, word of mouth will spread. But until you’re there, marketing in some form is necessary.
Customer Service Is Key
Not gonna lie, having a home bakery business can require a thick skin. People can be demanding, rude, unrealistic and unfair. But those should be rare exceptions. In my experience, if you’re providing quality products with great customer service, your clientele will love you. But that is the key…they are the customer and you need to delight them. Make sure you are organized in your orders and customer expectations to ensure you are able to meet and exceed them every time. A customer would rather you be honest then overpromise and underdeliver. It will take some time, but you will get into your groove as far as order capacity and more. Having an amazing clientele is one of the best parts of a bakery business!
On the flip side, YOU are the business owner! Do not let a customer bully you or stress you out. You will have to learn to say “no” and be okay with it. Trying to take on every order and request is a surefire way to suck the fun right out of your business.
Pricing
Also know that your prices are not negotiable. For some reason, some customers approach home bakeries with a haggling mentality. But I personally have never witnessed a customer try to negotiate a lower price at a store. You are a business and you’ve set your prices; a quote is not a starting point for negotiations. Now are there occasions where you might provide a discount or discuss how you can work within the customer’s budget? Absolutely! I encourage that dialogue, and that is good business. But when you provide a quote and someone says, “I can get it much cheaper elsewhere,” don’t take offense. If they can get what they want at the quality they want elsewhere, they should. Home bakery business goods are a luxury and your talent is not available at big box stores.
Still Want To Have A Home Bakery Business?
We’ve covered a lot and I hope I wasn’t too harsh with the truth. Starting a business is a HUGE endeavor that takes a lot of energy and time. I don’t want you to waste either of these precious resources. I hope you found this helpful and has helped you make some decisions about your baking future. Each one of these sections could be its own book so we’ve only hit the tip of the iceberg, but I hope you hung along for it all! I’m ridiculously passionate about helping home bakers become wildly successful doing what they love. But I also know it’s not for everyone and that is okay!
If you want to hear from many other successful home bakers who have built thriving businesses, there is no shortage of inspiration HERE, with our Featured Bakers. And hey, don’t forget to let me know when you want to be featured too, bestie!
Lastly, make sure you’ve subscribed to receive our weekly newsletter! Never miss out on a new recipe, technique, product recommendation, Featured Baker or free printables! Happy Baking, Besties!