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How to start a baking business in 6 steps

How to start a baking business

When it comes to starting a business, there’s (unfortunately) no single recipe for success. However, there are steps you can take to get started on the right foot. Whether you’re looking to open a charming bakery, an online cake shop or a specialty dessert catering service—you’ll want to heed these tips for whipping up the right foundation for your business, building a captivating business website and engaging new customers. Keep reading for expert advice and inspiration on how to start this type of business.

What is a baking business?

A baking business offers a range of baked goods and treats to customers who seek high-quality and delicious products. Services can include custom cakes, pastries, cookies, bread, cupcakes and more. Bakers work closely with customers to understand their needs, preferences and dietary restrictions and then create delectable treats that satisfy their cravings.

How to start a baking business

01. Define your business goals

Determine your vision for the baking business. Clarify your target market, preferred baked goods and the types of orders you want to undertake. Establishing a clear direction from the get-go will help you focus your efforts and attract the right customers.

As a good starting point, talk to your customers and target buyers. Ask what they like or dislike about their products. Take their feedback in stride and take the time to truly listen, as opposed to rebutting any criticisms with your own witty remarks. Co-founders, Darby Pritchards

02. Develop your baking skills

Hone your baking skills and expand your knowledge by experimenting with different recipes, attending baking classes or workshops and seeking mentorship from experienced bakers. Continuous improvement is key to offering high-quality products.

03. Create a business plan

Craft a comprehensive business plan that outlines your goals, target market, product offerings, pricing, marketing strategies and financial projections. A well-thought-out bakery business plan is essential for outlining where you want to take your business and how you plan to achieve your goals.

Once you've written your business plan, write a concept statement to outline your vision.

types of business plans, starting a bakery business

04. Set up your business

If you haven’t already, finalize your business name. Study all the components of naming a business—such as finding one that’s scalable and readily available—and use tools like Wix’s business name generator as needed.

From there, register your business. Choose a suitable legal structure or business entity, such as a sole proprietorship, partnership, limited liability company (LLC) or corporation. Note that your legal structure will determine your tax obligations, as well as your hierarchy and liabilities, so you don’t want to make this decision lightly. Consult an attorney or business advisor if you’re not sure which structure is best for you.

The specific licenses and permits required for a bakery business can vary based on your location within the USA, as regulations are often determined at the state and local levels. However, common licenses and permits may include:

  • Business license: Obtain a general business license from your local city or county government.

  • Food service license/permit: Many states require a specific license or permit for food service establishments, including bakeries. This might involve an inspection of your facilities. For example, if you're starting a bakery business in California, at least one employee must be certified in food safety from a state recognized Food Safety Certification examination.

  • Health department permit: Compliance with health and safety regulations is crucial. Your local health department may require a permit for food establishments.

  • EIN (Employer Identification Number): If you plan to hire employees, you'll need an EIN from the IRS.

  • Seller's permit: If your state imposes sales tax, you may need a seller's permit to collect and remit sales tax on the goods you sell.

  • Fire department permit: Ensure compliance with fire safety regulations. Some locations may require an inspection from the fire department.

  • Sign permit: If you plan to have signs for your bakery, check if your local government requires a permit for signage.

  • Zoning permits: Confirm that your business location complies with local zoning regulations.

It's absolutely crucial to research and contact your local city or county government, as well as the state health department, to determine the specific requirements for your bakery business. Additionally, joining local business associations or seeking advice from small business development centers can provide valuable insights.

how to register a baking business

05. Source ingredients and equipment

Identify reliable suppliers for high-quality ingredients and equipment. Establish relationships with local vendors or consider online options. Ensure that you have the necessary equipment—like mixers, ovens and baking tools—to fulfill customer orders.

Starting a baking business will require essential equipment to ensure that you can produce high-quality baked goods efficiently. The specific equipment you need can depend on the scale and type of baking business you plan to operate. Here's a general list of essential kitchen equipment you might need for a small to medium-sized baking business:

  • Oven: A reliable oven is the heart of any baking business. Consider the size and type based on your production needs. Convection ovens are commonly used for commercial baking.

  • Mixer: A stand mixer or commercial-grade mixer is essential for mixing large batches of dough or batter efficiently.

  • Baking pans and sheets: Invest in a variety of baking pans and sheets for different types of baked goods. This includes cake pans, muffin tins, cookie sheets, and more.

  • Proofing cabinet: If you plan to make bread or other yeast-based products, a proofing cabinet helps in the fermentation process.

  • Cooling racks: Cooling racks allow baked goods to cool evenly and prevent them from becoming soggy.

  • Measuring tools: Accurate measurements are crucial in baking. Have measuring cups and spoons, as well as a kitchen scale for precise measurements.

  • Mixing bowls: Have a variety of mixing bowls in different sizes for preparing ingredients.

  • Pastry bags and tips: Useful for decorating cakes and pastries. Invest in a set of pastry bags and a variety of tips for different designs.

  • Rolling pin: Essential for rolling out dough for pies, pastries, and other baked goods.

  • Pastry brushes: Used for applying egg wash, butter, or other liquids to the surface of baked goods.

  • Spatulas and scrapers: Helps in folding ingredients and scraping bowls clean. Silicone spatulas are versatile and easy to clean.

  • Bench scraper: Useful for cutting and portioning dough, as well as cleaning work surfaces.

  • Pastry cutter or dough blender: Essential for cutting fat into flour when making pie crusts or biscuits.

  • Flour sifter: Ensures that dry ingredients are well-mixed and free of lumps.

  • Storage containers: Keep ingredients fresh and organized with airtight storage containers for flour, sugar, and other dry goods.

  • Commercial refrigerator and freezer: Necessary for storing perishable ingredients and finished products.

  • Display cases (if applicable): If you plan to sell your baked goods in a physical location, consider display cases to showcase your products.

  • Packaging materials: Boxes, bags, or other packaging materials for selling and transporting your baked goods.

  • Cleaning supplies: Ensure you have cleaning supplies such as dish soap, sponges, and towels to maintain a clean and sanitary workspace.

  • Safety equipment: Fire extinguisher, first aid kit and other safety equipment as required by local regulations.

06. Establish pricing and packaging

Determine competitive and profitable pricing for your baked goods based on ingredient costs, labor and desired profit margins. Create attractive and professional packaging that aligns with your brand and appeals to your target market.

Why start a baking business?

The global bakery products market is projected to grow to $590.54 billion by 2028, according to Fortune Business Insights, with a growing interest in convenience and affordability. Moreover, U.S. bakeries make a combined $3 billion a year—with small bakeries making, on average, between $325,000 and $450,000 a year. Aside from offering a creative outlet, a baking business has big profit potential and can take many forms. Business ideas include - specializing in custom orders, event catering or pre-packaged goodies. You could also open a brick-and-mortar business or receive most orders online.

The icing on the cake is that you’ll enjoy lots of creative freedom across all parts of business.

Can a baking business be profitable?

A baking business can be profitable, but like any business, success depends on various factors including your skills, market demand, pricing strategy, quality of products, branding and effective business management.

In order to give your business the best chance of profitability be sure to produce high-quality, delicious and visually appealing baked goods. You must carefully assess the demand for baked goods in your target market, within this research identify trends and niches that you can cater to, such as specialty diets (gluten-free, vegan), unique flavors or custom designs.

You'll also need to set pricing that covers your costs while remaining competitive in your local market. Research the prices of similar products offered by competitors. Then be very on top of keeping track of ingredient costs, packaging, and other expenses to ensure you have a clear understanding of your profit margins.

How much does it cost to open a baking business?

The cost to open a baking business will vary depending on a number of factors, including the size and scope of the business, the location of the business and the types of services that will be offered. However, in general, you can expect to spend between $10,000 and $50,000 to start a baking business.

Here is a breakdown of some of the typical start-up costs for a baking business:

  • Business registration and licensing: $1,000-$5,000

  • Insurance: $2,000-$5,000

  • Bonding: $5,000-$10,000

  • Commercial space: $500-$2,000 per month

  • Kitchen equipment: $5,000-$25,000

  • Ingredients and packaging: $2,000-$5,000

  • Marketing and advertising: $1,000-$5,000

Total start-up costs: $10,000-$50,000

There are a number of ways to reduce the start-up costs for a baking business. For example, you can start your business from home to save on commercial space costs. You can also purchase used equipment and supplies to save money. Additionally, you can seek out funding from investors or lenders to help cover your start-up costs.

If you're serious about starting a baking business, it's important to do your research and create a business plan. This will help you to estimate your start-up costs and to develop a plan for making your business profitable.

How to manage a baking business effectively

Beyond setting up shop, you’ll need to be prepared to handle key management tasks, such as the ones listed below. Here are some quick tips to help you get ahead on these fronts.

  • Streamline production: Establish standardized recipes, production schedules and efficient workflows to ensure consistent quality and timely order fulfillment. Consider using production management software or tools to streamline operations.

  • Inventory management: Implement an inventory management system to track ingredients, packaging materials and finished products. Regularly assess inventory levels, forecast demand and order supplies in a timely manner to avoid stockouts or excess waste.

  • Customer relationship management: Maintain strong relationships with your customers by providing exceptional customer service. Respond promptly to inquiries and communicate effectively regarding order status and delivery.

  • Financial management: You may need to raise money for your business in order to cover all of the start up costs (equipment, space, employees etc.). Make sure to implement sound financial management practices (think tracking your expenses, pricing products appropriately, managing cash flow and budgeting for ingredients). You may find that you need an accounting software or accountant to ensure accurate record-keeping and financial reporting.

  • Continuous learning and adaptation: Stay updated with baking trends, new recipes and customer preferences through continuous learning. Attend baking conferences, workshops or online courses to enhance your skills.

Tips to promote your baking business

The strongest baking businesses are strong brands. To build up your brand, you’ll need to define your visual identity (e.g., learn how to make a bakery logo using a logo maker or by taking inspiration from these bakery logo ideas) as well as your brand message. From there, drum up attention around your brand by:

  • Making a website: Use a website builder like Wix to create a website that showcases your ready-for-purchase confections and/or drives attention to your physical bakery. Even if you only take in-person orders, creating a bakery website will help you spread awareness about your bakery by making it easier for customers to find you through search engines like Google. Or you can decide how to make an eCommerce website and use that to sell your baked goods without a physical location with an eCommerce business model.

  • Promoting your business on social media: Whether you choose to engage on Instagram, Facebook or TikTok, social media can help you to broaden your reach. Create content that showcases your baked goods, gives a behind-the-scenes look at your bakery and, ultimately, shows off your business in a memorable way. Through social media, you could reach both locals and travelers alike.

  • Using professional photographs: Invest in high-quality product photography to showcase your baked goods in an appealing and appetizing way. Use professional lighting, props and styling to create visually enticing images for your website, social media and other marketing materials.

  • Collaborating with local businesses: Partner with local coffee shops (or check out how to start a coffee shop), cafes or event planners to provide your baked goods for their customers or events (you could even learn the steps of starting a party planning business that goes hand-in-hand with your baking business). Offer samples, collaborate on promotions or create custom treats that complement their offerings.

  • Participating in farmers markets or pop-up events: Set up a booth at local farmers markets, food festivals or community events to introduce your baked goods to a wider audience. Offer samples, provide information about your business and distribute business cards or flyers.

  • Offering customized orders and special packages: Develop attractive packages and customizable options for special occasions like birthdays, weddings or corporate events. Promote these offerings through your website, social media and word-of-mouth referrals.

Examples of bakery businesses on Wix

Need some inspiration? Check out these baking businesses on Wix.

Diller Delights

Diller Delights offers its full menu of confectionery sweets online allowing visitors to place orders directly through the site. A self-taught baker, founder Laura Diller delivers fresh treats to residents all across Chicago, Illinois.

Get Whisked

At the time that she started her business, Get Whisked’s founder was just 11 years old. Having competed in baking competitions and met her role model—Duff Goldman—in the flesh, she continues to make a name for herself through Get Whisked, which donates a portion of net proceeds to St. Jude's Hospital for Kids.

Benefits of starting a baking business

In summary, launching a baking business allows for:

  • Artistic expression: Baking is an art form that allows you to showcase your creativity and talent. You can experiment with flavors, decorations and presentations to create unique and visually appealing baked goods.

  • Entrepreneurial freedom: As the owner of a baking business, you have the freedom to make decisions that align with your vision and goals. You can choose the types of baked goods you want to offer, set your pricing and control your business's direction.

  • Personal and professional growth: Running a baking business allows you to continually learn and grow as a baker. Quickly gain new knowledge and experiences, while being selective of the opportunities you want to take on.

Challenges of running a baking business

While starting a baking business has its perks, there are some challenges to be aware of:

  • Compliance with regulations: Baking businesses must adhere to food safety regulations and obtain the necessary permits and licenses. This includes meeting health department standards, labeling requirements and other food handling regulations.

  • Managing costs: Proper cost management is crucial for the success of your business. This includes accurately pricing your products, sourcing ingredients at reasonable prices and minimizing waste to maximize profitability. Remember, you need to take all your expenses into account to calculate your potential net profit.

  • Time management: Baking can be time consuming, especially for custom orders or large quantities. Balancing production order fulfillment, administrative tasks and other aspects of running a business requires effective time management skills.

  • Building a customer base: Attracting and retaining customers is a continuous challenge for any business. You’ll need to invest time into building a strong brand presence, marketing your baked goods effectively and providing excellent customer service.

Starting a bakery from home

Starting a bakery from home can be a rewarding journey, but it requires careful planning and consideration before you whip up your first batch of treats. Here's a roadmap to help you navigate the process:

  • Know your local laws: Cottage food laws, which regulate home-based food production, vary significantly by state and even city. Research your local regulations thoroughly to understand what types of baked goods you can sell, labeling requirements, packaging restrictions and any necessary permits or licenses. 

  • Define your niche: What makes your bakery stand out? Focus on unique recipes, specialized ingredients, catering to dietary needs or a specific aesthetic. This helps attract a loyal customer base and avoids saturating the market with generic baked goods.

  • Craft a business plan: Outline your budget, product offerings, pricing strategy, target market, marketing plan and financial projections. This helps you track your progress, secure funding if needed and stay organized.

  • Invest in essential equipment: Determine what equipment you need based on your chosen products. Starting with basic ovens, mixing bowls, whisks and baking sheets might be sufficient initially. Upgrading later on with stand mixers, cake decorators and specialized tools can be budget-dependent.

  • Build your brand: Develop a catchy name, logo and consistent visual identity for your bakery. Utilize social media platforms like Instagram and Facebook to showcase your creations and connect with potential customers. On top of that, your packaging should reflect your brand and protect your baked goods. Consider eco-friendly and aesthetically pleasing options that enhance the customer experience.

  • Explore sales channels: Depending on your local regulations, you can sell your baked goods through farmers markets, craft fairs, online platforms like Etsy, direct orders via social media or local coffee shops and cafes.

  • Prioritize food safety: Implement proper hygiene practices in your kitchen, maintain sanitary equipment and understand regulations concerning temperature control and shelf life for your products.

How to start a baking business FAQ

Is baking a good side hustle?

Baking can be a good side hustle if you're passionate about baking and have the time to commit to it. However, it's important to be realistic about the time and effort involved in baking and selling baked goods. You may also need to invest in some equipment and supplies.

What mistakes do startup bakeries make?

Can I start a bakery with no money?

How do I start baking at home to sell?

How to start a baking business as a teenager?

Which type of baking business is right for me?

How to start a business in a specific state

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