How To: Open Your Home Bakery
A young Julie, 2017, excited to display her first cupcake mockup her friend painted for her. Please note that your graphic design friends may take baked goods as a form of payment if you need artwork or a logo.
So. You want to open your home bakery. CONGRATS - THAT’S VERY EXCITING! Before you start slinging baked goods to family and friends, let’s make sure you’re set up for success as a business. Normaneek Bakery is actually my “second” home bakery, and this time around - I have a bit more business sense. I hope.
Local Laws + Regulations
Before you get too far, you’re going to want to Google your state’s Cottage Laws. Each state will have a slightly different list of rules and requirements allowing you to sell your baked goods directly to consumers. When I lived in Texas (back in 2017), I had to take a basic food safety course and file with the county clerk to get started. I was also capped at $50,000/year gross revenue.
But when I moved to California, the rules were different. The revenue cap was higher and there were two different operating licenses I could have gotten to operate from home. Now that I am in Tennessee, I have the “Tennessee Food Freedom Act.” The rules here are more lax than in other states. I don’t have to file anything, no food safety course, and no revenue cap. All I needed to do was reprint new labels for packaging, and I was good to go! Be sure you check with your state and know what rules you’re tied to. They can also change, and it’s your responsibility to stay updated and in compliance.
Space + Equipment
I know home bakers who operate from a smaller apartment, so minimal space is entirely doable. In the words of one of my favorite humans, Tim Gunn, you “make it work!” But here are a few things to keep in mind:
What new equipment might you need to sustain a home bakery business? You’ll likely need to upgrade a mixer, buy a few more baking sheets, invest in an expandable cooling rack, or even get one of those fancy, tiered bakery racks. Take inventory of your current equipment and ensure anything new has a place to live.
Where and how do you plan to store ingredients? The good news is that your CostCo membership now can be a business expense. The bad news is that you’re likely going to have giant tubs of ingredients to store. To keep ingredient costs lower, it’s advised to buy ingredients in bulk and invest in some non-toxic, food-safe containers.
If you have pets, are you able to keep them out of the area where you’re mixing, baking, decorating, and packaging? I have three dogs, and they all shed. The kitchen has to get a full cleaning before prep work begins, and we use a baby gate to keep them out of the kitchen and dining room.
Can your current fridge/freezer accommodate what you need it to accommodate? For cookies, I really just need to store butter in bulk. But for larger orders, I will prep dough in advance and freeze or refrigerate.
Where and how do you plan to store packaging materials? I have boxes of, well, boxes that lay flat until I’m ready to put them together for orders. I also have at least one ten-pound box of crinkle paper at all times. If you aim to do any sort of specialty packaging, this takes up space quickly. So, have a plan.
Let’s Talk Money
How do you ensure profitability? Do some research! Visit local bakeries and look for items similar to what you’re planning to offer. Use social media to find fellow home bakeries and view their pricing sheets. If you’re comfortable doing some math, find out the cost of each product you offer. Factor in other business costs (like packaging and your own time). Upcharge for more complicated baked goods or designs, individual packaging on items, elevated recipes, or seasonal, specialty items. Track your expenses and revenue, and adjust prices accordingly.
Do you need a separate bank account? It would likely make things easier, but typically no, not if you’re operating as an individual. You do need to track expenses and revenue separately regardless. Your home bakery is your business, and you’ll report and pay taxes on net profits.
How will you track expenses? I use Gmail and for every bakery online purchase, I use my bakery email. I label it as an “expense” and store it in a separate folder for safekeeping. I then use Google Sheets and track the transaction date, total cost, description of expense, and formal category for accounting purposes (supplies, cost of goods sold, marketing, etc.). Just be sure you keep every single receipt. The “annual business budget” template in Google Sheets is a great starting point.
How will you accept money? When I operated in Texas, I mostly only accepted cash and checks to avoid credit card fees. That actually led to a few clients who ghosted or gave me the runaround on payment up pickup/delivery date. This time around, I opened a Business PayPal account to be able to generate invoices and send directly to emails. Automatic reminders get sent out, I can set up all my terms of sale, and transfer the totals pretty easily into my bank account. PayPal will take a percentage of the sale, but for now, it’s worth it. If you’re selling at a farmers’ market, you’ll also want to get one of those squares that can connect to your phone. Just as each expense needs a receipt, every accepted payment needs a matching invoice. If you plan to use Zelle, CashApp, or Venmo and think you’re being sneaky and avoiding business fees - I know plenty of people who have gotten in trouble doing this. As a former auditor and tax preparer, I’m a stickler for the rules when money is involved.
Branding + Marketing: Basics
Choose a memorable name. Google it and search on social media to see if it’s already taken. I also recommend checking out the United States Patent and Trademark Office and doing a trademark search. If one day you want to be a big brand, sell merch, or open a brick-and-mortar - you don’t want to have to rebrand.
Design a logo. Canva is free and they have lots of user-friendly templates. You can also use companies like Fiverr or Upwork and get something more custom-made. I am not beyond bribing a graphic design friend and trading baked goods for logo mockups.
Reserve a social media handle. Even if you don’t intend to post regularly, it’s always a good idea to dibs the handles for your bakery name before someone else does. Especially if you one day decide to become a social media star!
Build a website. Lots of companies offer user-friendly website templates to give you an online presence. I host mine on SquareSpace, but I’ve also built on Wix and Canva in the past. Instead of an “add to cart” feature - I just link out to a Google Form for orders.
Labels + business cards. Most Cottage Laws will require you to have a label with bare minimum information. You should also brand these labels and ensure your website and socials are featured. And always carry business cards! Again, Canva is free and has templates you can use with an easy print/ship option.
Learn to Set Boundaries
Honestly, I should have started with this one. My first time opening a home bakery I had no boundaries. I took whatever order came my way. Even if I knew it would be a challenging design, I would not profit off the order, I already had too many orders, etc. When you’re just starting out, you’re happy to get work. At least I was. But over time, taking the wrong orders caused me to fall out of love with what I was doing. I also offered far too many deals and set my prices too low if people pushed back. After working in a leadership role in a legal tech start up, I’ve learned to better advocate for myself, set better work boundaries, and operate more confidently. Over time - you will, too.
Now Go Have Some Fun!
Starting a home bakery can be SO rewarding, but it will require planning and preparation if you want to make it a profitable business. Treat your customers right, deliver quality products, and have a bit of patience with the process. Feel free to email me or send me a message on Instagram if you need help, need to vent, or are feeling like you hit a bump in the road. Home bakers gotta stick together, right?
XOXO, Julie @ Normaneek Bakery