Home baking and cake decorating businesses are having a moment – between 2012 and 2016 numbers increased by an astounding 1,500% according to insurers Simply Business, and those figures are likely to stay high as consumers move from mass-produced food to artisan products.
The Federation of Bakers reports that the UK bakery market is worth £3.6 billion – so how do you go about getting a piece of the pie? Read on for our ten steps to starting a home baking business.
1. Register as self-employed
Before you do anything, register for Self Assessment with HMRC. Every self-employed person and sole trader needs to report their earnings, pay income tax and contribute towards National Insurance; it’s all very straightforward. Our guide to registering as a sole trader explains the process and why you might consider registering as a limited company once business grows.
2. Inform your local authority
You should register a food business with your local authority’s environmental health department at least 28 days before you begin trading; this gives them time to assess your food preparation era for hygiene. As intimidating as this is, the standards are very straightforward; for example, you’ll need adequate hand-washing facilities, lidded waste containers and for all surfaces to be washable and in good condition. Reading Borough Council has a good guide to the regulations as a PDF here.
3. Take out insurance
There are various aspects of business insurance, all important; for example, product liability insurance covers you if a client becomes ill after eating your cakes. Equipment cover is helpful for expensive appliances like your oven, refrigerator and stand mixer, while public liability protects you from accidental damage to clients’ property.
You should especially be prepared for personal accidents, say if you burn yourself badly with hot sugar, as it will affect your income while you recover. Some insurers cover employees but do not specify whether self-employed people are covered, so be certain before you take out a policy.
A good insurer will help you to build coverage that fits your needs.
4. Tell your landlord or mortgage provider
It’s perfectly legal to run a business from a rented home, but you must have your landlord’s written permission. Your landlord must be reasonable; they can refuse permission if you will be disruptive or damage the premises, but not if you are respectful and the property remains primarily residential. Common sense applies: baking and decorating are normal activities in a home, while installing a specialist bread oven is not.
Similarly, if you have a mortgage you should consult your provider first.
5. Find your baking niche
Home baking businesses are booming, so it helps to have a strong idea of what you’re doing and do it well. Perhaps you bake incredible vegan cakes, or you have a talent for decorating biscuits beautifully? Maybe your brownies are unrivalled, or you prefer traditional regional baking? Whatever your specialty, make it known.
6. Set your prices
Before you take on business, take some time to research your competitors’ rates and your costs. You’ll need to cover ingredients, overhead and your time; you deserve to be paid a fair wage! Work out your fee per hour and use this and your other expenses to set pricing guidelines.
7. Build your web presence
You should be able to point potential customers to a website that explains what you do, with pictures of your creations. Social media is a plus, but it’s better to have just one or two channels you do really well than to update everything sporadically.
To really show off your skills, your photos should be crisp, naturally lit and free from clutter. You can do this yourself, but working with a photographer ensures photos that will help you to stand out from the crowd. Students and new freelancers will often offer low rates in order to build their portfolio, or you might know somebody who will work with you for a reasonable price.
8. Promote your home baking business
Selling at local markets or hiring a stand at a specialist cake and bake show is a great way to show your wares and bring in customers. Offer free samples and bring plenty of business cards and price lists for punters.
If you’re social media savvy, perhaps you could work with a local influencer or event? Fashion brands usually hand out goody bags at runway shows, and themed cakes and biscuits always go down a treat. Be wary of doing too many sponsorships and freebies as it will cut into your time and budget, but careful placement can prove rewarding.
9. Work with other businesses
Supplying other businesses can be mutually beneficial and help you to build a stable income. Many bakers will supply local shops and cafés, or you could set up a standing order with a nearby office.
10. Keep track of your finances
Hold on to every invoice and receipt and make sure to track your income and outgoings – it’s much easier to work as you go than to rush at the end of the tax year. You can do this with simple spreadsheets and folders or install specialist software to handle it for you.
More Resources About Home Baking
Read our interview with Chris Player, founder of PlayerBakes. He talks about how he started his home baking business and how to get off to a flying start.