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There must dozens of websites claiming to tell you "how to start a cake business from home", all offering vague, general advice. We'll lead you through the process and provide links to detailed further information. The reason the other pages are so vague is because every state has different requirements and regulations; and even local zoning and health ordinances vary. So, we'll lead you through the process and take you to the state and local resources.
Each state has different regulations and allowances for home-based food business, usually called "cottage foods businesses"). Fortunately, baked goods that do not require refrigeration, like many cakes, are generally included in most state's cottage foods definitions. See the page for your state below to find out what types of cakes are allowed. Verify that the cakes that you want to make are acceptable for home-based production and sales in your state.
Most states prohibit cream, custard or meringue pies and cakes or pastries with cream cheese icing or fillings. Those usually do not meet the definition of a "cottage food business" in most states.
States with Cottage Food Laws
The vast majority of us now live in states that either have cottage food laws or exemptions. So, unless you live in KS, ND, MT or RI, click on the link below:
States without Cottage food laws or exemptions:
You probably do not need to get a lawyer for this. Usually, you can just go to your local city hall and ask! Your local Chamber of Commerce can also advise you if any other business permits are required. This SBA article has much more detail.
Here are some of the more common licenses and permits:
The following MAY be required - every state and locality is defferent, so you'll need to investigate:
Select your state from the list to discover which licenses or permits you’ll need, together with information and links to the application process.
Even a home-based business needs to have
The next most important steps are:
And if your business takes off, you will definitely need to get an accountant and consult a business attorney.
Business professionals will say you need to write "a business and marketing plan". That's great if you are planning to quickly become the next Apple Corp... but really for a soccer mom who's planning to sell cakes from home, is overkill, and nonsensical. You simply need to think through and understand what you’re planning to sell, what makes it different from the competition, and how you plan to make, store, sell and ship the cakes. How will you find and reach new customers?.
Word of mouth is good; but that's usually a very slow process. Social media, a Facebook page, Instagram, Pinterest and media exposure will help. Maybe donating cakes to local bake sales with a stack of postcards with phoitos and how / where to buy the cakes? Think outside the cake box in getting the word out.
To a big extent, that de[ends upon the cottage food laws in your state. IF you are trying to stay within the cottage food / home-based business regulations in your state, then there are usually limitations on where you can sell. Typically, that means direct sales, no cross-state lines, or mail order. Most states allow you to deliver the cakes to the customer; some do not. Perhaps conisder a stall at a local farmer's market? Check with local cafes and stores to see if they'll sell your cakes. But maybe your state will allow you to sell them through the internet and mail them. Again, gotta check this out first (see step 1)
How will you accept payments from your customers? A PayPal account can be used for online payments. In person, you will probably need to add a Square credit card device to your phone. Again, you should have a separate checking account (usually a free add-on to your existing bank account) for your business.
How will you package the cakes so they don't become a bag of cake crumbs by the time your customers open them? Look at cake packages in stores,, then Google "cake packaging" You can find them on Amazon, or often at your local Sam's Club or Costco. Labels? You can design and print then on your home computer, and a color printer. Office supply stores, like Staples, sell many types of label stock. Most states have very specific requirements as to what must appear on a food product label. And example from Colorado is shown at right. Again, see your state page for specific requirements.
If you are selling selling to local stores and at a farmer's market, you'll probably transport them in your own car. Be sure they are secure and meet any health department requirements.
If you are fulfilling orders that you take online or over the phone, you will likely be shipping them by DHS, FedEx or the USPS. Check out each of them, find out which offers the best service at the best price. And close; you don't want to have to fight traffic every day to ship cakes!
Before you make your first cake, you need to understand how many you will need to sell at what price in order to at least break even and then make a profit. What price do you need to get for that to happen. It's basic math. The simplest way is to make a spreadsheet in Excel to identify all of your costs (one-time costs, like purchase of a KitchenAid mixer, recurring costs, lice annual licenses; and ongoing costs, like flour, postage, raw materials, hiring additional helpers, etc.)
At the end of the day, as much as you enjoying making cakes, remember, it is a business. If you are not covering your cost and earning a reasonable wage in the process, is it worth doing? So keep up with the accounting, and be sure to include ALL costs, including your TIME! Save all business related receipts!
Making cakes to sell as a business is different than making them for your child's class at school. You need to have consistency, so customers can count on the quality, taste and appearance. You'll want to make some trial runs, and in the process look for any points of failure, things that can go wrong, things that would slow you down or undermine quality and consistency. Work out your methodology and routine for baking and delivering your cakes. You may want a routine like baking in the morning after the kids go to school, then delivering those fresh cakes to your local customers. Then spending the afternoons, cleaning up and developing new customers, doing marketing and accounting.
And take photos to use in marketing and on your website.
Expect to make mistakakes and have setbacks from time to time, but especially in the beginning. Learn from each mistake, and improve. Don't just fix the mistake; fix the cause of the mistake. Continually evolve and learn from the competition. Try new flavors and combinations. ANd when you become the next Mrs. Fields or Famous Amos, tell people you started with this checklist! :)