How to Start a Cake Business From Home

Before launching into the process of setting up your new home-based cake business, a little bit of background research is a good idea. Finding out more about your potential competitors and customers will help you understand how to build a business that can succeed.

Speak to customers and find out what they want. Sample the sweet treats being sold nearby and ask about which products are most popular. You may find out about some kind of niche that is not being catered for, or you may be able to identify areas where you can perform better than already established businesses. 

Two important questions to keep in mind throughout this market research are:

1. Is there enough demand for my products?
2. What kind of customers can I aim to attract?

Armed with your findings, you can now work out the type of home cake-baking business you want to build. Here are a few ideas for any home baker to consider:

• Wedding or event baking: You could choose to specialise in making wedding cakes and other large cakes for special occasions. For this type of baking, you will need to be great at baking and decorating, as well as ready to listen carefully to customer requests and deliver custom designs.
• Packaged goods: You may want to make packaged products for businesses to resell to the customer. Note that pre-packed food is subject to general food labelling requirements, which require the product to be clearly named with a list of ingredients, allergy information, storage requirements and more. 
• Dietary niches: With interest in veganism and vegetarianism growing, as well as an improved understanding of dietary conditions such as coeliac disease and lactose intolerance, thinking about dietary niches could make your business stand out. Vegan or gluten-free pastries or cakes could be your ticket to success. 

If you want to start a bakery business in a commercial kitchen or high street shop, check out our article on how to start a baking business.

The next step in setting up your bakery business from home is to create a business plan and budget. With this put together correctly, you will have a good idea of how much money you need to get started, how much money you need to earn and some key business objectives. In addition, business plans are often mandatory if you want to apply for a start-up loan or business loan.

For more information on putting a business plan together, check out our article on how to write a business plan.

Then there is your budget, which will need to be a comprehensive overview of all of your expenses. Some key things to remember include:

• Kitchen equipment: You may already have everything you need to get started, but you will likely need at least some new equipment. From rolling pins to whisks and refrigerators to ovens, there will be a variety of tools and appliances you will need for cake decorating, baking and storage. 
• Renovations: Your home kitchen may need some adaptations before it can properly house your new business venture.
• Food and supplies: Ingredients will be a constant expense for your business, but also remember to consider the cost of other necessary regular purchases like cleaning supplies. 
• Utilities: Running your business from home will likely result in an uptick in electricity, water and gas bills. Be sure to factor this, as well as the cost of any additional mobile phone, internet, security and insurance bills you may now be subject to, into your regular budget. 
• Training: While you do not need formal training or qualifications to start a food-related business, it can be a useful way to improve or brush up your skills. A Food Hygiene Certificate is not mandatory, but the Food Standards Agency recommends gaining a food hygiene qualification before running your own business. 

For a detailed guide on putting this budget together, take a look at the five-step guide to creating a small business budget.

Next, it is time to pick a structure for your home baking business. This is an important step, as it will impact many aspects of your venture’s future, including the legal status of your business and how you pay taxes. 

Many small business owners choose to operate as a sole trader, and this may well be the simplest option for a home baking business. However, if you would like to fully explore your business’s options, check out NerdWallet’s guide to picking a structure.

» MORE: Should I register as a sole trader or limited company?

Choosing a business structure is not the end of the registration process for food-related businesses. There is also the question of whether you need a licence to make and sell cakes from home. You don’t need a licence, but you are legally required to take some steps. That’s because any business that sells, cooks, stores, handles, prepares or distributes food must register with their local authority. 

Business owners need to do this at least 28 days prior to opening, so some forward planning is required. On the bright side, there is no cost for registration and your application cannot be turned down by the authorities. 

Once you have registered, you have to face the possibility of food hygiene inspections. These can take place at any time and will assess the hygiene of your preparation areas and procedures. 

Poor performance in these inspections may result in your business being banned from using certain equipment or processes. This is obviously not desirable, as it would limit your business’s capabilities and damage your reputation. You can recover from these bans though, with improved performance in future inspections potentially leading to restrictions being lifted. 

If you want to be prepared, make sure that you and any other employees or food handlers are well trained in food hygiene and have a strong understanding of UK food safety rules. 

Starting a cake business from home might sound like a modest way to launch a new business venture, but you will probably still need some money to get started. As start-up costs may be quite low, you might be able to simply rely on personal savings to get your business started. 

However, if this is not an option you can apply for business loans, business grants or other funding avenues. Read our guide to funding a small business for more information.

To manage this money, you will need a business bank account. This is normally a requirement for limited companies or partnerships, while sole traders can often continue to use a personal account, if their bank allows it. However, having a designated account for business looks professional and can help to distinguish between personal and business transactions. 

Finally, the most crucial step in the creation of any business is actually finding some customers. It can be difficult to start attracting punters, so here are a few imaginative ways to attract people to your business:

• Spread the word: Tell friends, family and everyone else you know about your new business, encouraging them to try your goods or recommend them to others.
• Put pen to paper: Use flyers and business cards to spread the word of your business even further, posting them through letterboxes, pinning them to noticeboards and handing them out to pedestrians. 
• Be a vendor: Get a stall at local events, markets or festivals in order to sell your homemade products. You will probably have to pay a pitch fee for this stall, but you could make money and spread awareness of your business.
• Offer delivery: Customers crave convenience, so if appropriate why not offer delivery of your baked goods? You can sign up to delivery sites, such as Deliveroo, Uber Eats and Just Eat, though they will take commission from each order and may charge sign-up fees. 
• Social media: If you are baking from home, you probably lack a shop window in which to display your goods to passers-by. Turn social media channels into a virtual shop window by showing off your products on TikTok, Instagram and YouTube. It’s not easy, but some baking businesses have managed to attract millions of views. 
• Get reviewed: Positive feedback on review sites, such as Tripadvisor and Google Reviews, can lead to new customers. If people have a good experience, encourage them to rate your bakery.