Opening a home bakery is, in some ways, much easier than opening a retail business, but there are also trade-offs. Here you'll find a guide to the equipment, licenses, and expectations you'll need to open a bakery.
You have a talent for baking and you need money. So you sign a few contracts with local restaurants and cafes to sell your pastries, which everyone raves about. Soon you're making hundreds of dollars a week, and even thousands of dollars a week after a few months. It's a great home-based business.
The reality is that most cafes and restaurants that have agreed to take your baked goods actually refuse to take them, even though you bring dozens of them. One or two companies don't always carry your product, and they pay very little for it. In fact, if you add the cost of gas to the cost of ingredients and compare it to the pay for baking, you realize that you are making less than minimum wage for an hour of baking.
In addition, your family begins to reject you and ask why you go to the restaurant so many times during the week because your activity takes up the entire kitchen. Your spouse gently points out that the profits from this activity are quickly eaten up every time you invite the family over for dinner. After about a month of this type of work, I start to get very tired. That's when the manager of the café, my best customer, asks me if I have a cooking license. When I told him the truth (I don't), he said he was sorry, but he couldn't sell anymore.
I'm sorry to make you sad. But it's better to know now than later. And now that you know everything that can go wrong, you may already know enough to make your home baking a success. For example, you should definitely try to find out, by calling or visiting city hall, what the requirements are for home bakers in your city. In some places, it's fairly easy to come across them. If this is the case, you need to make sure you have enough money in your start-up budget to get the proper business permit and kitchen license. If your kitchen doesn't pass food inspection, ask a local restaurant or bakery to "loan" your kitchen for a few hours a week to prepare your meals.
Then, evaluate the price realistically. Is it profitable to produce baked goods? Will you make enough to pay your own wages and taxes (25% or more if you are self-employed) and still get a bottom line that is worth the time and effort you put into it?
Finally, how many options do you have to sell your products? Is there a restaurant (or hotel or office building with vending machines) that likes your cookies, cakes, bread, etc., and is willing to sign a contract confirming that they will receive them if you deliver your products? Do you pay on the spot or 30 days later? Can you count on getting paid?
These are just a few of the hurdles home bakers must overcome. But with a little planning, creativity, and cunning, it is possible to run a truly successful home-based business.