If you are good at something, make money from it!
Cake makers have the unique opportunity to start their cake business from home. If you have the skills and the talent, you can easily build a distinctive brand to represent your treats.
However, as the demand for cake is ever-present, there has been a significant rise in cake businesses in recent years. Considering this, it is imperative to take on a strategic approach to set your brand apart.
This guide provides detailed tips on how to start a cake business from home. Continue reading to learn more about monetising from your baking talent.
Start with branding
Selling cakes from home requires innovation and creativity. This is why branding is important before you even start your cake business.
Building a brand creates an identity for your products. It makes you stand out in the eyes of the target customers.
Branding your business before its launch can place you at an advantage. From the get-go, your customers will be aware of what you are selling. This process would include taking care of the basics of creating an identity.
This means you would need to create a logo, social media pages, launch online advertisements, create flyers, posters and order customised boxes.
You can take the following tips into consideration to start your cake business branding:
- Create a logo
The foremost step that you need to take is creating a logo for your cake shop. With a prodigiously designed logo, you can convey the brand’s message, as well as inform your customer base about the type of cakes you specialise in. A logo can be extremely impactful for any business, therefore, it is crucial to meticulously create it, so you can send the right message.
Ideally, your logo can feature two to three elements. These may include an image, the business name and a slogan.
For a cake shop, featuring a cake image in the logo design is recommended. However, the type of product you add would be a representation of your brand. For instance, the following types of images can be featured:
- Designer cakes
- Customised cakes
- Traditional cakes
- Cartoon cakes
Once the image is decided, the next thing you need to focus on is the colour story. Your logo should feature attractive colours that best represent your brand. While the colours should be fun, they must also look professional.
While designing a logo, it is important to choose the right font. The text should be readable, clear, and must exhibit the goals of your brand. For instance, if you are selling designer cakes, choosing an elegant font is recommended, whereas, for cartoon cakes, you can get away with an informal font.
If you are not experienced with graphic designing, creating a logo on Canva- which is a free tool, is recommended. However, once the business flourishes, getting an expert to design the logo would be beneficial in the long run.
- Create a business card
The competitive world of baking depends on recommendations. As cakes are ordered for auspicious occasions, the customers only choose a brand that they can trust. This is why creating business cards to facilitate the word of mouth is crucial.
Your business card design can also be created using Canva. It is important to stick with the colour story that is representative of your brand.
Essentially, the business card should feature your brand logo, your contact information, as well as the handles to all your social media platforms. This way, when a customer passes on the business card to their friends or family members, the receiving party would have all the information to contact your cake shop.
- Create a website to increase accessibility
In order to thrive in the current economic market, having a website is crucial. A website helps your customers stay informed about your store, as well as your creations, by providing a platform for the customers to learn about your products.
When you create a website, make sure to add relevant information, such as news about your store. It is further important to add contact information, delivery timings and product details on the website.
However, once your business starts yielding a profit, investing in search engine optimisation (SEO) can prove to be beneficial. With an SEO service, you can rank higher on the Search Engine Results Page (SERP), which would increase the digital visibility of your store.
- Promote your products on social media platforms
Social media platforms play a significant role in promoting products and services. You can advertise all your creations by launching a page on any social media platform.
However, it is recommended to market your business primarily on Facebook and Instagram, as these platforms enable you to add pictures of your masterpieces. Visually attractive photographs invite an audience and keep them engaged.
Social media marketing requires posting on a regular basis. You can create a post calendar to schedule content publishing on specific days. This can help you stay organised with your online marketing.
In addition to uploading aesthetic pictures of your cakes, social media marketing further requires the effective use of hashtags. By using the relevant hashtags on your post, you can increase the post’s visibility. This would invite new followers, who can eventually become customers.
The key to social media marketing is creating content to increase customer engagement. Whether you add stories that feature home baking business ideas, or your posts include visual content, social media marketing would be successful as long as the customers can interact with the business’s profile.
- Create offline brand awareness
While promoting the business online is crucial, it is not enough. In order to set your business apart from the competition, offline marketing should also be carried out. This is done to make sure that you are reaching customers who are not active on the internet. Additionally, taking this approach would enable you to reach out to a wider audience demographic.
To execute traditional advertising, you can design flyers and posters. Flyers are ideal for business promotions, whereas posters can be used to market your cakes at various events. However, when you create the design, be sure to add a business logo, contact information, website URL, and social media handles.
Similarly, the posters and flyers should also follow the same colour story to strengthen brand identity.
Register your business
One of the most important requirements of starting a cake business is getting registered by the local authority within twenty-eight days of initiating the venture. The registration process is free and your application can not be refused. Failure to getting registered within the given timeframe can result in heavy penalties, fines, or even jail time.
Once the application is submitted, the relevant authority would visit the premises to carry out a food hygiene inspection. This would examine the safety and cleanliness of the environment where the baking is taking place. The intricacies of food preparation, handling and storage would be thoroughly assessed.
The inspection would be carried out at any time, without giving you prior notice. This means that it is crucial to abide by the authority regulations of your city. You can contact the local authority to learn about the requirements and make sure that everything is up to the mark.
While the requirements of different areas may vary, home baking businesses are expected to follow general criteria. Essentially, the kitchen and the surrounding areas would need to be kept clean and hygienic. Measures should be taken to offer protection against contamination and pest control. Here are a few additional regulations that must be taken into account:
- The home’s floors and walls should be maintained and kept in optimal condition. They must be in a good state of repair and must be thoroughly disinfected.
- The ceilings must also be kept free from mould, condensation, flaking paint and plasters.
- If there are doors or windows present, they should be kept clean and disinfected regularly to prevent dust build-up.
- Insect-proof screens should be installed and cleaned out on a regular basis.
- The utensils should be disinfected regularly and stored in a clean space.
- There should be a clean sink for washing food and cleaning equipment and a separate sink for washing hands. All these areas and equipment should be kept thoroughly clean.
- If it is possible, make sure to have a separate fridge for your personal food to avoid cross-contamination.
- The kitchen and food preparation areas must be made inaccessible to pets and children.
- All the food labelling regulations must be followed.
Sign up for a Food Hygiene Rating Scheme
In addition to registering your business, it is also recommended to sign up with the food hygiene rating scheme. In doing so, you can earn a formal certification that rates the hygienic conditions of your food. Your kitchen is scored on a five-point scale, five meaning that the kitchen abides by all the regulations.
This certification informs your customers about the cleanliness of the environment in which your cakes are made, which enables them to trust your business.
Registering for this scheme is applicable for all types of businesses that deal with food and directly serve customers, such as restaurants, cafes, takeaway shops, home businesses, and businesses that exclusively provide food delivery. Essentially, as long as your business is involved in the selling, cooking, storage, preparation or distribution of food, signing up for this scheme is beneficial.
Acquire permission from your landlord
Before starting a baking business from home, it is imperative to check the legal requirements. In some areas, running a business from a domestic building is against the law.
Considering this, it is essential to take permission from your landlord before embarking on this venture. If you are involved in regular baking, the use of an oven would drastically increase. As a result, the risks of overheating, fires, or other such unfortunate events may also arise.
If your landlord or mortgage company is not informed about the business, the insurance firm would not consider your claim if such accidents do happen. Therefore, keep your landlord or mortgage company in the loop to keep your financial interests protected.
In certain situations, you may be obligated to pay business rates on various aspects of your property that are used for your business. This would depend on the Valuation Office Agency, which ultimately decides if a rateable value to a home’s subdivision should be given.
In addition to seeking permission from a landlord or a mortgage company, it is further essential to take approval from the following authorities:
Local Planning Office: If the cake business requires any significant alterations to your home, make sure to seek permission from the local planning office.
Local Council: Authorisation from the local council would be required if your business intends to cater to a large number of customers or deliveries. Additionally, if the exterior of the home is used for advertisement, be sure to get the relevant licencing required for it.
Register as self-employed
When you make the decision to sell your creations, registering with the HMRC is essential. However, this process is quite simple and you can complete it online. The registration system would obligate you to carry out a series of self-assessments. This process is necessary for all business owners, whether they are dedicated to the venture full-time or part-time.
On the other hand, you can also set up your cake store as a limited company. The difference between a sole trader and a limited company is that in the case of the latter, there is a legal distinction between the company’s legal identity and its directors and shareholders. While this option is more professional and tax-efficient, it can be a relatively pricey and time-consuming process.
If you wish to set up a limited company, make sure to give your cake business a unique name. Legally, no two limited companies can share the same name. Additionally, you would also be required to set up a number of directors. The minimum requirement is one director; however, they must be over the age of sixteen.
Next, the number of shareholders must also be determined. Parallel to the number of directors, every limited company required at least one shareholder, although there is no limit to the number of shareholders. If your business has one shareholder, they would have one-hundred per cent ownership of the company.
Once your company is registered as a limited company, information on the shares and how they are issued must be provided. Additionally, the number of shares, their total value, as well as the names and addresses of shareholders should be submitted.
The next step would be to assign a person with significant control (PSC). The memorandum of association and the articles of associations must also be devised.
Essentially, if you choose to create a limited company, a record of its finances and accounting must be regularly maintained.
Once all the documents are submitted, you would be required to register the company with Companies House, where an official address and SIC code (code that identifies what the business does) would be given. You can register with Companies House online, however, a fee of £15 would need to be paid.
While incorporating with Companies House, the service address, the registered company address, and statement of capital would need to be submitted.
Create a business account
Another thing that you need to consider is whether your cake shop needs a separate bank account. It is recommended to create a business account that separates the business transactions from your personal finances.
If you start the cake business as a sole trader, there is no legal obligation to create a separate account. However, taking this initiative can make it easier to complete the self-assessments during the registration process.
On the other hand, creating a business account would be legally necessary for all cake businesses that start out as a limited company.
There are several bank accounts that have a monthly charge for the account. It is recommended to research your options to find the best bank that caters to the needs of your business.
Sign up for the adequate insurance policy
It is recommended to get insurance for your cake business to certify that all risks are eliminated. In the cake making industry, the following insurance plans can be beneficial.
Product Liability Insurance
This insurance plan offers protection in the case that your cake causes an injury or damage to a person or their property. For instance, if you use a sharp wooden stick to assemble the tiers in the cake without informing the client, there may be a risk for injury. The product liability insurance would cover the cost of any accident, in the unfortunate case that they happen.
Additionally, this type of insurance is also beneficial for home businesses, where clients visit your location to collect the cake. This insurance plan would cover the compensation payments, as well as the legal fees if the client submits an injury claim against you.
Stock Cover and Tools Insurance
Another type of insurance plan that is ideal for cake businesses is the stock cover and tools insurance. With this plan, all your baking and decorating equipment would be protected. In the unfortunate case that your tools and supplies are stolen or damaged, this insurance plan would cover the cost.
Invest in the right equipment
Being a home baker, you may already have access to some of the fundamental tools required for baking a cake. However, if you are taking your baking to the next level, there would be a need for some advanced baking tools.
Essentially, it is recommended to invest in purchasing high-quality tools and equipment to elevate the quality of your cakes. Some of the items that you may need are:
- Food mixer
- Cake trays and cake tins
- Cooling racks
- Electronic weighing scales
- Piping bags with various nozzles
- Cake boxes
- Silicone moulds
- Blast chiller
In addition to investing in equipment, it is further important to buy high-quality ingredients for your cakes. However, you can cut the cost by going for bulk purchases from wholesale retailers, instead of paying a visit to your local supermarket.
You can partner up with local vendors to score discounted rates for the ingredients that are frequently in use.
Create a financial plan
Once all the formalities of the business are taken care of, the next step is to price your products. Pricing your products is the most influential factor that you need to take under consideration. This stage would determine everything related to your business’s finances, including cash flow, profit margins, as well as the expenses that you need to cover.
Most individuals make the mistake of delaying their launch when they are unable to create a price strategy. However, it is crucial to proceed with the business inauguration and test out the prices in the market. Effective pricing is only determined after your products are available to customers for purchase.
You can also check your competitor’s pricing strategy to gauge an idea about the market price. This would give you an insight about what your target customers are willing to pay.
Once your pricing is finalised, the next stage is to manage the costs. Make sure that the income generated is greater than the costs of purchase.
Like any other business, it is possible that you may lose money in the initial months, however, with effective marketing, your business can benefit from a high return on investment.
Work out the details
The final details can make or break your business. Considering this, you must figure out how you plan on making sales. In addition to traditional and social media marketing, you would need to figure out how you will interact with your customers. The following things can be considered:
- Does your cake shop offer delivery or pick up?
- How can the customers place an order?
- How many days, prior to the event, should the order be placed?
- What payment methods would be accepted?
The key to success in any business is meticulous planning. So, keep the preceding tips in mind before starting a cake business.