Profitability?

Welcome to Cake Central.

It depends on whether or not it is legal in your state to sell home baked goods. Also, how much are you willing to work.

If you have to rent a legal kitchen, your profits will be reduce.

Also consider overhead, like insurance and equipment.

As a side business, I don't know how you would make a lot of money. By the time you pay your insurance and license fees and buy supplies, you're going to be out some $$. To make any serious money you need to work in volume, and at least full-time. I have 16-20 hour workdays some weeks.

"Net" profit is a difficult question because the first few years you are taking your profits and reinvesting it .... into advertising, into new equipment, into start up costs, etc. The smaller your gross sales, the higher your overhead (per unit / per cake / etc).

Also depends on what your product mix is .... whether you are heavy into birthday cakes or heavy into wedding cakes. I make more profit on one wedding cake for 100 than I do on 5 birthday cakes that serve 20 each.

I will share that my 2nd year gross sales was 3 times my first year .... my 3rd year was about the same as my 2nd year due to max'd out capacity. My 4th year is about 40% higher than my 3rd year. You will get out of it whatever time and energy you can put into it!

And CC is the best place to find info, get questions answered and share ideas!

Hi! Welcome to Cake Central. You will get a ton of good info from here. I am willing to share with you because I am in the same boat as you. I just started my business about 3 months ago and I still work a full time job to pay the bills so it's a second job for me. I live in a state that allows home bakeries so that definitely cuts down on the costs and so far in the last 3 months I have made -$1,800. Yes that's a negative sign If you're serious about doing this then you have to invest some money into it in the beginning and everything you make and then some is going to end up being put back into your business. If you are just starting out then it's likely you have to pay retail for all your supplies and every time someone wants something different you will have to buy new equipment, etc. Plus doing it as a side job, you can only take so many orders for the week and still have time to do them. I hope that helps you a little bit. I know there are people that have said they started home businesses and haven't spent any of their own money; so if you guys are out there, please tell us how!

How can you find out if it's legal in your state to sell home baked goods?

When I first started catering, I never bought equipment until I needed it. I would collect the 60% (+/-) deposit from the client, and used that to buy not only the food, but any add'l plates, forks, chafers, serving dishes, etc. My first big one, I even rented a truck and paid my staff out of that deposit, in addition to buying 200 plates, 200 sets of silverware and food for 200+ people. I didnt' use my money .... I used the client's money.

Each subsequent after that, then I didn't need to buy more plates, forks and chafers, so that money was either in my pocket or paying for add'l equipment and supplies, and expenses.

You don't have to spend a lot of money buying equipment until you actually NEED the equipment.

Even with now having a shop, I still use this philosophy ..... I didnt' spend the $350 on my Mirrored Dessert Stand, until I had a customer who ordered a mirrored dessert stand. Just to give you some "for instance" numbers, I charged this bride $1000 for this event .... $600 deposit paid for the stand, the food/desserts, and payroll for the staffer who worked this one, with money left over. So I had about $500 gross profit .... which was used to pay the rent, utilities and other business expenses. But the next time I do this dessert stand set up, I'll have an extra $350 in my pocket since I won't have to buy the materials again.

Reinvesting in yourself......

There is a sticky in this forum about what states it is legal in. If you tell us where you are there are probably a lot of people from that state that can help you too.

When I started doing cakes for money I spent money on classes, equipment that I needed WHEN I needed it, etc. I bought my first set of square pans WHEN I got a square cake order and the same for hex pans. Buy what you need when you actually need it and not before.

Try to spend your money wisely with a look for return on it.

I have had a part time job that I kept and plan on keeping even though I make twice as much making cakes as I do working my part time job. I work 25 hours a week for a company that pays me well for my time plus car expenses. This job has helped fund my cake business in the beginning and now is my spending money so if you have a part time job keep it or get one. It will leave you free to still do cakes and yet be a steady stream of money.

I am to the point where I don't even have room or NEED for anything else except for consumables. Purchase those things that will give you a return - my plateau was $165 but I rent it for $50. I have rented it for at least $1,200 over the past 2 years.