New cake business at home...help!

This subject comes up a lot on here. Do some searching and you can see what lots of others are doing.

I suggest investing in good pans and tools. I bought all the cheapo stuff, and now that I have started my business up, I am replacing it all with good quality. Also get a good mixer. Don't price too low or then you have trouble when you raise your prices. I am in the Dallas area and my prices start at $2.25 for buttercream and $2.75 for fondant and that is just for basic flavors.

HTH

Stephanie

Well, the first thing you need to do is check your zoning/deed restrictions/HOA covenants, etc. to make sure that you can have a biz in your home.

Second you need to contact your Dept of Health/Dept of Ag to get certified/licensed if you are in a state that permits home kitchens. You might have a Cottage Foods Law in your state - I just don't know.

Then you should get liability insurance.

Then you might want to think about setting up banking accounts, booking procedures and of course, look in incorporating. You might be able to put that off, but it's frequently fairly easy to DIY. The Secretary of State in my state actually provides forms and templates.

Next, you'll likely need to register with the state sales tax/revenue commission and ditto any local taxing authorities.

Oh, and check into getting a federal EIN. You won't need it right away,. but it's easy to do online, and you'll need it at some point.

Then of course there is the baking.

What Leah said. Make sure that you really want to run a business before you start running a business. I wrote a book about common business mistakes people make, and one person who bought it wrote me a thank you note saying that after she read it she realized that she was not ready to run a home-based business. Clarify your goals before you get started or you'll hate every minute of it.

South Carolina is where we plan to move in a few years. Unless my year old information has changed, it is one of the most strict and costly states to have a home bakery. It must be separate from your home and have a separate water supply. In other words, its own well and septic or public water and sewer lines. In other words, the building must essentially be a separate property.

When we look for a house, we know we will need a separate building and the funds to duplicate the water supply in addition to all of the other requirements.

I totally agree with Leah and costumeczar. Running a successful business needs different skills from baking and decorating. Starting a food business without understanding basic business issues leads to business failure. It always surprises me that people just think, "I eat. I have a kitchen. Of course I can do this."

All this advice is great. CA may pass a cottage food law and I have been working on cost - on a spreadsheet for three main local store (safeway, costco and smart and final) and three cake decorating supply companies so if this pass I know where I need to be plus add the cost of LLC, health permit cost, insurance and some rental fee for using my kitchen (a small fee as per my accountant) to see where I need to charge and if it will work for my. My husband says I am to organized and I said if I want to succeed and make this work you need to know the cost and enjoy what you are doing because it is hard work.

REALLY????? Is this even possible??

Yes:
The hearing date for the bill going before the Health Committee has been pushed back to April 17. There's an amendment process going on to clarify some of the language which is taking longer than expected. Hang in there! We'll make it to committee soon. We'll provide an update once the amendments are hashed out. Our team is fighting for amendments that keep the red tape and costs to a minimum for cottage food producers.

Some changes need to be made which is good and if it passes goes to the next which I think is senate.

FB group: https://www.facebook.com/groups/282510503800/

You can join the above group to help out and find updates. Also, a link to the bill is their.

I'd love to read the book costumeczar. Can you provide a link to it?

Yes:
The hearing date for the bill going before the Health Committee has been pushed back to April 17. There's an amendment process going on to clarify some of the language which is taking longer than expected. Hang in there! We'll make it to committee soon. We'll provide an update once the amendments are hashed out. Our team is fighting for amendments that keep the red tape and costs to a minimum for cottage food producers.

Some changes need to be made which is good and if it passes goes to the next which I think is senate.

FB group: https://www.facebook.com/groups/282510503800/

You can join the above group to help out and find updates. Also, a link to the bill is their.[/quote]

Actually I was being facetious about the "too organized". Sorry.

I've been in business for two years. It's not what I thought it would be, more business than baking. Not as much fun. But it's paid my bills while I was in school.

The_Sugar_Fairy, another CC member MimiFix wrote two books about how to start a home based business. The first one is very good, that's how I learned to do everything. The second one is better if you want to use your kitchen like a real bakery. Sorry, I don't know how to post links.

Thanks Janice. I'll have to check out all these books!

I am in the process of doing this right now as well! If you need to talk, I am here! I am in the process of taking a course with SEED, they are part of the SBA. It's a course that helps you write your business plan. I am forcing myself to do this before I actually begin operations out of my home. I was initially going to work from a commercial kitchen, but the cheapest I could find was $20 per hour for 8 hours a week. $640 per month was just way too much money! I couldn't make enough product in that amount of time to cover my costs with all of my other overhead. Anyway, I've decided to build a second kitchen/bakery in my basement (which I don't have yet). Currently selling my house, and going to buy a new one with a basement. My husband and I were wanting to get a bigger house anyway, so he suggested getting one where I can have a kitchen to become a legal baker. Great husband, eh??! Anyway, as I said before, I've been working on my business plan and learning a lot! I'm currently working on financials which I don't like, but it is helping me determine prices of my products and such. You need to charge what you're worth, don't underestimate yourself. And it will be harder to raise your prices later on. Compare your competitors products and prices to your own. That is how you can come up with yours.
You also need to contact your health department and find out what all they require of you and your facility. Get vendor liability insurance, possibly additional home insurance if you are having customers come to your home. I need to do this because I will be having cake tastings at my home. Anyway, this is getting long! Any other questions, just ask!

You have received some of the best advice in this one thread then I have seen in 2 years of reading this particular Business forum. Well done to those of you who answered and have done your due diligence, are willing to tackle the "business" side and recognize that it isn't just sugar and flour and eggs!!!

leah_s presents sound, basic, EXCELLENT advice, sprinkled with humor:
"Then of course there is the baking."

Hannah'sMomi: "I am forcing myself to do this before I actually begin operations out of my home."

katel~~Just about every person who takes a Wilton Cake Decorating Course gets all excited, thinks they can go home, start selling cakes and making money. The reality? A PROFITABLE home business is not going to magically appear out of thin air just because family and neighbors compliment one's cakes and say, "Wow! You're good! You ought to be selling these for lots of money!" Family and friends are not a "targeted" customer base that will pay the price per serving needed by custom bakers in order to be profitable.

Sure, you can make and sell cakes without doing ANY of the above, but that is not a business and you will not be paying yourself for your time. If you are serious about a part-time business, then I suggest you start with this excellent, very basic, article that is about pricing cakes. Invest the extremely reasonable amount for this software (about $150), figure out what it REALLY costs you in time and money to make your cake, THEN act on all the advice above.
http://www.cakeboss.com/PricingGuideline.aspx