“People tell me all the time that I should start my own bakery.”
A classic quote from many home bakers. Here are a few things to think about before diving head first into launching your own baking company.
Licenses: get licensed by your local and state governments. This means you will probably have to find a kitchen outside of your home to rent. Some states do allow home kitchen use, but check first with your local health department.
The LLC: establishing an LLC can protect you and your personal assets and can be easily done for a fee. I used Incorp Services to do this for me and paid around $275, including a year of registered agent service (required in most states). You can also fill out the forms yourself for less. Check with your Secretary of State’s office for details.
Liability Insurance: insurance is usually necessary for renting a kitchen and protecting your business if someone gets sick from your products. Policies can cost from $350-$500 per year. Many insurers want you to have experience in your field – you may need to get a part time job in a restaurant kitchen or bakery (if you plan on starting a food business). For some companies, this could be as little as having worked in a cafe or coffeehouse in high school or college. Hire a broker and check with a few different companies.
Wholesale ingredients: keep costs down. You can’t expect to purchase ingredients at the supermarket (unless you are testing recipes in small batches). Costco has most ingredients you need to start a baking company. Another great national chain is Restaurant Depot (although many things like nuts and fruit are less expensive at Costco), though unlike Costco you must have a registered business to get a membership. Start with wholesale stores while you are attempting to source local ingredients (more on that in another post!).
Product profitability: romanticism about starting your own bakery aside, your products have to make a profit in order to keep your business afloat. Calculcating profitability is easy and you can use MS Excel to create a template. In fact, if you send me an email I’ll send you the template I use (firstname.lastname@example.org).
Selling: As much as you may hate salesmen, you have got to become one. The great thing is you believe in your products and are driven to sell by more than just money (did I mention that was important, though?). You don’t have to be pushy, just proud of your products and interested in how you can help your clients improve their business. The one thing that I have found about selling is, if you find the right customer, you don’t have to try so hard. The customer is key because the right customer is always right.
I hope this helps you get started! It may seem daunting at first, but a well planned business has a better chance of success. More to come on this topic…