How To Start My Own Catering Business From Home – The baker in you wants to spend days making chai cookies and decadent cakes. The entrepreneur in you wants to be your own boss and make the call. But a realist knows that you don’t have the resources or time to start your own retail bakery.
Instead of renting an expensive store and hiring employees, these types of small businesses allow you to be your own boss and work from home.
How To Start My Own Catering Business From Home
If you want to know how to start a bakery business from home, you are in the right place. Here’s a step-by-step guide to turning your home kitchen into a small-batch powerhouse.
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A home bakery is a business, which means it is still subject to state and local food, business licensing, and tax laws. There are also subtle rules that apply to selling groceries from home.
Here are some general guidelines, but regulations vary from place to place, so be sure to check with your local food and business regulatory agencies before proceeding!
Home bakeries are usually covered by a section of the law called cottage food. This classification separates home bakeries from commercial or retail operations that are designated storefronts or production kitchens. Commercial bakeries must meet certain equipment and sanitation requirements, while home catering is exempt from many of these regulations.
Home feed is regulated separately, but is often limited to shelf-stable products that don’t require refrigeration… great for baked goods!
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To keep home food businesses from getting too big (and to keep large-scale operations from breaking retail bakery rules), cottage bakeries usually have a sales limit. They also have rules about who you can sell to. A cottage bakery usually only sells directly to consumers, so you don’t have to sell to a local grocery store or bakery.
The first step in this process is to evaluate the laws where you live. Your state and local health departments should be able to provide more information about cottage food laws in your area.
When starting a home baking business, there are other legal issues to consider before tying on the apron. Some states require you to have a business license to operate your home bakery. Depending on your state, you may also need a food handler’s license from the health department.
You must also set up a business entity, such as a limited liability company (LLC). Incorporating a business, as opposed to running a business as a sole proprietor or sole proprietor, protects your personal assets from legal liability in the event of a lawsuit. You may also need an insurance policy. Be sure to consult a cottage food expert and/or attorney for advice on the best course of action.
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One of the key rules of business is to keep business banking separate from personal banking. This means setting up a separate business bank account, which you can do after you set up your business.
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Goods sold may be subject to sales tax and/or food tax. You need to accurately track your sales and record their breakdown so you can make sure you’re paying the correct amount of local and state taxes.
Once you understand the rules and regulations and set up your business, the fun part can begin!
Many home bakeries make cookies, breads, muffins, cupcakes or cakes. As your boss, you can choose to build what you like best (choose not to build anything you don’t like). Auguste School of Culinary Arts Baking and Pastry student Katie Svalog makes legendary biscotti in her home bakery!
“Now that I’m in school, I’m strictly making cookies and biscotti [at my home bakery] so I can still focus on my school and keep my 4.0 and good attendance.” Katie Sulog, Associate Degree in Baking and Pastry*
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Be sure to consider local laws when planning your menu! Remember that in most cases the end product needs to be shelf stable, so anything that requires refrigeration is usually not an option.
The best thing about home baking is that they are flexible. Let’s say you go to the farmer’s market one weekend and sell pre-cut slices of banana bread. You hear from some people that they love your bananas, that they want to buy a whole loaf! Well, it’s easy for you – you can serve both slices next weekend
Whole breads for those who want it instead of sticking to a predetermined menu. You can switch things up as often as you like, experiment with different ingredients, or back off when things get a little busy.
Don’t know what to bake? Education Baking & Pastry Arts introduces students to different types of pastry. And with the online program, students can practice their techniques right in their home kitchens—perfect for the home bakery.
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Once you know what you’re going to create, you’ll have everything you need to complete your offers. Whether it’s a variety of cake or muffin tins, bread tins, cupcake wrappers, bags and tips, make sure you have everything ready to go and a place to store it all.
Some states’ cottage food laws require that bakery equipment be stored separately from personal kitchen equipment, so be aware of additional space requirements. Be sure to track the cost of all your deliveries so you can factor them into your menu pricing and tax payments.
Pricing your baked goods requires more than just looking at what your competitors are charging and doing just that. Your bakery needs to cover other overhead costs such as ingredients, labor, business fees and farmers market fees, leaving some for profit. But how to calculate all these numbers?
Create a spreadsheet of each ingredient used and the cost of each ingredient in the general categories. For example, you can list expenses:
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Maybe you plan to sell cupcakes. Based on the spreadsheet, you can estimate the amount of flour, sugar, baking soda, vanilla, eggs, and more. the cost that your prescription will cover per pack. If a dozen eggs cost $3 and you use two eggs in your recipe, you know that two eggs cost $0.50.
Let’s say your cost per package of cupcakes is $5.00. Then divide the total package price by the number of cupcakes in the package. For a $5.00 package of 24 cupcakes, the cost per cupcake would be $0.21 $5.00 / 24 cupcakes = $0.21 per cupcake. Remember, this is only the cost of the ingredients needed to make the item.
Then estimate how long it will take to make a batch of cupcakes. It will take two hours to bake, bake, decorate and package two dozen cupcakes.
How much can you expect to be paid per hour if you work in a bakery? Let’s say you get paid $15 an hour. So your batch of cupcakes is worth $30 of your time.
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. Divide the total dollar value of your time by the number of cupcakes. $30/24 cupcakes = $1.25 labor per cupcake.
Consider other expenses you incur for your business. This can include fixed costs such as farmers market fees and monthly site fees. These include variable fees that vary based on the quantity sold (such as the cost of labels and packaging) and cooking needs (think parchment paper and cupcake liners).
Calculating these values is difficult until you have experience and know how many items you will sell per month, but do your best to calculate your total monthly overhead by dividing it by the number of items you expect to sell each month. . When starting out, you may want to underestimate your sales so you don’t go deep from the start.
To make the math easier, let’s say your monthly expenses are $100 and you sell 400 items per month at an overhead cost of $0.25 per unit. $100 overhead / 400 items = $0.25 per item.
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Cost of goods sold (known in the industry as COGS) is the total cost of producing all the goods you plan to sell. Add up each individual price to get the cost of goods per cupcake!
In our example: $0.21 food cost + $1.25 labor cost + $0.25 overhead = $1.71 per cupcake.
Now you have
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Hi, I am Erick Norman. A blogger specialist in Kitchen Design.