What is the difference between a 'hobby baker' and a business? Well here in the UK as soon as you start accepting money for cakes, even if it's just a few pennies to cover ingredients, you are running a business. There are things both legal and advised that you need to do. Here are my 5 things you need to start a Cake Business
- Register with your Local Council
- Do your Food Hygiene training
- Get Insurance
- Decide on your Ideal Client and Niche Market
- Get you Marketing in place
Please note this list is not exhaustive, please do your research around matters of tax and employment law before you start a cake business.
To listen to this advise, check out our Podcast Episode 'Cake Business Basics'
1. Register with your Local Council
As soon as any money changes hands for food, the seller has to be registered for business with their Local Authority. Even if you class yourself as a 'hobby baker' the moment you take money you have started a cake business and have to be inspected to ensure you are producing food safely.
It's one of the easiest processes, and most importantly it's FREE! There really is no excuse for not doing it.
Simply go to your Councils website and find the relevant paperwork to complete. Some councils will allow you to apply online, but with others you have to post your forms in. They ask basic questions like, what are you producing, and will assess how urgent it is for the Environmental Health Officer (EHO) to come and inspect your premises.
They will come and inspect your premises at some point, but again depending on your council, it may be later rather than sooner. If you are worried about an inspection, or need any advise the EHO is there to help. They are not scary people, they want to help and most importantly they want to ensure you are producing food safely. Once they have been inspected, you will be issued with a Food Standards Agency Rating which you can proudly display to your customers.
There is loads of advise online at the Food Standards Agency website including training and the Safer Food, Better Business pack that you will have to have completed before your EHO comes to visit.
A word of warning. Food safety isn't just about having a clean kitchen. It's about having processes and procedures in place. It's about having all your paperwork completed AND having a clean kitchen. I have known businesses with spotless kitchens get a '1' rating because their paperwork wasn't up to date. It's all very well having a clean kitchen on the day, but if you can't prove your fridge temperature is consistently good, or that you provide adequate allergy information to your customers, you will be marked down for it.
2. Do your Food Hygiene training
Have you noticed that when you go into a Take-Away, they often have a wall with lots of certificates on it? They are usually stating their staff have completed their food safety certificates.
Level 2 Food Safety & Hygiene for Catering is another requirement for producing food. It is for anyone that handles, prepares or serves food and covers everything from the temperature a fridge should be, to how and what foods you can store, to best practice for food safety.
There are both classroom and online courses, and your EHO will be much happier if you complete one. In fact they often request you complete one every 3 years because by law food handlers must have an understanding of basic food hygiene principles and safety.
The cost of courses vary but you can do an online course for as little as £24.
3. Get Insurance
Now, whilst this isn't a legal requirement I cannot stress how important this is to research before you start a cake business.
Business insurance can cover many things from Public Liability (essential in my opinion), Business Insurance, Employer Liability if you have staff, car insurance, and I'd even check your home insurance. So let's go through those:
Public Liability Insurance and Business Insurance
Public Liability or PL is to cover you should a member of the public want to sue you. This can happen for many different reasons. Perhaps you use cream that is off and they become ill? or maybe you're selling at a market and they trip over something on your stand?
Public Liability Insurance covers you against claims by the public and is usually either £2 million or £5 million. My advice is to go for the highest you can afford.
There are many reasons to get Public Liability, and that includes being able to trade freely. Let me explain - if you decide to do a market, or stall at a fair, the organisers may ask for proof of your insurance before letting you in. Likewise, if you are setting up cakes at a venue, the venue may also ask for your insurance. They of course are covering themselves, by making sure you are covered.
Public Liability, is a kind of insurance a business benefits from, but be aware, it is not Business Insurance. It will not protect you from loss of earnings if you are ill, or theft of equipment etc. For Business Insurance like that you need something more specific. There are plenty of websites out there where you can compare Business Insurance, some will cover all of it, some will separate it all out. If in doubt speak to a broker about it.
Just make sure you check the small print!
Employer Liability Insurance
This is for when you employ staff. This covers you for any accidents they have at work, or grievances they may bring against you. If you don't employ anyone, then skip past this. If you do employ someone, then this is a MUST!
It is your responsibility as an employer to protect your staff. In my opinion it's not just a legal requirement, its a moral one.
Again, do your research. Speak to a broker or compare online to get the best fit for your company, as often Employer Liability Insurance Policies are based on number of staff and activities they will be doing.
Car and Home Insurance
If you are starting a business and will be using either your own car or your home, I would check your insurance. If an insurance company can dodge a payment it will. Don't keep information from them that may jeaopardise any possible payouts.
Most car insurance can be easily changed to include business use, some with very little charge, most do it for free.
If you are having customers come to your house for consultations or collections you may need to check if your home insurance will be ok with this. Most are, some I have heard aren't.
Like I say, don't do anything that could potentially make your existing insurances void.
4. Ideal Client and Niche Markets
Now, this is one of the biggies. Neither figuring out your ideal client or niche markets are essential, legal or required before you start a cake business. However, I would say unless you know these don't even start with your marketing. And if you don't start with your marketing you won't have any customers, so I recommend you get these sorted!
For more information on both Ideal Client and Niche Marketing download my Audio Workshop, or read my posts 4 Ways to Niche Your Baking Business and Ideal Client for Cake Makers.
Or listen to The Business of Cake Making Podcast Episodes:
Katie from Malarkey Cakes talking about Niche Markets
Lex Fleming talking about Ideal Client.
Again this topic is HUUUUUGE. However, I'm going to break it down into some smaller, bite sized chunks, and will again, promise to do bigger and better posts soon.
Once you know who your Ideal Client is, you'll know where they hangout on social media. They maybe on Facebook, Instagram, Twitter or Pinterest. Wherever they are get yourself a business account set-up and start posting.
When you first start a cake business you may be eager to jump in with all of them. However, I wouldn't recommend this. You'll get bogged down and overwhelmed. Choose 1 or 2 that you think will be a good fit and concentrate on them alone.
Make sure you include hashtags (if the platform encourages it), location and a portfolio of work you want to make. Create events, competitions, whatever you need to get noticed. Invite your friends and family to follow you, and encourage them to spread the word.
Whilst Social Media is great for getting the word out there, sadly you don't own it. At any point the powers that be can change the algorithms, or worse still someone can hack and steal your profile. Therefore, I would always advise on having your own website.
You can control all the information on it, you can point all your social media posts to it, you can share it on the bottom of all your emails. You own it. It looks how you want it too!
Fairs and Markets
These are a great way to get your product tried. Mostly you won't earn a great living from them - by the time you've spent a day or 2 baking, the hourly rate is going to be pretty low. BUT, take along examples or dummies of your bigger work, take flyers, and talk to people.
Fairs and Markets are great to get you face to face with potential clients. Choose wisely according to your Ideal Client and where they are likely to go, but there are so many choices from street markets, to school fairs, to food festivals, to wedding fairs etc.
It was how I initially built my reputation when I started my cake business. It can be quite hard work, and sometimes it's a little disheartening if you don't choose the right market - the worst one I did was the weekend after Lent started and everyone seemed to have given up cake until Easter. But when you pick the right ones, and you'll soon begin to learn which ones they are, you'll see your reputation and sales increase in no time.
Word of Mouth
This cannot be underestimated! Word of Mouth is one of my biggest marketing channels, and the frustrating thing is I have so little control over it. However, that's not to say I have no control over it, there are a few things you can do.
The best thing you can do it produce THE best cakes you can, and ask your customers, family and friends to recommend you. Don't be shy about this. You are in business and you need to learn to be bold.
Whatever Social Media channel you choose to go on invite all your friends to like you page and ask them to share it. Ask your customers to post photos of their cakes and tag you in it and ask them for reviews. Be proud of your work and fearless of shouting about it!
My advice when you start a cake business....
If you have decided to start a cake business, the best piece of advise I can give you is to start thinking like a business owner. Stop thinking like a cake maker wanting to earn some cash. Start thinking of a business owner who is making cakes. Changing you mindset will pay huge dividends.
Make sure you are legally covered for everything you need to be, and make sure your principles are covered in how you produce your cakes.
But most of all, enjoy it....now go on. Get out there and sell some beautiful cakes!!
For a more i depth post about this subject read an Essential Guide to starting a Cake Business.
Photos sourced from https://unsplash.com/