Starting a cake business is both exciting and daunting at the same time. You’ve taken that decision to turn your passion of baking and decorating into a business, to make a bit of money back from the hours you’ve happily spent in the kitchen. Friends and family have convinced you it’s a good idea, but how do you actually go about starting a cake business?
What are the legal things you have to do? What are the business things you should do? And what do you need to buy? It seems like a minefield, right?
This essential guide to starting a cake business covers all the things you have to do, many of the things you should do, and some things that it would be nice to do once you’re up and running and have the time.
What to expect?
First off though, if you have another income and hope to replace this with that, don’t expect to do that in your first year, or maybe even second year. Setting up any business takes time. Not because of the legal requirements, the things you have to buy or learning how to make amazing cakes. But you need consistent and regular orders and getting those isn’t instant.
Secondly, don’t ever forget the necessity to learn some business skills. If you’re to have consistent orders, you’ll need to know how and where to get them. It’s all very well knowing how to make the most beautiful cakes, but without some business knowledge you may as well carry on as a hobby.
This guide in divided into 5 sections, some are more ‘dry’ than others, but sadly they are usually the most essential.
Legal and essential admin
Registering your premises:
In the UK, and many other countries, there are legal requirements if you are selling food to the general public. I’m going to deal with the UK, but if you are in another country, I highly recommend you check out the local laws for food production. You don’t want to come a cropper before you even start.
Selling food means, money changing hands, no matter how small the amount. Even if you are only asking for someone to cover the costs of your ingredients, in the eyes of the UK law, you are selling food. What you’re doing is no-longer a hobby, it’s a business, and as such you should be registered with your local council.
Registering is free
Registering with the council is free and usually easy. You register with whichever council you pay your Council Tax to. Look on their website and follow the instructions. Each Council works slightly different. Some you can fill in a form online, some you have to post it.
Don’t always expect an instant reply, because cake making is considered low risk and isn’t always prioritised. I have known of some cake makers who haven’t heard anything for over 18 months. However, if you have your registration form in, you cover yourself with the other requirements we’re about to discuss and you wait the required 28 days from registration you can start to sell.
Food Standard Agency, SFBB, Food Hygiene Training, Allergen Training
When you are eventually inspected by an Environmental Health Officer from your local council, they will expect you to have certain protocols and procedures in place. Apart from having a clean and well organised kitchen you should also have the correct paperwork.
I have heard of food businesses receiving a 1 score, instead of a 5, just because their paperwork is not up to date. And when I say ‘just because’ it’s actually very important. Having your paperwork done means you are monitoring all the vital parts of your business. If anything goes wrong it is traceable in writing.
Most Councils will expect you to be using the Food Standards Agency’s Safer Food, Better Business Pack. It can be downloaded online and either printer and edited as a PDF and stored on your computer. Not all the sections will be appropriate to you as a cake maker, but make sure you regularly update your pack for your next inspection.
You will also be expected to have a current Level 2 Food Safety & Hygiene for Caterers Certificate, to have done the correct Allergen Training and have your food labelling and allergen information to hand.
None of this is difficult, it’s all pretty easy to find online, but it is essential and legal!
You will also need to register with HMRC or if not in the UK your local tax office as self-employed. For more information on this I highly recommend you listen to The Business of Cake Making Podcast with Accountant Claire Tovey. But here is some basic information.
If you take over £1000 in sales in a year, you legally have to be registered. It’s pretty easy to do via the HMRC website. This will mean, however, that every year you will have to submit a self-assessment tax return. Again is pretty easy as long as you have your records and accounts up to date and well kept. Which leads us onto our next topic.
Accounts and Record Keeping
Keeping your accounts up to date from the moment you start you cake business will definitely help you in the long run. You can either make your own spreadsheet up with monies in and monies out. Or you can use one of the free or inexpensive apps online. Some of which will even integrate with your bank account.
It is crucial to keep a track on your accounts not just for HMRC and Tax purposes, but also to make sure you are covering you costs and making some money when pricing. How do you know how much to charge someone for a cake if you don’t really know how much its costing you – but more on pricing later.
And whilst we’re talking about accounts, here’s little advise about bank accounts. Make sure you have a separate bank account for your business. Whilst, as a sole trader it’s not a legal requirement, it’ll be easier in the long run. Not only for your own record keeping, but also if anyone (like an accountant or the tax man) ever needs to check up on you and your business it’ll mean they don’t have to rifle through your personal spending.
Again, this isn’t necessarily a legal requirement, but I would say is essential if you want to keep your home. Running a home business generally must be authorised by either your Mortgage Lender or your Landlord. Some don’t allow businesses to be run from their properties.
Most mortgage lenders will allow it or will be able to advise how your terms can be amended. Landlords on the other hand can be trickier. Sadly, it’s not usually a personal thing, but an insurance issue for them and their own money lender. Renting a property is in itself a business. For them to get the correct funding and insurance they sometimes have to pass on restrictions to their tenants.
Again, whilst this isn’t a legal requirement, I would highly recommend getting Public Liability Insurance. In the very unlikely event that something goes wrong - we’ve all heard of the allergen horror stories, or someone tripping over at a school fete and suing etc. Having Public Liability Insurance will help put your mind at rest. Also, there are some instances where you will not be able to deliver your cakes without it. Some venues insist on it and will ask to see it
You can usually get £2 million, £5 million or £10 million insurance cover. Which you choose will largely depend on what activities you undertake. For example many fairs and markets will insist on £5 million cover as a minimum before allowing you to trade.
I have Direct Line cover, however there are other insurance companies which will cover Home Cake Businesses.
Home and Car Insurance
Whilst we’re talking about insurance, if you are running your business from home, you may also want to check both your home and car insurance cover. Most home insurance cover will be fine, as long as you have separate Business Insurance. Some will say you are not allowed the general public/customers onto your premises, so you may have to think about collections and consultations etc.
If you are delivering cakes in your own car, you should also check that your car insurance is covered for business. This is usually a tick box and won’t cost you extra, but essential to make sure you are covered.
Terms and Conditions
This is the last of the not legal, but essential if you are to run a professional cake business. Having your own Terms and Conditions in place is crucial when starting a cake business. They set clear boundaries between you and your customer, and they cover you if/when there is a complaint.
My Terms and Conditions are checked over and updated regularly to make sure I am covered, and my customer is covered should anything untoward happen.
They cover everything from delivery times to complaints procedure, to allergens in my kitchen to copyright and ownership of designs.
I know it sounds heavy and maybe a little unnecessary, but honestly one day you may be pleased to have them!
Get Some Business Knowledge and Know How
Getting some basic business knowledge is my number 1, need to haves! Knowing how to brand your business, know who your ideal clients are, how to lean into your niche, set and outline your business plan and goals, and market your cakes is going to be essential if you are going to make any money.
I will touch on a couple of the more important things here but I would recommend you listen to The Business of Cake Making Podcast to get a fortnightly top up of business advise.
Niche Market and Ideal Client
Before you go off and make everything for anyone who wants it, my first recommendation is learning all about Niche Markets and Ideal Clients. Put simply it’s about learning what your strengths are, leaning into them and selling to the people who will appreciate them the most and will pay for them.
Read 4 Ways to Niche your Baking Business and Ideal Client for Cake Makers for more information. As this is so important there is also an Audio Workshop on Niche Market and Ideal Client you can download and work through.
I will just leave you with the old saying “when you sell to everyone, you sell to no-one”
Write a Business Plan and set your business some goals
This isn’t meant to be some arduous task, or complicated document to present sales projections and money forecasting to give to a bank manager. This is a plan to give you a road map for you to focus on when running your business.
If you write a brief business plan for yourself, with goals and targets, you will have something to work towards. It should lay out what your business is, what its selling, who it’s selling to, what your branding is and what your goals are. When you keep focus you are more likely to succeed. Without a plan you, again, may end up going off on tangents and getting nowhere fast.
Listen to The Business of Cake Making Podcast Episode on Business Plans and Goal Setting for more advise.
Naming your Cake Business
Thinking of a name when starting a cake business always seems like a fun task, and to be honest, one a lot of people can get too hung up on. A name should reflect you and your business, and appeal to your Ideal Client. Don’t make it too complicated. Make it memorable. I recently changed the name of my own cake making business as it was no longer relevant to the market and Ideal Client I was trying to attract. Make sure it serves your client as much as it does you.
When coming up with a name I would advise to rest on one that no-one else has claimed. When I say that I mean – can you get the website domain you really want? For example, When I was deciding on Daisy Cake Company I originally wanted Daisy Cakes, but the website address was already taken, therefore I had to adapt it so I could claim my own website domain for business.
Branding your Cake Business
Branding isn’t just a logo! It is a huge topic that ranges from everything from all the visuals, including your logo and colours, to your brand voice and brand principals. I will do another post soon about branding, but think of it like this:
If you weren’t in the room and someone had to explain your company to someone else, what would they say? They probably wouldn’t say ‘it’s the one with a cake on the logo’ or ‘it’s the one with all the pink in its colours’. They are more likely to say ‘it’s the one that's quite classic and makes stunning tall white wedding cakes’ or ‘it’s the one that’s really funky and a bit alternative’.
What is the impression you want to leave people with when they meet you and your business? How do you speak to your customers – are you formal, or are you friendly? Are you classic or are you funky? Are you clean lines or are you colour? Will you be outspoken or do you keep your opinions to yourself? That’s your brand.
Pricing your Cakes
If you do just one thing in your business, make sure you price your cakes properly!
You are in business, which means you should be making money!
The absolute bare minimum is that you cover your costs and pay yourself. Covering your costs means you should know what they are – see Accounts and Record Keeping. Paying yourself, means making sure all your time is covered, and not just the time when your hands on your cake, and paid to at least the minimum wage. I know this sounds obvious, but you wouldn’t believe how any cake makers don’t pay themselves properly.
If you have worked out what Niche you want to work in, and who your Ideal Client is. You should know that the price and value you set will not be a shock to your customer.
Read How Much Do Cake Makers Earn?, 5 Things to Remember when Quoting Cake Prices or Listen to The Business of Cake Making Episode on Pricing for more information. To get more orders from your cake quotes read Preparing and Sending Cake Quotes.
Marketing your Business
Getting your cakes seen is hugely important when starting a cake business for finding new customers. Marketing covers everything from having a website, a blog, your social media accounts and wedding fairs etc.
The main thing I would say about this is be guided by your Ideal Client work. Advertising on everything, will in itself be a full-time job – but you want to be making cakes right? So pick the places you know you’re Ideal Client will be. It may be on Instagram and well as having a website, or having a blog and being on Facebook, or being on Facebook and Instagram and TikTok.
But don’t overstretch yourself. Choose just one or two of the best places for you and your business and really work on them. It’s better to do 1 thing really well, than 5 things badly!
What I would say though, is having a website should be a priority at some point for your business. It’s the one marketing channel you will really own. Facebook, Instagram and TikTok are all very well until they decide for some random reason to close your account. Have a space that is always yours.
This isn’t something that many people talk about when starting a cake business. Having the right mindset is as important as having the business knowledge.
Knowing and believing you can do it is so very important. There are a few things I’m going to highlight here and they’re all things that you need to do for yourself, before you can even think of running a business.
Why are you starting a cake business?
First ask yourself ‘why’ you’re doing it. Keeping your ‘why’ close by is something you may have heard before. If you always know what is driving you forward, in hard, long days, you’re more likely to succeed.
Set boundaries and keep to them. If you’ve decided to not work past 8pm, don’t reply to a message that comes in a 9.15pm. If you don’t want to work more than 35 hours a week, and that extra last minute enquiry will take you over that, say no to it.
Having your own boundaries will ultimately keep you from over working, over worrying and burning out. Burn out is a very real thing with cake makers (and sadly it usually comes hand in hand with undercharging). Valuing yourself and your time is essential for your own self care.
Imposter Syndrome and Comparisonitis
This usually is as result of comparing yourself far to much with others in your field. Believing in yourself is hard enough, comparing yourself to everyone else and still believing in yourself is impossible. Read Why You Should Ignore the Competition when Cake Making for more information
Lastly, and by no means least, I need to talk about Self Care. Looking after yourself is so important if you are to look after anyone else, including your customers. Self care can take many forms from a long hot bath, to switching your phone off after 5pm. For some great advise, with hints and tips listen to The Business of Cake Making Episode with Maria Ditch for more information.
Cake Business Equipment
I have one big bit of advise here, and that’s Don’t Buy Everything!
Seriously, we all think we need all the equipment. I can’t tell you how many boxes of cake tut I have hanging around in storage that’s never used. You know the stuff ‘oh, that mould for a teddy looks great, it might come in handy’ or ‘oooo, £30 is that all for those lettering stamps, bargain!’. None of which have ever been used and all still sit in their boxes.
You really only need a few bits of equipment to get and keep you going. I always say buy the best quality you can at the time. Here’s my quick guide to essentials, but listen to our Top Must Have Bits of Equipment for more information:
- Tins – buy them as and when you need them, but always buy a whole set of one size – don’t buy one and think you’ll buy the other 3 later, because what happens when later comes and you can’t get them?
- Offset Spatula
- Bench Scraper
- Non-stick rolling pin
- Set of basic modelling tools
The other stuff like impression mats, silicone moulds, stencils, tools, cutters, colours, sprinkles etc you have to ask yourself, very seriously – do I really need this, how many cakes will I really use it on, will it cover its cost? If it won’t, don’t buy it! Find another way to make the cake.
I would also recommend finding a few good suppliers for ongoing essentials such as boards and boxes etc. Buying them in bulk from a cake supplies store will always be better and more economical than driving around trying to find them locally in supermarkets.
Starting the Cake Making
Last we come to the actual cake making. I know it seems really far down the list doesn’t it?
There’s not really much to say about this, as you’ve already decided to start a cake business so probably know a bit about this. However, I do have a few things you need to look at.
What are you going to bake?
With this I’m going to refer you back to the work you should be doing on Niche Markets and Ideal Clients. Only bake what you know you’re going to sell.
For example, if you decide markets are going to be your thing, don’t experiment with loads of new recipes that you’re not sure will sell. Baking for business can be costly if you’re stuck with stock, because unlike some other hobbies turned into businesses, you can’t pack it up and stick under the bed until the next time.
Stick to what you’re good at, and what you’re customer wants. By all means try new things, but test the market before investing both time, money and ingredients.
Capacity and Work Flow
You need to know your limits of time and space. Do you have the time to make all the orders you’ve committed to, and do you have the space?
If you are starting a cake business from home, you need to think about how it will impact on your household and it’s members. Will you need the kitchen at meal times? Will you need to be ordering pizza on a Friday because you have 3 wedding cakes to make in the kitchen? Do you have enough space to prepare 3 wedding cakes? Do you have enough tins and oven space?
Learning your capacity and workflow boundaries is often a case of trial and error. We all take on cakes that spill over into our personal life, and learn to say never again.
There are some things you can do though. Firstly learn some good time management skills. Download my free Cake Planner here and read Organising you Cake Business orders to help you and listen to The Business of Cake Making Podcast episode on Time Management.
Mastering your recipes
Make sure you have a few ‘go to’ recipes on your menu before starting your cake business. When you have recipes that you know work well, and can be scaled up and down, you are taking half the stress out of baking for a business.
Once you gain experience you’ll know how you can fiddle with recipes to add other flavours, but only do that when you have time and ingredients to give it a go…..don’t do it on a customer cake that’s due tomorrow and these are your last eggs
Starting a cake business from home requires space. You’ll need space for ingredients, boards, boxes, for working, for finished cakes etc.
However, I’m going to let you into a secret – owning a shop or unit or commercial kitchen isn’t the holy grail! Yes, it may get all your tut out of the house. But it come with a whole heap of other things to deal with.
As long as you don’t buy all the equipment (see the Equipment section), set good boundaries for your business and make sure your Workflow and Capacity is under control, your baking shouldn’t rule your house.
For more information about Starting a Cake Business and running it successfully, listen to The Business of Cake Making. Our Fortnightly podcast hosted by cake makers, for cake makers running a business.