Starting off.... a home bakery business

[mum5]

Has anyone successfully done this, or is doing this?

What do you need to get started?

Is it financially viable?

I am thinking about doing this from my home, allowing me to be at home with my kids, AND to make money, doing something that I love to do and am good at. ( I am a classically trained chef/pastry chef )

I am thinking about starting off with simple items : cookies, bar cookies muffins etc, nothing fancy.

Could I sell to farms/ cafes etc in my immediate area?

Or shoud I just focus on hand delivering / shipping to private homes ?

The holiday season is fast approaching, most are too busy to make their own treats. I would love to be ableto offer that service for busy households.

I would love some feedback.

[Kaydove]

I haven't started a business so I'm going to give you my first impression from the perspective of a customer. When I was working fulltime, I would have loved something like this! I worked 50 hours a week and was just too tired to bake even though I love to. I couldn't imagine working fultime, with DD, during the holidays and then be asked to bake for a Christmas party, so if I could buy sweets from a professional that tasted homemade, I would have been all over it! Especially for family parties where all the other women stay home with kids or work at home half the time, mine and DH's Microsoft careers were often judged.

So there's your marketing strategy. Families with working parents and holiday parties.


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[rnra]

There is a lot more involved in having a home-based food business than most people realize.  Here's the basics that I remember, but it's not an exhaustive list.

1) You need to find out what the regulations are from your local health department regarding selling home-produced foods.  Some cities/counties allow home-produced goods as long as they are clearly labeled as home-produced.  Some require the labeling and an inspection of your home.  Some do not allow any home produced goods and require everything to be prepared in an inspected commercial kitchen.  Rental space in commercial kitchens is hard to come by.

2) You need a business license, sales tax permit, and food handlers permit (or higher food safety certification--some require you to do a food safety manager test which is much more extensive and expensive).

3) You need insurance for your business so that on the off-chance that you cause illness/injury to someone with your food items, you will be protected.  Most commercial kitchens require proof of insurance before you can use them.  Many cities require proof of insurance before they will issue a business license.

4) The labeling requirements can be pretty strict.  The exact requirements vary from place to place, but if I remember correctly, the requirements here were that every item had to be labeled with the business name, business contact information, expiration date, weight, nutrition facts (in USDA approved format), ingredients (in USDA approved format), and allergens (again, in USDA approved format).

5) It can be difficult (but not impossible) to turn a profit selling food.  People get used to paying Wal-Mart prices and aren't always willing to pay as much as it costs for you to make a profit.  When factoring prices, remember to include all the licenses and such above, ingredients, utilities, packaging, delivery, etc.

6) If you plan to sell things online or ship them across state borders, there are additional rules.

As I mentioned, many of the requirements vary drastically based on where you live.  The best bet is to get in touch with the health department or whoever controls such things in your area.  Also, sometimes there are small business groups/organizations that you can join for help.

I was planning to start a home-based candy business, but ended up bowing out and pursuing a different path (which I know realize was a wise decision for me).  While I was researching it, I became friends with a local lady who sold caramel apples from her home.  She didn't do big business--she sold 5 or so apples per week.  She had not followed all the guidelines above.  A vindictive neighbor reported her to the health department, and she was fined $4500.  It wasn't pretty.  

[mum5]

@ Kaydove - that is exactly the marketing strategy that I was initially thinking about!!

@ rnra - Yes I have briefly read about the requirements to opening up this type of business, and wanted real life feedack, so thanks :)

Yes, I think definately insurance is needed. What if you were to get somebody sick, with no insurance. Shudder!!!

I am also looking into part time work outside the home options, just a couple of nights a week. Just trying to figure out the best options for me, based on my families lifestyle, Dh's work schedule, no family nearby to offer free child care.... and the fact that it has taken me about 40 mins to write this post, as I have to keep refereeing arguements :) Maybe a job outside the home is n looking so terrible right about now!!! ;)

[Pamela Reiter]

Dear rna...well I have been there & done that...HUGE undertaking , but I was in the industry for many years . The biggest thing for us ,family business, was of course money ..it will cost alot more than you plan so make absolutely sure financial matters are are completely covered down to the salt & pepper! The other issue to consider are the hours , meaning you will be married to the business...my one day off typically meant going to the restaurant & fixing or cleaning something that had to be done by Tuesday morning or shopping because the weekend traffic was so great I had to refill something that sold like crazy...and then the baking ...typically had to bake something for the next morning ..so went in to bake at 4:00 am or after running home to catch a power nap & go back in the evening. Sorry to be the devil's advocate but these are things to consider!..Best of luck to you!

[puddle]

My sister started a peanut free home cupcakery.  It's feasible, but will definitely take some time to get off the ground.  Being peanut free, she's been able to get some large orders into schools.  In our state, she can only sell directly to the consumer without getting her kitchen licensed, so she can't sell through cafes or mail order or anything.  She's not making enough yet, but has only been doing it about a year.  She gets consistent orders, but still not enough, so she's looking for a part time job to supplement.  You'll have to put a lot into marketing if you want to make a real income off of it.  Most of her orders are through word of mouth.  But she loves baking, so it's work she actually enjoys.  The orders are usually for the weekends, so the end of the week is a little stressful.  And since she's constantly testing new recipes for new flavors, her family is sick of cupcakes.  It can definitely work if you put enough work into the marketing side, depending on how much income you actually need to make.

[mum5]

Thank you for all replies!

I have no desire to open up a restaurant AT ALL. Just a small at home business. ( maybe it would morph into that?)

 I have worked in the industry for many years, and have a love / hate relationship with it.

We do need $$$, and I am applying to upscale restaurants next week for a waitressing job. The bonus ( hopefully) will be good take home pay, and the downside, the late hours getting home at night, and having to get up and get the older kids to school and then be with a 2 year old / do all the household stuff until Dh gets home from work in the evening.

[Caneel]

Through a prior job, I have lots of experience in small business lending, analysis, problem loan work-out, etc.  Adding my thougths to rnra's excellent post -

5) It can be difficult (but not impossible) to turn a profit selling food.  People get used to paying Wal-Mart prices and aren't always willing to pay as much as it costs for you to make a profit.  When factoring prices, remember to include all the licenses and such above, ingredients, utilities, packaging, delivery, etc.

I couldn't agree with this more.  In my banking years, "hobby" businesses were a challenge, it is hard to turn a passion into a business that turns a profit, especially when it is something a customer "could" do on their own instead of buying it. (most won't bake their own cookie or make their own soaps, the challenge is getting them to open their wallets)  I don't mean to be a wet blanket but you really need to do your homework before you invest money into starting a venture.   

I know a woman that had friends and family clamoring for her wedding cakes, holiday baking, etc. when she was doing it for fun but that market dried up as soon as she starting a legit business (with insurance, paying taxes, etc.) and needed to charge "real" prices for her goods.  Her start up (she baked at home) was $15,000 and years later, she is still paying it off in small payments while she works a job outside of the house.

Add banking/merchant services for credit card transactions to your list of costs to cover.  A website too.

Check around for a Small Business Development Center in your area, it can be a wealth of free (or very low cost) information and classes. 

[EFmom]

My nephew and his wife started what was to be a side business making almond milk and selling it at farmers markets.  It's pretty complicated.  In his area, you can't really do this as a home based business, it has to be done in a commercial kitchen, so they have to rent space.  It has totally taken off, so much so that he quit his full-time, reasonably well-paying job.  There is a great deal of record keeping and marketing involved.

I think step one is really researching thoroughly the regulations of food preparation type businesses.