If you love to bake and have the expertise needed to create beautiful and stunning cakes for others, you might be thinking of starting a cake shop from home. While this can mean a great income from doing something you love, you want to ensure you're ready for the added work and responsibility that comes from running an actual business with paying customers and constant orders. Note a few factors to think about so you can ensure this is the right choice for you, and that you're ready to open your shop.
If you bake the occasional cake for friends and family, you may not be worried about your costs, if they pay you, and other such financial issues. However, running an actual shop means keeping track of costs and profits for when tax time rolls around. You also want to know how much you're paying for raw ingredients, so you can more easily comparison shop with other potential suppliers and are actually making a profit with your shop. If you're not very skilled at managing this on your own, you'll need to consider hiring an accountant or bookkeeper to keep track of your paperwork.
Food-service companies like bakeries, even when operating from a home, need to be compliant with many legal regulations. Local laws in your area may require you to install a three-compartment sink in your home for proper dishwashing, and you may need a commercial-grade refrigerator for holding your raw ingredients. There may also be legal regulations about packaging your goods, including a list of ingredients and even calorie count! Be sure you know these legalities and are ready to be compliant with them before you decide to open your home-based baking business.
When you bake cakes for friends, you may be happy with the few dollars they give you, since you enjoy baking and don't expect money from people you know. However, to run a profitable business, you need to consider pricing for your finished goods. This should take into account the cost of raw ingredients, but also costs you may not be considering, such as the energy used for the refrigerator and oven, fuel costs for driving to the supply store, decorating and packaging materials, and so on. You also need to be compensated for your time. If you're not sure how to price your items so you earn a profit but are still competitive, you may need assistance from a business planner or may need to rethink your business altogether.