Making Money from your Home-Based Baking Business

fionajean By fionajean, 21st Apr 2011 | Follow this author | RSS Feed | Short URL http://nut.bz/nqp1iz8h/
Posted in Wikinut>Business>Business Opportunities

This article will help you convert your home baking hobby into a lucrative business.

Introduction

Many people look on a home industry business as a way to make a little extra money. There is a general perception that it is not a “real” business because you’re working from home. This is utter nonsense. The fact is, a lot of home industry businesses are started to supplement income and those that are managed properly become full-time businesses in their own right.

Before you start Baking

If you want to be successful, you need to approach this as a “proper” business from the start. Take some time to think about exactly who is going to buy your goods, how they are going to be sold and the logistics involved in getting them to the end consumer. Also consider what exactly you will make. Baked goods especially have to be fresh to be enjoyed and some have very limited shelf-lives.

What is your competition? Here I am not only referring to direct competition but also to any similar product that may be competing for your consumer’s money. If you bake apple pies, for example, your pies are not only competing against other apple pies but also against lemon merinques, biscuits, etc.

Most important, before you open that oven door, is to work out exactly what your product is going to cost you. Do your research. Factor in cost of ingredients, packaging, electricity/ gas, transportation and also time taken to produce. If you decide to sell from a flea market, how much will your stall cost?

What it basically boils down to is, “Will someone be willing to pay the price I set for the product I sell?”

Extra time spent in the planning phase will save you a lot of tears and heartbreak later on.

The Basics

Now that you have decided what you want to bake, take stock of the equipment you have on hand. Your oven should be in good working order and reliable. It needs to keep a constant temperature. You will need various cake tins/ baking trays, etc and, if buying from scratch, start with the best you can afford. If you can, use what you have at home first. One caveat, I do find that my baked goods fair better in metal or silicone tins as opposed to glass ones. Consider having a few baking tins/ cookie trays if you’re going to be baking a lot as this is a great time saver. (I started out with one loaf tin and had to bake one loaf at a time, turn it out, wash and continue. Now I can bake four at a time – saves time, energy and electricity.)

Next consider labor-saving devices. If you have a limited budget, it may not be within your reach to get an electric mixer immediately but you should aim to get one. Creaming butter and sugar by hand is good exercise but is not so much fun when you’re baking for profit. You needn’t get one with all the bells and whistles but buy the best you can afford.

You are going to need a couple of wooden spoons – different sizes, a LARGE mixing bowl, a sieve, an accurate set of measuring cups, cooling racks (I use a stainless steel fold-away dish rack – works like a dream) and a whisk. A spatula is nice but a knife works almost as well. If you’re going to working with a lot of melted chocolate, a double-boiler is a nice to have as well. Bear in mind that there is a lot of specialized baking equipment out there that is nice to have but, with a little ingenuity, you can do without most of it.

The Ingredients

Use the freshest ingredients you can. Do not use baking ingredients past their expiry dates – they may look fine but probably won’t work well. Make a list of your basic ingredients and make sure these are always on hand. Common baking staples include: sugar, flour, baking powder (watch the expiry date), vanilla essence, butter and eggs. Store your ingredients as advised by the manufacturer but generally, eggs and dairy go into the refrigerator and all dry ingredients go in air-tight containers somewhere cool.

The Recipe

Follow the recipe initially until you get the hang of it. Measure out your ingredients – do not guess amounts unless you’ve had a lot of practice. Consider the recipe as a kind of checklist. Assemble all you ingredients before you start mixing any – that way you can be sure you have everything. Go step by step and get into a routine. Eventually, your recipe should become habit – Before I got my banana bread recipe down pat, I got cocky and ended up forgetting to put the bananas in.

Don’t make drastic changes to your recipe for when filling orders – clients who order Banana Loaf may not appreciate added pecan nuts or caramel.

Do not try to pass off flops as the genuine article. If the cake has turned out to be sub-standard, start again – do not damage your good reputation.

Experiment with the shelf-life of the recipe. Can the product be successfully frozen and thawed without detrimentally influencing flavor? How long will it stay fresh for as is?

The Packaging:

Packaging can make or break the product. Take a look at the picture of my banana loaves I took. These are a standing order for a client whose logo is bright pink. I always finish my products off prettily and use organza ribbon to make the banana loaf look more special, In this case, I match the ribbon to his logo so that it will also tie in with the sticker her will place on it. The added benefit here is that people tend to think that the goods are baked on the premises and thus view them as fresher.

Distribution

There are so many ways to get baked goods onto the market but the easiest way to start is to sell to friends and colleagues. (Check with your employer that you may do this first though.) Identify potential distributors – these may be stores or private people. I find that baked goods tend to sell better from stores but my brother does get a monthly order for me and I pay him a commission for this. You may consider selling at a flea market. Another idea is to approach businesses in your area and see if you’d be allowed to sell to their staff.

Selling directly is more labor intensive but cuts the cost for the consumer so you are able to be more competitive – you are also able to increase your profit margin because of this. Selling to a store is easier and less work on your part – they will, hopefully, be attracting clients for you. Some stores will buy directly, others on consignment. Try to get onto direct buying as soon as you can otherwise you have to wait for your money until your product sells. Stores add on their own mark-up so this option is more expensive for your customer. You’re also directly competing with the other goods in the store so your presentation must by carefully thought out.

Best Quality Standard

I personally monitor how long my products are being kept on the shelves at the distributors for and will often pull them off and refund the distributor if they are no longer fresh. In essence, this is not my responsibility but I want my end consumer to be sure that my product is fresh when they buy it. This isn’t just an endless pit, however, if something is not selling, I review why and consider discontinuing it or working with the distributor to adjust the costing if that’s the issue. I have found that some distributors put a huge mark-up on the product pricing it way above average market price. In these cases, I monitor purchases carefully and have usually found that I have to pare down their supplies intensely.

Service

Keep your promises. If you can’t deliver, be honest about it and let the client know as soon as possible. Treat your client better than you would expect to be treated. Decide how you will deal with complaints and be consistent. Most of all, rather under-promise and over-deliver than over-promise and under-deliver.

Keep Records

Keep records. Keep careful notes of what you’ve spent and received, your mileage, changes in recipe and any feedback received. Keep track of any failures – be they in the kitchen or on the sales side. Keep track of increase in supply costs.

Review

Review your progress periodically. Are you making money? Are you attaining your goals? Which products are best sellers? Which aren’t worth-while? What have the effects of changes in packaging or price been?

Starting a baking business from home can be challenging but, if done correctly, is very rewarding and can become a very lucrative business.

Tags

Baking, Home Industry, Home Made, Home-Based Business, Making Money From Home

Meet the author

author avatar fionajean
A freelance writer based in South Africa specialising in
articles on health and finance.

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Comments

author avatar Vernette carbon
24th Jan 2012 (#)

Thank for sharing this very informative article. I included it in my post for today pointing a link back to your site. You can see the post here: http://e-businessmoms.com/blog/how-to-make-bread-at-home-and-make-some-dough-while-youre-at-it/

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author avatar Kitty ondeng'
27th Feb 2012 (#)

I like the straight forward information I have recieved from this artical. I think I'm in business. I.m a fashion designer but I love baking, I want to see where this goes.

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