MoneyMagpie

Dec 18

Everything you need to know to make money baking

So you have all the skills to bake delicious and tasty cakes and now you want to start making some serious money. Take a look at our guide for the ins and outs of starting up a baking business and make money baking.

How to make money from cakes

Home cooking – especially baking cakes and cupcakes moneymagpie_fairy-cakes-cupcakes - Make money baking– is very fashionable right now, thanks to the likes of celebrity chefs and cooking competition programmes like the Great British Bake Off. People will pay good money for high quality baking – you can sell your food at parties, fayres, and perhaps even at local food markets.

The beautiful thing about earning by baking is that it’s straightforward and flexible. It isn’t something that you necessarily have to do on a regular basis – if you’re a little short of cash one week, it’s easy enough to hunt down your next local car boot sale and get baking. All you’ll really need is to have a good few recipes under your belt and a reasonable idea of what people would buy.

Getting started – Where to sell?

There are many places that you can sell cakes and other sweet products.

  • Car boot sale – Car boot sales are a great place to start selling your cakes as you will be able to get a feel for what your customers like.
  • School fairs
  • Online shop
  • Selling to local stores
  • Setting up your own shop

Location is important – Before you decide to make a real go of this, it’s advisable to give it a few test runs somewhere that isn’t going to cost you the earth.

Working out a business plan

Working out the basic ins and outs of your business will hopefully help you keep on track with your budget and assist you in the first few years of your baking business venture. Running your own business can be all of the following: exciting, draining, liberating, stressful and rewarding. Still, it doesn’t matter whether you’re aiming to start up a shop or become the next Richard Branson – if you follow our tips, you’ll find your life – and business – will be made much easier!moneymagpie_business-plan Make money baking

Here are our top 5 tips to starting a business:

  1. Start small and keep overheads low

Don’t spend any more than you have to on your start-up. Loads of big businesses start small: Laura Ashley began on her kitchen table, M&S started with a market stall and Tesco was just a couple of local grocer’s shops at the beginning. So before you fork out unnecessarily, consider… Can you use your kitchen as your workplace or will you have to find an alternative location?

Don’t forget insurance, as your household insurance may no longer be valid if you’re working from home. This is something you’ll need to check with your current broker, as you may need to upgrade your insurance.

Set up a separate bank account for your business. (If you mix up your personal account with your business account you’re asking for trouble – it’s confusing, extra hassle and no benefit to you at all when it comes to planning your business and life in general.) It doesn’t need to be an expensive ‘business’ account, it can be an ordinary current account – either with your current bank or with a different provider.

  1. Pay attention to cashflow

Starting up a new business can always be hard and any help financially can really make the difference. Don’t assume that people will pay on time as they normally don’t. Instead:

  • Cut down your waiting time by getting them to agree payment terms at the start.
  • Be clear in your invoices that you will charge 8% over base rate for any invoices that aren’t paid within 30 days.
  • Don’t spend money now assuming that you’ll receive payment from your clients – plan your business expenditure so that you are not creating debt and are not dependent upon anyone paying on time.
  • Have more than one income stream – even if that means doing a part-time job or taking in ironing.
  • If you’re having consistent problems with unpaid bills then consider joining the Federation of Small Businesses (around £200 a year) so that you can use their legal assistance to chase your debtors.
  1. Create a realistic business plan

As the saying goes: ‘If you fail to plan, you plan to fail’, therefore, even if you’re just setting up as a part-timer you need to give yourself a clear idea of your monthly costs and how much profit (or other income) you must generate to keep it together.

Work out what your monthly sales need to be (baking equipment, ingredients, delivery costs etc.). Make yourself a chart for the next 12 months showing the growth in sales you can realistically generate and be clear on how you’ll generate those new customers.

It’s a tough thing to guess but just the action of thinking it through will provide you with earnings goals and points to consider as you run your business.

  1. Networking is vital

The more you’re ‘out there’ touting for work the more likely you are to get the work. With the internet it’s possible to meet people without leaving your desk.

Join online networking groups and forums and start giving useful advice on areas directly relevant to your business. This raises your profile in a positive way. But don’t spend too much time on it – allocate a certain amount of time a week and stick to that.

A simple way to get some repeat business is to get some business cards printed off. If you’re making cakes, you could then advertise the fact that you bake to order for parties and events (if your kitchen can take the strain!) Pop into local cafés and coffee shops (not the chain outlets), hand them your card and make your services known – maybe even provide them with a few samples. Make sure you take your business cards wherever you go – you can meet interesting and potentially useful people anywhere.

  1. Give people what they want

Don’t make the mistake of being blinkered about what you want to produce/sell. You have to be very aware of what your potential and existing customers want – not just what you think they want.

Do speak to potential customers – both before you start up the business and as an ongoing habit. Take them to lunch, pick their brains, ask them what they want and need, what they hate and what they’d pay extra for.

Do keep a realistic perspective of what’s selling as your business develops. Is there a sideline product or service that’s very popular and takes less effort than the main offering? If so, focus more effort on it. Do be honest with yourself about what works, what doesn’t and why you’re in business. If you have to make enough to pay the rent then you need to be brutally honest about the success or failure of products pretty quickly.

What do you need to start

Important stuff to consider – hygiene certificate and how to get it including what it involves and how much it costs, raw materials, packaging, other business stuff like accountant, bookkeeping etc.

Food safety and hygiene – MoneyMagpie_Food-Hygiene - Make money bakingThe first thing you should do is research the food safety standards. It’s important that you know what is involved and of course keep on the right side of the law. Legislation says that all food businesses must register their kitchens with their local authority unless they operate on a “casual and limited” basis only.

If you’re simply selling once in a blue moon at a car boot sale or market then you don’t need to worry. However, if you are planning on making an income in this way, contact your local council and ask them what the rules are in your area: oddly the laws vary depending on where you live. For example, in some places you will need to become a registered trader even if you only sell your food once every couple of months. If you do have to register your kitchen, it’s totally free to do so and the council is obliged to accept your application.

Be aware that if you’re regularly selling food produce, it’s highly likely you’ll need to take a course in food hygiene. You can do this over the internet and it’ll cost you from about £15. The course is mostly just common sense so it’s reasonably easy and you can complete it in your own time.

Cost – If you want to make this moneymaking scheme worth your while, you need to do some basic costings. It doesn’t have to be complicated. You’ll need to take into consideration:

  • How much ingredients cost
  • Cost of the sale location fee (car boot sale/farmers market fee) if there is one
  • Cost of travel to the location
  • Cost of the food packaging (keep it simple to start with – clingfilm will do in some places)
  • Initial cost of food hygiene training (if you’re planning on regular sales)
  • Cost of labels/general stationery/invoicing pads
  • Extra cost of gas or electricity for your oven

Once you’ve worked out how much all of this is likely to cost you, you should be able to work out how much you’ll need to sell your cakes, sweets and jams for to break even and then make a profit.

While you do your research, you should be taking note of how much other stallholders sell their cakes and foods for, to get a rough idea of how much you can reasonably expect to charge. If you have to price your products extortionately just to make a profit, see if there’s anywhere you can cut back on costs. Shop around for cheaper ingredients or look for different locations that aren’t as pricey.

Courses – You don’t have to be qualified to sell cakes, but there are hundreds of baking/cake decorating courses you can go on which are likely to benefit the quality of your products.

Here are a few we recommend…

https://confectionperfection.co.uk/

http://www.bluedoorbakery.co.uk/

http://www.gourmetcupcakes.co.uk/courses/

Location – Try out a stall at a car boot sale first, because it will only cost you between £5 and £15 to set up there. You can find your nearest car boot sale on Carbootjunction. Once you’re more established, you might consider going a little more upmarket, although if you have cracked the car boot market you could also simply increase the number of cakes you take with you and let your business grow that way.

There are a number of other outlets that will let you sell your goods, such as the Women’s Institute, which runs country markets around the UK. It costs just 5p to join and they’ll take about 10% commission on sales to cover the costs of the market.

To join, you just need to pop down to your local market and have a word with the controller. You can find the contact details for your local market on the website or you can call their head office on 01246 261508 for more information.

To set up a stall at a farmers’ market, you need to find one local to you. You can do this by searching the Local Foods website for your nearest market. The website doesn’t deal directly with the people who run the markets so you can contact them via the details they provide on the site.

Keep on top of your financesChocolate Cake - Make money baking

It’s a drag, everyone hates it – but it must be done.

Make sure you:

  • Put money aside for your forthcoming tax bill.
  • If you can, speak up front to an accountant (recommended to you by someone you know) about how much you should put aside for tax and other similar issues.
  • However if you’re just starting up, you probably won’t have to pay VAT as you’re allowed a £77,000 turnover before you have to pay it. If you’re planning on going over that then you’ll have to contact HMRC to register for VAT.
  • Keep good records of your incoming and outgoing revenues, your receipts and other related information. Again if you speak to an accountant they will give you guidance on what files to keep, how to organize them and what to do to keep your accountancy bills down.
  • Accountants too expensive? Though a good accountant is invaluable, you don’t necessarily need one when you’re first starting out. Plenty of people do their own accounts on paper or using an Excel spreadsheet.

 

How to come up with ideas

It’s a crowded market so how do you make sure people want your cakes rather than other people’s?

The cake business has been around for longer than anyone can remember and in recent years the market has become very crowded. It’s important that you create and sell things people will want to buy. Chances are somebody will already have the best butter cream filling or the tastiest frosted cupcakes. How are you going to make sure you stand out from your competitors?  Think outside the box. Take a trip to your local car boot sale or farmers’ market and look for which food stalls are the busiest. If it seems like jam is the ‘in-thing’ and there aren’t that many stalls that sell it, you’ve found your product – Jam filled cakes.orange cheesecake - Make money baking

If you’re at a car boot and there aren’t any stalls selling food then it’s a good idea to take a look at the people that are there. Are they the sort who would prefer to buy upmarket, fancy, homemade produce or a couple of 10p fairy cakes to nibble on while they have a browse for basement bargains? Make the kind of cakes and sweets you think you could sell easily.

You can also ask your family and friends what they’d like. Try to ask a wide range of people and see if you come out with any unanimous decisions. Also, speak to any cake sellers you see at fairs and markets and ask them which cakes sell best.

 

Experiment – Once you’ve got a good idea of the kind of people you’re going to be selling to, it’s time to get your product sorted. You’ll need to come up with a range of different products to make this work. If you’re selling cake, try out different methods, ingredients, flavours and fillings. With sweets test out different recipes. You could try focusing on one area, like chocolate, fudge or maybe even health food!

Get your friends and family to try all your samples out and find out which are the most popular choices. They’ll likely be more than willing to help! It’s worth knowing that at farmers’ markets, you’re not likely to sell much unless you use local, organic ingredients. People who go to these events look for traditional homemade foods and one of the pros of shopping for food at a farmers’ market is that you’re able to ask the stallholder precisely where the food is from and how it was made.

Stallholders at farmers’ markets should be prepared to give honest, credible answers to customers – so factor these more expensive ingredients into your budget. Remember that people are usually willing to pay for high quality.

 

Presentation – Presentation is important, particularly if you sell at an upmarket venue. Consider your customers: are they going to want something ‘cheap and cheerful’, or posh-looking homemade produce? Funnily enough, some of the more expensive jams and cakes have ‘the rustic look’: you could find yourself charging a lot for produce which looks especially homely!

Packaging can affect your sales in a big way. Ribbon is cheap if you buy in bulk from a haberdashery store, and can neaten up any edges around your cakes. If you’re selling jams it’s worth getting some fancy labels printed, or spending some time decorating your own. You could experiment with themed packaging around holidays like Easter and Christmas, and for days like Valentine’s Day and Halloweeen

Whatever you use to package your products, it’s important to remember that you’re dealing with food. This means that you are limited to certain types of packaging depending on what food you’re selling. It’s mainly the use of adhesives which is restricted but again – you’ll need to contact your local council for more information.

 

Hampers

Everyone loves hampers – particularly at special seasons or occasions like birthdays. Big stores like Harrods and M&S do a roaring trade in them – have a look at their hampers to give yourself ideas of what to put in yours. Actually making the hamper can cost very little and the goodies inside can be made at home to bring down costs. However, the selling price can be as high as you like, so this is an amazing potential earner if you get it right.

  • Seasonal hampers – Seasonal hampers can be best sellers if you do them right. Easter and Christmas will be the best time to make seasonal hampers. Everyone likes a Santa shaped cake or Easter bunny cookie. These are the best time of year to sellChristmas hamper - Make money baking
  • Hamper presentation – It’s important to remember that these hampers or baskets are meant as gifts, so they should look as gorgeous as possible. If a customer is wowed by the first hamper you supply, they are far more likely to buy from you again.

The key to decorating baskets effectively and cheaply is to keep it simple. Place some shredded paper in the bottom of the hamper to protect your goods. Then arrange your items so they’re all facing the same way and look snazzy. You could layer the items by making levels in the basket from shredded paper. This way none of the items will be hidden. If you want to add a little more luxury you could tie a ribbon right around the hamper (this is also a good trick to hide the bunching of the cellophane) or you could drop a few foiled chocolates to cover empty space. Simplicity is the key for decoration of hampers.

To add touches of Easter arrange a few decoration chicks in the hamper or a few false flowers. You could also paint eggs and use them to add colour to your basket. At Christmas add some tinsel and a few red or green bow . You can pick up all these things cheaply at markets or at Hobbycraft or The Works.

How much should you charge?

To work out how to price your hamper, there are a few things you need to take into consideration.

The first and most obvious is how much it costs to make – this includes the items inside the hamper, the basket itself, the decorations and all the costs for the delivery (if you are offering this service rather than just selling at a local market).

The second cost is your time: how long does it take to make a hamper? Consider how much you would like to pay yourself an hour and incorporate this into the costs. The next cost is delivery. Are you going to deliver them yourself or are you going to hire a courier? Even if you deliver them yourself you have to consider the petrol costs.

Once you have a good idea of how much each hamper costs to make and distribute in total, you can decide how much you are going to mark the price up depending on the quality of your hamper and what you think the market will bear. Remember that if the price is too high then customers will use one of your rivals so make a note of their prices and try to stay under those if possible.

For more ideas about how to present and sell hampers see our article here.

Seasonal baking

Season cakes and cupcakes are also very popular. The safest thing is to go for very simple, cheap cake and biscuit recipes that you can decorate to look really special. Think about sponge cakes, madeiras, shortbread biscuits, gingerbread etc. None of these cost too much to make. With a little extra spent on the icing and decoration, though, you could charge three or four times the cost of making them!

To make your cakes different from other home-made ones, add a touch of your creativity. You can get some very funky tools from Lakeland that won’t cost you more than a cake you buy in a bakery and they will be invaluable for your little cake factory.

  • Easter cakesMake money from Easter - Make money baking

At Easter you can offer baskets with cakes such as simnel cake, hot cross buns, nest cakes or Easter biscuits. There are many recipes on the internet and in cook books available at your local book store, however Moneymagpie recommend the BBC Food website for easy-to-follow hot cross bun, Easter biscuit and simnel cake recipes. To find out how to make chocolate nest cakes visit cakebaker.co.uk. Another particularly good collection of Easter cake recipes can be found here. With over 85 recipes to choose from you’re going to find one that is perfect for your basket.

  • Christmas baking ideas

Christmas cakes can come in all different shapes and sizes. A Snowman topped with a delicious layer of snowy buttercream icing, a Christmas tree with green icing and hundred and thousands for decorations, or something more traditional like a rounded fruit cake. Fruit cakes are very seasonal but they cost a lot to make. Will you be able to make enough of a profit on them?  Whichever way you choose to go make sure you’re original.

Biscuits are also great for Christmas. Use moulds of different Christmas shapes to make your shortbread look special. Get one a cutter set and make biscuits in the shape of stars and snowflakes. Add some colourful icing and a few silver balls and you’re made. Who could resist them? Put your biscuits in a simple see through bags with a nice ribbon so they can hang from the tree – this way they can act as a decoration as well as a tasty Christmas treat.

  • Birthday cakes

Birthday cakes are great because people have birthdays all year round so there is sure to be a demand for your services if your price is right. With Birthday cakes people will usually ask for a specific cake, maybe a spiderman cake or in the shape of a number. This is a great time to experiment with food colouring, icing options and build up your portfolio, but  if someone asks for something you don’t think you can handle don’t take it on just because they are offering you their money. Make sure you have the skills to create what your customer is asking for.

  • Special occasions

There are so many special occasions that could be used as an opportunity to offer your baking services – baby showers, retirement parties, graduations, weddings and many more.

 

 What about biscuits, jams, sweets etc?

Can they be better to sell as cakes are so flooded? If so, how to do it?jam - Make money baking

The cake and cupcake market is very crowded, but if you think outside the box there is always a product that will be in demand. How about trying biscuits, jams, popcakes or even sweets. To get started, take a look at our resident food columnist Sarah Lockett’s easiest jam recipe.

Recipe: Easiest Jam Recipe Ever

Ingredients:

Equal quantities of berries and jam sugar ( I used 2kg raspberries and 2kg sugar)

Juice one lemon (optional)

Method: Put six saucers in the freezer (more of this later). Pick over the fruit to get rid of any green stems and leaves etc. I don’t wash raspberries (because they’re so delicate) but I do wash blackberries (they’re more robust) and strawberries (because they grow closer to the soil). Put fruit in a LARGE stainless steel (no aluminium, if anyone has aluminium saucepans any more?) saucepan with the sugar (and lemon juice if making strawberry jam). Heat gently, then stir, but try not to break up the fruit too much. Then boil for 15 minutes, scraping down the sides occasionally. While this happens get all your jars out and match the lids with them, then fill the sink with boiling water  from the kettle and the hot tap, plus a little washing up liquid and sterilise the jars and lids (or run them through the dishwasher on the normal cycle). Put a little spoonful of the jam onto one of the chilled saucers and leave to set for two minutes, or until it’s cold. Run your finger through it and if the skin wrinkles, it’s ready. If not, boil for a few more minutes and test again.

Take the jam off the heat and use a heatproof jug to scoop it out, and fill the jars. I put the lids on while it’s still hot (I like to think I’m sealing the bacteria OUT, as it’s so hot). But you do have to wait until it’s cold to label the jars (the glue melts). If you have kids of an artistic nature, they love designing the labels, which will give them

Finally, remember to have fun…

Running a business should be creative, satisfying and enjoyable. It’s a chance to express yourself, meet interesting and creative people, potentially make a lot of money and create a whole new life for yourself.  So do everything you can to enjoy the process of being in business. And make the most of the good times – when you get a big contract or when you complete a difficult task – because the challenging times will come around soon enough.

To inspire you to get started with your baking business we have two real life case studies of how you can turn your hobby into a fully functioning money making business – both case studies were self-taught bakers! See below.

Case study: Whitney Hurst – Lazy Day Cakes

Whitney Hurst started selling cakes from her kitchen in 2012. Before she knew it she had a load of orders and decided to set up her own shop – Lazy Day Cakes. Recently she decided to sell up to pursue her dream of becoming a midwife. Below Whitney tells us about her success and experience of selling cakes.

  • When and why did you start selling cakes?

In 2012 I fractured my spine in a gym accident. After months being bed bound and unable to work I was finally able to shuffle round my kitchen and that’s when I started baking. I had made my kids birthday cakes in the past but I got started on cupcakes. I was making 30+ a day and that’s when I decided to make a website to see what happened. Amazingly within a few days I had orders.

  • What was your first professional baking job?

I started by going to craft fairs and ladies nights. It didn’t take long realise that ladies love cakes but also are very conscious of them being a treat so I came up with a new recipe that reduced the fat content if the cakes by 50% that’s when things started to go mental.

  •  How did you go about promoting yourself in the wider community?

My only form of advertising was Facebook. I just put up lots and lots if pictures and that’s when the word started to spread. I was very lucky because people not only liked the look of the cakes but the taste was a win too. Quite often with cupcakes they look great but the taste isn’t always up to scratch.

  • How long did it take to get you established?

It took probably 6 months of events such as craft fairs before we started getting recognised.

  • Did you initially work from home and then go on to get a shop?

I did the cakes from home for 12 months doing the craft fairs, farmers markets and ladies nights. In June 2013 I opened the first shop where I had just four tables and a serving counter.  I was still baking everything at home and transporting the cakes to the shop daily. In October 2013 I moved into a shop three times the size where I had a full bakery and a much larger cafe area.

  • Did you have any professional training?

No. I am totally self-taught.

  • How did you set yourself apart from similar businesses around your area?

There was two other local business that were similar. What made us different was that having four kids we were so child friendly that people with kids wanted to come just so that they didn’t have to worry about messy children. Our workshops and parties were priced reasonably because the rent overheads were relatively low. The other business that offered just workshops, were really expensive because of a city centre location and the other just did parties whereas we did both and had a tearoom and was on a cute quaint craft centre so there was so much people could do when visiting us.

  • Why did you end up selling?

I wanted to pursue my passion of becoming a midwife and now that I have the support from my fiancée Ian, to go back to University I decided to enrol. I decided juggling the business and my studies wasn’t a possibility and closing the shop wasn’t really an option – considering how successful it was – so I decided to sell.

  •  Whitney’s advice to those wanting to make baking a full time career…

My advice to anyone wanting to set up a cake business is trust your abilities. It’s very difficult to compete with supermarket prices but they’re full if chemicals and made in machines. Don’t sell yourself short, work out how much the ingredients cost, how long it’ll take you to make the cake and add your time and at least minimum wage.

 Case study: Tarek Malouf –  The Hummingbird Bakery

Tarek Malouf was working at ABC News in London before deciding to start a bakery business in 2002. Following two years of researching and testing recipes, his first bakery opened its doors for business in early 2004. Below Tarek tells us about his journey to success and future plans for expansion.

  • When and why did you start selling cakes? 

Before setting up The Hummingbird Bakery I The idea of setting up a bakery came to me in early 2002. I was visiting a relative in North Carolina who took me to several traditional American bakeries that served pies and home made cakes. The smell of fresh baking in these places was amazing. During that time, my sister was living in New York, and we used to go and eat lots of cupcakes and traditional American goodies every time I’d visit her. Taste buds awoken, it was then that I realised I wanted to open my own bakery in London so that people here could enjoy the authentic taste of American baking.

  • How did you go about promoting yourself in the wider community?

Our launch was not promoted in any way. I tried to choose a location for my first branch that had plenty of American expats living close by, as well as a lot of passing foot traffic. I thought that if we could attract the Americans wanting a taste of home, then we’d start off with a decent customer base. This worked – a very large proportion of our initial customers were American – and after we opened the doors and let the smells of fresh baking waft out onto the street we soon started selling cupcakes to everyone who walked by.

  • What was your first professional baking job?

Prior to first opening The Hummingbird Bakery, I spent two years testing and refined countless recipes in my kitchen at home. Other than this, however, I had no real baking experience. I’d grown up with a great appreciation for the delights of American baking so I did at least have a very clear idea of how I wanted The Hummingbird Bakery’s products to taste. So really, my first professional baking job was in my Notting Hill branch.

  • How long did it take to get you established?

Prior to opening my first bakery, I did do a couple of private cake commissions for friends but this was in no way how I launched – I wanted to directly onto the high street. Having fitted out, equipped and opened the doors to my first branch, the business got itself established very quickly. Within a few weeks of launching, word quickly got around that we were baking delicious cakes and business began to grow rapidly.

  • Did you have any professional training?

I have no professional training in baking other than that which I’ve gained from working in my own bakery.

  • How did you set yourself apart from similar businesses around your area?

Initially we were in the fortunate position of being able to get the business off the ground with no real competitors – there certainly wasn’t anywhere else in London that specialised in quality American baking. Of course, as soon as cupcakes caught on, other cupcake bakeries did quickly pop-up. We have always differentiated ourselves on the quality and authenticity of our products. We bake on site at each of our branches throughout the day to ensure the complete freshness of our products. We also only source quality ingredients – real butter, jams and preserves from Tiptree, free range British eggs, cream cheese from Philadelphia and so on.

  • What does the future hold?

I plan to grow the business here in UK by opening further branches within and around London. I’m also looking at opportunities to open branches in other UK cities. We have franchise partners in the Middle East who have already launched three Hummingbird Bakery branches in Dubai.

 

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