Have you been thinking about making money from home as a baker by learning how to start an online bakery? The good news is that with the right game plan, it could all be a piece of cake-pun intended.
As with most things in business and in life, you need a solid plan. This is where you lay the journey before you: create and define your brand, your mission and vision, your financial projections and goals, target market, competition, and marketing and advertising strategy, and from there, you elaborate on how you can make money.
Calculate startup and operating costs
You need to be financially ready to operate your new business until your online bakery pays for itself. It is advised that you prepare funds that will get you through the first six months.
Overhead costs, commercial kitchen equipment, inventory, and miscellaneous expenses like business registration and professional services such as web development, web maintenance, and social media management should all be considered.
A detailed analysis of your expenses is crucial in how to start an online bakery because it leads you to price your menu items accordingly. Work with a financial advisor or an accountant to develop accurate numbers and realistic goals.
While you may already have the main baking tools you need, going commercial means upgrading. A bakery oven and a commercial refrigerator that can support your production volume should be high up on your list. If you are interested in commercial bakery equipment check Ckitchen.com.
Also part of how to start an online bakery is getting your kitchen up to the Cottage Food Regulations standards. This will entail making your kitchen pet-free and having a dedicated cold and dry storage area. You need to pass an initial inspection from the health department and then the yearly ones that will follow to keep your health permit. To do that, ensure your kitchen is complete and up to code. Prepare for potential adjustments that you might be requested to make.
Depending on the rules of your state, you might be required to work in a separate baking facility. Most of the time, however, you’ll be allowed to operate out of your home kitchen.
Finance the online bakery
Of course, it is no secret that a significant part of how to start an online bakery successfully is making sure you will be able to afford it. You should be financially capable to cover all expenses in the first six months of your business.
If you’ve maintained a favorable credit score but have no proof of cash flow and extensive business experience, a personal loan is a way to go. A business loan tends to be higher with more manageable repayment rates, but also more difficult to qualify for when you’re a startup or a newcomer.
Banks and credit unions offer personal loans as well as online lenders, who oftentimes implement a shorter and quicker application and approval process. You can get your capital fast, but interest rates will be higher, so keep that in mind. You can also explore equipment financing to complete your kitchen lineup and credit card financing for covering short-term expenses while building up business credit in the process. If you are still stumped, try your luck with friends and family if they are not your first choice already.
Register your business
If you want to know how to start an online bakery the right way, you should familiarize yourself with the legal aspect of it all too. You start at the secretary of state’s office to register as a corporation, partnership, or limited liability company. If you’re sticking with a sole proprietorship, you can head over at the county clerk’s office.
Next is to obtain an Employer Identification Number (EIN) from the Internal Revenue Service, a food manufacturer/distributor license and a health certificate from the health department. Consult with the Food and Drugs Administration for label requirements. You will likely be asked to provide nutritional information–a detailed list of ingredients contained in your baked products by order of weight, the net quantity of each and the total weight. Remember, you can’t be too descriptive here!
A zoning clearance is also required to be able to operate your bakery out of your own home. Keep in mind that you may be asked to operate with a revenue cap and that venues and events where you can legally sell if you intend to bring your business outside of the internet will be determined.
Establish an online presence
When talking about how to start an online bakery, a huge struggle is actually getting noticed. Thankfully, in an online bakery, a presentable, easy-to-navigate website is its own storefront. Facebook or Instagram are free platforms you can use, but a dedicated website is preferred. Although it will require extra effort to get done, you will find the better control over the overall design and the ordering process advantageous, not to mention how it can add a greater degree of legitimacy to your business.
Determine if getting a third-party will be more cost-efficient. Consider outsourcing any website maintenance tasks to minimize or prevent technical issues that can derail your business, or use dedicated online selling platforms to unburden you of some of these complexities.
After that, you just have to fill that website with excellent pictures showcasing your delicious creations in their best light. With no way for your online customers to taste the pastries outside of free samples, the photos should appeal to their senses. Your descriptions are just as important and should further communicate the flavors and experience that awaits the customer.
Find the perfect packaging
We don’t have to tell you how important this step is on how to start an online bakery. A rigid packaging with cushioning for added protection should hold up well throughout the journey. Insulate the food to keep it fresh by using corrugated boxes, glass Mason jars, zip-lock plastic bags, or wax paper.
Take this opportunity to get creative while at it! Beautiful packaging is enough to blow a customer away so much that they will rave about it online.
Get the shipping right
Unless you have the means, time, and manpower to deliver the products yourself, you will also need the services of a delivery company. As you think about how to start an online bakery that will be profitable, you will realize that teaming up with reliable delivery companies that offer excellent service for reasonable fees is important to get right. Find a food delivery service that uses a climate-controlled system to maintain the integrity of your products. Develop a list of multiple shipping companies for good measure.
Some of the most popular and successful bakeries in the world recommend conducting a shipping test by sending your baked goods to the farthest distributing facility of a specific company and having them send it back to be able to inspect the condition of the baked goods.
When it comes to the entire process of order fulfillment, there are various platforms that can help you organize and track orders to make sure your pastries reach your customer’s door safe and sound.
Avoiding shipping woes
We can’t talk about how to start an online bakery without talking about the shipping-related issues that you may encounter. It is important to anticipate urgency and unique product challenges by providing special shipping options to customers. Implement early order times to manage your time and meet deadlines. Be familiar with the difficulties and procedures involved in making your products so you can accurately estimate when you can deliver the orders.
As much as possible, try to provide multiple options for the delivery time, especially for less perishable items to accommodate the budget and urgency your customer is working with. Offer items that can be shipped in similar packaging to encourage larger purchases. For non-delicate products, your choice of packaging can help lower the shipping costs for you and your customers.
As part of learning how to start an online bakery that can hold a loyal client base, understand that shipping costs can be very high, which is enough for some customers to not add to cart. Your options to lower the cost of the delivery tend to be limited when urgency and special care are non-negotiable. As such, it is important to practice transparency with regards to the fees attached to the products to give your customers the chance to manage their budget and prevent unpleasant prices on their part that could sour their experience.
When it comes to shipping schedules, consider designating specific days of the week for shipping all orders for that week. For the weekend and overnight deliveries, additional fees can be requested. Most customers wouldn’t mind especially if your products are too good and they feel that they are well accommodated and taken care of through the whole process.
Price your baked products
Proper menu pricing has a major impact on how to start an online bakery that will actually stay afloat! Your prices should encapsulate everything that went into the product. It’s not just the ingredients, labor, and the skills, but also the packaging, promotions, kitchen maintenance, and most importantly, the time you spent making them. Put a number on each one so each factor is measurable, specific, and justifiable. Find that sweet spot between competitiveness and profitability.
Promote and impress
Have your friends and family talk up your business. Hit the streets with free samples and give your potential customers a taste of your products to convince them to try them out. Share mouth-watering product pictures on Instagram and encourage customers to do the same if they are happy with what they received. Odds are many of them would post about it online when they are satisfied, and with that, you can ask them if you could feature them on your social media of your store. Facebook should be great for promoting and posting reviews and how-to videos and connecting with customers. Sweets and pastry fans always love to watch a good-looking cake or a savory pastry get made from scratch.