How to start a cake business from home

Making cakes from home can be a good way to make some extra money and get started running a business, but it can require careful planning and business smarts.

The rewards can be sizeable – with an IBIS World report opens in new window revealing that Brits spent more than £9 billion on baked goods in 2022.

Whether your speciality is cupcakes or wedding cakes opens in new window, and you might know your genoise sponge from your dacquoise sponge, you’ll need more than just baking knowledge to help your passion turn a profit.

Find out how to start a successful cake company with our handy guide and learn how to set your prices opens in new window, what legal and food safety requirements you need to meet, and how to market your sweet treats opens in new window.

 

Choose a type of cake business

When planning the type of cake business you want to launch, it’s worth considering the scale and shape of your business – will you only sell event and celebration cakes? Will your cakes be on commission, or will you only sell a number of options your clients can choose from? Will you do delivery or collection only?

You may need to consider how much physical room you have in your home for your business and how operating from home opens in new window will work alongside domestic activities.

You may also decide to have an additional external location to sell your cakes, such as a market stall – read our guide on how to set up a market stall business opens in new window.

 

Setting pricing

It’s a good idea to research pricing and how to be competitive opens in new window while still making a profit from your cake-making business.

Factors affecting pricing include labour, the cost of ingredients and equipment, packaging and shipping, your experience level and expertise, and overheads such as insurance or utility bills.

You’ll also want to consider how much profit you want from each cake sale and factor that into your pricing strategy.

You should consider how you’ll recoup any initial start-up costs.

A business plan can help and act as a roadmap to your cake business’s success, outlining goals and time frames, how your business plans to generate money, and how your business can be sustained in the long term.

Read our guide on how to write a business plan opens in new window, and download our free business plan template here opens in new window.

 

Registering your business

When starting your home cake business, you must register with HMRC opens in new window to ensure you pay the correct amount of tax.

You can register as a sole trader opens in new window or set up a limited company opens in new window.

Depending on where you are operating your business, you may need to register your business with your local council at least 28 days before operation.

Requirements and fees for this registration can vary depending on the local council – some councils may charge a fee for the registration and inspection process.

 

Cake business regulations

You must adhere to certain regulations to ensure your cakes are allowed to be sold for consumption.

You will need to register your business with your local authority opens in new window.

This is a requirement even if your cake business trades from home, sells online opens in new window, and is involved in preparing, handling, storing, cooking, or selling food.

 

Food hygiene regulations

The Food Standards Agency opens in new window (FSA) is tasked with ensuring all food businesses are operating under safe, hygienic practices and that their products are safe for consumers.

They rate food premises on a scale of one to five, with one being the lowest, worst rating and five being the highest, most excellent.

In 2020, the FSA released a comprehensive, downloadable Safer food, better business guide opens in new window that can be used by any UK food business to ensure they stick to food preparation and hygiene standards – your local council may expect your business to follow these guidelines.

You could also consider gaining a Level 2 food hygiene certificate, which proves that you are aware of your legal responsibilities and food hygiene best practices.

Many councils and insurance providers may consider a Level 2 hygiene certificate an essential requirement for anyone running a food business.

 

Insurance

Although not a legal requirement for running a home cake business, having insurance could be considered essential opens in new window.

Public liability insurance opens in new window and product liability insurance opens in new window can cover you and your business in the event of a legal claim.

Some insurers may lower your premium if you have a food hygiene safety certificate.

If you offer delivery services, it could be worth also investigating if your motor insurance covers business activities.

 

Informing lenders and landlords

Whether you own your home or rent, you must inform your mortgage lender or landlord about your home cake business.

Depending on your mortgage lender’s process, you may need to ask their permission to start your home business or, at the very least, inform them about it.

If you are renting or leasing, you must ask for your landlord’s or the freehold owner’s permission before starting your business.

Both mortgage lenders and landlords may have the right to refuse your business, depending on any contractual agreement you have in place.

 

Buying equipment

Depending on the space available and the layout of your home kitchen, you may need to purchase or rent additional equipment.

Essential pieces of equipment for your home cake business may include:

• ingredient and equipment storage
• electronic stand and hand mixers
• ingredients
• fridges
• freezers
• ovens
• bowls
• cooling racks
• piping bags
• oven gloves
• cake stands
• packaging
• cleaning supplies.

In order to comply with food preparation and hygiene safety standards, you may need to keep the equipment you use for your home cake business separate from your everyday kitchenware if you use the same kitchen space.

This is to avoid any cross-contamination that could make your cakes unsafe to eat.

 

Marketing your cake business

Marketing your home cake business can help grow it into a successful, perfectly baked enterprise.

For start-ups, there are cost-effective digital marketing options you could consider to promote your business to your target customer base opens in new window and make it stand out from competitors.

You could build an e-commerce website opens in new window for your business to collect orders and take payments.

You could set up social media accounts opens in new window to promote your business using high-quality photos and videos or offer flash sales and discounts to followers.

Non-digital marketing options include word-of-mouth recommendations, attending networking events, partnering with local businesses such as cafés, handing out flyers, and entering start-up awards – even if you don’t win, the exposure could help generate brand awareness and sales.

Read our guides on how to market your start-up on a shoestring budget opens in new window and why you need to market your business in the first place opens in new window.

 

 

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.