How to start a bakery business

How to start a bakery business, step by step

1. 01

   Read your cottage food law

   Cottage food laws decide whether you can bake at home and sell. Texas allows most foods made in a home kitchen, excluding meat, seafood, ice cream and a few others, up to $150,000 in yearly gross income. Local health departments there can't require a permit or fee for direct sales.

   Every operator needs a basic food handler course. Rules differ a lot between states, so read your own state health department's page before you buy a single box.

2. 02

   Label every box correctly

   Texas cottage labels need your business name, your address or a state ID number, the product's common name, any major allergens and a disclosure that it was made in a private home without government inspection.

   Foods that need refrigeration, such as cream cheese frosting or custard fillings, also need the date made and safe handling instructions on the label. Keep those off the menu at first if you can.

3. 03

   Bake a short menu people reorder

   A micro bakery wins on a few things done very well: sourdough, cookies, a signature cake or cinnamon rolls. Pick three to five items that use the same oven schedule and keep well for a day.

   Bake each one ten times and weigh every ingredient, so every batch comes out the same and you know your exact cost per loaf, cookie or slice.

4. 04

   Sell at markets and by preorder

   Farmers markets put you in front of people who already pay for good bread. In Austin, cottage food vendors are exempt from the farmers market permit, as long as they skip open samples and follow labeling rules.

   Preorders cut waste: customers order by Wednesday, you bake Friday, they pick up Saturday. Texas allows online orders from home when you, an employee or a household member deliver them in person.

5. 05

   Price for your time, not just flour

   Add ingredients, boxes, card fees, market fees and the hours you spend baking, packing and selling. Then compare with the nearest bakery's price for the same item. Most new bakers underprice their time first.

   Cakes and custom orders take the most hours, from consultation to decorating, so they need the biggest gap between cost and price. Quote them by servings and design, not by ingredients.

6. 06

   Know when to move to a licensed kitchen

   Move when you hit your state's sales cap, want to wholesale foods that need refrigeration, or want to open a storefront. Texas cottage operators can't wholesale foods that need temperature control.

   A storefront or licensed kitchen in Austin needs a food enterprise operating permit and a pre-opening inspection, plus a certified food manager on site during operating hours.

7. 07

   Take preorders on your own site

   A site with this week's menu, prices, pickup times and a custom cake request form turns market regulars into weekly orders, even on weeks you aren't at the market.

   Replo checkout can take payment for a preorder box or a gift card. Custom cakes work better as a request form you quote by hand.

What it costs to start a bakery business

What it costs to start a home micro bakery in Austin, Texas, plus the permit for a storefront later. The cheapest way in is home baking under cottage food rules.

Your first 30 days

1. Week 1

   Rules and menu

   • Read your state's cottage food page and note the sales cap.
   • Take the food handler course and get a free EIN.
   • Pick three to five items that share one oven schedule.

2. Week 2

   Test bakes and labels

   • Bake each item ten times and weigh every ingredient.
   • Work out cost per item, including boxes and your hours.
   • Print labels with name, address, allergens and the home disclosure.

3. Week 3

   Site and first market

   • Put up a site with this week's menu, prices and pickup times.
   • Apply to one farmers market and ask about its booth fee.
   • Set a preorder cutoff two days before each bake day.

4. Week 4

   Sell and adjust

   • Sell at the market with a card reader and a preorder sign-up.
   • Note what sold out first and what came home unsold.
   • Cut the slowest item and raise the price of the fastest.

Build your bakery's site

Frequently asked questions

How do I open a bakery business?

Start from home under your state's cottage food law, if it allows baked goods. Take a food handler course, label correctly, sell at markets and take preorders. Rent a licensed kitchen or open a shop once sales outgrow the cottage rules.

Can I bake cakes at home and sell them?

Yes, in many states. Texas allows home-baked goods with no local permit, as long as you complete food handler training and label each item with the home kitchen disclosure. Cakes with fillings that need refrigeration also need a date and handling instructions.

What is a micro bakery?

A micro bakery is a very small bakery, often run from a home kitchen, that sells a short menu in small batches. Most sell by preorder or at a weekly market rather than from a shop with daily opening hours.

What sells the most in a bakery?

Whatever your regulars reorder, which you'll only learn by selling. Bread, cookies and cinnamon rolls are common starting points because they're quick to bake in batches. Track what sells out first at each market and build the menu around it.

Why do small bakeries fail?

Usually pricing and waste. Bakers often price on ingredients alone, forgetting their hours, boxes and fees, and bake too much for walk-up sales. Preorders and a short menu fix both before you take on rent.