How to Start a Home Bakery Business: Step by Step

Step 1: Check Your State's Cottage Food Law

Before anything else, look up your state's cottage food regulations. You need to know what products you're allowed to sell, any revenue limits, labeling requirements, and whether you need to register.

Step 2: Decide What to Sell

Start with what you're known for. If everyone raves about your sourdough, lead with that. Don't try to sell everything. A focused menu of 5-10 items is better than 50 mediocre options.

Pro tip: Pick products with good margins. Custom decorated cakes have high labor costs. Cookies, bread, and brownies scale much better.

Step 3: Calculate Your Prices

Use the formula: (Ingredients × 3) + Labor + Packaging = Price. Don't underprice yourself. You're not a grocery store.

Step 4: Set Up Your Business

• Business name: Pick something memorable. Check that it's not taken.
• Labels: Most states require cottage food labels. Include your name, address, ingredients, allergens, and "Made in a Home Kitchen."
• Payment method: Set up PayPal, Venmo, or a card reader. Don't be cash-only.
• Order system: Get something to track orders from day one. Even a simple spreadsheet beats nothing.

Step 5: Get Your First Customers

• Friends and family: Your first customers are people who already love your baking.
• Social media: Instagram and Facebook are free. Post photos of your products regularly.
• Farmers markets: Great for exposure and building a customer base.
• Word of mouth: Deliver an amazing product and people will talk.

Step 6: Scale Smart

Once orders start coming in, you need systems. Manual order tracking breaks down fast. Financial tracking becomes critical for taxes. A proper order management platform lets you focus on baking instead of admin work.