Guide to Starting a Cookie Baking Business
The Small Business Startup Guide
If you have a special talent and own some great recipes for baking amazing cookies, then starting a cookie business may just be what you were born to do. But before you dive in head first to your new dough making business venture, make sure you have a good idea as to what lies ahead of you. Baking some cookies for family and friends is one thing, baking cookies for profit is a whole different ball game.
What do you need to start a cookie business?
As with any business startup, we highly recommend that you do some online research. Check out your competition both locally and nationally. Remember, you’ll be competing not only with local cookie suppliers, but potentially with those who sell nationally as well. Your cookies will need to stand out from the crowd if you’re going to be successful. Once you have a better grip on the competitive environment, it will be much easier to see where and how your cookie business is going to fit into the mix.
One of the biggest decisions you will need to make while pondering your cookie dream business is determining how you plan to sell your cookies. Are you planning to build an e-commerce store and sell direct to consumers online? Do you plan to have a brick and mortar retail storefront? Do you plan on offering your cookies wholesale through retail partnerships like restaurants, coffee shops, and other businesses? Do you plan to focus only on catering? Or do you plan on using a combination of different selling methods? There are benefits to every approach. Just make sure you have some idea as to what’s going to work best for you.
Starting a cookie business is actually pretty simple, especially if you plan to operate from home. In addition to registering your business and fulfilling all of the necessary business startup requirements, you will need to find out what types of specialty permits and licenses you will need in order to make and sell food. Many states regulate “cottage food,” meaning food made in a home kitchen for sale. If you plan to sell to restaurants and retail, there may be different requirements.
Some of the requirements may include:
Food Handler’s License
If you are engaged in the handling of food, and in this case you will be, you will most likely need to get a food handler’s license (may also be referred to as a food and safety certificate). In order to get the license, you may be required to pass a test on proper food handling and storage. Anyone who helps out in your kitchen and handles the food will most likely need to be licensed as well.
If you plan to sell your cookies to people and organizations hosting events, you may be required to obtain a catering license.
Kitchen Health and Safety Inspection
If you plan to prepare, bake, and package your cookies at home, your kitchen will need to undergo and pass a health and safety inspection from your local government. Many cookie entrepreneurs prefer to lease space at an existing approved commercial kitchen facility.
Zoning Laws and Permits
Many cities have zoning laws in place that prohibit running his type of business out of your home. Check with your local city or county government to see if there are any such restrictions.
Homeowner’s Association Compliance
Be sure to review the rules of your homeowner’s association agreement. Some of these groups restrict the type of business you can operate from your home.
We have more information on licensing below.
In addition to any licenses and permits that you’ll need to obtain, you should look at putting together a business plan. Once you have determined what type of cookies you want to sell, you will need to have a plan in place which lays out your anticipated startup costs, projected monthly revenue, marketing strategy and tactics, and more. It doesn’t have to be complicated, especially if you plan to start small. We have some more information regarding business set up and marketing below.
How much money can you make with a cookie business?
There are many factors that play a role in profitability, including your cost of goods (inventory), marketing spend, staffing costs, delivery, packaging, what you price your cookies at, whether or not you’ll be selling wholesale, cookie quality, etc. Whether you sell a cookie at an average cost of $0.50 per cookie or $2.50 per cookie, you’ll want to shoot for a gross profit margin of at least 50%. This is the difference between your actual sales price per cookie and the actual cost of making that cookie. So if it costs you $0.50 to make a cookie, you’ll want to sell it for at least $1.00. If it costs you $0.50 to make a cookie and that cookie is not worth at least $1.00 to the buyer (based on appearance, taste, etc.), then you probably aren’t going to be successful.
These days, people think nothing of shelling out $2.00 or more for a large gooey mouth-watering chocolate chip cookie purchased from a retail bakery or cookie store. If you can produce an amazing cookie for $0.50 that people are willing to pay $2.00 to get their hands on, you have a much better chance at long-term success. Keep in mind that if you plan on selling wholesale to local businesses, it’s okay to have a lower profit margin as long as the increased volume of cookies sold makes up for it.
If you’re making $1 per cookie in gross profit, then you’ll need to sell 100 cookies per day to walk away with $100 in your bank account for that day. If you package your cookies by the dozen, sell 10 packages per day and you’ll net $120 in gross revenue.
Don’t expect this business to be easy, you’ll probably be working some long hours to get it off the ground. The good news is that you’ll be doing something you probably love to do. Of course, one of the biggest downsides of owning a cooking baking business is the tendency to eat all of your inventory.
Naming and registering your cookie baking business
Before starting your cookie business you will need to come up with a great name and get it registered with your local state government. The possibilities for great names for a cookie business are endless! We have more details on how to do that on our “registering your small business” information page.
State requirements for getting a business license for your cookie company
Buying a domain name for your cookie business
Do you need a domain name for your startup cookie business? Even if you don’t have a website? See why we think it’s a good idea by checking out our “buying and securing a domain name for your small business” page.
Setting up a business bank account for your cookie baking business
If you are wondering if you’ll need to set up a business account for your new cookie business, the answer is yes. See why it’s important by visiting our information page on setting up a business bank account and credit card. You’ll be glad you did!
Getting business insurance for your cookie baking company
Setting up a website for your cookie baking business
It’s not imperative that you immediately have a website built for your new cookie business. But if you do decide you need one, we have a great small business website resource page that will give you a few great pointers on getting one set up.
Creating a logo for your cookie company
Collecting sales tax
If you live in a state that collects sales tax, then yes, you will need to charge sales tax and file with your local or state government. More details can be found on our “small business sales tax” information page.
Marketing your startup cookie business
There are 3 keys to running a successful business. These include great customer service, a quality product or service, and effective marketing. Without effective marketing, especially in the startup phase, you’re going to have trouble finding customers, and without customers, your amazing cookie company is doomed to fail. But don’t sweat it, we have a comprehensive startup marketing guide for small business startups that will get you pointed in the right direction.