When I set up my business the biggest hurdle was knowing exactly what bureaucratic hoops I needed to jump through. Setting up any business requires a degree of red tape; anything to do with food, even more so. I could only find one blog post at the time that consolidated all the relevant info into one place; and that's a good few years old now. So here's my nutshell version of how to set up a cake (or sweet food) business in 8 essential steps. It includes points about the emotional and mental side of running a business as well as the legalities!
1) Know why you're starting this business
It's not enough to keep you going that your friends think you make the best cupcakes in town. You need your own reason why you are doing this, one that you can return to time and time again on rubbish days to remember the fundamental 'why' of your business. It usually involves money, but not only money. Maybe you want a challenge, maybe you want a job you can work from home. It will be different for every person but you need to know, deep down, why you are doing this.
2) Work out your business boundaries
If you're working from home (which you probably are), how are you going to maintain the boundaries between professional and personal? When will you be 'open' for enquiries, calls, messages? When will you get your work done and how will you manage this around your family? Think it through: what is your week going to look like and where do you draw the lines.
3) Work out your pricing
Most people start out charging far too little, and while it's fair to say that until your cakes are of a certain standard, it probably won't work to charge the high end of the spectrum, you do need to get your head into gear and think about your costs and how you work out your prices. This will be different for EVERYBODY so don't ask Facebook cake groups 'how much would you charge for this' as it's not a very accurate or reassuring pricing strategy. There are some great business coaches out there; find one and stalk them.
4) Register your kitchen with the Environmental Health Service of your Local Authority
You should do this 28 days BEFORE opening your business. Registration is free. Here is a handy link to where to register. If you have any questions, just give your Environmental Health Officer (EHO) a ring. They WANT to help you and are not there to try and close you down, they want to help you keep and stay open safely. Similarly, when they come and do your inspection (usually within 18 months of you first opening), they are super friendly and helpful and not there to judge you, but there to give you as much information as possible. If you work from home they will ring you in advance to set up an appointment time; they won't just walk into your home and start swabbing worktops.
When you have an inspection from your EHO they are focused on: food storage and labelling, how you manage allergens, how you record data like fridge temperatures, what systems are in place to avoid contamination and the structural integrity of your kitchen. They will ask you questions more than rummage around in your kitchen.
5) Safer Food, Better Business
The government have helpfully produced this extremely useful pack for food business of all sizes and types to fill in and use to store daily and weekly information. It's a good idea to work your way through it, filling in the relevant sections before setting up shop. You can then use the record pages weekly to ensure you are running your business in accordance with best practice. Here is a link to download the SFBB guide. You are likely to need the 'caterers' option if you are starting a cake business from home.
6) Register with HMRC
You will need to register (probably as a sole trader initially) with HMRC. It's unlikely you'll pay tax for a while as the pre=tax income allowance is now knocking on £11,000, but you still need to submit a self-assessment tax return each year. On that note, either set up a simple spreadsheet and get a good filling system in place to keep on top of your accounts now, or outsource to an accountant from the get=go. Do not keep stacks of receipts for months at a time and then tackle them in one go. Believe me, I've learnt the hard way...
7) Get yourself some public liability insurance
Do not be tempted to forego this. What if someone gets sick from one of your cakes, or trips in your home while they're coming to collect their order? Lots of companies now do specific cake decorators' insurance for very reasonable prices. I use C G Lloyds as, although thankfully I've not had to claim, they have really good reviews for customer service and dealing with claims. An insurance policy that covers you up to around £2 million will cost you around £50-60 per year.
8) Level 2 Food Hygiene Certificate
Bafflingly, this isn't a legal requirement, but I think it's a really good idea to have one! You can do the training online and get your certificate electronically, and they email you when it's time to renew, every 3 years. It's just £12 at Safer Food Handler.
So there you have it, the 8 essential steps to setting up your Cake Business. I would recommend that you do all of these and don't skimp; otherwise you are putting not only your customers and the general public, but yourself at risk, too. Safer Food, Better Business, Happier Business Owner & Clients. Have fun!
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