Make Money Baking at Home Thanks to Cottage Food Laws

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Cottage food laws have opened the door for you to start your baking business. Today is a dream come true for many bakers around the country who have yearned for the opportunity to make money at home baking. Unfortunately, simply baking well is not the only ingredient to building a successful business. If you have spent any time at all here, you know I have talked about taking the steps to set up your business.

That link is just one of many articles I have written about running a business. After you set up your business, then you have to start getting the word out. Social Media makes it affordable for all of us to spread the word that we are open for business. If you are working from home, it is a challenge to make others aware that your specialty items are now readily available to the world. Are your pies always requested for the church pot lucks? Does everyone at the office hint that your cookies are the perfect addition to any office party? Selling your products is critical to any business.

You see, those links are articles here on my site that give you really critical information if you are thinking of starting a business. I invite you to spend some time just looking at things already here to help you start your business. I am also going to encourage you to follow the information on how to build your website. It might seem funny that a website that talks about how to make money baking would cover using WordPress. I have to tell you that the purpose of my site is about how to make money from home [Read more…]

Microenterprise Home Kitchens Differ From Cottage Law Home Kitchens

I think it might sound strange for me to say that cottage law kitchens are common knowledge. As a matter of fact, it is still unknown to many people. It is however, an idea that has caught on in a big way. The public is getting more comfortable with purchasing food from someone who has prepared non hazardous food in their own home.

In many states, one of the requirements of the cottage food law is that it has to be an in person transaction. You will actually meet the baker. If you are purchasing it from their home, you might actually be invited into their home. It made me think, in most restaurants you never see the people who are preparing your food.

Laws are changing

Homemade dinner delivered to your door

Home bakers have rallied and fought to get cottage food laws passed in their states. Today there is a new movement in some states. In California, microenterprise home kitchens are coming on board. They are different from the cottage food laws. They allow a much wider range of foods that they can prepare and sell.

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Cottage Food Laws Are Here to Stay.

The Stats are in – the proof is in the pudding.

In 2008 the USDA valued the home based food businesses at 5 Billion dollars. In 2016 those businesses were valued at 20 Billion dollars. I have not been able to find the latest numbers, but more and more states are raising or eliminating the cap home bakers can earn. Of course, I don’t have a crystal ball, but it does seem reasonable to predict a measurable increase when the next stats are released.

Great news for home bakers

Back when I first started following the cottage food laws, many states did not allow bakers to sell what they made in their home kitchens. If a state did have a cottage law, the amount of money a home baker could generate was pretty low, around $5000 and most of the states required that foods made at home be sold at farmers markets.

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What’s in a Name?

Choosing the Right Name Takes Time

In business, the name you choose can mean a lot. In the last post I talked about choosing a fictitious name. If you decide to just do business using your own name you don’t have to get a DBA (fictitious name). I want to look at some of the reasons you might want to seriously consider not using your own name. 

While I am sure everyone reading this has a wonderful name, will it really be remembered and attract attention to the product you are selling? It is critical that the name be memorable and catchy. For example “Karen’s Cakes” does describe what products the business has,  (sorry if any of you have that as your name), but an improvement might be one of the following:  “Let Them Eat Cake”, For Heaven’s Cakes!, or the “The Cake Fairy”. Those names are more likely tho be remembered.

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Cottage Food Law Checklist

Baking is what we enjoy, but as entrepreneurs, there are things we have to do to properly get the business set up. I know, this is the part that some days makes me want to scream, it is laying the foundation of your organization.

I am not a natural planner, but have learned over the years that it sure makes things easier when you take the time to develop the roadmap from the very beginning. I will assume that unless you live in New Jersey, you are living in a state that has Cottage Food Laws.

When you go to your state, if a permit is required, that is a starting point on your plan. Once you have the permit, there are other things that that you need to get started. I am not talking about your kitchen, equipment or supplies. Today I am just covering the paperwork.

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Cottage Food Laws May Not Be Enough

Unfortunately although cottage food laws make it so much easier to start a home baking business, there might be other legal issues to contend with depending on where you live. Going to your state and finding out where you can legally sell your product is the first step. You may only be able to sell at farmers markets, or you might be able to even sell to stores and boutiques, depending on the laws.

It can get more complicated though. There may be zoning laws that prevent you from operating a home based business in your neighborhood. There may be neighborhood associations that prohibit it. If you rent your home you may need permission from the landlord. 

Possible Solutions

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Work from Home Baking for Money: Legally

I have written a lot about Cottage Food Laws but even today most people I talk to have no idea you can make money baking from home in 49 states. If you are desperate to add extra money to your budget, you might have everything you need to easily do that.

Not convinced, let’s take a look at what you need. You can start your baking business with very little investment. If you live in a house with a kitchen, and your kitchen has things like a stove, refrigerator, mixing bowls, mixer, measuring spoons etc., you have most of the equipment to get started. Of course you need a recipe and the ingredients your recipe calls for. I should add that it helps if you enjoy baking.

Get to know the law in your state

There are laws making it legal to sell your baked goods in all states except New Jersey. Later in the post I am including a chart for a first glance at the laws in each state. Basically in most states you need to apply for a permit. There may be a small fee attached to that permit. Some states require an inspection of your kitchen. If an inspection is needed, find out what the health department requirements in your state are. Basically they will be concerned with cleanliness, adequate refrigeration, and proper storage of foods.

Most states have rules about how and where you can sell your products. You can get a list of what foods are allowed. If it requires refrigeration it is not going to be allowed. For example, in Missouri you can legally sell the following foods under the law: breads, cookies, fruit pies, jams, jellies, preserves, fruit butters, honey, sorghum, cracked nuts, packaged spices and spice mixes, dry cookie, cake, bread, and soup mixes.

I didn’t forget, I promised you I would share a quick guide of Cottage Food Laws across the country. Here is a summary  that will help you know what you need to know to get started. Remember to check with your own state to find out the latest updates and specifics that will be enforced this year. Before you go though, think of how these laws can help you earn money right from your own home. No excuses, turn on the oven and  BAKE.  Cottage Food Law Guide

 

 

Gingerbread Might Get You Lots of Free Marketing

Marketing your baked goods may be the hardest part of your job. Getting TV stations & newspapers to give you news coverage for free is almost unbelievable. My husband first found an article about that very thing in a small local paper. When I dug a little deeper, I found out that this story had a much bigger following than that small paper.

He showed it to a relative who had studied abroad and actually went to this church. I loved the story, and when I thought about it a little, I decided I wanted to put this on my website because it is such a unique way to get noticed maybe someone who reads this will tweak this idea and start to build their own baking reputation. I could talk more about the story, but watch the video first and then I will share my thoughts.

Well, maybe this example is extreme, and you might argue that you don’t have either the time or the money to take on a project like this. I get that, but trying this on a much smaller scale might get you some marketing traction.

Many schools & not for profit organizations do fundraising each year. You could consider constructing a replica of the gym or football field in a winning season. Maybe you could donate cleverly decorated cookies that follow a theme of an event. You put on your thinking cap and look for ideas in your area that put your product in front of a group of people. When you do that make sure to include business cards. Creative ides might just be a game changer for marketing your cookies, cakes, pies and other home baked foods.

“Cookie Lady” Wins $10,000 in Baking Contest Using Her Mom’s Recipe.

It sounds like a dream come true, and be honest, you might also dream of finding baking success with one of your recipes. From what I can tell though, although I am sure her recipe is out of this world, it seems like her hard work and perseverance played a huge part in that great win.

You see, after her son was born she did not want to return to her job and searched for some way to replace her income. She had always loved baking, so she started watching YouTube videos on how to decorate cookies. She was sure that she could do that so she started baking at home. In the beginning she did swaps in mommy groups to get her name out.

When her husband retired, they decided to open a bakery and make a go of it with cookies. Now she has custom orders, and around the holidays her work days are often over 15 hours (that’s a lot of cookies). For her large custom orders, she is booked months in advance. She does cookies for weddings, baptisms, first communions and more.

In addition to the baking, she is now teaching classes on cookie decoration. She as rented a shop adjacent to her business for her classroom.

So, what are you waiting for, grab your computer and start watching you tube videos. You too might grow a huge following. I believe it is possible and the “Cookie Lady is proof to of that.

New Jersey Still Does Not Have a Cottage Food Law

If you are a New Jersey resident, putting a price tag on your baked goods is currently illegal. In that state, drivers licenses are issued to the undocumented, former inmates can vote, and the minimum wage has been increased.

The cottage food laws have been stalled by one Senator, Joe Vitale. Here is a video clip with the details. If you live in New Jersey, contacting the senate to show your support of a cottage food law would help.

Recipe for “Baking for Money “at Home

INGREDIENTS:

  • PICK PRODUCTS TO START WITH
  • UNDERSTAND PRICING
  • USE SAMPLES TO MARKET

If you love baking, it is tempting to try and start your business with too many products. Most of us are capable of making a wide variety of products. I urge you to start small and use the KISS (keep it simple stupid) principle.

You also need to consider what type of product has the perceived value that commands enough of a profit margin. For instance, many people can make chocolate chip cookies. Although the ingredients for cookies can be pricy, the perceived value may not be high enough to have a profit margin that makes sense. 

On the other hand, many cakes have a higher perceived value but actually have lower ingredient costs. A nicely decorated cupcake or cake can command a rewarding return. If you learn the wedding cake trade, now you can charge top dollar.

Pricing

When we start our business, knowing what to charge is a challenge. Since we can easily whip up a dessert, under estimating the value is a common mistake. One rule of thumb is to total up all the costs, including packaging, and multiply it by three. 

It is important to remember that if you set your prices too low, you will have to work harder for less money in the end. Your competition is not the big box store, they make their money with volume sales and it is impossible to compete on volume. 

Instead, you compete on quality, producing a better tasting product. There are lots of customers out there who are willing to pay for homemade baked goods, so don’t be afraid to get paid for your time and expertise. 

Samples

Letting you potential customers sample the product is an easy way to start selling your product and get people talking about it. All of us have been to the grocery store and see the tables where vendors are offering samples of their product. Take a hint from the experts, if that was a tactic that did not work, companies would not be giving away their product. It often gets customers literally hungry for more.