2023 Guide: How to start an online bakery business?

You’re the absolute best in what you do. Your friend and family relinquish your cookies, pies, and donuts. Everyone within a mile of your home orders their birthday cake because they trust your creativity. Now imagine how great it would be if you could use your baking skills to make a business. I bet you already have!

While a lot of people have a knack for baking, not many are able to make a business out of their passion. Be it a lack of time, increasing commercial real estate, or high maintenance costs, it was and still is an expensive feat to start a bakery business.

Turning a passion project into a business isn’t something you can easily accomplish if you don’t have access to the right guidance and resources. Conventionally you would need a physical store to start a bakery business, but not anymore.

Speak to the bests in the business, get the basics right, do your sums at the beginning itself, and most importantly, start from home with low investment.

Wondering how this can be done? Read on and find out.

6 Steps to Start Online Bakery Business

  1. Do your research
  2. Create a business plan
  3. Register your business
  4. Get the required Permits
  5. Build your online presence
  6. Created a solid marketing plan

1. Do your research

The are a number of things that one should take into account when starting a food-related business. According to Tessa Stuart, a food brand consultant and author of the book Flying Off the Shelves, "one of the common pitfalls for food startups include focusing on the product to the exclusion of spreadsheets". There are some important elements of starting a food business that should never be neglected if you really want to set yourself up for success. Do your homework well and start with the basics…

Know your competitors

Who are your competitors? What do they specialize in? Where do they deliver? Are there any gaps that you can fill in? Analyze the local competition and describe how the bakery will differentiate itself. Knowing the competition helps understand the demand. You can also win some edge in pricing if you can find a solution that makes your products appear more appealing and cost-effective.

Know your costs

It is important to be clear about the cost of goods (COGS). These include raw materials, cost of production, packaging, and logistics. It is important to note that the requirement for starting a business is very different from baking goods on demand. Plan all the expenses in advance, work out a spreadsheet, and understand the nitties-gritties of factors that can affect the cost of production positively and/or negatively.

Forecast volume demands

When do you plan to launch? How do you plan to manage operations during rush hours, festivals, and holidays? Do you plan to employ more people to meet the demand? Do you plan to offer special discounts to rev up sales during the slowdown? Take all these factors into account during the planning process.

💡Pro Tip: Speak to the experts in your industry. What are the challenges they face in day-to-day operations? Note down everything so that when you sit down to make a business plan, you have all your learning and information at your fingertips.

2. Create a business plan

This is where you start documenting your research. A business plan gives structure to your business ideas, vision, and mission. It also helps you identify different steps to establishing an online bakery business. You'll get clarity on branding, equipment, supplies, and even capital to set up the infrastructure.

The three most important elements of a business plan are

Executive Summary

An executive summary for a bakery business plan should provide a brief overview of your online bakery business, including its goals, target market, competition, marketing strategy, and financial projections. The executive summary should be concise, yet comprehensive, and should be written in a clear and compelling manner to attract the attention of potential business partners

Operations Plan

The operations plan for an online bakery business outlines the processes and procedures that are required to run the business on a day-to-day basis. It should cover all aspects of the business, from production and fulfillment to customer service and quality control. Describe the steps involved in producing baked goods, including recipe development, ingredient sourcing, baking, and packaging. Outline how orders will be received, processed, and delivered to customers, including the use of any third-party fulfillment services.

Marketing Plan

"In order to penetrate your target market and attract new customers, it's crucial to have a well-defined marketing and PR plan. In this section of the online bakery business plan, you can outline the steps that you intend to take to reach your audience through various PR and social media channels.

👉 Also Read: Restaurant marketing tactics to put your business on the map!

3. Register your business

It may not be the most exciting part of starting an online bakery business, but definitely the most crucial one. Make your bakery business official by registering your business officially register your baking business. This isn't the most exciting part of the process but thinks of it as an official stamp on your new venture. It's a way for you to make things official. For example, in the USA, you need to register your business with the secretary of state's office to form a corporation, partnership, or limited liability company. The specifics of how this works depends on the state and local government.

You should also visit the U.S. Food and Drug Administration (FDA) website to determine label requirements for baked goods. You may need to create a label that includes ingredients and nutritional information.

The next step in the process is to apply for an Employer Identification Number (EIN) through IRS (Internal Revenue Service). You would use this number for banking, tax, and other business documents.

Now that you are launching an online business, you have to register a domain name that is the same or similar to your brand name. GoDaddy can be a good place to find available domain names.

👉Also Read: How to make a food online business ready for Mobile-first indexing?

4. Get the required Permits

Starting a bakery business in the United States requires obtaining various licenses and permits to comply with federal, state, and local regulations. The specific requirements can vary based on the business model and location of the business.

Below are the 5 most common licenses and permits that an online bakery business may need:

Business License

A business license is required for all businesses operating in a particular jurisdiction. This license establishes the business as a legal entity and allows it to operate within the city or state.

Food Service Permit

A food service permit is required by most states to operate a bakery that sells food to the public. This permit ensures that the business meets health and safety standards set by the state.

Health Department Permit

A health department permit is required by many localities to ensure that the bakery meets sanitary and hygiene standards. This permit may also require regular inspections of the bakery.

Sales Tax Permit

A sales tax permit is required to collect and remit sales tax on all food and beverage sales. This permit is obtained from the state tax authority.

Food handler’s certification

Some states require food handlers to have a food handler’s certification to ensure that they have the knowledge and skills to handle food safely.

What’s the cost of these licenses and permits?

The cost for each varies depending on a lot of factors. However, you can expect to shell out somewhere around $1000-$1500 in total to acquire all of the above-listed permits.

As a potential bakery owner, it's crucial to learn about different permits for a food business in your specific state, county, and city. You can visit The Small Business Administration (SBA’s) website To determine the necessary permits and licenses required in your state.

It's also important to stay on top of your licenses and ensure that they remain up to date. The Small Business Administration (SBA) advises that some licenses and permits have an expiration date and it's easier to renew them rather than apply for a new one. Therefore, it's crucial to keep track of when they need to be renewed.

💡Pro Tip: If you plan to develop innovative dishes or new manufacturing processes, then you should protect your intellectual property with patents, trademarks, and copyrights issued by the US patent and trademark office.

5. Build your online presence

Now that you have all prerequisites pieced together to start an online bakery business, It's time to build your online presence. And it all starts with a good website coupled with an efficient online ordering system designed for food businesses.

"Simplify the online experience for your customer as much as possible: says Jonathan Israfil, co-founder of Kerbside Creamery - a bakery business launched during Sydney's first COVID-19 lockdown in 2020. “When it comes to setting up a site, less is more. I really can't reiterate that enough. Keep things simple and approachable. Buying should be effortless”, she further adds.

There are a number of online ordering software in the market that you can try. and with that comes the responsibility of making the right choice.

So how do you do that?

How to ensure that you have chosen the right solution for your business?

Check out this list of Top 10 Questions to ask when choosing a restaurant online ordering software for your bakery business.

Don’t have much time and money to start a website from scratch? You don’t really need one. Launch your online bakery business in minutes with Restolabs Online Ordering Software. Try it Free for 90 Days. No Credit Card is Required.

These four simple steps will help you get started with your online bakery business in just a few minutes:

1. Sign up and start adding your business details.

2. The next step is to customize the store as per your business needs. Start adding the menu items with the description and pricing.

3. Now configure the payment options. Connect with one of over 50 payment gateways. You can head over to the payment section, browse various payment choices and select the one (or more) that fits your restaurant's needs.

4. Publish your store and start tracking your orders

You can also book a free demo with our technical experts to learn more about creating your online bakery without a website, including special features designed for upselling, pre-ordering, social media ordering, tracking, support for multiple gateways, and integrations with other POS, delivery and loyalty program services. .

6. Create a solid marketing plan

A well-defined marketing plan gives you an edge over the competition. If you don’t understand your target audience and market well, you won't be able to sell your products consistently. There are a number of marketing activities that you can include in your marketing plan. But a few strategies should be on top of your list when starting out a new bakery business. These include direct-mail marketing, social media marketing, and google ad marketing.

Utilize social media platforms like Facebook, Instagram, and Twitter to promote your products and engage with your followers. Share photos and videos of your baked goods, and consider running social media contests or promotions

You can also partner with food bloggers, influencers, and food photographers to showcase your products and reach a wider audience.

A couple of brands that are doing pretty well on Social Media…

Source: https://www.instagram.com/levainbakery/

Source: https://www.instagram.com/salsbakery/

In conclusion, starting an online bakery business is a great opportunity for bakers to tap into the growing demand for convenient and high-quality baked goods. By following the steps outlined in this article, you can build a strong online presence, reach a wider audience, and drive more sales for your business.

With hard work, dedication, and a commitment to providing high-quality products, you can successfully launch and grow your own online bakery business.

💡You Might Also Like...

👉 5 Best POS Systems For Restaurants - Pros, Cons & Pricing

👉 How Restaurants Integrate WhatsApp With Online Ordering System To Increase Orders

👉Are Free Online Ordering Systems For Restaurants Worth It?