How to Start a Cookie Business
Friday May. 13th, 2022
Are you a passionate baker whose cookies receive rave reviews from family and friends? Why not put your skills to work and start a cookie business from home? You could sell your cookies locally, or package them in tins and sell them online. Here we will offer some tips to help you get a cookie business started.
First, you need to know what it will cost to get started. If you’re going to run your business from home, your costs will be very low. Assuming that you already have all the equipment you need, you’ll just need to invest in some packaging materials and an inventory of ingredients. That might cost you about $500 or so. You’ll also need to register your business with your state, get any required business licenses and permits required by your state and local governments, and obtain business insurance. All of that will cost between $300 and $500. Finally, you should have a website to help you market and sell your cookies, which could cost about $1,000 if you have it professionally developed. So, in total, starting your business will cost around $2,000 or less.
How Much Can You Make?
You’ll probably sell your cookies by the dozen, and prices average between $10 and $20. So, let’s say you sell them for $15 a dozen and sell 50 dozen online per week. That’s $39,000 in revenue, and after the cost of ingredients and packaging, you’ll probably keep about 70%, which amounts to $27,300. Not bad for a home-based business! Over time, you can probably at least double that amount if you begin to get referrals and repeat business.
Create a Business Plan
Writing a business plan will help you to think through every part of starting and running a business. A business plan is also necessary if you apply for a loan.
Your business plan should include:
• Executive Summary: Brief overview of the entire business plan. Write this after your plan is complete.
• Product and Services: Describe your products or services in detail.
• Market Analysis: Assess market trends.
• Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and try to find a way to give your business a competitive advantage.
• Sales and Marketing: Develop sales and marketing strategies.
• Management Team: Overview of the management team, detailing their roles and professional background. This may be just you at this point but think about who you might need in the future. Consider who else you might need to hire for various roles.
• Operations Plan: This is the logistics of how you will run your business on a day-to-day basis.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
Determine Your Business Structure
You need to decide what your company's business entity type will be. Here are the main options:
• Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns. You usually do not have to register a partnership with the state.
• Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. You must register your corporation with your state.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. You must register your LLC with your state.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
You’ll need to start marketing your business to find customers. You’ll probably get local word-of-mouth business from family and friends. You’ll also want to use social media to get some visibility for your business. Post on as many sites as you can including TikTok, Instagram, and Facebook. You can also do paid ads on those sites and do pay-per-click campaigns on Google. You should also get listed on Google My Business and Yelp. The key is to direct people to your website where they can see your products and place orders.
Once you follow the steps, you’re ready to bring in some cash. Once you’ve had some customers your business should start to grow from referrals, as people tell other people how delicious your cookies are. You’re also likely to get repeat business. You might want to change up your cookie products occasionally so that people have new cookies to try.
You’ve got some knowledge about the business now, so start baking and get your cookie business off the ground!