There are several reasons for you to leave your high paying job and start a home baking business. I have met numerous home bakers and found marriage, children, and passion were the top three reasons of people venturing into home baking business in India.
As it seems, it is certainly easy to kick start a home baking business in India. But as you may think, it is not an easy market to crack. Like every business, the home baking business also needs to be handled like any other full-time business, if you like your business to grow and find paying customers. But unfortunately, the marketing part of the home baking business is often neglected and hence most of the home-bakers struggle in finding paying customers.
Cost of starting a home baking business in India?
Though you can start a home baking business with as little as investing in an oven and some basic ingredients, let’s just look at a tentative cost of starting a small home baking business in India.
Space: If you are starting from there is not startup cost because you will be using the kitchen of your home only and commercially you may look at a space of 500 sq ft that will be aprox 50K rent per month and it means an investment of 150K based on 3 months of security deposit.
Business Licenses: So again depending on where you start your business from. If you are starting from home you may not need any license to being with. However if you are starting up commercially you may need to spend about ₹10000 on FSSAI, Fire License and Municipal Licence.
Equipment Cost: A home baking business is easy to start with little equipment investment. To begin with you will need an oven, some tins and trays, some mixing bowls, spatula etc. Keeping the cost for essentials only the cost could be anything between ₹10,000 to ₹15,000. But when you do it at a commercial place you will need to Mixers, Big Ovens, Deep Fridge, Working table, sit out space etc. and combined total for a 500sq. ft it will be about 600K of expense.
Ingredient Cost: Depending on what you would want to begin with either cakes, or cookies, or bread, you will need to create a list of ingredients that you will need. Some ingredients are just too common in almost all type of bakes and some are specific to the type of bakes you may bake.
In our 30DaysBakingChallenge program we make people learn Muffins, Cupcakes, Cakes, Frosting, Cookies, Pie, Tart, Blondie, Brownie, Bread and Buns. So they do 30 recipes in 30 days and the cost of ingredients for all of these is about ₹7,000. And in a commercial space you might need little bit more ingredients because you will need to keep items on display and the cost of ingredients will go upto 20K.
Packaging Cost: When you need to sell your products, your products should appear great in the way they are packaged. Packaging is the first thing the customer is going to see before even tasting your product. Moreover muffins liners, cake box, etc. which are bare minimum you will need all comes under packaging cost. It is difficult to calculate the cost of packaging because it will depend on the quantity you would want to buy, however based on the investments levels above, let approximate it to ₹5000. At a commercial space, you will need more packaging items and the cost could be around 10K.
Marketing Cost: Your letterheads, business cards, logo, packaging design all comes under marketing cost which is the bare minimum you would invest in. The marketing cost will involve a lot more as you grow but to begin with lets but an approximate cost of ₹5000. The marketing cost for a commercial space will be much higher than this. You will need a good looking display board, Newspaper inserts, some invites to influencers and cost on it. This all will cost aprox 100K
Miscellaneous Cost: There are many expenses that we cannot factor in and they depend from individual to individual, for example transportation cost. This could be because of you travelling to different places to procure the equipment and ingredients or may be delivery charges of the items etc. Sometimes depending on place to place the cost of packaging, marketing etc. could be higher or lower. So let’s keep a ₹10,000 into miscellaneous for all those unknown and un-factored expenses.
So brings the startup cost to
Space + Business Licence + Equipment + Ingredient + Packaging + Marketing + Miscellaneous
on the lower side is = 0 + 0 + 10K + 7K + 5K + 5K + 5K = 32K
And on higher side is = 150K + 10K + 600K + 20K + 10K + 100K + 10K = 900K
Now in addition to the startup cost, there are monthly fixed expenses and variable expenses you should also factor in. For the initial period, I always recommend you to keep fixed cost as minimum as possible and try to keep more of variable cost.
- Bank Loans/EMI
- Website Cost
- Professional fees like CA
- Tools & Software’s
- Internet & Phone
- Taxes (GST)
- Marketing & Advertising
- Printer Ink
So looking into the above a home baker can get started in as low as ₹32,000
Create a Business Model
A business model is the way a company works. It’s how it’s all main area functions together. Assume of a company as a human body. A human body is made up of so many organs and parts and they all work in a harmony. But if either of the body organ stops functioning, the entire body starts to suffer.
Same is the case with a company. All different function areas of the company needs to work in sync. It is always easier to understand how a company works if you clearly identify the different function area that make it up. This is where the business model canvas will come handy. We discuss the Business Model Canvas in detail in our 30DaysHomeBakerChallenge Program. This program is specially designed to help home bakers kick start their home baking business with all the required business knowledge to grow their home bakery.
Choose a location for your home baking business
Whether you decide to start your home baking business from your home kitchen or you decide to rent out a kitchen the location plays an important role for your business. Now if you are in a locality you have lot of college going students, working people or a place which is surrounded by office complexes, chances are that your business will find more clients than to a place that is quaint or a place that is outskirts of the city.
If you decide to start a full-fledged bakery then a high-end shopping plaza with heavy footfall is one of the most ideal place. Taking a place that is divided into two floors or you are able to divide the space into two floors by creating a mezzanine floor would be an ideal situation. This will give you an ability to create sitting area for people to enjoy your bakeries.
Before you finalize do ensure that you are permitted to use high end ovens in that space and that you have water supply in the premises.
Get all the licenses to start your home baking business in India
Whether it is FSSAI, GST, Health License Police Eating House License, or Fire License, it is advisable to get these licenses beforehand. Once you start your business, you should really be worried about government bodies obstructing your business days. After all each business day will cost you much more than getting licenses in the first place.
Name and logo of your business
Your brand logo acts as the face of your business. It makes you recognizable. Your business name is what they will recognize you with. Your brand name must be simple, easy to remember, and talks about the values of your business. Your brand logo should be memorable and should leave the desired impression of your company on people’s minds.
If you intend to open an eat-out place then you must keep a minimal theme designed with elegance. Keep a design aspect that helps you display your products at the most noticeable place to your customers.
Book a domain and create email id
Online presence is one of the most important things in today’s place. Just a one-page website is enough for you to show your presence and appear more legit business which position you above then the other business who do not have a website. Along with the website, you also create a professional email id like email@example.com. This affirms the people interacting with you to believe that they are talking to an established and strong business identity.
Block social media handles
Once you have decided your business name, get on to the social media that matters most and block all the social media handles. It’s no fun that somebody else blocking those social media handles once you have started getting recognition. Essentially when you finalize a business name, you must ensure that relative social media handles are available for you to not land up into any trouble later on. At the least, you must ensure Facebook, Twitter, Instagram, Pinterest handles are available for you.
Plan your menu
When you have customers willing to order from you, a well-designed menu helps them navigate through your offerings and then place the order. This way you do not leave customers to keep wandering in thoughts of what to order, but help the person in finding the right fit for his needs.
Keep in mind to give a variety of choices to the customer to choose from, but do not overdo it. You do not want the customer to get overwhelmed with the choices and then the buying decision gets shaky. Do ensure that you are keeping things on the menu that you are really happy baking. Do not keep items on the menu that you feel customers would want, rather keep something on the menu that you love baking.
And for the initial few months keep the scope of modification in your menu as you will analyze what people are liking in your menu and what is in demand.
Once you have sorted out the menu, ensure that you are pricing them appropriately. Keeping a price based on what others are pricing their product at is a bad way of pricing your products. Your manufacturing cost could be completely different from theirs and thus your selling price would be. Do not undercut the prices as that will lead to nowhere. Create your USP’s in other areas and not on pricing. Keeping your USP on pricing might attract customers for a while, but these are the customer that you will lose the moment anybody else gives a better pricing point to them.
We have a well-designed pricing model and calculator that each of our 30DaysHomeBakerChallenge students is using and are extremely successful in pricing their product appropriately.
Position yourself well in the home baker space
Now this one is the most important one, and the most difficult one too. When I say difficult, I want to talk about the patience and dedication it needs for you to position yourself and start attracting customers.
When you start your business, it is obvious that you need customers, you crave for them. You want the customers to keep calling you on your phone so that you can make money. In the quest of acquiring customers, the position part is often looked upon.
But without positioning yourself you won’t be able to attract right kind of audience. Nobody knows you, they do not know what you do, and they have no idea why should they choose you on others. And you expect them to come and buy from you.
You will need to spend some time on social media to educate people on what you do and why you do what you do and what’s in there for the customer. And it does not happen overnight, you can to constantly keep telling stories to people so that they are able to recognize you and your band and associate you with the USP’s you have to offer and that’s when you will see the desired customer calling you up.
Position yourself well for all of it to work in your favour.
Now with all these tips you will be able to open hour dream home baking business in India and make it successful! Should you need more help, I welcome you to join my 30DaysHomeBakerChallenge program and give wings to your home-baking business. There is no point struggling with your business when you have a guided help to make it successful.