3 Easy Steps to Start a Delicious Cookie Business
Are you the go-to person for friends and family when someone needs cookies? Do neighbors, and colleagues get excited when they see you bringing those delicious baked goods around? If so, you have probably heard something along the lines of “Hey! Why don’t you go into business selling these things?”
Well…why don’t you?
If you are confident in your cookie-making abilities and enjoy coming up with new recipes while perfecting your old ones, perhaps the cookie business is for you. But where do you start? What costs are involved? And is this really a profitable industry?
We will answer these questions and more regarding how to start a cookie business and hopefully send you on your way to sweet success!
Step 1: Do Your Research
Do I Need Any Licenses or Permits to Start a Cookie Business?
Yes, you will need a business license, as most businesses across the country generally require it. Other licenses and permits may apply depending on where you are operating your business. For example, if you plan to work out of your home kitchen, you will want to refer to your local zoning regulations to see if you can do so legally. You will also likely need to obtain licensing from your local health department, so once your kitchen is set up, contact them to arrange an inspection.
Any other licenses you need may depend on the laws in your area, as they can vary greatly from state to state and even county to county. Check your local laws to see what applies in your situation.
What Are Some Skills and Experiences That Will Help You Build a Successful Cookie Business?
It would certainly be helpful if you have previously worked in a bakery, especially if you have experience baking cookies and operating the business side of things.
Even if you do not have experience in a formal baking setting, you may still have some of the skills of a successful baker (not to mention a businessperson) that would serve you well in your own business. For example, professional bakers are usually well-organized and pay close attention to detail.
Baking is a science, so you must have all the right equipment and ingredients on hand, your measurements correct, and the ability to precisely execute the steps in your recipes. To do all this, it is also important to keep calm under pressure and practice patience, as sometimes your cookies just will not work out the way you want them to, and you may have to start from scratch, even if you have a big deadline or order in the near future.
Finally, it is also important for a cookie baker to remain curious and creative. Those who spend the extra time in their kitchens perfecting their old recipes and experimenting with new ones will likely reap the rewards of their labor.
Customers will probably not be complaining if their favorite cookie business often releases new creations for them to try or makes their old favorites even better!
Step 2: Figure Out Your Costs
What Are the Startup Costs for a Cookie Business?
The good news is that a cookie business does not have to have many upfront expenses, especially if you plan to do things on your own in your home kitchen. There may be some extra costs involved here, though, depending on the laws in your area.
For example, you may have to buy new kitchen equipment specifically for your business, change your existing kitchen, or even install a second kitchen in your home to legally operate out of your home.
If you do not want to operate out of your home, then you are looking at the costs of renting a commercial kitchen. If you do not need a kitchen at your disposal full-time, you could try to keep costs down by contacting a local commercial bakery and seeing if they would allow you to use their kitchen after hours.
After you have looked at your kitchen-related costs, you have to consider the price of any permits and licenses associated with your chosen place of business. You will then need to price out your ingredients, any extra kitchen equipment you require, labor (if hiring any outside employees), and packaging.
Also, if you are planning on delivering to customers and your current method of transportation will not do, you may even have to factor in expenses for something like a delivery van.
What Are the Ongoing Expenses for a Cookie Business?
There are two areas to consider for ongoing costs: the direct costs and the overhead (or indirect costs). The direct costs are the ones that are directly associated with making your cookies, like the ingredients, labor, and packaging. Overhead are the costs of running your business, such as the rent, utilities, delivery, and everything else that does not fall under the category of direct costs.
If your cookie business starts to take off and you find yourself constantly filling orders, the direct costs will also increase. Fortunately, many cookie ingredients do not spoil quickly, so you can try to mitigate this possible increase in cost by buying in bulk.
Packaging is another area where you can potentially keep your ongoing costs down. Professional-looking, custom packaging can be expensive, so you may want to consider more generic boxes and/or bags, at least until you start turning more of a profit.
What you could do instead is get personalized sticker labels for your business and use them to close your cookie packages. The sticker can also include information about the cookies, such as dietary restrictions and ingredients.
It is often easier to estimate your overhead because this will mostly remain the same unless you change your place of business. If you do decide to move to a bigger place eventually, make sure you can still afford all the overhead expenses for your cookie baking business.
Step 3: Make a Profit
How Much is the Cookie Industry Worth?
Globally, the cookie market was valued at about 30.62 billion USD as of 2018. Cookies are quite popular all over the world!
What is the Growth Potential for the Cookie Industry?
Over the period of 2019-2015, the cookie industry is expected to grow at a CAGR (Compound Annual Growth Rate) of 5.3%. The demand for cookies is not going anywhere anytime soon, so if you have always thought about opening your own cookie business, now is your chance!
How Do You Market Cookies?
First, consider your target market. Arguably, people of all ages and from all walks of life enjoy cookies, so the target market for a baking business is going to be dessert and snack lovers. There may be some interest in healthy cookie options, but typically when people reach for a cookie, it is not because it is good for them!
You are also going to want to market toward people who like to try new variations of cookies, as when you are first starting out in the business, it can be helpful to give them a reason to choose your cookies over their old favorites. This may mean coming up with a new recipe using unconventional ingredients or even decorating your cookies in a special way. If you want to try and specifically market toward children, for example, you could decorate your cookies to look like their favorite characters.
The extra work involved will likely increase the cost of your cookies, though, so if this is the route you choose to go, then you will also want to be marketing toward those with some level of disposable income.
Though it is important to cater to cookie lovers in general, you could also market your cookies toward more specialized audiences. For example, if you offer vegan, organic, or low-carb cookies, even if it is just one recipe, you could attract different types of customers. Make sure the packages are clearly labeled with this kind of information to grab people’s attention.
How Much Should I Charge for Cookies?
The purchase price of your cookies and other baked goods should cover approximately how much it takes you to make each unit or package, with at least a little extra added in for profit. Consider your direct costs, overhead, and your time and effort in producing each cookie when setting your prices.
It is also a good idea to consider how much your competitors are charging for their cookies. Generally, bakery cookies tend to go for about $2-$6 each, or $12-$25 per dozen.
Any Other Tips for Jump Starting a Cookie Business?
Of course! Here are some ideas to help your cookie and baking business thrive:
- Create a social media presence for your cookie business. Delicious-looking and/or well-decorated cookies can intrigue and attract new customers from both in and outside your area.
- Reach out to locally owned grocery stores and cafés in your area to see if they would consider selling your cookies or even the cookie dough.
- Capitalize on the growing cookies-as-gifts market. You could contact businesses that make gift baskets to see if you can get your cookies included in their baskets.
- Donate cookies to bake sales or as prizes for fundraising auctions.
For more information on starting your cookie company and becoming an entrepreneur, read our guide on how to start a business. It shares steps you should take to get your business off the ground while covering taxes, insurance, obtaining a business license, and naming your new business.
Be sure to check out our other posts for more ways to start your side hustle!