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The Setup Costs Of A Cake Baking Business

Posted 07/05/2010 by Mary Horgan

adding up figures

Setting up a business is a costly enterprise. Start-up expenses will vary drastically from business to business but it is important for all budding professional, self employed cake bakers to carefully calculate the potential cost of their business venture. There are plenty of small costs that, if unforeseen, could mount up. Foresight is paramount to remaining in control of your business’s finances.

Capital Costs

The capital costs of your cake baking business are likely to be your most immediately obvious outgoings. These are one off, sizeable purchases. An oven, professional grade bowls, pans and other cooking equipment are part of this category. Office equipment, computers, telephones and fax machines will all fall under this heading too. Premises, vehicles and research costs also come under this umbrella. All these items can look dauntingly expensive on your business’s shopping list. Depending upon the size of your business, however, a proportion of the cost of these items can be deducted from your business tax bill. Small businesses also receive an Annual Investment Allowance. Under this scheme, 100 percent of the first £50,000 of qualifying expenditure on plant and machinery can be written off against the business’s taxable profits.

Marketing Costs

First of all, remember to factor in the cost of business cards, as you will need these early on in your dealings. You may need to consider paying for a featured listing in your local phone book. Don’t forget to give thought to these initial basic costs.

In terms of advertising, it is important to research the cost of printed adverts in a variety of local and national media, if this is something you are considering. Leaflets and any introductory offer coupons will also need to be printed. In developing your brand, you may be keen to engage professional help to design your logo and/or company colour scheme. When it comes to the web, you will need to factor in the cost of webhosting. You might also consider engaging professional help in terms of web design or search engine optimisation (SEO). You should also think about the cost of Online Adverts, such as pay per click (PPC).

Legal and Financial Costs

Insurance will make up a large part of the setup costs of your new cake baking business. Remember that you will need public liability insurance, product liability insurance, professional indemnity insurance and perhaps employers’ liability insurance. You may be able to find a more affordable package that combines a number of these.

Professional help will also prove costly. You may choose to hire an accountant. Even if you decide not to go down that route, it is likely that you will need at least one consultation with an accountant. If you are running a catering business or similar enterprise you will need to hire a solicitor to help you draw up standard format contracts for your clients. You may also need help devising employment contracts. The cost of employment, of course, should also be a prime consideration.

Software prices, too, can add up. You may need to invest in financial software, such as a bookkeeping programme. It is advisable not to skimp on these initial outgoings, as laying the foundations for a smooth-running business is likely to prove cost effective in the long run.

Remember To Pay The Mortgage…

Whilst the costs listed above may seem sizeable enough, it is vital to remember that your regular, personal outgoings are unlikely to alter. Child care costs, rent or mortgage payments, food and utility bills will all still need to be met. It is important to factor these into your calculations, as your financial security could otherwise be at risk.

Take time to write a full shopping list for your business venture. Note down everything that you will need to pay out for and research the cost of each. Funding a new business is almost always stressful but thinking ahead will ease the load.

6 Responses to “The Setup Costs Of A Cake Baking Business”

  1. Manisha says:

    Hello, I am willing to start a cake shope in one of the most busy areas in UptonPark are, on Green street. I am very confident about my skills and potentional about the Green street. My husband is professional Pastrychef and was working till Feb 2012 with Marriott (county hall London) as pastrychef. He is willing to help me out in this business. We both are here new to the country, and we want to do everything legally and properly. We want to maintain the highest standered of hygine and quality. What are the legal things do we need to aquire beofre starting???????? please help me. Thanks and Regards Manisha

  2. pauline says:

    Hi i would like to open my own cupcake and coffee shop but wasn’t sure if i needed to have quaifications or not as i will ne baking the cakes myself ?

  3. Becky says:

    Hello, I am starting a small cake business, selling cakes and puddings from my home. I am having real trouble choosing a supplier for cake boards/boxes on/in which to give my cakes to the customers. Could anybody please reccommend a place to buy these in bulk at a reasonable cost? Thank you.

  4. Fat says:

    Manisha, Is the cake shop now open? If so where about and name. Thank you

  5. Thecupcakeco says:

    Great article most helpful

  6. Laura says:

    Hi, I just wondered if you could advise me on starting a cake business. I’m currently already working full time but want to set up a cake business from home part time. Do u know how this will affect my tax, as will only be doing a few orders each week so just not sure if it’s worth me doing it cuz of the tax, hope you can help. Laura

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