How to Start a Cake Business From Home in the UK

If you’re a baking enthusiast looking for a new profit-making venture, starting a cake business from home might be the perfect option for you. 

The UK cake market is projected to reach a revenue of £2.318 billion by 2030, making it a highly attractive sector.  

In the following sections, we offer a step-by-step guide on how to start a cake business that will generate money without ruining the fun part of cooking.  

Step 1: Research and Plan Your Business

The first step to starting a home baking business is in-depth market research. This is a crucial practice for anyone opening a new company and can expose additional information on competitors, market trends, high-demand niches, risk areas, and other valuable insights.

As a result, you’ll have every opportunity to create a better business that attracts clients and makes your family and friends feel proud.

Understand the Market

Start by gathering as much information as possible on the market itself:

• How big is the market?
• What type of cake baking services is it made of?
• How many other home bakers are there in your area? What types of cakes do they offer, and what are their prices?
• What portion of home bakers opened a professional bakery and started selling cakes on a larger scale? 

Finding the answers to these questions is vital for determining your growth opportunities. For example, the UK has experienced a 53% surge in home-based baking ventures, with more Brits than ever turning their love for baking into thriving small businesses.

Next, think about your target audience and try to identify customer groups that are likely to spend money on home-produced cakes. As a cake baker, you can choose to target individuals, wedding planners, or local cafes. 

If you prioritise individuals as your main target group, identify the perfect age groups, occupation, taste preferences, spending capacity, and other important factors. For instance, most UK adults enjoy cakes and sweet baked goods as an occasional treat, with only about 30% indulging weekly. 

Younger adults (16-34) are the biggest fans – they love fresh, premium, and limited-edition bakes, and nearly 40% say they’d pay twice as much for something freshly made. While more people are thinking about health and looking for options with natural sweetness or extra protein, over half would rather just enjoy fewer treats than switch to “healthier” versions. 

This opens the door for creative, high-quality cakes and sweet bakes that feel worth the indulgence.

Define Your Niche

Next, decide on a speciality and define your niche to differentiate yourself from other home bakers.

To do this, research trends in cake design, flavours, and dietary options like vegan or gluten-free cakes. Research what the demand is for specific types of cakes, like wedding cakes, novelty cakes, custom cakes, themed baked goods, or cupcakes. 

Ideally, offer unique selling points, like personalised designs or allergen-friendly options, to stand out from the crowd. 

To separate yourself from your competitors and niche down, you can explore the following options:

• Working with a specific type of pastry – allows you to use less ingredients, minimise food waste, and unlock your creativity. For instance, focus on choux, cookies, or cakes of different flavours.
  
• Make cakes for specific diets – offering cakes that match vegan, gluten-free, nut-free, or vegetarian diets can help build a loyal customer base.
  
• Experiment with unusual ingredients – most people are attracted by unusual things that appear more custom, luxurious, and rare. Try positioning yourself in this space by creating cakes with vegetables, spices, or exotic fruits.
  
• Bake with alternative sweeteners – younger consumers are most conscious about their health and often prefer healthier choices, like date, apple juice, stevia, or grape juice. 

Making the right decision on your niche will be based on market results. Examine trends, consumer preferences, and dietary insights to make the right choice. 

Develop a Business Plan

Don’t underestimate the power of a business plan. Even if you’ll be home-based, a business plan is core when it comes to guiding you towards your goals and serving as a road map to success. 

The good news is that you don’t even have to spend days creating a detailed document. Simply outline the most important sections, including a business description, products and services, marketing and sales, pricing, and financial plan.

Outline your goals and make a list of start-up costs, including:

• Food hygiene or allergen training; 
• Insurance;
• Basic equipment and kitchen tools (mixers, cake tins, others);
• Ingredients;
• Utilities;
• Marketing. 

Also, don’t forget to factor in any “hidden costs”, like fuel for delivering your cakes or delivery rates, time spent baking, cake decorating, washing up, and bookkeeping. 

Step 2: Register Your Business and Meet Legal Requirements

The second stage of selling baked goods from home is dedicated to something vitally important – registration and legal requirements.

Register with HMRC (His Majesty’s Revenue and Customs)

When starting a new business (even if it’s from home), you’ll need to make an official registration. In the UK, food businesses that operate from home can either be registered as sole traders, limited companies, or partnerships, in case you have a co-founder.

Most home bakery owners in the UK choose to make a sole trader registration as this is the simplest option. 

As a sole proprietor, you’ll need to pay tax on your earnings via Self-Assessment and be personally responsible for any debts or liabilities your cake business accumulates. You’ll also need to register with HMRC for tax purposes and pay National Insurance contributions depending on your profits.

If you choose to set up a limited company, you’ll need to register the business with Companies House and pay corporation tax. Also, a separate business bank account is highly recommended for limited companies to keep finances separate. 

Obtain Necessary Approvals & Comply With Other Legal Requirements

There are several legal components of running a cake business from home that you must be aware of:

• Comply with the government’s requirements and guidance for running a business from home – including obtaining permission from mortgage providers or landlords, the local council, getting insurance, tax allowances, business rates, and health and safety.
  
• Register as a food business with your local authority’s Environmental Health Department – a mandatory registration that must be made at least 28 days before you start trading.
  
• Ensure you’re disposing of food waste safely and in accordance with requirements
  
• Follow UK food preparation and hygiene standards – you can find more details on specific requirements in the Safer food, better business guide produced by the Food Standards Agency (FSA).
  
• Create the necessary paperwork for HACCP and Food Safety Management – The Hazard Analysis and Critical Control Points requires that you have a food safety management plan ensuring that you manage food safely.
  
• Adhere to allergen labelling rules – have information on the 14 major allergens and always declare allergens in any product you package and sell. In some cases, Natasha’s Law may also apply. 

Keep in mind that after registering with the Environmental Health Department, you’ll have to undergo an inspection with an Environmental Health Officer, who will ensure your kitchen meets hygiene standards. 

This inspection usually takes place a few weeks or months after you begin operating and covers things like the food preparation area, storage, cleanliness, and procedures. After the inspection, the officer will give you a Food Hygiene Rating from 0 to 5 (5 being the best). 

Although not legally mandatory, food hygiene training is highly recommended. It will allow you to obtain a Level 2 Food Safety & Hygiene for Catering certificate, which is certainly considered an advantage. This certificate can lower your insurance premiums and show your dedication and understanding of food safety rules. 

Allergen training is also a useful asset to have before starting your cake business from home. 

Insurance Requirements

Having an insurance policy is not an official requirement when starting a cake business from home. However, in some cases, it might be a requirement by other parties (for instance, if you sell your products at a craft fair you may be asked to have public liability insurance).

The types of insurance that we highly recommend exploring as a baker include:

• Public liability insurance; 
• Product liability insurance; 
• Professional indemnity insurance;
• Additional insurance (in case you use vehicles for deliveries, hire staff, or other situations).

It’s also important that you inform your home insurance provider that you’ll be starting a business from home as you might need to make changes to your home insurance or include an endorsement for business equipment. 

Step 3: Set Up Your Home Kitchen

After you’ve familiarised yourself with all of the legal aspects and requirements of starting a cake business from home, you can move on to the most interesting part – setting up your home kitchen. 

Adapt Your Kitchen

As noted above, your home kitchen needs to meet hygiene and safety standards just like a commercial setup. 

Start by creating dedicated zones for your cake business:

• Hygiene first – Make sure surfaces are easy to clean, cupboards are pest-free, and ingredients are stored correctly in airtight containers.
  
• Separate baking space – If possible, dedicate a counter or shelf specifically for baking. Avoid using your baking area for other household activities like laundry, crafts, or pets’ meals.
  
• Cleaning routine – Set up a regular cleaning schedule, including sanitising countertops, washing utensils thoroughly, and checking for expiry dates on ingredients. 

Consider adding a small whiteboard or checklist for hygiene and prep tasks, as this can help maintain consistency as orders increase.

Invest in Equipment

Having the right tools is just what enables home-based bakers to produce high-quality cakes efficiently. 

While it’s tempting to buy everything at once, focus on essentials first and expand as your business grows:

Category	Items
Baking Essentials	Stand mixers, hand mixers, baking tins (multiple sizes), measuring cups, scales, mixing bowls, silicone mats
Decorating Tools	Piping bags, nozzles, spatulas, turntables, cake scrapers
Packaging Materials	Boxes, cake boards, protective covers
Display Items	Cake stands, tiered boards, props for photography or client consultations

Acquiring all these assets can be expensive. Check out second-hand equipment or local baking suppliers to save money without sacrificing quality.

Stock Up on Ingredients

Let’s not forget about the must-have component for anyone who wants to sell cakes – the ingredients. 

Stocking wisely ensures you can consistently deliver delicious results:

Category	Details
Core Ingredients	Flour, sugar, butter, eggs, chocolate, vanilla, and other baking staples
Premium Options	Specialty items like Belgian chocolate, exotic flavorings, organic ingredients
Bulk Buying	Purchase non-perishables like flour, sugar, baking powder in bulk to reduce costs
Fresh Produce	Regular deliveries of fruits, creams, and fillings to ensure freshness and minimize waste

Of course, the exact ingredients you’ll need to invest in depend on your baking style, niche, preferences, and tastes. 

Step 4: Create a Pricing and Payment Strategy

We’ve now reached a stage that is often considered burdensome and challenging for most business owners – payment and pricing strategies. Don’t worry, with the tips we share below, covering this phase won’t be a problem. 

Calculate Costs

Let’s face it – even if you set your prices based on the competition and the market, at the end of the day, the goal is to cover your expenses and make a profit.

To do this, make a list of all costs associated with starting and running your business on a daily basis, including ingredients, utilities, packaging, and others. You can use our recommendations from above and add information on UK pricing, exploring new, second-hand, and bundle prices.

When determining your costs, don’t forget your personal time and effort. Factor in shipping along with overheads like insurance and utility bills. 

Ensure your prices reflect the complexity of your designs or customisation options.

Payment Methods

To make payments easy, quick, and safe for both you and your customers, it’s best to offer a mix of digital, card, and online checkout options. 

Some of the following options are highly recommended for home-based cake bakers:

• Online checkout system – allows customers to order and pay in one step and is an ideal choice if you plan to sell cakes through a website, social media, or an order form.
  
• Card payments – suitable for customers who prefer to pay by card at collection or delivery.
  
• Online payment links – perfect for taking deposits or full payments via email, text, or social media. This option makes sense for large orders like wedding cakes.
  
• Digital wallets and mobile payments – Apple Pay and Google Pay are becoming increasingly popular, especially for mobile-first buyers. 

Offering a variety of payment options can help you capture more sales, build trust, and simplify your bookkeeping. When choosing your payment provider, make sure you’re partnering with a reputable and proven name to guarantee safety and security for your business and your customers. 

It’s also worth mentioning that keeping records of financial transactions is key. Use a simple spreadsheet or invest in accounting software to track income and expenses. 

Step 5: Market Your Cake Business

Creating delicious cakes is great, but your business will only grow if more leads learn about them.

Create an effective marketing strategy that will put your brand in front of more people and help boost your sales:

Build an Online Presence

First, create a simple website showcasing your portfolio, services, and contact details. Integrate booking and payments functionalities to allow users to find everything they need onsite. 

Then, you can invest in SEO and Google Ads to increase your visibility and ensure that users who search for cakes can land on your page or content across social media. 

HubSpot’s 2024 Social Media Trends report uncovered that one in four consumers today search for brands via social media apps instead of internet browsers. Use trending social media platforms like Instagram and Facebook to share mouth-watering photos of your cakes and utilise TikTok for video content.

The best way to engage with more users on social media platforms is to post regularly and establish an authentic voice. 

Some interesting content ideas for maximising reach and growing your audience include:

• Close-up icing and piping videos showing the process;
• Funny baker moments that the audience can relate to;
• Step-by-step tutorials;
• Cake hacks; 
• Customer testimonials or stories; 
• Order reminders. 

Don’t forget to engage with other profiles and like or comment on other people’s posts to boost engagement. 

Attract Local Customers

Locally, you can also explore key avenues for attracting more customers.

For example, consider partnering with local cafes, wedding planners, or event organisers for referrals. These businesses already have an established customer base that, to some extent, matches your ideal customer group. 

Although often considered outdated, flyers can also be a game-changer for home bakers. Distribute promotional and eye-grabbing flyers in your neighbourhood or attend local markets to network with potential partners and showcase your work.

Encourage Word of Mouth

Perhaps the most valuable type of marketing is the one that comes from loyal customers – word of mouth. 

Encourage people who have already had a taste of your work to share their stories with friends and family. You could incentivise your clients to leave reviews and recommendations on your website or social media channels by giving away discounts or special offers. 

Step 6: Manage Orders and Customer Relationships

Managing orders and customer relationships is also a big part of growing a successful cake business from home. 

For maximum results, explore the following options:

• Streamline order management – Use templates or software to collect order details, including design preferences, dietary needs, and delivery times. Set clear policies for deposits, cancellations, and last-minute changes to avoid confusion or even legal disputes.
  
• Deliver high-quality products – Meet delivery deadlines and ensure cakes are securely packaged. Provide care instructions to maintain cake quality until consumption.
  
• Build loyalty – Keep in touch with customers for future events and offer seasonal promotions or loyalty discounts.

Remember that maintaining customer relationships and having returning customers is much easier and affordable than acquiring new clients. 

Step 7: Plan for Growth

As you become more comfortable with your home-based cake business, explore ways to grow and scale. 

For example, consider expanding your offering by adding new product lines, like cupcakes, cookies, or dessert tables. Experiment with seasonal themes or trending designs and perhaps cater to holiday-related orders.

At some point, you may discover that it’s time to hire employees and get assistance in running your home-based venture. When building a team, don’t forget to cover any legal requirements related to training and insurance.

Finally, scale your operations by investing in more advanced equipment or moving to a commercial kitchen if needed. Explore wholesale opportunities with local businesses or event planners.

Conclusion

By following this detailed guide on how to start a cake business, you can turn your passion into a money-making machine. 

Throughout your journey, make sure you’re complying with all applicable rules and regulations related to producing and selling food from your home.

Frequently Asked Questions

Do I need a licence to sell cakes from home in the UK?

Yes. You must register your home as a food business with your local council’s Environmental Health Department at least 28 days before trading. Registration is free, and an inspector will visit to ensure your kitchen meets food hygiene standards.

Do I need any qualifications to start a cake business from home?

You don’t need formal qualifications, but you must complete basic food hygiene training – usually a Level 2 Food Safety and Hygiene Certificate for Catering. It’s a short online course that proves you understand safe food handling and storage.

What legal information do I need to include on my packaging or website?

You must list allergens and key ingredients clearly on labels, menus, or your website. Common allergens include eggs, milk, nuts, gluten, and soy.