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Start a Cupcake Business
Starting a cupcake business from home in the UK is quite straight forward, but there are some essential issues you need to be aware of. It's easy to get all the boxes ticked and start selling your cupcakes like ... well, like hotcakes ... but don't get caught out because there was an essential step you didn't cover.
This hub is a short outline list of what you need to do when starting a cupcake business from home in the UK - in other countries there will be other rules and regulations. The basics will be the same, but the laws will differ slightly regarding what you are allowed to do and what certificates and inspections you will need.
Your Business Model: How Will You Trade?
Any business in the UK is defined by its business type. If you are starting a cupcake business alone, then you will be a sole trader. If you are starting your cupcake business with a friend then you will be known as a partnership.
However, if you have big plans, you might want to consider becoming a Limited (Ltd) company, which protects your assets should anything go wrong.
So your three options are to be known as, to trade as, one of three choices:
- Sole Trader
- Ltd Company
As a sole trader or partnership, you will need to inform the HMRC in order to pay tax on the profits you make. As a sole trader or partnership, you can start today - just llet HMRC know soonest (within 3 months of starting).
Setting up a Ltd company takes a little more time and there's a cost too. You have to get your Ltd company name registered and you will need a 'proper accountant' to do your final accounts for you every year.
Cupcake Business Pricelist
You will need to do some research to work out your cupcake business pricelist. Find out what others are charging and what they're offering, then do your sums to see if you can compete on price, quality, or range.
It isn't the cheapest that wins! If you can offer something others can't, then customers will choose your cupcake business.
Whether you are a sole trader, partnership or Ltd company it is essential you keep your accounts from day one. This isn't difficult to do but is essential.
Keeping a box of receipts to hand over will cost you a lot of money in a year's time when you try to hand that over to an accountant. These day's it is very simple to enter your accounts into software programs. This keeps you organised and, at least, means you hand over accounts in a way your accountant can handle, saving you a LOT of money. It's worth it.
Free Accounts Programs
One leading UK free accounts programs is called Crunch.
Is Your Kitchen Clean Enough?
If you are making any food for human consumption, you will need to register with your local Department of Environmental Health.
They will send an Environmental Health Inspector out to inspect your kitchen.
The Department of Environmental Health can also provide you a pack of catering documentation and some leaflets to help you prepare for this visit.
You can ask them lots of questions to get your kitchen to a state where it will pass the , which will inspection - and if it fails they will tell you what you need to do - so don't be scared of this. It's an essential step in setting up your cupcake business. They are actually on your side. They want your kitchen to pass their inspection, they want your business to start.
The alternative would be to rent space in an existing commercial kitchen. For this you will need to identify local professional kitchens and approach them to find out if they'd let you operate from there. The downside of this is it's somebody else's kitchen, you'll be restricted to the hours you can be in there - and there will be a cost.
If you hold the Food Hygiene Certificate then this helps smooth the way to getting your kitchen inspection passed. Simply doing the Certificate makes you knowledgeable about what you need to do, so you'll gain the knowledge you need to get it right first time.
Legal Requirements for Opening a Cupcake Shop
There will be legal requirements for opening a cupcake shop. There will be laws set at a national level - and requirements set at a local level.
You will need to have the kitchen professionally approved - and provide public liability insurance - but you'll also need to ensure that the shop you plan to sell cupcakes from is allowed to sell cupcakes. In the US it's called zoning, in the UK it's referred to as the business class of the property. The local issues can always be answered by your local Council.
It might be that you're allowed to sell them from your shop, but not to offer a delivery service - or vice versa. You need to check what you can do in the shop you choose.
Class A3 is food and drink - but Class A5 is hot food and takeaway.
Get Your Food Hygiene Certificate
If you are working with food you need to obtain your Food Hygiene Certificate. This isn't a legal requirement, but it'll certainly be something that gives your customers confidence. The Food Hygiene Certificate teaches you all about food safety and law and how to store ingredients etc.
It is pretty essential knowledge for anybody starting any food business, whether a sandwich shop or a restaurant!
Food Hygiene Certificate Online
Some local colleges will offer the food hygiene certificate in a variety of course formats, but it's also a course that's ideal to be done online. For many people the availability of a food hygiene course locally simply doesn't fit in with the business start up dates, so the online option is preferable as you can start today.
There will be a cost to take this course and get your certificate, but as this is ESSENTIAL to starting your business it's something you shouldn't try to avoid - and the cost is tax deductible too.
If you have this Certificate then the kitchen inspection will go more smoothly as it is evidence that you know how to keep your kitchen/food safe.
Do Your Maths - Ensure a Profit
With any business you will have your costs. Costs in setting up a cupcake business break down into two sections:
1) Product Costs
- Cupcake ingredients
- Cupcake equipment
- Kitchen tools.
2) Business Costs
Making the cupcakes is just one part of the business - you now need to sell them, create price lists, contact suppliers etc. Don't underestimate the cost of running the business, which might include these, and more, costs:
- Website, facebook page, and similar
- Business cards, literature, labels, printing
- Marketing costs
- Telephone calls, electricity/gas/water.
What costs you incur and how much they are will depend on your individual business, how you plan to market your cupcakes and the geographic area you plan to cover.
Get a Website, Webpage or Facebook Business Page
You will need a website of some sort. Customers will expect to be able to look at your website, see photos of your cupcakes and perhaps see your price list. If you are doing markets, then this is a great way, too, to list your dates/locations so customers can find you.
The alternative is to just keep it simple and create a Facebook Business Page, which is free.
For both of these, you can do it yourself, for free or on a low budget, or you can get your website custom-built. Many websites these days are built using Wordpress software (this isn't Wordpress.com which you can't use for business purposes), which is easy to use and can be auto-installed easily when you buy a domain name/hosting.
Having an online presence is ESSENTIAL if you want customers to have confidence in you, if you want them to become repeat customers and if you want them to recommend you to their friends, family, work colleagues or in online discussions.
Facebook divides people like Marmite .... there is a quiz to help you decide if Facebook is right for your business.
Entrepreneur of the Year, 2012 Won by a Cupcake Business
In 2012 Lucy Clark of St Albans won the University of Hertfordshire’s prestigious annual Enterprise Ideas Challenge for her cupcake business, netting her a cool £10,000 in prize money and worldwide exposure for free through the award.
This was achieved in less than two years of operating and she now has a solid income and trade for life!