A home bakery business plan sets out what you'll bake, the cottage food rules you'll bake under, who buys and where, what each item costs and sells for, and the first year month by month. Its numbers look nothing like a storefront bakery's. With no rent, no staff and an oven you already own, a home bakery's fixed costs are a few hundred dollars a month, so it can make money almost from the start; its limits are the oven, your hours and what your state's cottage food law allows. In the example below, a home baker selling sourdough, cookies and cinnamon rolls at two markets reaches about 950 items a month by month 11, loses $66 in month 1, and ends the year about $15,000 ahead on top of paying for the baking. The storefront bakery plan in this series, on the same island, loses $10,567 in its first year. Below is a description example, each part of the plan, the projection, the comparison, and a free template.
The short version
- Check your state's cottage food rules first: what you can bake, where you can sell, the label, any sales cap.
- Describe the business in a paragraph: the bakes, the customers, the markets, the goals.
- Cost each item: ingredients and packaging, your hands-on time, and the card fee.
- Keep fixed costs to what you need: market fees, insurance, mileage, a little marketing.
- Project 12 months, and compare the year's sales with any cap.
- Know what would make you move to a commercial kitchen, and what it would cost.
- TaroStack costs every bake from what you paid and shows what each item really earns. More below.
Part 1: the business description
Windward Roots, the made-up taro business I use in these examples, began as a home bakery. Its description reads:
Windward Roots Bakery bakes taro sourdough, cookies and cinnamon rolls in a home kitchen on Oʻahu under the state's cottage food rules. We sell at two Saturday markets and take preorders for pickup. Every item is labeled with its ingredients, allergens and the statement the state requires. In the first year we plan to sell 260 loaves, 520 cookies and 175 rolls a month.
Part 2: the cottage food rules
A home bakery runs under your state's cottage food law. It usually decides which foods are allowed (bread and cookies are commonly allowed; items that need the fridge often aren't), where you can sell (often direct to customers only), what the label says, whether you register or get inspected, and in some states a cap on yearly sales. Check yours before you plan anything else; how is in how to start a cottage food business. If your state has a cap, compare it with this plan's $34,243 of first-year sales.
Part 3: what each item costs
The costs come from is a home bakery profitable, where a month is worked through. For the plan, each item carries its hands-on time at $20 an hour and a 3% card fee:
| Per item | Sourdough loaf | Cookie | Cinnamon roll |
|---|---|---|---|
| Ingredients and packaging | $1.45 | $0.55 | $1.10 |
| Your hands-on time, at $20 an hour | $2.00 (6 minutes) | $0.33 (1 minute) | $1.00 (3 minutes) |
| Card fee, 3% | $0.30 | $0.09 | $0.15 |
| Variable cost | $3.75 | $0.97 | $2.25 |
| Item | Price | Variable cost | Contribution | A month at full speed |
|---|---|---|---|---|
| Taro sourdough loaf | $10.00 | $3.75 | $6.25 | 260 |
| Cookie | $3.00 | $0.97 | $2.03 | 520 |
| Cinnamon roll | $5.00 | $2.25 | $2.75 | 175 |
Part 4: operations
| Area | In the plan |
|---|---|
| Kitchen | Your home kitchen, kept and used as your cottage food law requires |
| Oven | How many loaves a bake, how many bakes a day: this is the ceiling |
| Selling | Two Saturday markets and preorders for pickup |
| Labels | Product name, ingredients, allergens, your name and address, the state's home kitchen statement |
| Records | What you baked, from which ingredients, sold where; sales against any cap |
Part 5: the first year, month by month
Sales start at 15% of full speed and reach 100% by month 11, against $540 of fixed costs a month: market fees for eight markets, gas and mileage, extra power for the oven, insurance, online ordering, and the permit spread over the year.
| Month | Loaves | Cookies | Rolls | Sales | Profit | Cash, year to date |
|---|---|---|---|---|---|---|
| 1 | 39 | 78 | 26 | $754 | −$66 | −$66 |
| 2 | 52 | 104 | 35 | $1,007 | $92 | $26 |
| 3 | 65 | 130 | 44 | $1,260 | $251 | $277 |
| 4 | 78 | 156 | 53 | $1,513 | $410 | $687 |
| 5 | 104 | 208 | 70 | $2,014 | $725 | $1,412 |
| 6 | 130 | 260 | 88 | $2,520 | $1,042 | $2,454 |
| 7 | 156 | 312 | 105 | $3,021 | $1,357 | $3,811 |
| 8 | 182 | 364 | 122 | $3,522 | $1,672 | $5,483 |
| 9 | 208 | 416 | 140 | $4,028 | $1,989 | $7,473 |
| 10 | 234 | 468 | 158 | $4,534 | $2,307 | $9,780 |
| 11 | 260 | 520 | 175 | $5,035 | $2,622 | $12,401 |
| 12 | 260 | 520 | 175 | $5,035 | $2,622 | $15,023 |
The year's sales are $34,243 and the profit $15,023, on top of $20 an hour for the hands-on baking. Market days, shopping and cleaning are the owner's time on top; at full speed the whole week is about 40 hours.
Part 6: a home bakery against a storefront
| First year | Home bakery, this plan | Storefront, in bakery business plan |
|---|---|---|
| Fixed costs a month | $540 | $10,000 |
| Total to start | $2,850 | $40,600 |
| Lowest cash point | −$66, month 1 | About −$20,200, month 7 |
| The year's profit | $15,023 | −$10,567, before the owner's pay |
The storefront isn't a worse business; it's a bigger one, built to sell far more than a home oven can bake, and its first year pays for that. The home bakery is the cheap way to find out what sells. The time to move is when the oven, your hours or the cottage food cap is the limit and the orders are still coming. A commissary kitchen, rented by the hour or month, is the usual next step; what it costs is in commissary kitchen cost.
Part 7: the startup budget
| Item | Example |
|---|---|
| Cottage food permit or registration | $150 |
| Stand mixer | $450 |
| Sheet pans, racks and tools | $300 |
| Dutch ovens and proofing baskets | $200 |
| Boxes, bags and labels | $250 |
| First ingredients | $200 |
| Market tent and table | $300 |
| Product liability insurance, first year | $400 |
| Website or online order page | $100 |
| Working cash | $500 |
| Total to start | $2,850 |
Get the template
Download the home bakery business plan template. Type your bakes with their price, variable cost and monthly volume at full speed, your fixed costs and startup budget, and how fast sales will come; it works out each month's sales, profit and cash, the first month with a profit and the lowest cash point. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The plan has three items. The kitchen has a sourdough starter, two flours bought in 50 lb bags, butter in three sizes, preorders by text, and two markets with different bestsellers. When flour goes up, the loaf price stays where it was because nobody worked out the new cost. And the day the baker moves into a commissary kitchen, nothing written in the notebook says which recipes yield what at scale.
How TaroStack does it
TaroStack costs every bake from what you paid, and keeps the recipes ready for a bigger kitchen.
Every bake, costed. Each item is a recipe, with sub-recipes for the starter and doughs, and units convert: buy flour by the 50 lb bag, bake by the gram. Recording a bake takes ingredients off stock at what you paid and divides by what came out good. Recipe truth checks, from your own batch history, whether a recipe yields what it claims.
What each item really earns. Margins are reported by product and by customer, on what each bake actually cost, so the loaf whose margin slipped when flour went up shows in the report once its next bake is costed. Preorders are sales orders for their pickup date.
And ready to grow. Counting works on a phone, and the reorder list shows flour and butter in days of cover. When the bakery moves, the recipes, costs and history move with it, and a second site, the commissary, is a plan away.
| The question | Notebook | In TaroStack |
|---|---|---|
| What does a loaf cost now? | Worked out once | Every bake, at what you paid |
| Does the recipe yield what it says? | Hoped | Recipe truth, from your batches |
| This week's preorders | Texts | Sales orders, by pickup date |
| Enough flour for Saturday? | Lift the bag | Days of cover |
Recipes, batches, sales orders and margins are on every plan, from $49 a month; more than one site is on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.