You make the best cookies, brownies, and Whoopie Pies in town, so you decided you wanted to try spreading the joy and start selling them. You don’t have enough money to spend on a physical store between the rent, utilities, equipment, permits, etc., so instead of looking for a physical location you decide to start small with an online store. All excited you lay out a budget; but how much will you need a month? What do you need to build a store? How are you going to mail everything? Well, here’s a little how-to article to help you get started.
Budget – How Much Money Do I Need?
Your budget is going to be split up in 3 ways: what you need to actually make your products, what you need to build the online store, and marketing.
When coming up with a baking budget, first decide what your goal profits are. The best way to figure how much to charge per baked good is dreaded math; so figure out the cost of each ingredient first. You do this by taking the cost of the item and dividing it by the amount that you need. This will give you the cost of each ingredient that goes into a tray of brownies or whatever you’re cooking.
Example: 1 Gallon of Milk Costs $3.75
1 Gallon = 16 Cups
3.75/16 = .234375
I would round up since we are dealing with budgets, so the price per cup of milk is $0.24
You can do this with all of your ingredients until you figure out exactly how much that tray of brownies cost. After you figure out the cost you can decide how much to price those brownies. When you are first starting out you want to price conservatively, so don’t get too crazy with dreams of profits.
Now that you know how much to price your brownies, you are going to need equipment. If you are starting out small, in your own kitchen, you may be able to get away with your personal equipment and things you can get for cheap. Once you start growing you will need to decide what equipment you need that you believe is worth being higher quality and what equipment you can get away with buying cheap. Remember to stick with your budget and adjust your budget when you reach milestones.
Budget in EVERYTHING!
Other budget items you need to remember: storage items, packing items, if you need to hire someone to help, and lots more little things that add up. I suggest you make a list of every little thing along with a price to keep all of your expenses straight. If you need toothpicks, figure out the exact cost of a single toothpick, it may sound tedious but it is going to be the best way to figure out exactly what your profit margins are and how to price everything out.
The E-commerce Side
So now you know exactly what each, individual brownie costs; you’ll have a pretty good price idea and are ready to sell. But, then you realize a good website can also cost money. Now before you break into tears and break your calculator in half due to math overload, I can help you get through this. Let’s break everything down.
Hosting – The first thing you need to figure out is your hosting plan. The good news is that there are a lot of programs that make e-commerce easy. In my opinion, the easiest to set up without any prior website experience is Shopify. https://www.shopify.com/tour/ecommerce-hosting
Online and In Person
One of my favorite things about Shopify is being able to sell online and also in person with their credit card reader. This is a great thing because every item you sell in person will be organized with your online sales. You can keep track of inventory and profits in one area (this is my favorite feature for anything you are selling), not just baked goods. If you decide that along with brownies you are going to sell brownie making kits and only have a limited number of them available this feature can be a life saver.
Don’t forget to figure in the cost of hosting into your budget. A basic Shopify account is about $29 a month. At the end of the month, this is going to be taken from your profits and put back into the business.
For more information on comparing e-commerce sites check out this Forbes article: http://www.forbes.com/sites/allbusiness/2014/09/26/which-e-commerce-platform-is-the-best-choice-for-your-online-store/
Domain Name – Domain names are insanely important; it’s basically your store’s name. If you name it something that has absolutely nothing to do with baking, people won’t know what to search for to find you and you may end up getting buried on the internet. If it’s a common name or a variation of a common name it will either cost a fortune or will also get buried by the competition. A domain name should be something easy to remember, rolls off the tongue, and relates to your online bakery. When you find a domain that you like, research it.
The last thing you want is to buy a domain name that recently ripped a whole lot of people off. Also look into your competition and see what keywords can be used to make your website easy to find through SEO.
For more on building, websites check out my other articles http://wahtips.com/tips-on-creating-a-website/ and http://wahtips.com/posts/should-you-start-your-own-online-store/
Building The Website – I mentioned before that building a store with Shopify is extremely easy and you need no experience to make it. However, because it is so user-friendly it does generally cost more over the long term than if you make a website from scratch. If you are a website building expert, then building a website and putting a plugin like Woo Commerce would be a great option.
Hiring a Website Developer
If you aren’t a website expert, you can always hire someone to build it for you, although the short term cost can be anywhere from $1,000-20,000 depending on who builds or site and how. It can be very costly and not a great option for someone who is just starting out. Obviously, this is going to be personal preference, while a custom-built website from a professional is going to be the most unique and you can build it exactly to your own tastes; it can be costly and become a headache if the person who is building it isn’t the best or most professional. The Forbes website that I posted earlier has reviews on self-built website software also.
Marketing Your Online Bakery
After all of your hard work, you managed to figure out your budget, build your website, and are now waiting for those orders to come in so that you can start baking. The orders never came in though because, oops, you never marketed it! In my opinion, marketing can be the hardest part of the whole thing, especially since you know you have a beautiful, functional website and an awesome product. How do you get people to your website?
The first thing you do is spread the word throughout your community. Let your friends and family know, go to local bake sales, farmers markets, and homemade days. Have a yard/bake sale and hand out flyers. There’s a lot of ways to let your local market know you exist online and you can ship your delicious baked goods all over the country.
Work social media so you can expand out past your community, create a Facebook page and encourage people to leave reviews and share it around. Go to twitter and let everyone know about the great deals on your website.
Spread the Word
Join communities like forums and comment sections on baking articles to let people know what you are selling (remember to follow the website owner’s rules though and DON’T SPAM!). strike up deals with other websites and local stores to cross promote. There’re many free ways to get your name out there. If you want an extra boost in traffic, you can advertise through Google AdWords or Bing Ads.
Make Deals with Your Local Shipping Company
One cost that you may throw on the back burner and forget about is shipping. Shipping edible goods can be tricky and costly. The trickiness of shipping edibles is keeping them as fresh as possible and packing them in a way that they will hold up well.
Here is an awesome website on how to pack up your baked goods http://www.sugardishme.com/how-to-ship-baked-goods/
When it comes to what company to use (UPS, USPS, FED-EX), look at who has the best rates and shop around. If you are planning on having a high volume of shipments, you can even strike up deals with these companies to give you major discounts. Some smaller, local shipping companies can also save you money, so make sure you check out every option to get your biggest bang out of your buck. Don’t be afraid of haggling, you are a business person now and the shipping company needs you as much as you need them.
If you are shipping locally, offer a delivery service. This can be both cost effective and a nice bonus for those who live in the area. If you have older kids, paint their bike to correspond with your stores color scheme and send them off to deliver the goods. This teaches kids responsibility and, hey, it’s free labor! Obviously, I don’t want you to send your 6-year-old out alone to go door to door, but if you have a couple of teenagers who want to earn a few bucks. why not use what you have.
You figured out how much your baked goods should cost, your budget, everything you will need, you made your website, you advertised everywhere you could, you negotiated shipping rates like a champ, you got your teenagers and their friends (hey why not recruit friends!) to deliver locally as needed, and you are on your way to becoming a hit with both the online and local community!
Hopefully, this helps those who are thinking of going into the baking business, if you become a success don’t forget to send me a brownie! Also, if I missed anything or you have additional ideas let me hear them in the comments below!