a question for people selling baked items ?

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Joined Jun 25, 2001
Hi ,
I have just started baking cakes and selling them to my neighbors and friends. I have a two part question.....if anyone could help me it will be greatly appreciated..........thanks

1. Do i need any kind of disclamer form, which will prevent people from suing me...........i prepare birthday cakes and any occasion cakes (did a class from wilton) and do so in the most hygiene manner. I was only worried if i could be sued...........can anyone help me here......

2. I wanted to know how to calculate the cost of utilities and labor so that i can determine the cost price of my cake...

Thanks a lot for your time .....
 

pete

Moderator
Staff member
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Joined Oct 7, 2001
If you are doing this from your home, not a bakery, then I believe that no disclaimer can keep you from getting sued. The issue lies in that you are preparing food in a kitchen that has not been inspected by the health department. You might even be breaking some zoning and building codes. You may want to check this out with your local officals and see what others, here, have to say, but I would guess that you have no protection.
 
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Check your state laws. In my state it is possible to get your home kitchen certified for commercial production, provided it meets strict equipment requirements and passes an inspection.
 
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Joined Jan 1, 2001
This is all very good advice. Definately check your local and state laws, some states do allow you to operate from your home after getting approval from the board of health and local FDA office (regulates bakeries and home retail operations). Also if lawsuits are a concern, purchase some liability insurance-the risk from an operation such as yours is relatively small, so the premiums should not be too expensive.
Regarding costing, figure out what your raw materials and food costs are. Don't forget to include in that figure the cost of cardboard cake rounds, boxes and any other non-edible supplies you use. If it walks out the door in a customer's hands, it should be figured into your cost of goods sold. To figure what to charge, take that number and divide by .3 to obtain a 70% gross margin. This is generally what bakeries use to figure their pricing structure. Trying to figure out what gas & electricity, rent and so forth for each cake is a study in futility and will never be accurate. A 70% gross margin should amply cover your overhead costs and supply you with a nice profit.
 
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just a thought but the liability insurance might not cover you if you are not cooking in an approved kitchen space.
 
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Life is about taking risks, my parents showed me that u can beat the system though by taking a small buissiness started in the back yard and running the gauntlet.
By the time the government had even noticed them doing bussiness, the company had been sold for a seven figure sum and nobody ever got sick or sued. Doubt in yourself is your only enemy.
 
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Joined Apr 28, 2003
Here, theres a by-law that won't allow people to operate a food business out of their own homes for health and saftey reasons. However, the government won't really look into it unless your business is making a certain amount of money so the disclaimer thing is out of the question.

For your second question. You need to reach a unit standard/cost so something like 1kg flour = $0.80 or 1egg = $0.25. You can now calculate the ingredient cost of what you make. Utilities + labour should be covered in your mark-up price i.e. calculate your daily gas consumption by dividing up your monthly gas bill into 31 days/month and cross reference to your sales of that day minus cost of ingredients.

Daily gas consumption - gross daily profits = +/- net daily profits

make nessesary adjustments to your pricings but I think, for a home based business, mark-up shouldn't exceed 40% depending on how much your ingredients cost.
 
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Peppercorn, I have to disagree. Taking risks and doing business correctly is one thing, taking risks by not following laws and codes is a totally different subject. Just another little part of our crumbling society.
No offence, just very passionate about this issue, more so the sanitation situation more than the Gov"t. Proven fact, most food borne illness breeds in the family kitchen, not comercially inspected ones.
 
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Joined Dec 4, 2003
SweetDreams...

Now, first off, my experience may be different from yours in that I live in Canada, not the states, but hey, who knows, it might help.

I started out by baking cakes, etc and just giving them to family, friends, etc. just for the fun of it. I then realized that there was money to be had here and did the same thing you are currently doing. Baking and then selling to neighbours and friends.

CrepeMaker said "sell your products to your friends ad known ones" By doing this, it will not keep you out of trouble. IF by ANY chance, somebody were to get ill or maybe bite into a foreign object, you are held accountable. So, if you just sell to your family and friends, and nobody else eats it, you are probably ok. BUT the minute another person/child eats that cake and gets ill, etc. the parents of that child are not your friends. If that makes any sense at all, keep it in the back of your mind. If it didn't make sense, sorry! :confused:

With regards to a 'disclamer', don't even bother. If something were to happen and was taken to court, your disclamer would be null n void since you decided to act on your own accord and sell products (starting your own business) without approval from local government. (i.e business licence, inspections, etc)

So...In SHORT (yeah right), you can get sued with a disclamer or not. I would really look at getting a business licence, etc if you are serious about this 'hobby' and turning it into a business. If you are not, and it is in fact just a hobby, DO NOT charge for the items, instead 'give' them as gifts.

God I like to blab!
 
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Joined Apr 20, 2004
Perhaps you could find a commercial kitchen that is available (at your church, school etc.) you could use on "off" times when they are not using it. Also-look into taking the food safety course at your local heath dept.
 
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