Setting up a cake business: 4 things you need to do

Whether you’re setting up a cake business from home or have premises to move into, make sure you’re safely set up from the start with these tips from the founders of The Cake Professionals. 

Image credit: Setting up a cake business – don't forget your seatbelt!

If you’ve been following our cake business series you’ll know there’s lots to consider, like how to transition from cake hobby to business and how to approach and balance starting a cake business when you’ve decided to take the leap. 

But what happens now? Can you just start making/decorating beautiful cakes and away you go? Unfortunately, not! There are legal, as well as recommended, requirements that can’t be ignored if you want to create a successful business with longevity. But fear not! Phil and Christine Jensen, directors of The Cake Professionals, are here to share four steps you need to have in place:

  1. Register as a food business
  2. Get a food hygiene rating
  3. Insurance
  4. Terms and conditions

It’s over to Phil and Christine…

Setting up a cake business – don’t forget your seatbelt!

“Some think that making sure their business is safely set up is an optional extra. Can we just be blunt? It’s as optional as a seatbelt… safe set up keeps us and our customers safe in case of accidents.”

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1. Register as a food business with your local council

fastening seatbelt

If you’re going to start making cakes for money you’re legally required to register as a food business with your local authority at least 28 days before you start selling any cakes. So, if you sell your cakes through a Facebook page, a website, or a card in the Post Office window, then as a business operating to the public, you’ll need to officially register.

The reason for registering is that your council is responsible for all the food business on its patch. They will offer training, advice and links to all sorts of food related updates over the years. Staying visible with them helps your business to keep up to date with changes in the law and with best practice. Registering is simple, and free! You simply go to the government website. Pop in your postcode and follow the online instructions. If you have any questions just contact your local council and you’ll find them super helpful.

Register a food business on the UK Government Food Standards Agency website.

2. Get a food hygiene rating 

setting up a cake business - food hygiene rating chart

Not every local authority requires cake makers to have a physical inspection of their business set up. If they do though, there are a couple of reasons it’s a great idea to get an inspection done. 

Firstly, it can be really helpful. Your local Food Safety Officers are not out to get you – quite the opposite. Their aim is to make sure all food businesses are set up correctly. If they find anything that’s not up to government guidelines, they’ll give clear guidance on what needs to change and a timeline to make the changes in. So, having an inspection can give you the confidence that you’re officially ready for business.

A second reason relates to marketing. Customers like to know they’re buying from a legitimate and hygienic business. Having an official food hygiene rating of 5 stars really helps to give your customers confidence they’re buying from a food business that’s operating safely.

Find out more about food safety for cake decorators.

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3. Get insurance 

three tier cake

You’re not legally required to buy business insurance. It’s just a really good idea and not necessarily massively expensive.

“But aren’t I covered by my home contents insurance?” you might ask. Well, the answer is actually ‘NO’. We know of two cake makers who’d mistakenly assumed that their home insurance covered their business’ stock and equipment. When disaster struck, they didn’t get a penny for the thousands of pounds they’d spent on equipment, materials and stock in their home-based work areas.

Most home policies will explicitly exclude coverage for business losses. You need to get a special working-from-home policy if you do work from home. If you have separate premises then regular business insurance will do.

Each business insurance policy will cover different things, but the following three are probably the most important:

  1. Coverage for your equipment and stock – this is what we most often associate with insurance.
  2. Business interruption and sickness cover – if you fall ill, or your business is stopped from operating this will help you cover your lost earnings.
  3. Public Liability Insurance* – this covers you if you were to be sued because someone is in some way harmed by you during the running of your business. IMPORTANT NOTE: If you don’t have this cover, you are personally liable. That means the injured person/people can recover money from any assets you own, like your car or your house. We like Public Liability Insurance, it means we all sleep better at night.

*Some venues require you to provide evidence of your level of Public Liability Insurance cover before you can to deliver to parties on their property. 

4. Define your Terms & Conditions 

setting up a cake business - terms and conditions

Imagine for a moment that you have a full year of cakes booked and then, let’s say just for argument’s sake, a global pandemic strikes and all your customers cancel… but that would never happen would it?!

Handling the unexpected stuff of life is why we need to have a T&Cs document which is clear and read and agreed to by customers before they make a payment. No T&Cs? Then we’re stuffed if something goes wrong (that’s a technical legal term which means… we’re stuffed.)!

T&Cs are there to do two things – to protect us and to protect our customers. By providing clarity on the agreement we’re both entering into, T&Cs help avoid misunderstandings further down the line.

They don’t just cover what happens if the client cancels. They can cover a whole range of topics like what happens if you fall ill, inclement weather, colour matching. Really anything that you think will be helpful to spell out upfront. Bear in mind that T&Cs have to be fair. That is, they can’t be all about what the client must do without also outlining what you will do. One sided T&Cs will not stand up if challenged legally. 

That brings us on to the most important point. They need to be properly legally drafted because we want them to be legally valid. Otherwise we run the risk of discovering that we’re not properly covered by them, exactly at the point where we need them to work. The good news is there are services out there that will help to formulate great T&Cs, or provide templates that can be used. It doesn’t need to cost the earth, and it’s really important.

Now you’re more familiar with setting up your business safely, don’t miss more priceless advice from the series!

Cake business finances: a guide to knowing your numbers

Cake business bookings: top tips for handling enquiries

How to transport a cake

How to price your cakes: your time & bakes are valuable

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