How to Start a Pet Bakery

Start a pet bakery by following these 10 steps:

1. Plan your Pet Bakery
2. Form your Pet Bakery into a Legal Entity
3. Register your Pet Bakery for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Pet Bakery
6. Get the Necessary Permits & Licenses for your Pet Bakery
7. Get Pet Bakery Insurance
8. Define your Pet Bakery Brand
9. Create your Pet Bakery Website
10. Set up your Business Phone System

We have put together this simple guide to starting your pet bakery. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Pet Bakery Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a pet bakery?

The startup costs for a pet bakery business can range from $1,000 to $100,000, depending on the bakery’s business model. Upfront costs that all pet bakeries have include insurance premiums, licensing fees, initial ingredient costs and packaging costs. Licensing fees vary, but they usually cost a few hundred dollars, at most. Pet bakeries that cost tens of thousands of dollars to open are usually franchise operations, and they often have a brick-and-mortar location.

Pet bakery owners who want to keep their startup expenses minimal can sell through a website and established retailers, rather than through their own physical store. They also can purchase small amounts of ingredients and packaging materials to start with, increasing their order amounts as their business grows and generates revenue. Finally, many states let pet bakery owners use their own kitchens as a processing facility, as long as it’s licensed. This eliminates any rent costs.

What are the ongoing expenses for a pet bakery?

The primary ongoing expenses for a pet bakery business are annual license fees, the costs for ingredients and packaging materials, and any employees’ salaries.

Who is the target market?

An ideal customer is someone who is concerned about the health of their pet and has discretionary income to spend on gourmet pet food. There is usually a higher demand for specialty pet food in cities, where more pet owners have discretionary income to spend on specialty pet food. (Pet bakeries in less populated areas often face less competition, though.)

How does a pet bakery make money?

Pet bakery businesses make money by selling the pet foods they create. These foods may be sold directly to customers (retail) or through intermediary retailers (wholesale). Wholesale prices are lower than retail prices.

How much can you charge customers?

In 2014, the average price for private label pet food $1.22 per pound, and the average price for branded pet food was $2.22 per pound. Thus, a 25-pound bag of private label pet food would cost $30.50, and a branded bag would run about $55.50.

The average price of a branded bag shows that consumers are willing to pay $55 for a 25-pound of pet food. Although the average price for private label pet food is less, a specialty pet bakery business that is able to gain customers’ confidence may be able to charge branded rates for their specialty foods.

How much profit can a pet bakery make?

How much a pet bakery business profits depends on how many outlets it's selling in. The more places a pet bakery’s goods are sold in, the more customers will see and, potentially, purchase the bakery’s pet foods.

Two pet bakeries show the potential revenue that such a business can generate. Dogswell was founded in 2003 with one pet food specifically designed to help dogs who suffered from hip dysplasia and arthritis. The company earned $35,000 in revenue in its first month and $500,000 in its first year. It’s now in several national chains and had an annual revenue of $17 million in 2008. Three Dog Bakery started in 1989, so it’s a well-established company. It has dog foods in national chains and averages between $10 and $15 million in annual sales. Local pet bakeries, it should be noted, won’t see these types of sales unless they get their products into national chains.

How can you make your business more profitable?

A pet bakery business can increase its profits by finding additional retailers, offering new lines of pet foods and creating pet treats.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your pet bakery is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

Federal Business Licensing Requirements

Manufactured pet food is regulated by the FDA. Check this guide for an overview of their regulations.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a pet bakery business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Certificate of Occupancy

Operating a pet bakery typically requires a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

If you plan to lease a location:

• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a pet bakery.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

If you plan to purchase or build a location:

• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for your business’ location to ensure your business will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

Anyone who is passionate about pets and nutrition may be interested in opening a pet bakery business. Pet bakeries usually start out selling through other retailers or online, rather than their own brick-and-mortar store. Because business owners don’t need to keep specific retail hours for customers, it’s possible to start this business up while maintaining another job.

What happens during a typical day at a pet bakery?

A pet bakery business owner spends much of their time creating and packaging pet foods, and marketing the foods their bakery sells. Marketing may involve running a site online, building relationships with retailers or both.

What are some skills and experiences that will help you build a successful pet bakery?

Specialty pet food must be carefully formulated, and each ingredient must be individually considered. Additionally, each line of food needs to take into account the unique needs of the species that it’s designed for. (For example, chocolate is poisonous to dogs.)

Pet bakery business owners, therefore, should be experts in pet nutrition. The Academy of Natural Health Sciences offers certificates in pet, canine, feline and equine nutrition, and Dogs Naturally Magazine University offers a pet food nutritionist certification. These certificates can help pet bakery owners learn about pet nutrition and other aspects of running a pet bakery (e.g. FDA regulations), but a certificate isn’t required. Owners can also learn what they need to know from books on animal nutrition and websites like the Pet Nutrition Alliance’s site. Books from other pet bakeries (e.g. Short Tails and Treats from Three Dog Bakery) can also provide insights and inspiration.

Pet bakery owners who want even more expertise may want to bring a board-certified veterinarian on as a nutrition consultant. Veterinarians, as an opinion piece on PetMD points out, have more training than certified pet nutritionists. Having a veterinarian help create pet foods will ensure they're nutritional, and it can help instill consumer confidence in the pet bakery’s brand.

What is the growth potential for a pet bakery?

Many pet bakery businesses start out small, selling their specialty pet foods in local retail stores or through a single website. As they grow, pet bakeries can sell their pet foods in more and more retail locations, including national chains like Petco and Petsmart.

Not sure if a pet bakery is right for you? Try our free Business Idea Generator and find your perfect idea.