My best friend asked me this question, and I don't know the answer, but I'll bet you all do. 
I live in Georgia, where you can't bake from home legally. So then, how do you start a legal business? How do you convince the banks to loan you money, or start making money once you open the shop, if you don't have a customer base and an order history? Seems like a catch 22 to me, like they are setting you up to fail. 
Can anyone shed some light on this? I'm curious.
About a year ago I used about $2000 in credit cards to buy a used convection oven, mixer and pans and smallwares. I rented a commercial kitchen (shared with another business) and looked for wholesale clients. I never intended to stay mostly wholesale, but that's where I am right now. The plan was to save up for my own shop someday and have steady income to show the bank. However, it's taken nearly a year to show steady income as most of my profit goes back into the business since I never had a loan to buy everything I needed. Anyway, that's one way.
I worked nights at the hospital until I had enough $$$ to get started. I rented the most ridiculous building and my hubby and I renovated it ourselves for free rent in the beginning and cheap rent after that. I kept my job at the hospital until the shop really started taking off...which wasn't very long. I started with regular appliances and built up as I grew. I sold the shop this past May due to the impending birth of our second son....but I don't regret any of it! It was hard but soooooooo worth being legal and not having to watch over my shoulder all of the time.
i worked for other bakeries for years....i knew i wanted a shop when i first applied.
lemmee tell ya, you can really save a lot of money if you focus on your goals.....for a long time i never bought any new clothes...bought a couple things off ebay to wear, no professional haircuts....no out to eat, no movies, and i still drive an old car.
it just depends how much you want it.....people really waste an ungodly amount of money on junk.
i never borrowed a dime, now i'm saving for a new roof for the building i am gonna turn into the bakery...
it takes awhile....but time is gonna pass anyway, might as well be workin on something.
now if i could just lose this weight LOL
How do you convince the banks to loan you money, or start making money once you open the shop, if you don't have a customer base and an order history? Seems like a catch 22 to me,
Yes, it is.
Banks have told me (and other CC'ers) that you can't get a loan to open a food industry business until you've been in business for 3 years, which you can't do without a legal kitchen, which you can't get without a loan, which you can't get until you've been in biz for three years, which you can't do until you have a legal kitchen......
Unfortunately, in today's world of instant everything, the idea of saving up for something has gone by the wayside. Why save when you can credit card it? 
Which is why so many folks are in financial trouble.
Understand that banks are also looking to reduce their risk. They want to know not that you can bake and decorate, but that you can run a business, hire the right people, manage the books, know how to price, know how to market .... who is your competition and how will you make people want to come to you instead of them.
So some of it is logical .... some is catch-22.
But it's why it took me 25 years to get here .... but I got here!! And you will, too! 
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