Are you interested to open a bakery business? Do you want to know How To start profitable Bakery Business? If yes, then this article is for you. I’m writing this article from my 5 years’ experience to write business plan for different startups. You are in the right place to open your profitable bakery business. Bakery, It’s a very common word to us. Bakery business is a unique business that is different from other types of business. how much do you need to start a bakery? Or how much will it cost to start a bakery? The answer would be $10,000-$50,000. The profit potential is upward moving for a bakery, particularly if the business can focus on both retail and wholesales baked goods. This article will help you about how to open a bakery from writing a business plan and fund collection to purchase the right equipment for your new bakery.
These are the kinds of most popular and most profitable bakery items.
Opportunities and Risks
The following are expansion opportunities cited by the retail bakers:
- New products
- Retail locations
- New markets
- Resort clients
There are also several opportunities of a bakery business that make it viable business option.
- It’s easier to create a loyal customer base.
- High Profits in High-Traffic Locations
- The Barriers to Entry Are Low
Risks of a Bakery Business
Before knowing about how to start a bakery business, you must know the risks.
- High Fluctuations in Prices
- High Competition in the Bakery Business
- Sensitive Health and Safety Standards
Types of Bakeries
There are a different types of bakeries. Basically, there are 2 types of bakery business: retail and wholesale.
- Bakery cafe: They sell baked goods like breads, pastries, cookies, and more. They also sell coffee and tea. This kind of bakery arrange dining space for customers so that they can sit, eat and enjoy.
- Counter service: This kind of bakery try to sell from front desk. There is no space to sit and eat.
- Bakery food trucks: Besides the brick-and-mortar store, food truck bakeries sell their products from a movable truck. Since the truck space is very small, they don’t cook in the truck. They just sell the baked foods from truck.
- Home bakeries: If you ask me, how to start a bakery business from home? Yes, it’s possible to start from home and this is a kind of cheapest capital requirement business and a popular bakery category. They are trying to market their products online and then deliver them through uber eats, foodpanda.
- Online: They don’t have any storefront. They are trying to open with a website, food picture, and through social media.
- Counter service: They are using a small commercial space; customers can come and pick up baked goods from the counter.
- Specialty service: If you plan to specialize in a certain kind of baked good, a specialty service is your best option. Whether you run the business from your home or rent a space is up to you.
- Sit down: More owners are trying to capitalize on the sit-down and dine option. It’s a growing trend in the bakery industry right now. Picture a space that has both an area to order baked goods and spot to sit and enjoy them.
How to Start a Bakery
Have you decided what type of bakery you want to start? Now let’s getting into the details of starting a bakery.
Write a Business Plan
This is the first step of how to start a bakery business? At first you have to write a bakery business plan. Without your bakery business plan, you will not be able to going forward. The business plan is an integral part of starting a new restaurant because it lays out what type of business you want to open, how it’s going to be structured, what sort of products you’re going to sell, marketing strategies, and financial projections. If you ask me how to start a bakery business plan. I’m telling about the sections of a business plan. There are seven main sections to a bakery business plan:
- Executive Summary
- Company Description
- Market Research and Analysis
- Products and Services
- Management Plan and Structure
- Marketing and Sales Strategy
- Financial Projections and Plan
Your business plan serves as the foundation for your business, and a strong plan can help you get funding and make the process of opening a new bakery easy.
Obtain Loans and Startup Capital
At the starting of a bakery business, you have to lease a commercial space, outfitting your space with equipment, hiring staff, purchase kitchen, and paying for utility bill. You have to collect a significant fund to cover these costs.
There are different ways to getting funding: Commercial loans, Business lines of credit, and Small business loans.
- Commercial Loan: You can apply for commercial loan at any bank. The benefit of this kind of loan is lower interest rates and access to huge amounts of capital. In that case you must have a good credit score.
- Small Business Loan: This kind of loan is created by the Small Business Association. Small business loans typically have lower interest rates and are available to people who have a good business idea.
Leasing a Commercial Space
After getting the fund, you can look for commercial space fir your bakery business. The bakery business space size is depending on the type of bakery business you are going to start. You have to consider some things when looking for a commercial space:
- Health Regulations and Zoning
- Safety and Crime Rates
- Proximity to Suppliers
- Size and Space Requirements
When you have found a suitable location for your business, you can hire a lawyer to draw up and negotiate a lease with the landlord.
Permits and Licenses for Bakery Business
The foodservice industry is very sensitive and heavily regulated on a federal, state, and local level. You will have to take permission and licenses that you’ll need to obtain before opening your bakery business. Permits and license will vary depending on your location and business size.
Logo Design and Brochure Design
At this point you have to create your logo and brochure design through any expert professional. You can hire any freelancer to design your logo and brochure template.
Ordering Equipment for Your Bakery
The most common equipment for bakery business. If you ask me what is needed to start a bakery business, the answer is followings
- Mixers: Mixers are the basic bakery equipment. A large dough mixer, an emulsion blender with whisk attachments, and countertop mixers are characteristically considered necessary.
- Oven: Different bakeries will have different types of ovens depending on what they are planning to make. Stone deck ovens create most amazing hearth breads, and convection ovens are good for cakes and cookies.
- Dough proofer: Proofers make the dough-rising procedure simple by adjusting heat and humidity. Dough is uniformly proofed, which modernizes the production process.
- Bakeware: Quality bakeware is important because it is used seriously each day. Always look for quality bread pans, muffin tins, cake pans, etc.
- Smallwares: This is another important equipment. In addition to necessities like spatulas, spoons and mixing bowls, you’ll need pastry knives, icing tips and flour sifters.
- Dough sheeter: Do you have any plan to open a pastry shop? A dough sheeter can ease the process and save tons of time.
- Bread slicer: If you have a plan to offer fresh breads? Many customers will want the option to have it cut. Bread slicer is a necessary for your bread business, as it will let you to quickly cut slices for easy packing and sale.
- Sheet pan racks: Sheet pan racks is important for delicious baked goods that you’ll need the space to cool.
- Dry storage: Dry ingredients are important for many baked goods. Appropriate storage is essential for ingredients like flour or sugar.
- Refrigeration: Eggs, milk and cream are key ingredients for bakery business. You have to make sure that they are safely stored in the correct refrigeration temperature.
- Display case: Visibility of products is essential for any bakery business. You have to showcase all of your baked goods in your display case.
Hiring and Training Staff
Hourly Rate for Industry: Bakery $13.08/hr.
- Baker $12/hr.
- Cake Decorator $12/hr.
- Pastry Chef $13/hr.
- Bakery Manager $15/hr.
- Cashier $9/hr.
- Bakery Clerk $10/hr.
- Barista $11/hr.
The average salary for a Bakery staff is $24,968 in United States.
The staff size of your bakery business will depend on your bakery’s size and type. Bakery will need to hire and train staff to take orders. Basically bakery staff will work in the back-of-house, , preparing and baking your food.
Every bakery must have at least one or two employees that have formal training or bakery experience run the business. You can hire some unskilled workers for washing dishes, mixing ingredients, packaging products, and doing other tasks that don’t require experience or expertise.
Marketing and Advertising Strategies
You can run the business through online and offline strategy.
You can use social media to promote your business.
- Facebook Messenger
- WhatsApp Messenger
- Conduct market research: The first step is conducting a good market research and determine market size and target market. This includes information related to demographics in your bakery’s area, any competitors, and market demand.
The products that make up the bakery market are as follows:
- Rolls: 19 percent
- Cakes: 15 percent
- Retail bakery products: 10 percent
- Soft cakes: 8 percent
- Pies: 2 percent.
- Write a market analysis: Market analysis is a summary of your market research, and it will be helpful for your bakery’s business plan. It should include information such as the average income level in your area, market size, discretionary spending among the target market, and your competitor’s prices.
Estimated market volume of bread and bakery products worldwide in from 2017 to 2025 (in million tons)
- Set goals for your marketing campaign: Set a realistic goal for your bakery business and run your marketing and advertising campaign.
- Determine how you want to advertise your business: There are many ways you can advertise your bakery business. You can consider traditional advertising policy, such as distribute brochure, newspaper advertisements and flyers.
Now this is the final stage. You can make an arrangement for opening your bakery and welcome customers to your business. A successful grand opening can help your bakery business off to a good start and help to create some loyal customers and branding.
One of the great policies are to get customers in your bakery on your grand opening is to offer discounts and promotional offers. For example, you can offer discounts up to 100 people to visit.
One of the best ways to ensure that bakery goes smoothly is to stay organized and ensure you’ve created a detailed business plan, following it respectively that will help get your business off to a good start.