Do you love baking yummy goodies? Making tasty treats to satisfy your sweet tooth as a hobby can be turned into a profitable business. We at founderactivity have brought to you the ultimate guide on how to start a bakery with all the necessary ingredients and steps to plan, start and grow your bakery business.
There is no single recipe for success. But there is one essential ingredient: PASSION.Martha Stewart
Moving to further expand your knowledge on you can start a bakery business, we have provided a full guide in this article.
Types of bakeries
When planning to start a bakery business, you need to have in mind what kind of bakery you want to open. Your products, prices and your customer base will differ based on what type of bakery you open. Below we have described the types of bakery businesses and you can check out what interests you.
• Wholesale Bakery
A wholesale bakery is the type of bakery that produces its products and caters to a larger audience. The target audience of a wholesale bakery can be grocery stores, restaurants and cafes. These kind of bakeries tend to make large batches of classic bakery items since it caters to a commercial audience. Since classic bakery items will already be popular among its customers, it is much easier than to create a variety that retail bakeries offer.
• Retail Bakery
The other type of bakery is know as Retail Bakery. Retail bakeries are the most popular type of bakeries you will see. These kind of bakeries offer their service directly to their customers. Retail bakeries also have its own different forms that cater to its customer in different methods.
Types of Retail Bakeries
1. Bakery Café
Bakery Cafes are the combination of both a bakery and a café. This means they offer seating space for their customers. While relaxing, your customers can enjoy their time as if they were in a small restaurant. They offer all baked items that a bakery would offer and beverages such as coffee or tea, you would normally get at a café.
2. Counter service
A Counter Service bakery is the kind of bakery that sells bakery goods to their customers so that they take it on the go. This kind of bakery does not offer dining space for its customers. This is convenient type of bakery business if your target audience is mostly busy and people with jobs. They tend to be in a rush and look for food to take on the go since they do not have the time to dine.
3. Bakery food trucks
Bakery food trucks are not your traditional situated kind of bakery. You will find your baked items to be sold on a mobile truck. Due to the limited space on a mobile truck, all bakery items will have to be baked prior to moving onto the truck. This means that all baked items will be baked at a bakery before being moved to a truck for sale. And from wherever the truck can make the most sales, bakery items will be sold on the spot to its customers.
4. Specialty bakeries
Specialty bakeries cater to a niche segment. Your specialty can vary to wedding cakes, gluten-free items, sugar-free items, nut-free items or even baked desserts. These kind of specialty bakeries exist because of the availability limitation and most of its target audiences are also segmented.
Check out our article on Profit Margin on Cakes, click here.
5. Home bakeries
Home Bakeries are growing in popularity because of its low cost startup and you do not need much culinary experience. You can even start a home bakery business as a teenager. Most home bakeries use online methods to promote their business to get orders. Online payments are accepted and suited for a home bakery business. They use courier services to get orders delivered to their customers. Home bakeries mostly offer cakes, cookies, brownies and cupcakes with their own personal spin to make it unique.
How to start a bakery
Once you have decided what type of bakery and what type of bakery items you want to sell to your targeted audience; you have to start the process on how to start a bakery. We have provided the steps that you will need to achieve your business goals.
The 6 factors below are what you need to start that bakery business that has been cooking up in your head.
You can access our article on the Top Profitable Bakery Products, click here.
1. Conduct Market Research
Conducting a market research is one of the most important factors for your business. Doing this research helps you recognize who your target audience is and their preferences. Knowing what your target audience prefers will benefit you because you will be able create a menu. A menu that consists of all your customer preferences. By giving them a variety of their preferences to pick through from your menu, you can expect your customers to come back again.
You can also add some unique delicacies to make your business outstand from the rest of the businesses in the bakery industry. Using your market research, you can recognize the behavior of your target audience. With this information, you can decide the type of bakery format that is suitable with your bakery business idea.
2. Create Bakery Business Plan
Planning your bakery business will help you and your business to stay on the same lane to achieve set goals. Your bakery business plan should include:
- Summary of the Bakery Business Plan
The summary of your bakery business plan will act as the overview of how you plan to run your business. This summary should include your bakery mission and vision, the legal structure of your bakery, what kind of business entity and history or future plans of the bakery.
- Business Overview
The business overview of your bakery business must include the business concept and layout, the type of service your business is providing, a sample menu and information of your management team.
- SWOT Analysis
Doing a SWOT Analysis for your bakery business will help you identify the Strengths, Weaknesses, Opportunities and Threats with regards to your business.
- Operations Plan
Your operations plan must consist the details of how your bakery business would function. Such as how the orders will be placed, what the menu will offer, the services, staff management and proper supply of raw materials.
- Financial Analysis
Your bakery business financial analysis should consist of the income and expense statement to monitor the profits and losses, financial statements and cash flow statements. Having a financial analysis will help you keep track of the money flowing in and out of your business.
- Marketing Plan
In your business plan, it is important to include your marketing plan. It will be mentioned how you plan on attracting your target audience or customers to your bakery business. It will also have you plan on promoting the bakery and how you will grow brand awareness.
If you want to learn more about business plans, click here.
If you want to learn more about marketing plans, click here.
Choosing Business Entity
When you are writing your business plan, the structure of your business entity is an important factor. This is an important step because all your legal factors will depend what entity your business will recognize as.
To start with, the below business entities will be suitable for a bakery business.
- Sole proprietorship
An unincorporated business with either a single proprietor or co-owners who are married.
- General partnership
A company that is not incorporated and has several owners. Maximum number of owners are 20 members.
- Limited liability company
A registered company with limited liability for all of its members also known as an LLC.
A business that is incorporated. The most popular varieties are S corporations and C corporations.
3. Choose a suitable Location
Choosing a suitable location for your bakery business can be tough. But you need to make sure you find a commercial space in the most ideal location for your business. Most preferably a location with high foot traffic. Also a front view business location for visibility and accessibility would benefit you. These factors can be subjected to the space available and your choice of location. You should also consider the proximity to your suppliers and competitors.
4. Get required Permits and Licenses
Before starting your bakery, you’ll need to secure a few permits and licenses because the foodservice sector is extensively regulated on a federal, state, and local level. Depending on where you live, different permits may be required. Check your local laws and ordinances to determine if any particular rules apply to your new business. These permits or licenses needed for a bakery business are stated below:
- Sales privilege license
- Food handler’s license
- Catering license
- Kitchen health and safety inspection
- Zoning laws and permits
- Homeowner association rules
5. Bakery Layout
The layout of your bakery business is crucial. This is mainly to ease the convenience for your customers. Depending on what type of bakery business you decide to run. Such as opening a bakery with space for your customers to dine or offer counter service. Or you could even offer both of these services to grow your customer base.
6. Marketing and Branding
Strong branding and marketing it strategically will do you wonders for your bakery business. The industry of baked goods is fun. Your bakery can certainly stand out with the help of some effective company branding. It is easy to come up with taglines or puns and add it to your business. Colors, logos, music, taglines, and packaging can all be used to describe about your bakery.
1. Name of the business and Product Names
Your bakery business name must be unique. A name that stands out and has not been used before. Authenticity is key. Your products names can go similarly to match the name of bakery business. Making it outstand the regular names to bakery items in the bakery industry. For example, Cronut.
2. Color Scheme and Packaging
Your bakery business can stick to a particular palette of colors. The benefit of a color scheme is that when it is used on packaging, your customer will tend to recognize it instantly. As a business, raising awareness about your business is always important.
3. Social Media
Using social media to promote your business in today’s world is one of the smartest ways to attract your target audience and raise business awareness. Social media now has the ability to make anything new go viral and make it a trend. Therefore, using different social platforms where you can reach your target audience with ease is beneficial to your bakery business.
For more guides on How to strategize on Social Media to grow your business, you can access our articles from the links below:
<<< Ultimate Facebook Marketing Strategy >>>
<<< Ultimate Instagram Marketing Strategy >>>
<<< Amazing LinkedIn Marketing Strategy >>>
If your bakery business will be providing your customers a seating area, you have the ability to decorate it in a way that resonates with the business. You can sync it with the color palette you have picked and use it on furniture for your business. And you can also give your bakery a theme. Such as sweet inspired colors, bohemian styles, floral accents or extravagant chapel ceilings and seating to give you the luxe vibe.
5. Price of your Products
When deciding how to price your products according to the market retail price, normally you would consider your cost of supplies and tax. What most bakery owners tend to not do is, include their service and maintenance costs in their products. Instead they charge it separately on the bill. What they do not realize is that they could be undercharging.
6. Bakery Equipment
You’ll need commercial-grade bakery equipment to help you produce all those baked goods. Without your equipment breaking down in the process you can transform your bakery into a true, profitable business.
But what kind of equipment do you need for a fully functioning bakery? They are listed below:
- Decorating tools
- Sheet pan rack
- Holding cabinets
- Cleaning and Ware-washing
- Dining Area
- POS System
Coming to the end of this article how to start a bakery, different bakeries will need different factors. Depending what type of bakery business you decide to start, you can organize this guide likewise to cater to your business needs. Ensure you conduct a proper research and plan your business to achieve the goal of a profitable bakery business.
READY ? SET… BAKE !
I can’t believe I got fired from the calendar factory. All I did was take a day off