How To Start A Bakery

Starting a bakery is the fantasy of many household cake makers. But how do you make the transition from baking at home for friends and family to generating successful and sustained public sales? Here at Business Name Generator, we can equip you with the knowledge to kick-start your commercial bakery.

Determine how you will stand apart from your competitors

Firstly, you should identify the kind of bakery you wish to establish. Will you concentrate on bread and pastries or cakes and cookies? Many products are categorized under the bakery heading, so it is imperative for you to specify your area of expertise so that your consumers know exactly what to expect. Try to stand out from the crowd and the competition in your area. Consider allergies and intolerances, vegan options and healthy options. Can you collaborate with other local suppliers for your ingredients or packaging?

Likewise, a specific focus helps you to clarify your product line so determine what you are good at and find out if there is a market for your particular product. As a result of market research, you will be able to identify your competitors, current trends and similar bakeries within your locality. This will help you to decide upon your unique selling point (USP). Acquaint yourself with your target demographic, and you will be able to identify and fulfil their needs culminating in sustained and loyal custom.

Create a realistic business plan

A well-considered, thorough business plan is advantageous to both potential investors and your business. Subsequent to your market research, you will be in the position to outline your business plan comprising a cash-flow analysis and profit and loss account. Here, you will be able to calculate your start-up costs and explore potential funding sources. Additionally, you can access numerous business plan templates online.

Creating a business plan will be beneficial to you and potential investors. Outline your business idea and the market research you have undertaken. Include a preliminary cash flow analysis and profit and loss account. Specify your start-up costs and where you will get them from. For more information on creating a business plan click here.

Calculate your start-up costs and plan your finances

The start-up costs involved in opening a bakery can be high. You will need premises, a ventilation system, ovens, and baking equipment. Firstly, find the premises you want and negotiate the rent in your favor as much as possible. Gather quotes for a commercial ventilation system that the relevant authorities will approve. When looking for ovens and baking equipment, consider buying them second-hand. Many companies specialize in this, offering guarantees for all the products they sell. You will save a lot of money if your bakery is full of good quality second-hand equipment. Then you have to add running costs like electricity, water, salaries, and transport to your monthly expenses. The business should start with enough capital to last at least three months.

Establish your objectives

Your company will need to set realistic goals and strive to achieve them to profit. If your estimated monthly costs are $3,000 a month with a $10,000 turnover, you will have to ascertain whether they are realistic. In reality, you might find that your costs are $3,500 a month, and your turnover is only $9,000. This can be the difference between profit and loss. You will have to analyze your expenses and look to reduce them and, subsequently, try to increase your sales. If you do this successfully, your bakery will make a profit

Scout your locality, find available premises

Finding the right location for your bakery is probably the most critical factor when starting your new business. Consumers value convenience and will be averse to traveling too far for your products. Therefore, your bakery should be located centrally in the town to attract passers-by as well as local residents. Obviously, the premises should also contain a kitchen so that you can cook your products on-site. If your competitors already occupy the town’s prime location, try and locate premises that are not too far away from it to offer consumers an alternative. Additionally, this will allow you to cater for any overflow from your competitors. If your location isn’t the best in town, you will have to rely on superior products, competitive prices, and exceptional service to build up a regular clientele.

Ensure that your premises has suitable facilities

It goes without saying that a kitchen is essential. Choose one that has room for a commercial mixer and refrigeration.

You will also need to consider purchasing the following:

Baking equipment such as cake and loaf tins, the variety of which will depends on your product range
Baking moulds and ramekins, these are especially important when creating individual desserts
Baking utensils: pastry cutters, icing sugar nozzles, shaped dough cutters, rolling pins, electric whisks, blenders, sieves, scales, measuring jugs, timers, thermometers, and baking paper.

Adhere to licensing guidelines

Bakeries are subject to the same regulations as restaurants. Prior to being granted a license, the authorities will check your health and safety protocols, confirm the existence of proper ventilation, and evaluate your food preparation processes. In most cases, the license will not be granted until the premises are complete. Therefore, a certain amount of risk is involved when you consider the investment you have already made in the business.

So before you invest any money, meet with the relevant authorities and talk through the licensing process with them. They will inform you if your chosen premises are suitable for a bakery. Contrary to popular belief, they are not there to obstruct your application rather, you will regard their expertise as invaluable.

When you decide to proceed with your business, you should strictly adhere to the licensing guidelines. Consequently, there should be no problem in obtaining your license following the final checks of your premises. Remember that your license can be revoked at any time if the authorities believe you are not maintaining the required standards.

Sell quality products

Don’t make the mistake of trying to cater for everyone. Instead, pick out your favorite, most delicious pastries and bread and prioritize them. If they taste good, your customers will be happy. However, outstanding food generates regular custom.

Furthermore, make sure your coffee is good. Most people won’t mind paying a little extra for a premium brand. This will also enhance your reputation.

In the future, as your business and confidence develop, you can add more items to the menu. This will revitalize the bakery whilst retaining consumer interest.

Additionally, you might decide to incorporate a special breakfast offer, including free coffee, between certain times. Alternatively, your lunch special could change daily, adding variety. Due to this, the bakery could build up a faithful lunch following. Moreover, an evening deal could offer a takeaway baguette with a free soda.

These are great examples of keeping things simple while still providing variety and great value for money.

Create your brand

Begin by naming your bakery. Brainstorm words that are relevant to your USP or products as well as researching names of competitors for inspiration. Once you have your name, you can create or assist in creating your brand’s logo and/or slogan.

Construct a website that is professional and unique. Give it and your bakery a catchy title. Try our different name generators here. There are many hosting providers such as Wix or Squarespace to choose from when creating your website. Have a look at BlueHost to get a 60% discount on web hosting and a free domain name here.

To attract organic traffic to your site, think about writing a blog. Post photos of you making your cakes and bread, or post images of the bakery filled with customers, and of course, photograph the delicacies themselves. You can also promote those special deals we mentioned earlier.

Link your website with Facebook and Instagram and set automatic updates to attract more customers.

Create a buzz around your business

Advertising is key. You should start to let people know about your new bakery before it even opens. People will be ready for it when it does. The opening week is especially important for increasing customer awareness. When marketing your bakery, you must think local, not global. Read our Guide to Marketing, and try some of the following ways to increase your visibility.

Create business cards and distribute them with every order
Set up a business account across all social media platforms where you can post product details, special offers and create events such as your opening day event.
Initially, you could offer free cakes in exchange for local businesses to advertise your bakery
Contact your local newspaper to ask them for advice on publicity
You can send free samples to influencers, collaborate with other members of the baking community and film reels of your business in progress building excitement and intrigue in your bakery.
Register your business with Google My Business to drive your Google search optimization.
Alternatively, sign up with the most popular home delivery services, which have been particularly popular since the pandemic.
Encourage reviews and interact with your customers

Lead your business

When you open your bakery, you will have to change from an employee mindset to that of an employer. There will be no guaranteed salary at the end of the month. All the company’s costs will have to be paid before you take out any money. Additionally, you will have to work long hours alongside completing all paperwork in the evening. This will become part of your daily routine.

Furthermore, you will have to manage the company’s social media accounts, ensuring their content is up to date. Your bakery will have to develop new ideas and products to entice customers. Learning how to negotiate discounts and special offers with suppliers is a skill you will need. If you are prepared for all this as a bakery owner, you will have every chance of success.

Inevitably, the owner determines the identity of any business. Therefore, you have to set the standards in relation to work ethic and dealing with customers. If you are friendly and approachable, the chances are that your employees will be too. Unfortunately, this is also true when you treat a customer poorly, so be careful.

Price to make profit

Initially, it is difficult to strike the balance between reasonable pricing that attracts custom and prices that generate sufficient profit for your business. When pricing your products, consider the following overhead expenditure:

Business tax
Utility bills
Business insurance
Waste management
Labor- cost of employees
Rent
Any other costs: website design, advertising fees

We recommend that you determine a price per cake which factors in the time and effort that has been spent on it. Additionally, do your research with regards to your competitor’s prices and compare your pricing with theirs. Try to buy in bulk or think of extra services that may allow you to charge that bit extra.

Consider the additional services that you can offer

In order to maximize your unique selling proposition, look at what your competitors lack and fill in that gap! You could offer:

Free delivery: if you are planning to offer delivery and if this is an affordable option considering all of the costs that this incurs, free delivery is a great offer that sets you apart from your average food delivery service.
Healthy cakes: Likewise, in an ever health-conscious environment comprising sugar tax and rising obesity, creating a range of bakery items that are lower in refined sugars elevates you from your competitors.
Free from: due to the mounting requirement for dietary specifications in relation to food allergies and intolerance and lifestyle choices in general, wheat-free, dairy free, egg-free, nut-free and gluten-free bakery products are hugely popular.

Conclusion

If you consider your bakery ideas viable, calculate your start-up costs by checking the rent on local premises and obtain quotes for industry-standard ventilation and baking equipment. Get your marketing strategy right. Know the customer you want to attract to your new business. Make sure your business is legal, has a license to trade, and has a sound bookkeeping system in place. Finally, stand out from your competitors and charge prices that provide you with a sufficient profit margin. If you can tick all these boxes, you are destined for success. Your bakery dreams can become your reality.