If delicious baked goods are your passion and you’ve decided to go all-in and start a bakery of your own, let us be the first to congratulate you. You’ve overcome the first step in starting a business of any kind, which is to make the promise to yourself that you’re going to go through with it.
Outside of taking the emotional leap to start your own bakery, there are a number of real-world items you’ll need to check off your list. We’ll touch on each of those things here so that you can know you’re heading in the right direction, toward your baking dream.
How to start a bakery shop business
Have a business plan
A bakery, just like any business, needs a business plan to get started. A bakery business plan may not be as complex as others, but it will need to have the same basic components as any business.
First, the business plan will outline the bakery’s mission and vision statement. Do you want your bakery to sell every kind of baked good or do you want to specialize? Will you be open all day or just in the mornings? Will you have other menu items like coffee and tea or will you only sell baked goods? Will it be dine-in or carry-out only? These are all questions that your initial mission and vision statements must answer.
Once you’ve expressed your vision for the bakery in the business plan, then you have to do the hard work of financial forecasting. By performing a competitive analysis, studying area demographics, counting foot traffic, and understanding target consumer income estimates, you can set up a sales forecast spreadsheet for the first few years of business. With the sales forecast, you can more accurately project cash flows and determine an operating budget.
Your operating budget will take into account your expenses in an expense spreadsheet. Your expenses would include both fixed (overhead) and variable costs. Things like the rent on your bakery’s space and utilities would be fixed costs, while employee payroll and food costs would be variable. You’ll also need to determine the point at where your business would break even between your expenses and projected income. This is called a breakeven analysis.
Although all of this financial legwork is definitely not the reason you wanted to become a baker, it’s necessary to secure capital to cover the start-up expenses for your bakery. Building out a space, buying equipment, and obtaining permits and licenses are all costly components to opening a bakery. Lending institutions and investors need to know their investment is secure by seeing that all financial projections are backed data before they give you a loan.
Draw up blueprints
After you’ve got the hard work of the business plan out of the way, then you can start on the more fun aspects, like designing your bakery’s layout. Get with a contractor you trust to help you draw up blueprints of how you’d like the inside of your bakery to be. Consider the flow of traffic for not only customers but for you and your employees as well. You’ll want to arrange equipment in a way that minimizes the steps taken and maximizes convenience. Remember that for a lot of bakery kitchen equipment, due to heat or plumbing sources, once it’s hardwired in, it can be very costly to move down the road. That’s why having the best-laid plan, in the beginning, is always best.
As is the case with almost every foodservice business, the equipment can be the most costly aspect of your business. When starting, it’s crucial to remember that you don’t have to have the latest and greatest ovens or other equipment. When on a tight budget, you can almost always find used equipment through dealers, wholesalers, or auctions. Then once your bakery starts bringing in the profits you projected, you can always upgrade to those fancy new ovens you always wanted.
Hire and train staff
Although you’re a great baker, you can’t do everything yourself. Everyone knows that finding good help in the food service industry can be challenging. It usually comes down to a tradeoff between paying good workers higher wages, or cycling through employees who you will have to constantly train—which will cost you more time and energy. It’s important to consider this when calculating your operating budgets in your business plan.
Consider marketing and advertising
For most small businesses that are just starting out, a marketing and advertising budget is a luxury. Many businesses have to focus all their fund on the large start-up costs, then if there’s anything left over, it goes towards marketing. Depending on your bakery’s location and surrounding competition, you might not even need advertising. However, if your cash-flow projections from your business plan aren’t meeting the mark, it could be that people don’t know you’re around. In that case, it could be beneficial to invest in advertising. However, before paying for ads, consider social media. With the right tactics, businesses can make themselves know at little to no cost.
Have a grand opening
If there is one thing you spend money on when you first open your doors, it’s advertising. In whatever way you can, announce when your bakery is opening to the surrounding area and give people a reason to come. Have promotions, contests, games, or whatever you think will get people in the door. Once they’re at your establishment enjoying your delicious baked goods, chances are, a good portion of them will return and hopefully tell their friends.
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