Do you have a passion for baking? Why not turn your passion into a business? Here’s how to start a bakery that will be successful.
Do you love to bake? Are you looking to start a baking business? Are you considering the idea of opening your bakery?
Before you make any moves, you need to realize a harsh truth. 8 out of 10 start-up businesses fail. This usually happens within the first year and a half of the business.
The reasons for businesses folding in a year or two vary. But it all boils down to having the right knowledge and not jumping the gun to start your business before some thorough preparation.
What are the essentials you need to know? Continue reading below as we teach you how to start a bakery business the right way.
Launching a Great Bakery
If you want to know how to start a bakery business right, you need to invest some time in studying the essentials. You also need to mix some business intelligence and analytics to complete the winning formula.
But let us start with the fundamentals. These are the things that will help you build a solid foundation for your bakery business. Let’s take a look at them below:
1. Determine Your Approach
First, you need to determine the kind of approach you want to take for your bakery business. Determine the kind of bakery you want to open. There is a traditional counter service where customers can go to a physical counter to place their orders.
There is also the sit-down type where a physical store can accommodate customers who wish to dine in. Next is the specialty service that is perfect if you wish to focus on a particular baked product.
Last but not least is the online approach. You don’t a physical store for this one. Instead, you need to have a solid website with lots of pictures.
2. Formulate a Plan
After deciding on your approach, you can start formulating a business plan. Your business plan will serve as your blueprint. It will help you come up with your goals, generate revenue, and identify your target market.
You will need to answer some key questions. How much will your initial expenses be? How long will it take for you to break even?
What will you call your bakery?
The business plan will also prompt you to focus on financing. In the business plan, you need to list down the equipment that you need. You also have to list the tools and appliances like refrigerators, ovens, and utensils.
As for the outline of the business plan, you should have the following: an executive summary, company overview, market analysis, and business offering. It should also feature your marketing strategy as well as your final projections.
3. Generate Your Capital
With a business plan in hand, you need funding for its execution. Your goal is to secure a loan and build a start-up capital. The capital will cover your equipment and leasing expenses.
It will also take care of the training and salary of your staff. It will also handle your monthly utilities and other overhead expenses.
When securing a loan, there are three types to choose from. There is the traditional commercial loan, the business line of credit, and the small business loan.
You can apply for a traditional commercial loan in your local bank. This loan can give you access to huge amounts of capital. It also comes with friendlier interest rates.
The key requirement for approval is a high credit score.
On the other hand, a line of credit gives you access to a certain amount of money. The good thing about this is the bank will only charge you the amount that you will spend. Every time you pay off the balance, you can request for more credit.
The downside, however, is the amount. You cannot expect something as big as what a traditional commercial loan offers.
Lastly, the small business loan is what you should go for if you have a borderline credit score. It also comes with lower interest rates. The caveat is it may require you to give collateral.
4. Find a Space
If you decide not to go the online route, you need to find a commercial space you can lease. If you are putting up a retail bakery, make sure you pick a location that is close to your target market.
If you are looking to put up a food truck bakery, then all you need is to buy a quality truck. But in case you are planning to build a wholesale bakery, you can lease a space that is farther from the city.
6. Fix the Permits and Legalities
You also want your business to be clean when it comes to permits and licenses. Check your local laws to find out the requirements. Make sure to submit all the requirements.
You also need to register for the state and federal taxes.
7. Open a Bank Account
To ensure that your personal finances don’t mix with your business expenses, you need to open a business bank account. This will ensure that your car, home, and other valuables are safe in case your business encounters a lawsuit.
8. Order Your Equipment
After finalizing your finances, you can start ordering your baking equipment. This will depend on the type of goods you are planning to sell.
These items include equipment for dough preparation, as well as storage. You also need to spend on display cases and stylish boxes. You should also get some cleaning items for your staff.
9. Hire the Right People
Speaking of staff, you should also hire the right people for the job. The number of people will depend on how big your bakery is. If you are running a retail bakery, you need to get a cashier.
You should also have at least two people who know how to bake. If you are planning to sell specialized goods, you may need to hire professional pastry chefs. Don’t forget to hire people who wash the dishes and baking equipment.
10. Launch Your Brand
Now you are ready to launch your business. Implement your marketing and advertising strategies according to your business plan.
It is wise to host a grand opening. Invite all of your friends and relatives. Open your doors to those living close to your bakery.
Additionally, create social media accounts for your business. Establish your presence online.
Learn How to Start a Bakery Today!
Now that you know how to start a bakery the right way, you can start creating a solid business plan. Be patient to avoid costly mistakes.
Once your business is up and running, you need to continue improving your business processes. We invite you to check our other articles that will help you cover all bases.