How to Start a Bakery Business

Do you want to start a bakery business? Here in this article, we list down a stepwise bakery business plan guide on starting a successful bakery unit.

The bakery is a traditional industry. Also, it is one of the most promising businesses in the food processing industry. Bakery products are an item of mass consumption in view of its low price. Additionally, the rapid growth and changing eating habits of people, bakery products have gained popularity among the masses.

This industry holds a large share in the global food packaging market. In addition, the industry is growing very fast. Product innovation and increased penetration in fast-growing regions such as Asia-Pacific and Latin America are the main drivers of this increase. However, pastries are the fastest-growing category among baked goods, accounting for almost 80% of absolute volume growth.

Currently, in-store bakeries are gaining importance both due to their lower prices and the convenience of one-stop shopping trips. Over the past five years, Western-style bread and bakery products have become more popular in emerging markets. Because of the rising levels of affluence and changing consumer tastes have positively stimulated demand.

10 Steps Bakery Business Plan

1. Find your Niche

There are a variety of ways you can start a bakery. Furthermore, some of the most popular bakery items are bread, biscuits, cake, pastries, cupcakes, donuts, candies, fruitcakes, wafers, etc. You need to decide first what kind of bakery items you want to make.

The bakery is a highly crowded industry. Definitely, you will find a small bakery even in every small town in the world. However, all those are making profits out of their business. Do detailed market research identifying and defining your competitive advantages will keep you ahead of the other competitors.

2. Learn the Art of Baking

To be successful in developing a successful business, one needs to have passion and know-how for baking. If you feel you need to learn more about the process of baking, take training from competent people or from online courses on the internet which are plenty.

3. Write a Bakery Business Plan

Crafting a business plan is the most important aspect of commencing and running a successful business. By creating a business plan, you’ll force yourself to look at the business from every angle. In addition, if you are looking for funding, potential investors will have a close look at this document.

The bakery business plan defines your business, sets goals, creates a plan to generate revenue, lists expenses, describes your customer base, and examines your competition.

While documenting your bakery business plan, include the following topics:

  1. Executive Summary
  2. Company Overview and Description
  3. Market Analysis
  4. Business Offerings
  5. Management Structure
  6. Marketing and Public Relations Strategies
  7. Financial Projections

4. Choose a Business Model

This is another crucial aspect of starting a profitable business. There are many ways you can start and run a successful bakery business from home. Some of the legitimate options are

Online Selling: In this option, you don’t need to open a  storefront for your business. You can start out online. With a killer website, pictures of your work, and a way to place an order, you can run a bakery from your home. Counter service bakery. With a small commercial space, customers can walk in and pick up baked goods from an employee-managed counter.

Home Service: You can start with a small commercial space. In this option, customers can walk in and pick up baked goods from an employee-managed counter.

Specialty Service: If you plan to specialize in a certain kind of baked goods, a specialty service is your best option.

Dine In Option: It’s a growing trend in the bakery industry right now. If you can afford some space at your home or at your backyard, you can make it a place where people can taste your baked items.

5. Get Licenses & Permits

The foodservice industry requires extensive sets of licenses and permits to start and run. You must obtain  required permits and licenses before opening your bakery business. The sets of licenses will depend on the location of your bakery unit. Contact your local competent authorities and learn in detail the required permits needed to run the bakery business.

6. Identify Target Audience for Your Bakery Products

This is an important consideration in starting a successful business. determine whether you will attract a niche or mass consumer. Depending on this, you will need to select the right products, business models, and marketing strategies. However, catering the mass consumers is the most profitable option. You can cater

  • Families (Homes)
  • Schools (boarding house and campus)
  • Groceries Stores
  • Shopping Malls
  • Wedding Ceremonies
  • Event Planners
  • Sport Centers
  • Corporate Organizations
  • Clubs & recreation centers
  • Housewives

7. Procure Equipment Needed to Run a Bakery

You need a wide array of equipment to manufacture baking items. Here we list down types of equipment need to run a bakery manufacturing unit commercially.

  • Dough Preparation – commercial mixers, work tables for kneading, dough dividers, dough sheeters, and dough scales, holding and proofing cabinets, refrigerators.
  • Baking Equipment: Convection ovens
  • Storage: Shelving and storage racks.
  • Cleaning and Warewashing: Compartment sink, disposable gloves, cleaning chemicals, sponges, scrubbers, and other essential cleaning items.

8. Arrange Startup Funds

You will need to arrange the startup fund for initiation and operation both. However, we can define the fund requirement in two ways. One is your one-time investment. It goes mostly for the tools and equipment purchase. And the second is your working capital. Generally, it includes rents, staffing, ingredient purchase, marketing, and delivery expenses with other operating costs.

9. Secure Space

According to your business model, you will need to secure an ideal space for it. However, we would recommend you going to rent space in starting. As your business grows, you can switch to a purchased property at any moment of time. Before finalizing the deal, check the property document. Additionally, do some local market survey to know the price trend of that particular location.

10. Pricing Strategy

Fixing the right price is an important factor regardless of you are starting a product-based or service-based business. Initially, offering an average price or a little bit below the market price will definitely help to attract consumers. However, we would recommend, try to offer at least some innovative products with good profit margins.

The all-Inclusive payment policy is always a better proposition. Try to offer as much as various payment options to your customers. However, some of the basics are

  • Cash payment
  • Payment via Point of Sale (POS) Machine
  • Online bank transfer (preferably for those that will order the products and would want doorstep delivery)
  • Check payment from the institutional clients as well as from the B2B clients.
  • Payment via Mobile money.

Find below a bakery business plan checklist which you need to follow before starting a bakery business:

Bakery Business Plan Checklist

  • First of all, check the business name availability
  • Then go for business registration
  • The opening of corporate bank accounts
  • Securing Point of Sales (POS) machines
  • Opening mobile money accounts
  • Opening online payment platforms
  • Application and obtaining registration and licenses
  • Securing the Space
  • Conducting feasibility studies
  • Arranging startup capital
  • Crafting a business plan
  • Drafting of employee’s manual
  • Drafting of contract documents and other relevant legal documents
  • Design of the company’s logo
  • Designing and printing of packaging and marketing / Promotional Materials
  • Recruitment of employees
  • Procurement of furniture, electronic appliances, and bakery equipment
  • Creating an official website for the company
  • Health, safety and fire protection arrangement
  • Compilation of the product list
  • Arrangement for trainers and training facility
  • Establishing a business relationship with vendors
  • Arranging delivery vehicle

Finally, to make your business more profitable, you must have a marketing plan.

Additionally, you must have sales promotion strategies. Some of the options you can try

  • Launch the business with a grand celebration party.
  • Tap the local market first
  • Do some outdoor events for the product promotion
  • Create the same products in innovative sizes and flavors at different prices.
  • In addition, go for the electronic media advertisement to catch the mass consumers.
  • You can sponsor relevant events, such as bakery competitions and wedding shows on TV, etc.
  • Go for some outdoor or billboard advertising.
  • Online promotion is a must. You can promote the products on social media and blogs.
  • Finally, establish a solid distribution channel for your product.

Promote your bakery products at nearby retail stores, wholesale if possible. Creating a food blog will surely add value to customers about your business. You can also create a small retail online store to tap a wider audience.