The bakery is a popular type of food business establishment and allows you to showcase your creativity by presenting a unique market. In addition, people can also enter the industry by opening a home bakery. Starting a bakery business presents many specific challenges that are different from other industries. We will go through the process of writing a business plan, submitting a license, and raising funds to choose the right equipment for your new bakery.
How to open a bakery and set up a self-employed baker? Can I set up as a self-employed person? Can I settle it without a diploma and a contribution? What are the success factors? These’re some common questions that may come to your mind when you consider opening a bakery.
To be legally qualified as a “baker,” you must ensure yourself kneading the dough at the point of sale. You must also be aware of its fermentation, it’s shaping, and it’s cooking and retail your production. Moreover, you must be an expert in making unique cakes for birthdays and anniversaries to make your bakery business profitable.
Types of Bakery
Before planning and setting up your new bakery, you need to understand the different types of bakeries and the type of customers they serve. The two main types of bakery businesses are retail and wholesale. Although these two types of bakeries produce similar products, their prerequisites and consumers are different.
Retail bakeries are a common type of bakeries. These bakeries sell their products directly to their consumers. They come in different forms; many of them are specialized in one type of food. Let’s look at different types of retail bakeries.
This type of bakery is a mixture of bakery and cafeteria. They usually sell baked goods such as bread, cakes, pastries, cookies, coffee, and tea. Bakery cafes typically have a dining area where customers can sit and eat.
This type of bakery has a counter service in front of the house. Usually, they do not have a place to eat. Instead, they have a counter where customers can order freshly baked products to take home.
Bakery Food Truck
Instead of using physical stores, food truck bakeries sell their products on mobile trucks. Due to the lack of space, many bakery food trucks do not actually bake in their truck. Instead, they prepare their products in a home bakery or commissioned kitchen.
A specialty bakery usually focuses on various baked goods. These types of bakeries generally make food for special events such as wedding or birthday cakes and muffins. This type of bakery can be better because it has weird products that consumers can’t find anywhere else. Also, they are better than the products they can find in other low-quality bakeries.
It is a prevalent type of bakery. You don’t need a lot of startup investment or culinary experience to start a home bakery. Home bakeries sell their products through online marketing and then deliver them by mail. Many home bakeries also have specialties. They offer a variety of baked goods such as muffins, donuts, cookies, or browns.
Another important type of bakery is wholesale bakeries. They don’t sell their baked products directly to patrons. Instead, they sell their baked goods in businesses such as grocery stores, restaurants, delicacies, and cafes.
How to start a bakery?
Have you made a decision about what type of bakery you want to open? And what type of product you want to make? Now, it’s time to start adding details to create a bakery. Here are a few steps that help you to start a bakery business.
1. Conduct a bakery market research
The first step in opening a bakery is to research the bakery market to confirm that there is a lot of demand in the area.
To do this, you will need to analyze in detail:
2. Features of your future client:
Is it a neighbor customer or people working nearby? So what are the peak times? What is their most requested product? Purchase frequency and average ticket?
3. The bakery is already established nearby:
What kind of bread do they offer? Do they also offer pastries or sandwiches? Are customers happy with the current offer?
4. Trends in the sector:
How are consumption habits changing? Is there a trend towards independent bakeries or franchises? Are large food stores a threat to artisan bakeries?
5. Write a stellar business plan.
After doing market research, the next step in opening your new business is to write a bakery business plan. A business plan is a crucial part of creating a new restaurant. It must explain what type of business you want to open, how it will be formed, what products you will sell, your marketing strategy, and financial projections. The bakery business has seven main parts.
- Executive summary
- Company Description
- Market analysis
- Business Offer
- Management plan and ownership structure
- Marketing and advertising strategies
- Financial estimates
Your business plan is the core of your business, and a strong plan can help you fundraise and open a new bakery.
6. Evaluate your initial funds
As part of your business plan, you will be immersed in financial matters. The number you need is the initial cost. You will need to compile a list of items ranging from ovens and refrigerators to small utensils such as pots and pans. Make sure you have a complete list of tools. These items will be a one-time hit, but you will need money to make a living as the business grows.
You will not earn any profit overnight. So you will have to sit down and find out when you will be break-even and how much money you will need by then.
7. Choose a business name.
You may have already chosen a business name, but if you haven’t worked yet, now is the time. Once you’ve figured out what you want your business name to be, you need to make sure no other business has already chosen it.
A quick Google search should be the first step in making sure no other business is already using your name. Not only will this save you from possible confusion with road users, but it will also help you avoid any legal problems.
8. Leasing a commercial space
Once you’ve the funds, you can start looking for a commercial space for your bakery. The type of retail space you will need will depend on the type of bakery you are opening. For example, if you are pondering to open a food truck bakery, you have to buy a truck, and you want to rent space in the commissary kitchen. Retailers will want to find a location close to the desired population, including the house’s front.
Wholesale bakeries sell their goods to companies rather than consumers. That’s why they may move away from cities or populated areas. But whatever type of bakery you open, when looking for a place to shop, there are a few things to consider:
- Proximity to suppliers
- Size and space requirements
- Sanitary regulations and zoning
- Security and crime rates
Once you’ve found your desired location for your business, you can hire a lawyer to draft and negotiate a lease with the landlord.
9. Permits and licenses
The food source industry is heavily regulated at the federal, state, and local levels. There are some permits and licenses that you will need to get before you can open a bakery. Your license requirements will vary depending on your location. So make sure to check your local laws and regulations to see if any special rules apply to your new business.
10. Register for tax and get EIN.
All businesses have different taxes, licenses, and employer requirements. Knowing these requirements before starting a bakery will help you avoid costly and temporary mistakes. The business you choose, as well as some other factors, will affect the business taxes you pay.
Suppose you plan to hire employees to help you run your bakery. In that case, you will also need to apply for an Employer Identification Number, also known as an EIN or Business Tax Identification Number. You can do this through the IRS. This number will be used when you submit your business income tax or payroll tax return as well as when opening a business bank account, credit card, or applying for a business loan.
11. Create an advertising plan for your bakery
Many businesses can start marketing their business on social media for just a few dollars a month. While waiting for permits and licenses, you can start to promote your business. Set up your social media accounts for your business, consider them as your primary advertising platform.
Social media is a great way for businesses to market their new bakery. Even before you open your door, you can reach thousands of people in your area.
12. Buy start-up equipment for the bakery.
Why do you need to open a bakery? Equipment is absolutely essential to get started the business. These are the tools you should keep in mind for at least the first few years of your business. Some of this stock will include consumables, which is the best time to start a lasting relationship with vendors.
Basic equipment requirements include:
- Point of sale system
- Cabinets and cupboards
- Dough press and dockers
- Sheeters, rounders, and distributors
- Bakery oven and Bakeware
- Flour sifters and trays
- Holding the cabinet
- Refrigerator and possibly in the freezer
- Washing equipment including three sink baskets
- Work tables and climatic equipment.
When it comes to equipment, most of the folks often find a restaurant warehouse for a lot of items on this list. In general, it’s best to avoid second-hand equipment because guarantees can save your business.
Take the opportunity to open a bakery business to invest in quality equipment. You need to strive for longevity and make sure all your equipment meets sanitary standards.
13. The price of your products.
When trying to price your food, it is essential to note that the price is determined by your expenses, operating costs, taxes, and market. To calculate your baked goods’ cost, you must first determine the monthly operating costs of your business. This will help you estimate how much you can earn to cover the full cost of running your business.
Hopefully, this article has removed all of your worries about starting a bakery business.
Good luck for your new business! Share with us in the comments below any information you have about opening a new business or bakery.