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How Do You Start Your Own Bakery
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Gbbo: Make Starting Your Own Business A Piece Of Cake
Baking and selling sweets may sound like an attractive business idea, but without the right knowledge and skills, opening a bakery can be a confusing endeavor.
While cooking for others is rewarding and a passion for baking is important, your love of your craft can only take you so far. We’ll take a closer look at what you need to know when starting a bakery business.
All retail bakeries sell baked goods directly to consumers, and some specialize in one type of pastry or service. You can choose from the following types of retail bakeries:
You may want to consider diversifying your products to appeal to different customers, especially if you sell primarily seasonal products, such as wedding cakes, when most events take place during the summer.
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The type of bakery you want to run will determine other aspects of the business, such as the space, equipment, and ingredients you need. We will discuss these details next.
Depending on the financial resources you have, you can buy or lease a bakery space. For new business owners, renting space may be a more affordable option, but purchasing commercial real estate may be a better long-term investment.
Your city or state may provide resources for finding business locations. Some offer benefits like tax credits, so check with your local Small Business Administration office or Small Business Development Center.
Equipment is the second largest startup expense for a bakery owner after rent. No matter what baked goods you sell, you can expect to buy pastry cases, commercial ovens, and refrigerators. A large table (called a work surface), a mixer, and a dishwasher are also critical in a bakery. Your costs will depend on the products the bakery serves and the size of your space.
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Many bakery owners start out by buying used equipment, but it’s worth investing in some new equipment. A used oven or refrigerator can leave odors that can affect your pastries. The pastry case should be free of odor or damage so that the pastries look delicious. If purchasing is prohibited, renting equipment allows you to use the equipment you need for a certain period of time, but at the end of that time you no longer own it.
New bakery owners often think they can handle the entire operation, but hiring a manager, especially someone with industry experience, can be helpful. Managers can take administrative tasks like inventory ordering off your hands, and they can train any bakers you hire to ensure product consistency.
To save time and money on training employees, you may want to hire experienced employees. Finding a talented decorator who can meet deadlines can be difficult, but the right person can be invaluable, she says.
Rent and equipment are usually a bakery owner’s biggest expenses, but other ongoing costs can add up. Depending on the hourly wages an employee earns based on their skill level, salaries can be a significant expense.
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Economic factors often cause ingredient prices to fluctuate, making forecasting inventory costs challenging for bakeries. Also, natural disasters or weather events in other parts of the country can also affect the price of ingredients like wheat and vanilla extract. Buying basic ingredients in bulk helps reduce inventory costs.
The cost of baked goods usually reflects the labor and ingredients required to make them. To price an item, estimate the time it takes to complete the cake. If you can afford the price hike, consider the cost of ingredients and the cost of opening the bakery, such as electricity and water, based on the time it takes to make the cake.
Promoting your bakery is a crucial step in getting customers to your door. Set up social media accounts and a website for your bakery where you can post photos of your bakery products.
Engaging social media followers through giveaways and contests will encourage people to engage with your brand and become familiar with your bakery. Make sure your social media output matches the actual experience of visiting the bakery. Customers also expect consistency, so your product should look and taste the same every time they come.
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If your personal savings are not enough to open a bakery, there are several business financing options that can help you. Here are some financing options that may be suitable for new bakery owners.
The SBA works with lending institutions to guarantee loans to small business owners. You can get an SBA-backed loan of up to $5 million for general business expenses. The SBA offers several programs, including the 7(a) loan program and the microloan program, both of which may be attractive to bakery owners.
7(a) loans are the SBA’s primary product. Eligible small business owners can receive loans of up to $5 million with repayment terms ranging from 7 to 25 years. These loans can cover start-up costs or ongoing working capital needs. Microloans are small, with a maximum limit of $50,000. The SBA sets limits on interest rates to prevent lenders from charging higher amounts for loans. Competitive rates and terms make SBA loans an attractive financing option for many small business owners.
For those who have difficulty qualifying for a traditional bank loan, online alternative business lenders can be a viable financing option. Online lenders may accept borrowers who have been in business for a short period of time and have low credit scores. Turnaround times for online loans are often fast, with some lenders announcing approvals within days or hours.
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You can apply for term loans, equipment financing, invoice financing, cash advances and lines of credit with online lenders. However, fast financing and minimum requirements come at a price. Online lenders often charge higher interest rates and shorter repayment terms for loans, often offering smaller amounts than banks.
Crowdfunding allows business owners to raise money from family, friends and the general public. Without extensive experience or collateral, it is sometimes difficult for new startups to get business loans, and crowdfunding can be a viable option. Online platforms like GoFundMe, Kickstarter, and Indiegogo allow you to launch a campaign outlining your business and funding needs. Most platforms charge a fee to use the service, and providers may ask you to provide products or shares in your company in exchange for money.
Funding times can be slow because it takes a while to raise money, and the money you raise may not be what you expected. Competing with other online crowdfunding platforms can be challenging, but the exposure gained through platforms like GoFundMe or Kickstarter can be invaluable in building a customer base.
Although a formal background in culinary arts or business management can simplify the process of opening a bakery, it is not a requirement. A local small business development center or community college can provide education and guidance as you make decisions about your bakery.
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To retain customers, the quality of the food and the in-store experience must be consistent. The key to sustainability is effective bakery management. If you don’t have extensive industry experience, consider hiring a manager who can lead your team or at least teach you the ins and outs of running a bakery. Wondering how to start a baking business from home? You’re at the start of an exciting journey – our 10-step guide will help you get started.
From mastering UK home baking regulations to actually selling cakes from home, here’s what you need to know.
When you start a home baking business, you will need to tell HMRC that you are self-employed so they know you must pay tax through the self-assessment system. You even need to do this
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