Have you perfected your bread and cakes, so you’re now planning on starting a bakery business? My hat comes off to you! While it can be a really profitable business, starting up in the bakery industry isn’t such an easy task. There are a lot of factors to consider before you actually jump into the business and start selling your products.
The bakery industry is an extremely competitive one and you need to sell great quality products at the right price, to stay successful. So if you’re having some jitters, here are 18 tips that can help you in your quest to start a bakery!
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#1 – Decide on the type of bakery you will be
The very first decision that you have to make is to decide on what kind of bread you will make. There are many types of businesses that you could open, but be sure to choose one that is suitable for your experience and capabilities. It is also worth considering here where you will sell your bread (see the following point). Here are some options that you can consider:
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If you plan on specializing in a certain type of baked goods, then a speciality bakery would be the perfect option for you. Having a speciality bakery means that you focus on one type of baked good. This can be cakes, artisan bread such as sourdough, gluten-free products or whatever! This option allows you to be regarded as a “specialist” or “artisan” in your field. It will allow you to be noticed quickly in your area and attract customers quickly.
You will need to be competent in the area that you specialise in. It will be harder to “learn on the job” as expectations will be high. It can also be challenging to scale as staff will either will expect higher pay for their skill or it can take longer to train them up.
Grab n’ go bakery
Depending on where you are going to sell your bread you might wish to focus on grab and go products. Bakery items such as sandwiches, pies, focaccia slices, pastries and cakes can be designed to be picked up during lunch breaks. You’ll have to locate in a heavy footfall area to pull this off. You could also provide a mobile solution. These come in the format of a delivery service or a mobile truck that travels to set locations at peak times.
The challenge with this type of bakery business is the higher number of ingredients required. There is also the amount of labour need to make, serve or deliver your products. Because of these obstacles and high rent expenses, profit margins are often tight. Running this kind of operation can be quite stressful to make a decent profit.
This type of bakery is the most common. Preparing bakery products using pre-packaged “dough improvers” or “mixes” is how many bakeries operate. The level of skill is lower making it easier to train staff and grow your business. Many customers won’t care how it’s made as long as it tastes good! The challenge with this baker format is there are many bakeries like this that already exist. It may be harder to provide something unique in order to create demand in your area.
#2 – How you will sell your products?
The topics of how to attract customers and from where you will sell your products go hand in hand.
All you need is a great online platform that customers can easily interact with. This can be a website, an Instagram page, or even a Facebook page (for the oldies!). Products ordered online are usually for delivery, so you will have to work out how you are going to do this. You could deliver your items yourself, hire a driver or for long-life products, use a courier.
If you plan on having a small commercial space for customers to walk in and buy your products this is your option. You can also have a chance to socialize with your customers if you want to manage the counter yourself. It’s also a way to delegate to an employee so you can spend more time baking.
More and more bakery owners are considering sit-down bakery-cafes. You can have an indoor seating area with a counter where you display your elegant products and pastries. You can also have an outdoor seating area if you have the space outside your commercial property. Customers can buy your products and sit down to enjoy them with a cup of coffee. You can also branch out into chef-prepared breakfasts, lunches and even evening meals.
In this business, you’ll be trying to lock down the local businesses to larger orders. This can be more high-risk to start with if you have no contacts, but once you get a few customers it will feel like a very sensible option. Lower rent costs, fewer complications in serving customers and regular orders make owning a wholesale bakery fantastic.
While a food truck bakery may not be a fashionable choice, but if your main purpose is to make money, don’t cut it out of your options yet. A food truck is a well-versatile business since you can basically go anywhere to sell your products! You’ll be more mobile than the other types of businesses mentioned above. You can also have more than one food truck if you plan to expand your business.
Link up with local offices to provide catering, attend festivals and street markets or camp outside a busy train station. It’s a great way to get new wholesale customers too!
#3 – Come up with a great marketing strategy
This step is probably one of the most important factors before opening your bakery to the public. Create a buzz around your bakery business and get people excited! There are several ways to attract customers.
You need to formulate a marketing strategy that works for you because not every bakery business will work the same way. What you want to concentrate on is attracting the right sort of customers to your business. Building a social media fanbase is great, but if you’re a wholesale business could you better spend your time picking up the phone?
Conduct market research
Conducting market research should be the first step in your marketing campaign, as this is where you determine your target market. This includes the demographics in your business area. From here, you should also do some competitor analysis to see what they’re doing in terms of their marketing and why customers choose their products.
Take this time to try to find out what your market is looking for. Once you’ve gathered information, you will be able to create a marketing strategy that will meet their needs and expectations. Here are some points on how to build up your bakery marketing plan.
#4 – Build your bakeries branding
Use what you found in your market research to design your brand. This means answering the below questions and conveying the responses in your interactions, logo and marketing material:
- What do you want to make people feel when they see your brand?
- What level of sophistication do you want to convey?
- What do you want to be recognised for?
- How do you want to talk to people?
- Are you an Expert? Fun? Budget orientated? A social hub?
#5 – Have a website for your new bakery before you start!
This is likely to be your first point of contact to your potential customers, you don’t want it to let you down. You might be willing to make your own on Wix, but you’ll be rolling the dice to discover if your design skills are up to scratch. I’d advise that you find a reputable website builder that can build you a website to last. They are generally much cheaper to maintain too.
#6 – Find your way to advertise or get sales
There are a lot of ways on how to advertise your business. In the case of a physical bakery business it this should be done before you even open your doors. You can start with the traditional methods such as print ads, signage, flyers, newspapers, magazine ads, direct mail, and so much more.
What you need to make sure is your ads should have a clear call to action that will entice the customer into your bakery business.
Social Media Marketing
A social media presence is pretty vital in today’s business world. Social media is the easiest way to get your brand message out there. Use platforms such as Facebook, Twitter, and Instagram to create customized posts that are attractive for people to click on. This will allow you to reach a wider audience of potential customers who can lead to more sales.
There’s no one-size-fits-all when it comes to marketing and advertising strategies. What I can suggest you do is run a couple of channels, and see which ones will work better for you and double down.
Having an online business is a popular choice for a start-up. As an online bakery, you can do all of the product makings in your home bakery. Sadly, no one can smell the nice aroma of freshly baked bread online. So what you need to do is appetize your customers by having great-looking photos and videos! This will most likely be something you may need to study before you launch.
Search Engine Optimization
People need to know how to find you, and many people use Google to do and search for this. They’ll enter the phrases such as “bakery near me”, or perhaps tap in the name of your bakery.
Getting your bakery business to come up at the top of the search results is going to get your website more hits and customers in the door. Internet searchers either want to discover someone local to purchase bread from, or want to find more about your business. So having a properly built website that ranks well is very important.
Once it’s set up, drop posts and pictures as often as you can to keep in touch with your “fans” and grow your traffic. It’s also possible to outsource search engine optimisation to experts across the world. They will be able to dial into your website and perform any tech bits. A good website with frequent and relevant content will give you authority on search engines. If they like your site, they’ll send more traffic. You can also use your site to sell your products or if there is enough demand, bakery-related equipment.
It might sound a bit “out there” but setting up a YouTube channel and posting regular videos can draw customers in from destinations you could only dream of. Becoming an authority in YouTube makes you a better baker in many peoples eyes, just look at **$&&* %&&!
#7 – How much does it cost to start a bakery?
When opening a new business, always assess the capital and start-up expenses that you’re going to need to invest. Bakery businesses cost varying amounts to start. A small home bakery might cost around $5-10K to open. Whereas a bakery shop in a central location is going to probably be upwards of $100K.
Costs to consider when starting up a bakery business:
- Deposit and rent costs for a commercial space
- Renovation and decoration costs of the space
- Equipment needed for production and selling the products
- Ingredients to get started
- Staff costs – including yourself
- Funding costs for loans and finance payments
- Marketing costs
- Delivery costs
- Business rates and taxes
How much are you willing to part with? Are you getting a business loan? Can you finance your equipment?
Funding is usually the biggest hurdle when starting a business for the first time. It’s easy to get excited and all pumped up, but it is important not to bite off more than you can chew. If the amount you’re investing doesn’t align with your current financial capabilities, then it might be better to reconsider a more sustainable solution.
#8 – Choose the right location
You may come up with the best-baked goods in the world, but what if you’re operating in the middle of nowhere? If you’re expecting customers to come to you, no one will!
You should consider the location of your shop carefully before taking the plunge. You need to choose an area where you’ll have a good, steady flow of customers. Make sure that the location is accessible to people, like near public transportation or along busy roads.
#9 – Write a business plan
Once you’ve decided on what kind of bakery business you want to operate, you should now make your business plan for it. Having a business plan is an integral part of any business. It’s going to be the basis of the business’ structure, marketing strategies, financial plans, and operations. It will guide you to look at the business from all possible angles. There are seven main sections for a business plan:
- Executive summary
- Company overview and description
- Products and services
- Market analysis
- Strategy and implementation
- Organization and management team
- Financial plan and projections
A business plan will serve as the backbone of your business and the road map to success. So make it great and well-detailed. I explain more in my book about my bakery business.
#10 – Secure permits and licenses
Wherever you are, there are special permits and licenses that you should secure first before operating your business. You need to be familiar with the local laws and ordinances before you start your business. The types of permits and licenses vary depending on your location. It could be a business license, zoning compliance, fire department certificates, and the likes.
Also, consider that these things will require some time before they can be approved and processed, so make sure to give yourself some lead time.
#11 – Select your bakery equipment – don’t skimp here!
You may see a price of equipment on eBay that claims to do the same thing as the brand you’re familiar with for four times less money. Like many, you may be tempted to purchase one of these and make a saving on your start-up costs. I highly recommend that you don’t buy cheap, unbranded bakery equipment. Buying equipment like this can be a big risk. I learned this lesson the hard way!
A bakers tale….
The spiral mixer I bought seemed like a bargain. It could do everything the branded names could, it had the same specifications and looked great. But as I used it, it couldn’t develop the dough. My bread collapsed once it went into the oven. It made me late for a delivery, as I’d had to remake a mix and I lost the contract. The seller of the mixer refused to refund it so I was stuck!
Despite declaring strong spec and features, products like this are often not up to standard. I recommend you only purchase products that are already proven in a professional environment.
Yes, you’ll find a few bargains by searching on some online sites. But for the most part, it’s better to stick to branded names in the bakery equipment industry. Especially if you’re planning to run your business for a long time, make sure to invest in quality equipment. It will ensure the longevity of your equipment, efficiency, and consistency of the food you produce. You don’t want to buy cheap, get poor results, and then end up spending the same amount of money on better equipment that you would have got in the first place.
#12 – Design your range or menu
As a new business, a lot of customers will rely on your menu or price list. People tend to recognize products that are familiar to them, so it makes sense to keep your menu simple. As you can see in many successful bakeries, their menu is usually composed of classic items that are simple and straightforward. There’s no need to overcomplicate things, just add some brief descriptions and prices for each item.
Having a good design will also help customers easily order what they want. Customers love to see their options presented clearly before them, so having a few photos would definitely help as well. You can consider adding symbols for vegetarian items, gluten-free items, and the like. Your goal is to make your menu or price list as user-friendly as possible!
#13 – Know your profit margin
It took me ages to understand profit when I started my own bakery. Where the dough ingredients cost 10p a loaf, how much should I be selling one for? It’s not easy to work out, but the best way I found was to create a spreadsheet and use this bread costing guide.
The price of your products is important to your branding and marketing plan so get a good idea of what things will cost you before you get started. Otherwise, you may be alarmed at the amount of profit you will get!
#14 – Build a great team
You might have the best plan and equipment, but if you don’t have a good team at your bakery, it’s going to be hard to succeed. When I say “team” here, I don’t just mean employees. You also need to consider your suppliers, investors, and any other people in the mix who are influential in your business decisions.
You should always try to hire the right people for the job. If you’re hiring in a management role, it’s important to invest in training and development for your future employees.
If someone is the right fit for your business, they should be willing to work with you on building a plan for their development. It demonstrates how much people believe in the company and will encourage them to work harder for it. Do what you can do in-house, but in skills where you are lacking don’t be afraid to look for external trainers.
As a start-up, it’s going to be hard to run a business alone. What can help you is a great team that can support you throughout. Always keep in mind that passionate people will care about your bakery business as much as you do! So take good care of them and you’ll be well on your way to success.
#15 – Have a good relationship with your suppliers
I can’t stress this enough, but you need to build a good relationship with your suppliers. The last thing you want is for them to give other businesses preferential treatment over you. You should always be offering your suppliers a good deal because many of them will offer you deals in return.
If there are any problems or changes you can make, you should tell them as soon as possible. It doesn’t cost any money to treat them well, and you might save yourself a lot of unnecessary stress.
#16 – Sell your ingredients
If you’re using good ingredients, shout about it. Tell your customers what makes them special, how you select them, how you craft the recipes with them to make the best quality products.
Give history and story to your products, it’ll add value every time. That said, actually allowing your customers to purchase a small bag of flour, yeast or sourdough will give an air of pride in your own ingredients. It’ll also generate a small amount of easy profit for you too.
#17 – Outsource non baking-related tasks
When running a business you should try to spend your time maximising your strengths. In other words, “Get other people to use their skills and concentrate on your strengths.” If your strength is baking, try to outsource other tasks so you can grow your business faster.
#18 – Know your recipes!
You should know what breads you’re going to bake from day one. You may start off with a limited range, but try not to start developing new recipes when you open. Do it before, either hire a unit or if necessary set up at home.
When you first open you’ll then be able to doors focus on driving a great customer experience and training your team. Time spent trying to work out which cheese works best inside a pastry is best once you’ve settled when you haven’t got these stresses.
Further reading to help your new bakery startup
And there we have it, the top tips for starting a bakery. If you’ve found this helpful, check out the book I wrote about my first bakery business.
In the end, it bombed. If you read the book, I’ll tell you the things that I’ve done wrong and how you can avoid these mistakes. I’ll also give you the secrets to success, and show you how to start up a bakery business that will meet all your expectations.
Reading this book is the best way to help in making your start-up bakery (or any small business) a success (in my opinion). It’s not all easy swimming out at sea, sometimes there are some sharks to avoid! Comment below if you have any questions.