Do your family and friends incessantly ask you to bring those delicious cupcakes to get-togethers? Are your brownies the talk of the town (in a good way)? Do you make the pies for the community pie-eating contest?
If your baked goods garner their own attention, you might have a great shot of rolling that dough from the counter to the bank. If you’ve been thinking about opening up your own business, and people clearly want your product, you might be ready to take a crack at a bakery. Opening any business takes a tremendous amount of effort, and some bakeries are tougher to run than others. But this shouldn’t discourage you, as those that take the time to prepare have a greater chance of enjoying a delicious future. If you’re ready to take the plunge, here are the main ingredients needed to make your dream a reality.
Whether it’s a bakery or any other venture, your business plan should include every conceivable detail about your operations. A good one includes an executive summary of your business, market analyses and market positions, just to name a few. It’s also what you’ll use to win over investors and lenders that you may need for funding. For an in-depth guide to creating a business plan, click here.
Learn the Financials
As part of forming your business plan, it’s important to understand the costs that come with opening and operating a bakery. Unfortunately, because they’re more resource-intensive than other businesses, bakeries can be pricey. Even so, affording the startup costs isn’t impossible. The following are some financial requirements of running a bakery:
- Large-volume production equipment
- Certified kitchen space or commercial office space
- Bulk ingredients
- Business licenses
- Food Handler’s certifications
For instance, instead of buying your own baking equipment, consider saving money by renting a certified kitchen space. While this might save you cash, you may not be able to get the storefront you desire. Your second choice is to consider renting or leasing large-volume equipment, which can offer you savings in the location of your choice.
Select a Suitable Location
When looking for a space, make sure it is clean and suitable to run a bakery from. Cooking (and subsequent cleaning) requires lots of electricity, water and gas, so if possible, try to find a place with a lease that includes utilities. If you are located in a major city, not only will you be competing with other mom-and-pop shops, but you will likely compete with grocery store bakeries as well. If this is the case, think of finding an area that is artisan and community-oriented. This will help attract clientele that’s averse to big corporations.
If you live in a small town, steer clear of encroaching on and upsetting the territory of other bakeries. If territory is crowded, find a bakery that is going out of business or closing due to its owners retiring. An added bonus to this approach would be the possible opportunity to inherit or purchase existing equipment at a far cheaper cost, as well as any brand equity that may already be established.
If possible, consider serving historically underserved areas that other businesses might neglect. If you can offer an affordable product to a local market that has nothing like what you’re offering, your odds at turning a profit become more favorable.
Regardless, whether you plan to set up shop at a new location or a pre-existing bakery, be sure to complete a pre-inspection to help you discover any detrimental flaws in the property.
Secure the Equipment
In order to fulfill large orders, you need to invest in commercial-grade equipment and supplies (e.g. pots, pans, refrigeration, display cases, pan racks, ovens, etc.) that can handle the bulk. While buying new items is tempting, there is no need to break the bank on brand-new appliances when there are plenty of used options available. Find restaurants that are going out of business, and see if you can buy their equipment on the cheap. Check out Craigslist and eBay for more deals. Just be sure to thoroughly inspect whatever you buy before making a purchase, because the last thing you want is to open your doors with display cases that look picked over. Delicious treats are far more appetizing to the eye and stomach when made and displayed in high-quality equipment.
Health Inspection and Other Legal Obligations
Before opening your doors, get in touch with your local Department of Health, and see what licenses and permits you need for your bakery. In most jurisdictions, you will need to pass a health inspection and pay for a permit thereafter. Additionally, you should acquire a small business license, liability insurance and a food handler’s certification. Municipal or county governments handle most health regulations, whereas business licenses are usually dealt with by local Secretary of State offices.
Create a Compelling Product
Your product will be the key to your success, so before investing time and money in a bakery, you need to know what to sell and for how much.
You may have ambitions of selling a wide variety of baked goods from the start, but you’ll want to begin with a small number of items and a focus on your best offerings. Would that be cookies? Or might it be cheesecake? Take a look at the other competitors in your area, and plan accordingly. If you know for certain that your cookies will beat out every other location, then do some research and testing to support that. But if you can make a mean cheesecake when everybody else is making doughnuts, and you know people will pay for it, that might be a good indicator that you should run with it.
Once you’ve settled on your signature product, you’ll need to consider its profit potential. For instance, if you produce cookies, your retail price will have to account for ingredients, potential packaging costs and any marketing costs in addition to profit considerations. If you use expensive ingredients, can you seamlessly interchange or even integrate cheaper ingredients to ensure the greatest possible profit margin? If you can’t sell your goods with an acceptable profit margin, then you’ll have to re-examine how you make and price them.
Once you hit the sweet spot, and business comes rolling in, it may be a good idea to broaden the number of goods on the menu. When you have the community convinced that your cookies are the best, it’s time to start thinking about growth.
On a final note, make sure to focus on quality and consistency. This includes exact specifications on how to create your products, so any present or future employee will know exactly how to make them. The last thing you want is for your bakery to get bad reviews because your once-awesome cookies are fading to mediocrity.
Promote Your Bakery
It might be last on this list, but your marketing plan should have been a key part of your business plan. Now it’s time to start implementing it. Once again, do not throw money at things that you feel are not going to work. You need to test various methods of reaching people and getting them to spend their hard-earned money at your business. Your efforts might include creating a logo or mascot, or maybe you’ll use testimonials to build a solid word-of-mouth following. Whatever you do, maintaining consistency across your branding efforts will make your business hard to forget.
Create a website for your bakery that displays your products and highlights your specialty. Design business cards, marketing brochures, labels and boxes to send home with your clients. Before your grand opening, make sure you send press releases to local media sources and announce it on social media to boost community awareness. Bring samples of your product to Chamber of Commerce events and other local businesses, and offer to bake for some local charity fundraisers.
Doing your due diligence before opening your bakery will obviously not guarantee success, but it will surely get you closer than cutting corners. When you’re ready to introduce your delectable product and business to the world, do everything possible to make sure your effort, time and money are not in vain.