Complete Guide On How To Start A Bakery Business

Starting a bakery is a charming business. Bakery items are tasty and mouth-watering foods. A bakery owner can make a lot of profits from the bakery business. Opening a bakery business can be easy, but running a bakery business can be messy if you don't have the right skills and knowledge. So, before entering the bakery industry, you must get the proper knowledge on how to start a bakery business. In this article, we will provide the exact outline of how to start a bakery business.

What is Bakery?

A bakery is an organization where flour-based goods are baked in an oven and sold from a storehouse location as a wholesale or retail to the different grocers, restaurants or other businesses.  

The bakery business is highly demanding. A bakery business can range from a home to a family operation, small business and large to commercial enterprises. 

One of the most significant advantages of starting a bakery business is its popularity and low starting cost. Bakery products are an essential part of our daily lives. We must buy different types of bakery goods daily for other purposes, especially on birthdays, holidays, weddings, anniversaries, etc. 

Introduction Of Bakery Business

The invention of baked goods is thousands of years old. The Roman empire at first invented baked goods. Their baking art was very popular. Their baked goods became very famous throughout the whole world along with the roman citizens, and the demand for baking goods has increased rapidly. 

Around 300 BC, the fame of baking art was extremely high. It was considered one of the most valuable and respectable professions. At first the bakers grind grain into flours and bake in an oven at home for making bread. 

Finally, at 168 BC the first “bakers guild” was established in rome. After that the popularity of baking goods spread all across the world, especially in  Europe and western part of asia.

The significant increase of demand for baked goods forces them to build an establishment place where the customers can purchase baked items. After gaining popularity, the bakers started to sell their baked items on the street. This is how the bakery business started to grow and make a strong position in the culinary business.

List of Bakery Items

When you are going to open a bakery business, you have to know in detail about the bakery items. Baked foods are mainly made from dough ( a mixture of flour, grains, water or sometimes other liquid ) or batter (a liquid mixture that contains flour, salt, sugar, leavening, etc ) and lastly cooked in the oven. Choosing the wrong items could be the biggest mistake when opening a bakery. 

Here,  we will talk about some of the most popular bakery items.

• i) Bread

Bread is a food that is made from the mixture of flour with water or milk. It can be baked with or without yeast or other leavening agents.

• ii) Bun

Buns are bread products that are baked with yeast-leavened. They are famous for their good taste and soft texture.

• iii) Cake

Cake is a type of food that is made with a mixture of flour, sugar, oils, and eggs. Sometimes cake is baked with dry fruits along with other ingredients. Cake is considered to be the modified version of bread. Cake shop business plan is an excellent bakery business plan. 

• iv) Biscuits

Biscuit is a baked item that  is made with flour, baking powder, baking soda, sugar or yeast. It is a variation of dry cake and  dry exterior along with soft interior. The biscuits can be many different sizes with different flavors. 

• v) Brownie

Brownie is a kind of dessert typically made from flour, eggs, sugar, chocolate and butter. It is a baked sweet with rectangular or square shapes. Brownie was first invented in the United states. It is so famous that almost all countries around the world consume it. 

• vi) Cracker

Cracker is food that is made from flour, salt, seeds, herbs,cheese, or other flavoring ingredients. It is a dry and flat baked food.

• vii) Cookie

A cookie is a crispy, sweet baked dessert often made with flour, butter, eggs, sugar and different types of flavoring like chocolate or vanilla. It contains high sugar and fat.  

• viii) Muffin

Muffins are generally bread that is similar to cupcakes. They are considered quick breads. Muffins are made from flour, yeast, water or other leavening ingredients. 

• ix) Pastry

Pastry is one of the most popular bakery items. It is the combination of flour, salt, water, fat and other shortening. The taste of a  baked pastry is savory and sweet. You will find many different types of pastry in the bakery. 

• x) Tart

Tart is a mouth watering baked food with sour taste. You will get a sharp taste and smell in every bite of tart. A tart is a baked item and  the top of the tart is filled with custard or fruits. 

• xi) Torte

Torte is a sweet dish that is referred to as a dessert. The torte is similar to cakes but there is a difference between cake and torte. They generally originate in central europe.

How to Start a Bakery Business: Effective Ways

Are you one of those people who like to get the fresh smell of baked foods? If the answer is yes  and want to get involved in the bakery business or look for bakery business ideas, then stay with us. In this article we will try to guide on how to start a bakery business. 

1. Select A Bakery Style

Before jumping into the bakery business, you have to do a wide research about the current demand of bakery products. You have to do your research according to your bakery locations. It will help to choose the ideal bakery items for your bakery business. 

So the first and most important task for a bakery business is to select the appropriate bakery goods. Basically bakeries are divided into two main formats. 

# Wholesale Bakeries

Wholesale bakeries are typically larger bakeries. A wholesale bakeries do not sell their goods directly to the customers. For the wholesale bakeries, the market is different. They sell their products to business organizations like cafes, restaurants, grocery stores, big bakery shops, etc. 

You don't need a decorated bakery factory or high traffic area for a wholesale bakery but you need a larger working space. Wholesale bakeries have to produce a high amount of baked goods to fulfill their demand. 

# Retail Bakeries

Retail bakeries sell goods directly to the customers. They are the most popular and common types of bakeries. You will find many different categories of retail bakeries and they can select a certain type  of baked item for their bakery. Retail bakeries need a well decorated space for their business.

Let's Discuss The Types Of Retail Bakeries.

# Food Truck Bakery

Food truck bakeries is a mobile bakery that is being operated from a  food  truck. A food truck bakery is a very famous type of bakeries. They can operate their business in multiple locations. One more benefit of a food truck bakeries is they can attend various occasions and functions. 

# Home Bakery

Home bakery is a small type of bakery that operates from a home in a residential kitchen. They produce less amount of products. Their goods are generally for local pick up or online selling.

# Bakery Cafes

Bakery cafe is a combination of a cafe and bakery. They sell different types of baked items with coffee or other beverages. A bakery cafe needs a large space for a dining area for sitting and eating.

# Counter Service Bakery

A counter service bakery doesnt have any sitting or dining area for customers. Basically the customers place orders and take the baked goods.

# Speciality Bakery

This is a type of bakery that is special on any specific  item. Like some bakeries produce only wedding goods, cup cakes, some produce lactose free goods, etc.

2. Create A Business Plan

One of the most challenging and hard tasks for your bakery is to create innovative ideas for bakery business. It has a great advantage. If you can make an effective bakery business plan, it will be much easier to open and run your bakery business. 

In your business plan, you have to include your goals, stakeholders, investors, services, financial plans, business operation, products, marketing and sales plan, etc. So you need a well elaborated bakery business plan template that covers all the operation of your bakery business. 

3. Make Ur Bakery Menu

Menu is the heart of any culinary business. You need a well organized menu to attract customers and force them to come back again at your bakery. Before deciding your menu, you have to take a look at your competitors, see the marketplace for the failings that you can fill, look for the demand for the bakery goods, etc. 

After that your responsibility is to design your menu. You have to target those bakery items that have ingredients that are available and have high market value. After deciding the menu items, your next challenge is to set the price according to the current market price. Always remember that price plays an important role in bakery business so try to follow the rules of menu engineering. 

It will help a lot to make a profitable menu. After completing the offline menu design, you can build an online menu. You will find different types of menu templates that are ready to use. So select templates and add your items with the proper description, prices, photos, etc. 

4. Do A Financial Plan

Starting a bakery business requires many startup costs. It will be a wise decision to find financial options for your bakery business. But you have to remember that every financial support has their own rules and considerations. So you have to be very careful while choosing financial support.

You have to identify and evaluate the advantages and disadvantages of each financial support. While making a financial plan, you have to consider all the facts like cost for the commercial space, license and insurance cost, equipment cost, interior and exterior design cost, staffing cost, ingredients cost, making and baking cost, marketing and advertising cost, etc. 

To cover this cost you can take different types of loan. One of the best ways is to open a business account and apply for the business loan. You may apply for three common business loans.

# Small Business Loan

A small business loan is a very popular type of loan that is created by SBA(Small Business Association). Their main target is to protect and help the small business by providing financial support. Small business is very available with lower interest rates. So, you can apply for a SBA loan for your bakery business.

# Commercial Loan

Commercial loan is a type of loan that provides access to a high amount of money with lower interest cost. you can apply at any local or major bank for the commercial loan. But you have to remember, you need a high credit score to get a commercial loan.   

# A Business Line Of Credit

When you use a business line of credit, you can get the ability to use a limited amount of money. It doesn't allow for a handsome amount of money.

# Startup Business Grants

A startup business grant gives you the access to the support of your startup business cost. You can get startup business grants from a private organization, government agencies or  from any state corporation. 

5. Obtain Necessary License And Permission

What licenses are needed to start a bakery is a common question for those who want to get involved into the bakery business. After choosing the location for your restaurant, you have to get the necessary licenses and permissions for your bakery business. Different locations have  different requirements for permission and license. But you have to follow the local laws that are essential for opening a bakery business. 

Here, we have listed those necessary licenses and permission.

# Licenses

• Business License
• Food Service License
• Catering License
• Food Handlers License

# Permits

• Zone Permits
• Health Permits
• Seller Permits
• Employe Identification Number
• Business Registration

Always remember that every bakery business has to be registered as a legal company. So you have to choose the bakery business entity that defines a good business structure. 

6. Get The Equipments And Supplies

Best output comes from the best equipment. So for ensuring best customer services and enriching your bakery production you have to buy good equipment. What types of equipment it needs depends on your bakery menus. The size and number of equipment depends on the amount of goods you are producing.

Here we have provided a list of business equipment needed to start a bakery.

# Dough Preparation Equipment

You may need different types of Dough preparation equipment. 

• Commercial Mixer
• Kneading Table
• Dough Sheeters
• Dough Dividers
• Dough Scale
• Holding Cabinet
• Refrigerators

# Baking Equipment

As we know, bakery goods need to be baked. So you need different types of baking equipment.

• Convection Ovens
• Deck Ovens
• Revolving Ovens
• Baking Pans And Trays

# Sales Equipment

Sales equipment is very important for your bakery business. If you choose the right sales equipment, they will increase your bakery sales and make more profits. 

• POS Software
• KDS System
• High Quality Box
• Scale and Measuring Tools

# Washing Equipment

Washing equipment is used for cleaning and washing utensils and other ingredients.

• Three Compartment Sink
• Hand Washing Basin
• Cleaning Powders
• Disposable Gloves
• Scrubbers
• Brush

# Storage Equipment

If you want to make a smooth kitchen operation then you have to keep your kitchen well organized. You have to store your ingredients and other necessary stuff properly. For these you need a good storage area and equipment. 

• Refrigerators
• Storage Racks
• Bakery Smallwares

7. Create A Bakery Layout

When you select your bakery location and select all the equipment then you have to create your bakery layout. Bakery layout is essential for the smooth bakery operations. 

In your bakery layout, you have to include your floor plan design, commercial kitchen layout, storage area, food preparation area, washing and cleaning area, etc. 

For example, you have to keep your cooking and baking area far from the storage area where refrigerators and other cooling equipment are kept. If you keep your storage area near your baking area, your storage ingredients and equipment may get hamper. 

On the other hand, you have to keep your washing area separate from your baking area. It can reduce your food hygiene. Moreover, you have to follow all the food safety rules in the layout of your bakery. 

8. Hire The Staff

It is not possible to run a bakery business alone. So you have to hire the staff for your bakery business. Whether your bakery is wholesale or retail, you must have to hire experienced staff. Always remember the kitchen is the backbone of any culinary business. 

So if you want to be successful in the bakery business, you have to make sure the kitchen is working very well. For a well working kitchen, you have to hire well qualified and hard working staff. 

As we know, a bakery shop opens  early in the morning, so it would be better to hire those staff who stay near your bakery factory. You may also arrange for a  training  session to train your staff according to your bakery categories. Moreover you can reach different types of culinary schools to hire the bakery staff.

9. Develop A Marketing Strategy

Developing a marketing strategy is very important for your bakery business. So before entering into the  bakery business, you have to make an ideal advertising and marketing plan for the bakery business.

Advertising will help to spread your bakery business into the market. As a part of your marketing strategy, you have to analyze your market and write a short summary about the bakery demographic, competitors, etc. 

While marketing and advertising your bakery business, you have to set realistic goals for your business. As we live in the era of the internet, we have many different social media sites. This social media helps a lot to connect with people all over the world. You can choose these social media sites for marketing your bakery business. 

How Profitable Is A Bakery Business?

Can bakeries make a lot of money? Absolutely yes, the bakery business is one of the most profitable businesses. You may get surprised by knowing how much a bakery owner can earn. Bakery products have become a mandatory part of our lives. To make your bakery business profitable, you have to know how to run a bakery business effectively.  

Everyday millions of people take delicious baked items for their meals. The average profit margin of a bakery business is 5% to 10%. But you have to  remember the range of the profits can vary according to several  factors. 

There are many bakery businesses that have a profit margin of about 13%  to 15%. Actually profit margin depends on the types of bakery goods, location, operating cost, sales volume, etc. You can use different strategies to maximize your bakery profits. 

For example:

• # Reduce Operating Cost

As we know, operating costs are high for bakery business. So you have to try to reduce your operating cost as much as you can. The more you can reduce your operating cost, the more profits you can make. Reducing cost includes several terms like better deals with suppliers, less staffing cost, low energy consumption, etc. 

• # Monitor Inventory

To maximize your bakery sales, you have to keep tracking your inventory on a regular basis. It will help to reduce your food waste and effective workflow.

• # Increase sells

One of the most effective ways to maximize your bakery profits is increasing your bakery sales. You can use many strategies for increasing your sales. fOr example, you can give special offers, do offline and online marketing, create a bakery brand, fast delivery services, etc. it will dramatically increase your bakery sales.

• # High Margin Products

If you want to maximize your bakery profit, you have to focus on high profits goods. Generally, high profit goods have high prices. So if you choose high margin products you can make a handsome amount of money with less sales. 

Final Thought

In the end, we would like to say that experience really matters. So it would be better, if you gain some experience before jumping into the bakery business. Moreover you have to remember, you may face many difficulties while opening and running your bakery business. But never give up. It takes time to see the progress in the bakery business. So work hard and gain knowledge on how to start a bakery business, definitely you will be a successful bakery businessman.