Bakeries are very common. In big cities, you’ll see several competing for customers on the same street. But here’s the catch, no matter how fierce the competition is, have you ever seen any of these with no customers around? Probably not right?
People will always long for bread as it’s a staple. In connection, if baking excites you and lifts your mood, then consider starting your own bakery. You can attack this business in different ways to ace the game. Read this guide on how to open a bakery.
Before knowing the different ways on how to start a bakery, you must first get an idea of how much you’ll need to spend when starting.
Popular sources say that starting a bakery requires at least $10,000-$50,000. However, this doesn’t tell us much. And so, we’ll give you a clear breakdown of the realistic costs in this section.
You need several pieces of baking equipment. While it’s possible to do things manually, the highest level of sanitation and production efficiency can only be ensured if you have the right tools.
These are the most important machines to have when starting a bakery; a dough press, electric dough mixer, oven (gas or electric), electric dough slicers, refrigerator, sheet pan rack, and sheet pans. The table below outlines the cost of these pieces of equipment:
| Cost | |
|---|---|
| Dough mixer | $3,297 |
| Dough press | $5,946 |
| Oven | $13,010.90 |
| Electric dough slicer | 3930.40 |
| Refrigerated display case | $2,932 |
| Sheet pan | $68.55 |
| Sheet pan rack | $259.44 |
| Overall cost | $29,444 |
There will also be building expenses, provided that your bakery will be a brick-and-mortar location.
The average cost of a commercial lease is $9-$18 per square foot, depending on the characteristics of a chosen location. This means that if you plan to have a 500-square-foot bakery then expect to invest $4,500-$9,000.
You also have to think about utility bills. Gas, electricity, internet service, and water will cost $1,500-$2,500 on average.
Your bakery can’t make products without supplies. You can’t start without having a clear idea of this cost. The table below shows the cost of ingredients, taking into account that you’ll use 30 packs per month:
| Cost | |
|---|---|
| Baking flour | $1,239 |
| Yeast | $2,397 |
| Baking salt | $959.10 |
| Eggs | $82.50 |
| Baking sugar | $534 |
| Overall cost | $5,212 |
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A brick-and-mortar bakery works best if you have the budget. Here are the steps you need to take to open one with success.
The first is to look for a location. Ideal places are those near to residential sites, city centers, universities, shopping centers, parks, and other similar places where people are usually found and will be inclined to buy bread.
You want to study a chosen location first. In this stage, you’ll need to get a solid grip on what kinds of people are always around. Is it students? Office workers? Homeowners? Construction workers?
If you know your customers, then you’ll know what to sell. For example, if your bakery is in a location where students are around, then the ideal goods to sell are cakes, doughnuts, pies, and pizzas.
Aside from demographics, you also want to know the cost of commercial leases in the area. By doing this, you avoid getting bamboozled by exorbitant commercial lease prices.
Look for a space in the area. For a startup bakery, what you’ll need isn’t a full-blown commercial building. A 500 square feet space with good visibility and adequate area for housing equipment and supplies is enough. Once you find this, look for the owner or property custodian and haggle for the price of the commercial lease.
When you have the space, then it’s time to turn it into a bakery. You need to find a contractor to do this. By working with a contractor, you ensure that the finished bakery conforms with the building codes of the area where you’re about to do business. A contractor can also help you come up with the ideal bakery design.
If you’ve secured the space, then the next step in how to start a bakery and how to start a cupcake business is getting the permits and licenses. These are the ones you’ll usually need.
Business Licenses
EIN
Food service permit
Building fire and mold permit
Certificate of Occupancy
Business name
Business plan
Organizational structure
Tax
Lastly, don’t forget to purchase insurance. What you’ll need are a general liability policy and a commercial property policy. General liability insurance will cover claims filed by a customer who sustained bodily injuries or property damage while on the premises of your business. On the other hand, commercial property insurance will ensure that your business survives when disasters happen.
You need to hire employees. This is an essential step since every bakery can only be successful with more than one person doing all tasks alone. You’ll need to hire bakers, cashiers, dough makers, chocolatiers, cake designers, and others.
By the way, one of the pitfalls of businesses hiring a lot of people is the delayed payments of payroll. This is why it’s important to invest in software that automates the task. Consider using OnPay. OnPay helps you process payroll and tax filings easily. You only pay $40 per month for this handy tool. By clicking here, you can try it out for free for one month!
Another thing you need to remember about employees is the effective management of tasks. This is why you should also invest in software that keeps things aligned. Try using Bloom. Bloom allows you to track projects, sign legal papers, and do other important matters for business growth. This doesn’t cost much. The best part is that Bloom offers a 1-month free trial and by clicking here and signing up, you're also able to start a free trial and then have 15% off your first 12 months!
As you consider how to start a small baking business, consider the potential of doing it in your house. A home bakery cuts the cost of a commercial lease. Moreover, you enjoy working comfortably in your own space. The only downside though is that you closely need to follow health and safety protocols. So how to start a bakery business from home? Here are the steps:
Your state may have specific laws that govern what you can sell out of your home and what requirements your kitchen may need to make. Familiarizing cottage food laws is a key part of knowing how to start a bakery from home. In most cases, all kinds of bread can be sold except those stuffed with meat and vegetables.
The next step in how to start a bakery and how to start a cake business from home is registration. Most home bakeries register as sole proprietorships. Just like registering a brick-and-mortar business, you’ll need a unique name, business plan, organization structure, and EIN.
A home bakery needs permits and licenses just as a brick-and-mortar bakery. Permits and licenses that you need to have are:
Sign permit
Health and safety permit
Fire safety permit/certification
General business license
Tax
Check out those state laws and make sure that you have the right license to operate. A lawyer can provide you with more information about how to start selling baked goods from home legally.
You still need several types of insurance coverage to cover your home bakery. General liability insurance is still useful even though you don’t admit people to the business premises because it can sort out claims for food poisoning or foodborne illness. Insurance companies will allow you to secure the house against fire through commercial property insurance. Will you be delivering your baked goods? If so, you may need commercial auto insurance.
Reach out to your local community. You may want to bake goods for local events, the market at local fairs, or become part of local social media groups. You can also approach other businesses. For example, you can contract a restaurant and be the supplier for their burger buns.
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A lot of people spend their time shopping online. In connection, some market their goods online and make money that’s equal or greater than the usual brick-and-mortar baking business. Here are the steps you need to take when thinking of how to start an online bakery.
When thinking of ho to start a baking business online, decide whether you want to leverage a website or an account in online selling platforms.
A website allows for more customization. You can always change its function and add additional features as the business grows. Moreover, there are few restrictions in terms of how you want to present and sell your baked goods. The downside is that creating and maintaining a website is costly. Moreover, it takes time to build traffic.
Online selling platforms are cheap and fast. You can start selling right then and there. The problem is there will be restrictions and guidelines to observe. Online platforms you can leverage are Tiktok, Etsy, and Facebook.
Blogging, guest posting, and google ads are some of the proven ways to grow your online bakery’s website. We highly recommend you invest time in blogging and guest posting as they’re a cost-effective way to drive sales. Don't forget to claim your Google My Business account.
A baking business done through online selling platforms is trickier to grow in terms of presence. Nonetheless, what we recommend you to do is create good content and then distribute it to different channels such as Facebook, Youtube, Tiktok, and others.
Reviews are a critical part of starting your online bakery. As you determine how to start an online bakery from home, consider asking past customers, or even satisfied friends and family members who have enjoyed your baked goods in the past to post reviews and photos of your work.
Fortunately, as you determine how to start a baking business, you may have several options for securing financing and getting your bakery up and running:
Approach the Small Business Association. The SBA loans are available to anyone regardless of what their business model is as long as the credit score isn’t that bad. SBA 7(a) loans are the most viable option. You can also go for SBA microloans for starting small.
Do you have a piece of land, a house, or any other valuable property that may be treated as collateral? In such a case, consider getting a business loan. This is the most viable method if you want to start strong and not afraid of taking risks. You don’t need to approach banks anymore as there’s Uplyft. Try Uplyft that can help you get up to $5 million dollars of funding extremely fast (as little as 4 hours!!!): Apply for loan now.
A small amount coming from many investors goes a long way. This is the idea of crowdfunding. Crowdfunding will source the needed capital from numerous investors. One of the best parts is that you don’t shoulder much risks. There are many ways to crowdfund. However, we recommend you try this with the help of EquityNet, which helps entrepreneurs raise anywhere from $10,000 to $10,000,000 to start their new businesses!
Opening a bakery can be a great first job for entrepreneurial teens. Are you wondering how to start a baking business as a teenager? You may want to follow many of the same steps lined out for adult bakers who want to start a home or online business. In addition:
Be clear about your boundaries. You may have only a set amount of time to bake around school and other activities
Keep practicing your craft. Bake for school bake sales and fundraisers, friends' parties, and more
Sell your baked goods--don't just give them away! Teens are often pressured to simply perform those services as a "favor" that would leave them without the compensation they might need for their efforts. As you open your business, commit to generating a profit
A bakery isn’t all about making bread. There are many things you need to do to ensure success. Here are some of the key considerations if you’re wondering how to run a bakery.
Keep the supply of raw ingredients steady and avoid delays. This is very important because if the opposite happens, you’ll lose income and productivity.
Another thing to keep in mind when running a bakery is to keep periodic checks on the condition of raw ingredients. You don’t want to use spoiled ingredients without notice. Authorities and customers will be on your tail in case you’re at fault for food poisoning or foodborne illness.
You want to keep equipment well-maintained and well-cleaned. Not paying attention to the condition of equipment can result in fires, workplace accidents, breakdowns, and contamination.
Never sell bread near its expiry. Bread will spoil and it’s important to keep tabs on when and act on it. Though it might seem wasteful, throwing bread that’s about to spoil is better than losing the trust of your customers.
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