Starting a bakery can be intimidating and overwhelming. There are so many questions to answer: which bakery supplies do you need? How much money will I need to invest in the bakery? What bakery equipment is essential for my bakery? And what about marketing and community involvement?
– This blog post will cover all of these topics, as well as provide step-by-step instructions on how to start your own bakery!
1- Choose a Bakery Type: Storefront, Home, or Commercial Kitchen
There are three primary bakery types to choose from when starting a bakery business.
A storefront bakery is the most common type of bakery, where you own your physical location and sell baked goods direct-to-consumer through either in-store sales or onsite catering events.
Some bakeries also serve beverages and offer seating to create a bakery cafe or coffeehouse restaurant.
Consider going mobile and taking your bakery on the road in a food truck or coffee cart.
Home-based baking business
A home-based bakery gives bakers more flexibility with their start-up time because there is no high-cost bakery equipment needed to get started.
Independent bakers sell their baked goods online, at farmers’ markets, to retailers or restaurants.
Commercial bakery owners, on the other hand, have full access to all bakery supplies and commercial kitchen equipment!
Which bakery type suits your lifestyle?
A storefront bakery offers a more traditional bakery feel with in-store sales or catering events where customers are able to purchase baked goods directly from you.
A bakery with a home base is perfect for bakers who are looking to start their bakery without an initial high investment. Home-based bakeries might be the right fit if you plan on selling baked goods through local farmers’ markets or through other outlets like food trucks, catering events, etc.
Commercial bakery owners, on the other hand, have full access to all bakery supplies and commercial kitchen equipment. This bakery type is perfect for bakers who want to hire employees and manage multiple bakery locations.
Bakeries that produce large quantities of baked goods typically fall into this category, including supermarkets or restaurants. Wholesale bakeries often sell their products directly to retail stores, rather than consumers.
2- Write a baking business plan – calculate your startup costs
Write a bakery business plan first! A bakery business plan is an essential part of starting any bakery, no matter if it’s for your storefront or wholesale bakery. You will use this document as the foundation for all bakery decisions and as a roadmap for where you want your bakery to go.
Bakery Business Plan Sections
The first section that the business plan should include is a mission statement. This bakery mission statement sets the tone for your bakery and what you want to accomplish with it. Ask yourself,
- What does my bakery stand for?
- What do I want it to be known as in the community?
A bakery mission statement is important because it will help you stay on track with your bakery goals. You can even use your bakery mission statement as a way to communicate what people can expect from your bakery.
What are my startup costs for starting a bakery? Begin by assessing both bakery expenses and bakery income.
This section will outline your startup costs, monthly overhead costs (like rent), the cost of equipment needed for your bakery, etc. You can also use this calculation piece as a way to determine how much you need to charge for bakery products.
Get detailed examples of bakery startup costs and tips on how to reduce your capital needs in my in-depth article here
Make financial plans and predictions for your new bakery startup
Your bakery sales, expenses, and profits are going to be heavily influenced by the bakery products that you offer.
If your bakery is bakery-cafe, then coffee sales will play a big part in your bakery projections. If it’s a bakery that specializes in cakes, then your bakery sales are going to be largely dependent on cake production. The more specific you can get about what products you serve at your bakery, the better.
Your financial projections should also take into account market demand for your baked good or any other pertinent factors that might have an effect on your bakery business such as seasonality and special events.
Be sure to include a detailed bakery budget, including monthly overhead costs and capital expenses that your bakery will need to operate successfully. And don’t forget to add in the costs for your marketing activities such as ads, events, websites, social media contests, and other online promotions.
What are my business risks? Any baker would be lying to themselves if they didn’t acknowledge that there are bakery risks to starting a bakery.
Some questions that bakery owners might need help with when it comes to risk are: Does my competition have any effect in this area? How much influence will my vendors have over my production process?
This section of the bakery business plan should include the various ways that you will market your bakery, whether it’s through social media or local community involvement.
This section of your business plan should include a bakery employee timetable. Use this information to determine how many people you need on your team as well as what positions they would fulfill at your bakery. Include here information about qualifications and pieces of training needed.
This section is dedicated to performing your competitor analysis and determine how you will set your bakery apart from them.
Some questions that bakery owners should ask about competition is:
How is my bakery different than other existing companies?
Who is my bakery competition and how can I differentiate myself from them?
What marketing strategies will I implement to set myself apart from competitors?
>>Are there any bakery grants that I can apply for? Check out our list of the best startup grants available here
3-Decide on your baked goods menu and price your products accordingly
Once you’ve got your bakery mission statement and bakery business plan, it’s time to start thinking about what bakery products you’re going to offer.
But before we start baking we need to do one more thing – research the bakery competition.
This is where we will do a bakery competitive analysis and look for trends like popular bakery products, prices, and bakery customer qualities (gender, age range, professions).
This step will help you set your bakery apart from other bakeries by determining what bakery products you’ll be offering and how to price them appropriately.
How To Properly Price Your Baked Goods
To accurately calculate your best selling price, you need to add together these numbers:
Cost of ingredients + Labor costs (based on time to produce) + Overhead expenses (rent, loan payments, utilities) = COG (cost of goods) + Profit Margin = Sales Price
* (Average baked good profits are approx 10%)
4- Find the right location -Brick and Mortar or Online
The bakery location you choose will depend on the type of bakery business that you’ll be running.
A bakery-cafe might need to stay open for longer hours and therefore require a storefront space in an area with lots of foot traffic. A cake bakery, however, could do well in a commercial kitchen shared by other businesses or even be run out of an owner’s home and delivered to customers.
It will also be important to consider bakery zoning restrictions that might affect where your bakery can open as well as things like how much space you’ll need, whether there is enough parking located nearby (or the right public transportation options), and bakery ADA compliance if you need it.
* If this is your first time opening a bakery, consider starting out online to save money on overhead costs like rent or renovation expenses for the bakery. You can still get customer feedback through social media marketing campaigns that will help you determine which bakery location option would be best before investing in brick-and-mortar bakery costs.
5- Register Your Legal Business Entity
Now that you’ve got bakery business goals, a bakery mission statement, and your bakery location options figured out, it’s time to start the legal paperwork.
The first thing you’ll need is an LLC (Limited Liability Company) or corporation certificate for tax purposes as well as insurance coverage if required by state law.
The bakery LLC will also be beneficial when it comes to opening up bakery bank accounts and filing taxes each year (and no matter how many employees your bakery hires).
If you decide to use a bakery business name other than your own, be sure that it’s not already trademarked or copyrighted by someone else.
6- Get the appropriate licenses and permits for your state and industry
Also make sure you have any bakery licenses you might need in order to operate legally, such as a bakery business permit or food handler’s license.
Depending on bakery type and location, you may also need a bakery license or permit to sell your baked goods at other locations such as farmers’ markets or retail shops.
* Find out what you’ll be needing before starting any bakery business so that you can budget for the appropriate licenses and permits which will vary by state and industry.
7 -Register for sales taxes and obtain an EIN number
To legally start bakery operations, you’ll also need to register for bakery sales tax and get an EIN (Employer Identification Number) from the IRS.
An EIN is a nine-digit number that identifies your bakery business as separate from its owner(s). You can use this same bakery EIN number every year when filing bakery tax returns.
*Register for bakery sales taxes if you need to and apply for an EIN number with the IRS by visiting their website.
Applying online gives you instant approval, so it’s a quick bakery business registration process that will only take up about five minutes of your time!
8- Brand your bakery and choose a business name
Now that you’ve got bakery licenses and permits, financial bakery business accounts, bakery sales tax registration, and an EIN number for your bakery business – it’s time to think about branding!
Your bakery brand is integral to the success of your bakery as a whole. You need a well-branded logo and name that will entice bakery customers to buy your bakery products.
How to Name your Bakery
Consider bakery business name options that will suit your bakery’s needs based on location, industry, and growth aspirations.
Choosing a bakery brand is important because it sets the tone for everything else related to your bakery – from marketing materials like social media posts or website content about starting a bakery to signage at the bakery itself!
Bakery Name Ideas – That are Available! Not Taken!
Are you opening a new bakery and need cute bakery name ideas? Well then, check out my big list of hundreds of catchy bakery names complete with inspiring logo examples to name your baking business.
Get inspired by this ultimate list of memorable bakery names that is filled with hundreds of creative, cute, unique, edgy, funny, and cute bakehouse name ideas!
Now selecting a good bakery company name is a piece of cake! Sweet!
Examples of great bakery names
|Tart Bakery||You’re Sweet As Pie||Sugar Lips|
|Honeybuns Bakery||Flourishes Custom Cakes||Pound Your Dough|
|Sugary Sweet Bakery||Hazelnut Bakery||Spiraling Caramel Dessert Shop|
|Sugardrop||Biscuit’s Corner Homestyle Baked Goods|
Marketing Ideas for Bakery Startups
There are lots of bakery marketing strategies you can use to get the word out about your bakery business. Think bakery social media, local advertising, and online search engine optimization (SEO).
-Bakeries that are just opening up should start by introducing themselves on social media to bakery enthusiasts – stage contests, post photos of your delicious creations and give coupons. Use hashtags like #bakery or any other bakery-related hashtag, bakery Instagram stories, and Facebook Live videos!
It’s also important to post about the bakery on all of your personal profiles so that your friends and family can send you referral customers.
– Send flyers around your bakery location with information about bakery goodies and specials
– bakery customers love loyalty programs – consider starting one that bakery customers can sign up for at the counter.
– bakery business cards and bakery brochures are also excellent tools for bakery marketing. Cake decorators should include photos of their best designs.
9-Separate your business finances from personal finances
It’s important bakery owners keep their bakery finances separate from bakery owners’ personal funds.
This way, you can easily monitor the bakery spending and ensure that there is enough money to cover all bakery expenses each month. It’s important to keep good records like bakery ingredient receipts and bank statements.
When it comes time to choose a business banking account for your bakery, make sure you stay organized by choosing one that allows you to easily separate bakery finances from personal ones.
10-Secure business funding and loans
It’s bakery business loan time!
With bakery costs like bakery equipment, supplies, and commercial bakery rental space to cover, you’ll need some outside funding. Your best bet is to find an SBA (Small Business Administration) bakery loan that will give your bakery the capital it needs with low-interest rates and flexible repayment terms.
If bakery loans aren’t a bakery option for you, think about bakery funding through sales or crowd fundraising.
Or you could finance the purchase or lease of your equipment to help fund your bakery startup.
You could also use small business grants to pay for bakery supplies and equipment as long as bakery customers don’t mind getting a few goodies in return!
>Check out our list of proven sources of startup funding in the article here.
11-Obtain bakery equipment, hire staff
It’s time to start looking for equipment and employees!
For a bakery, you’ll need everything from bakery ovens and cupcake trays to flour sifters – so make sure you think through your bakery supplies list carefully. Don’t forget about all of those little accessories like mixing bowls too!
If bakery owners are buying bakery equipment, bakery financing is a bakery option.
Bakery employees will be crucial to the success of your bakery so hire wisely – bakery managers and staff with experience in the bakery industry could help you get off on the right foot!
12-Market your new bakery with a grand opening event
Bakery owners are ready to open their doors and celebrate with some delicious treats for all of those who helped them along the way. They’re also excited about meeting new customers as they come in through that first opening day!
– plan a bakery grand opening celebration – invite bakery staff, family members, bakery suppliers, bakery customers, bakery partners, and community members
– ask bakery staff to prepare some signature bakery goodies for the celebration – you can even make them do a mini demonstration on how it’s made!
– decorate your bakery location with balloons or streamers – add signs that celebrate the opening of your new bakery
– invite local media outlets to bakery grand opening event – you can even offer them bakery samples in exchange for a sweet mention 🙂
– bake some of your bakery goodies into cupcakes and have the bakery staff hand out or sell these treats at local events around town during that first week!
-don’t forget about social media marketing after the big day too. Post photos from the bakery grand opening bakery event on Facebook and Instagram to celebrate bakery success!
How to open a bakery in your state
Thinking about starting a bakery? Learn how to open your own bakery with these step-by-step business guides specifically written for your US State requirements (Come back and visit again since more states are being published regularly).
How to Open Your Bakery Business in California
How to Start a Baking Business in Florida
How to Open a Bakery in Illinois: Business Startup Guide
How to Start a Bakery in New York: Step by Step Guide
How to Open Your Bakery in Texas, USA
How to Open a Bakery in Virginia: Business Startup Guide
FAQ: How to open a bakery
How can I make my bakery business more profitable?
Business owners can increase bakery profitability by establishing pricing with healthy profit margins (5-20% industry average), offering bakery catering services for special events (weddings, parties, corporate meetings, and conferences), picking up or deliver bakery goods locally, and offering wholesale bakery options for local businesses (especially restaurants).
How much profit can a bakery make?
A bakery can make $100,000 – $250,000 in bakery sales depending on the bakery’s location and bakery menu. The average profit margin of 5-20% would yield profits of $12,500-20,000.
What are some bakery business costs?
The biggest bakery business cost is baking supplies (ingredients, packaging) followed by equipment expenses like ovens or refrigerators for your kitchen.
How does a bakery make the most money?
A bakery makes the most money when bakery owners price bakery goods so that they have healthy margins. If a bakery owner is able to sell their baked goods for $20 but only pays $15 for them, then their bakery business has made extra revenue of $5000!
Read my list of the most profitable food items here.
What are some bakery trends?
Some current bakery trends include vegan baking, bakery decorating classes, and bakery theme birthday parties. Best-selling baked goods in America are in this order donuts, cupcakes, cakes, pies, and cookies.
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