Starting a business requires a lot of courage, but not necessarily a business degree. While you might need help from experts in their fields, here is a guide to help you outline your plan and understand what goes into starting a bakery, things to watch out for, and discern where you will need help.
How To Make Your Business Plan (Pro-tip: Don’t Wing It)
Writing out a clear-cut business plan will help you in multiple ways you cannot foresee. Although, it is likely to be altered as you go along, having a plan will help you organize and assess your business more accurately. Moreover, having everything in one place often leads to new ideas and opportunities you may be missing out on.
Understand Your Why
Why have you decided to open a bakery? Is it for the love of baking, because you think it is a good financial opportunity, because you’ve seen a gap in the market you think should be filled or because you’re promoting specific kinds of bakes you think should be propagated more in the market? There is no right or wrong why, but understanding your reasons will help you make every business decision better, understand your long-term goals and also keep you going when the going gets rough. (Possibly also help you think of a name and tagline)
What Kind of Bakery Do You Want To Have and At What Scale?
There are many different types of bakeries you could start based on your location and the resources available to you.
- A Retail Bakery, where you sell directly to customers.
o A Complete Brick & Mortar Bakery
o Bakery plus Cafe
o A Home Bakery
o Cloud Kitchen
o Food Truck
o Countertop bakery/ Kiosk
o Co-Op Kitchens
- A Wholesale Bakery
Here you would sell baked goods on a larger scale to clients such as restaurants, bakeries, cafes, hospitals, and so on. Although this requires a larger capital, once you have clients, it tends to be a steadier source of income as it will not depend on the number of customers that came in that day.
What Is Your Niche? Do you have any specialty products?
What sort of baked goods are you going to sell? A particular item, a combination of many, local favourites, sweet or savoury or both? Is there something specific you are great at that could be your specialty? Is there anything different about your goods (eg. vegan, gluten-free, keto, healthy bakes, etc)? Are there going to be seasonal variations and specialties? It is important to also perfect and detail these recipes to the teaspoon and have testing sessions for feedback.
What Differentiates You From Others?
This will also be your top branding and marketing point. What about your products or your service is setting you apart from the rest? It could be their type, the raw materials, and their sourcing, their aesthetics, special customer service, the accessibility, the pricing, the story behind it all, your values, etc. that will help you brand your bakery and catch people’s attention. While it is hard to achieve uniqueness in every aspect, a few meaningful differentiators are necessary to help you stand out.
Gain an understanding of the demographics of the people in your area who will have access to your bakery – their age, sex, income group, education, likes and dislikes, and so on. Understand your consumers and tailor your products and services to reach them.
Learn about the food trends in your locale and what sort of products are popular right now and what form of bakeries, seating, ordering methods, types of menus, various payment methods are preferable to your target consumers.
It is also important to assess how much of the market share you would like to capture so that you can take the appropriate steps towards it.
This information may be difficult to assess if you are a beginner at it, and it might be useful to hire a marketing agency for it.
Your Long Term Goals
It is important to have long-term goals and assess where you would like to see your bakery 3 months, 6 months, 1 year, and 5 years from now. Having detailed goals about where you would like to be will constantly keep you striving to do better and guide your decision-making processes at every step of the way. Having Key Performance Indicators for regular intervals will also help you assess what you could be doing better.
Business Partners, Staff & Roles
It is important to decide whether you’d like to have business partners or not. More than for financial help, it is essential to ensure they have a similar vision as you. Setting out clear-cut roles for each person from the beginning prevents disputes and allows the business to run smoothly.
The number and type of staff you will require must be looked into. Head bakers, cooks, and waiters will seem obvious, but also remember to take into account hiring branding/marketing experts, accountants to manage your money, and other services you may require. Their roles and salaries must be decided upon and salaries decided to account for your expenditure.
- Divide your expenditure into start-up costs (initial costs to get your business up and running such as testing out different suppliers, testing out recipes, staff training, furniture, cutlery, design elements, and so on), fixed costs/month (costs that don’t fluctuate monthly such as bills, rent, salaries) and variable costs (costs required to produce sale items each month).
- Sales forecasting – Estimate the number of products you will be able to sell each month. This can be done from previous estimates, estimates based on prior experience working elsewhere, or by analysing competitors' sales, depending on which stage of the business you are at.
- Calculate the amount of money you will require to breakeven and the potential profits you are estimating.
Writing a clear concise summary of the business plan with everything a potential investor would be most interested in is essential. Even if you are bootstrapping your bakery, it could help you in the future should you choose to approach an investor or apply for a loan if required.
Understanding The Equipment Needed To Start Your Bakery
Based on the scale of your bakery, different types of equipment will be required.
For Preparing Dough – Flour sifters, Planetary Mixers and Spiral Mixers.
For Shaping Dough – Dough Sheeters, Dough Dividers, Dough Moulders, Dough Rounders.
For Proofing Dough – Dough Proofers/Proovers.
For Baking – Rotary Rack Ovens, Convection Ovens, Tunnel Ovens
For Automation – Bowl Lifters, Bowl Tilters, Conveyor Belts, Automatic Panning Equipment.
Baking Accessories – Moulds, Pans, Trays, Cream Injectors, Icing Equipment
Raw Material Suppliers & Vendors
Sourcing quality ingredients at the best prices will require a lot of phone calls and visits to suppliers and vendors. Testing the supplies to ensure you are getting what you have paid for should be done if you do not completely trust your source. Testing all your recipes with the ingredients from potential suppliers and adjusting them for the different properties of each is essential.
Setting-Up Your Bakery
Staff Training – Even if you’re hiring trained staff, training them to adhere to your vision and the operations of your bakery is essential.
Operations – Every step of the way must be planned and organized - the supply-chain, transport logistics, setting up equipment in different parts of your bakery, ready inventory, preparation for the following day, how orders will be placed, communicated, paid for, prepared and delivered, and customer management.
Branding – Your brand colours, your website design should you decide to have one, your brand language, logo, packaging, cutlery, and furniture should all be cohesive with each other and communicate what your brand stands for.
Social Media – Social media is a powerful tool in defining your brand image, reaching out to your audience, and driving sales. Everything on there from the colours, design, presentation of your products to engagement with your customers is likely to determine how well your business does.
Collaborating with other companies in your niche but not doing exactly the same thing is a good way to spread the word of your bakery. For instance, collaborating with a well-known restaurant that doesn’t sell baked goods is a win-win for both of you as they get to sell baked goods and generate revenue for the decided period and you get your bakery name out there.
Pop-up stores & local flea markets are becoming bigger by the day and showcasing and selling your products there, especially if they cater to your niche, can help you get returning customers.
Promotional offers – Sales psychology tells us that promotional offers develop a feeling of reciprocity, loyalty, pleasure, and value towards the brand. Especially as a new bakery, promotional offers could be a good way to build a solid customer base.
Paid ads – Flyers, newspaper ads, radio ads, hoardings, and online Instagram and Google ads are a great way to generate sales.
Analysing the before and after effect in terms of sales and new/returning customers of each of these methods can give you an idea of what strategies to drop, which ones to modify, and new ones to try. Marketing can however be tricky and especially with online ads, perhaps going for a marketing agency would be a good idea.