Did stay-at-home orders at the start of the COVID-19 pandemic renew your passion for home baking?
If yes, you’re not alone. However, if you plan to sell baked goods to profit from your hobby, you must know that the home-baking trend is expected to decline.
Now, if you plan to run a small bakery business, here’s what you need to understand. You’ll be competing with about 3,000 commercial bakeries and over 6,500 retail bakeries.
You can still stand out, though, if you offer specialty goods or excel at local distribution services. That said, if you’re opening a bakery, here’s a list of what you need to prepare.
Bakery Format and Business Plan
Is your bakery going to be counter-only? Or do you plan to have customers dine in?
Maybe you’re considering a bakery cafe, food truck, or pop-up shop? Your bakery format choice will depend on your budget and what the local scene already offers so you can make your bakery unique.
Of course, your business plan should detail this and include your bakery’s name (check if it’s already taken), executive summary, funding sources, projected financial growth, market analysis, marketing plan, and sales strategy.
Money Matters
What’s the cost of opening a bakery?
That depends since you’ll have to factor in how much you’ll pay in leasing a commercial space, getting insurance, hiring and training staff, buying equipment, etc. The good news is you don’t need to cover these costs yourself if you can take out loans.
You can go for a traditional commercial loan, an SBA (Small Business Association) loan, or a business line of credit. It’s also worth looking into equipment financing. After all, you’ll need commercial ovens, refrigerators, freezers, holding cabinets, and so on.
If you don’t plan your expenses properly, you could end up with higher startup costs just from purchasing bakery equipment.
Licenses, Permits, and Other Essential Business Docs
You can’t open a bakery without securing the necessary permits and licenses.
Go online if you don’t know where to apply for them. State websites often have this information readily available. They’ll also have details on restaurant tax requirements, including how to apply for an EIN or Employer Identification Number.
Other Things Needed for Opening a Bakery
You’ve decided on a bakery format and may have already secured the ideal location. Financials and permits are also almost settled. However, there are more items on your checklist you need to take care of.
These include hiring and training staff, creating a menu and pricing products, promoting your bakery, and hosting a grand opening. Yes, it’s a long list, but it will all be worth it once your business takes off and grows.
Bake It Till You Make It
Now that you know what “ingredients” you’ll need for opening a bakery, are you ready to become an enterprising baker?
There’s a lot of work to do, but keep in mind not everyone gets to pursue their passion and profit from it. For more business tips and advice, feel free to check our other posts.
