Are you one of those who makes delicious cakes for your friends’ birthdays instead of buying them? Do you know how to make your own breakfast cakes every morning?
If you are thinking of becoming your own boss and want to make the most of your skills, setting up a bakery can be a great business idea for you.
This venture has many advantages, and endless possibilities to make it grow and improve its profitability.
You can start a simple bakery where you sell cakes to take away or turn your place into a cozy cafe where your customers come to chat with their friends.
Also, products such as bread, sweets or birthday cakes are items we all buy every day or for every special occasion, we celebrate.
That is why it is a profitable type of business with which you can make good profits in a very short time, although you need to take into account some suggestions to be successful.
Here you will find a complete guide with all the steps you need to take to set up your bakery, and some extra tips that will help you to have loyal customers who will buy from you again and again.
The 14 steps to setting up a successful bakery
1. Think about the type of bakery you want to open
The first decision you have to make is what kind of bakery you want to start. There are four types of establishments that you can generally start:
Online bakery: thanks to new technologies, nowadays you can set up a bakery on the Internet without much effort. You will only have to create a web page, upload photos of your products with their descriptions and prices, and incorporate an online shopping system. But remember that if you are going to bake your cakes at home you will need space, equipment for baking and decorating, and a well-conditioned place to store your freshly made creations.
Take-away bakery: This is the typical bakery where customers come in, choose products from your counter, and take them home.
The advantage of this model is that you can do it in a small place as you will not need much space.
Specialized bakery: if you are good at cooking a particular type of cake, opening a specialized bakery is the best option for you.
You can specialize in products such as birthday cakes, cupcakes or special sweets, or even special pastries for people with eating problems, such as sugar-free, lactose-free, gluten-free, vegan sweets…
Bakery with cafeteria service: more and more people are renting a large space where they put a bakery counter with cakes, and the rest of the space is furnished with comfortable tables and chairs so that their customers can drink their sweets there accompanied by a good coffee. This option is the one that has a greater investment compared to the rest but also produces more income than the others.
How to get money fast
Before choosing one of these four models you should consider some things like what your cooking talents are (if you are going to be the one making the sweets), what your budget is, and the goals you want to achieve.
An example: if you barely have any savings, but you don’t want to take out a loan to start your business, the best option would be to start with an online bakery since it’s the cheapest model.
If you want to open a specialized bakery, but only know how to bake traditional products such as bread and muffins, you will need to hire a specialized person to cook them or take a course to learn yourself.
So think about those three fundamental factors first – your capital, your talents, and your goals – and choose the type of bakery that best suits you.
2. Check if there is competition in your area
When starting up any type of business, it is essential to find out if there are competitors who sell products like yours, and how you can differentiate yourself from them to be successful.
Competition is not bad, because that means that there is a market of customers who want to buy what you offer; but you must be careful with certain aspects.
If you are thinking of renting a place in a commercial street where there is already a bakery selling birthday cakes, it would not be good to put a business there that also specializes in cakes.
The most logical thing would be either to set up another type of bakery where you offer different sweets, or to look for another street where there is no business like yours.
Think about which area you want to start your bakery in, and take a walk there while you write down the businesses that could be your most direct competitors.
3. Write a business plan to help you get organized
I will never tire of saying how important a business plan is to any kind of venture. With this simple book you will be able to see clearly all the steps you will have to take, and what to do if any kind of problem arises.
In the business plan you must reflect what kind of bakery you are going to open, what products you will sell, who your customers will be, what possible competitors may appear, the money you will need to start everything up…
In the following article you have a complete guide to create your business plan step by step: How to create a successful business plan.
4. Get the capital you need
Setting up a bakery is not cheap unless you do it through a website in which case you will save a lot of money.
But if it’s a traditional bakery you must count on a series of expenses such as renting the premises, paying for licenses and permits, hiring employees, paying for electricity, gas, ingredients, cooking equipment…
Make a list of all the expenses and costs you will have to calculate an approximate price of the money you will need to get your business started.
When you have the total calculated, add another $3,000 to $4,000 in case something unexpected happens, and then look for ways to get that capital.
If you have some money saved up, you can invest it in your bakery and get the rest through friends who can lend it to you. Or go directly to a bank to finance your business idea.
But don’t forget to also look for aid such as subsidies that governments of all countries have for entrepreneurs or small businesses like yours.
Read this article to find out more: How to get money to start your own business.
5. Find a place to put your bakery
Now that your idea is becoming real, it’s time to look for a location to find the ideal place to start your bakery.
If you know your city well, go visit the areas you think have the most potential for your business to succeed. Look at neighborhoods that are relatively new, with a good number of inhabitants, and where there are no bakeries like yours.
If you don’t know where you live, you can look at a website that has demographic data on how many people live in each area, which streets are the most commercial, etc.
What I do recommend is that at this stage you do not buy your place: just rent it for a few months.
This way, if your business goes badly, you will avoid investing too much money on this purchase.
6. Check which licenses and permits you need
All businesses need a series of permits and documents in order to open their doors (if you want to know what they are, look at these procedures for opening a business).
But there are certain businesses that require special licenses such as a bakery since it is a food business.
Go to your city hall and to your State Department of Health Services and ask what papers you need, what documents you have to fill out, and where you have to present them.
This step is VERY IMPORTANT: don’t even think about selling your first candy without ALL the necessary permits, because otherwise you will get a very expensive penalty and your business will be shut down.
7. Make a list of the equipment you need to get started
Your store will not only need a nice decoration and a counter to sell your sweets: you will also need to install all the necessary equipment to bake and preserve your cakes in the back.
The general equipment that a bakery usually needs is as follows:
- Test boxes or proving chambers (places where bread and dough can be raised to the right temperature)
- Baking trays and grids
- Mass mixers
- Work tables
- Sinks for cleaning the utensils used
- Scales for weighing ingredients
- Tools for decorating sweets
- At least one refrigerator to store the products and ingredients (depending on the amount of candy you make)
- Other small appliances, such as mixers
You should also have other additional equipment such as a counter and cash box, display cases where your cakes can be seen, shelves, napkins, plates, glasses, trays and wrapping paper…
Once this list is made, you will have to look for suppliers to buy all the necessary equipment.
Be sure to contact at least three different distributors to check prices, quality of the machines, and also ask them what their return or exchange policies are, or if they have discounts when buying several units.
8. Contacting food providers
Whether you are going to be the one to cook or hire a specialized baker, you will need the raw materials to make your cakes and bread.
Some ingredients can be bought at any grocery store, but most will cost more if you buy them from a wholesale supplier.
Look for companies that offer these foods in industrial quantities and contact them to see what their prices are, the quality of their raw materials, their purchasing conditions…
Don’t settle for just talking to one company: contact at least three or four different ones and ask them all the questions you have in order to reach the best deal for you.
If you don’t know any ingredient distributors, you can go to associations of shops specialized in food so that they can give you a list of companies that sell this type of product to other bakeries.
9. Calculate your sales prices
Once you know how much each ingredient will cost, the materials you need to make each cake, and the time needed to cook it, it’s time to calculate the selling price for your customers.
This is a decision you can only make based on your expenses and the percentage of profit you want to make on each candy you sell.
Read this step-by-step guide to find out what price is best for each of your products: How to price your products and services.
10. Order enough material for the first two months
Here it is very important that you calculate the approximate number of products you will sell in the next two months to buy enough ingredients to make those delicacies you will sell later.
I know it’s not easy, but you have to estimate how many people will be able to come into your store, and how many of them might buy some of your cakes.
Make sure your approach is always high so you never fall short of ingredients.
For example, if you think that in two months you will sell 150 loaves of bread and 75 cakes, raise the number to 200 loaves and 100 cakes so that if you have more customers in a week than you expected, you will not be short of products to sell to them.
When you have done this calculation you will be able to buy the ingredients you need better from the supplier you chose before.
11. Create a good advertising strategy
Customers aren’t going to come to your business alone. Some of them may pass by your window and enter your bakery to buy without doing anything.
But the vast majority will look at your shop for a moment, and then pass by.
That’s why you need to make a good advertising strategy that will attract buyers and make them want to buy from you again and again.
If you’ve decided to set up a bakery in a shop, the first thing you need to do is to have a nice, clean window that invites everyone who passes by to come into your shop.
You can also put up posters on the glass with the offers you have at the time, or funny phrases like “we have hot bread for you” or “come in and try the best sweet you have ever eaten”.
It’s also a good idea to give out flyers or brochures on the streets near your bakery for people to visit, or offer samples for your potential buyers to try.
Also, use the Internet to attract more customers in your area: create profiles on Facebook and Instagram where you upload photos of your cakes with the address of your store or make a web page so they can locate you better.
Contact local newspapers, radio and television stations, tell them the story of how you started your business, and what’s so special about it that you can appear in these media and be known by more people.
But above all, don’t forget the most important advertising tool of all: your own customers.
Treat them well and make them feel special. If someone comes into your business, likes what you offer them, and you make them feel good about it, they will most likely recommend you to all their friends and acquaintances.
12. Interviewing potential employees to hire them
Whether you like to cook, and you’re going to be the one baking sweets, or you need a baker to make them, you’re going to have to hire employees to help you with your bakery.
You can’t be in two places at once – cooking and serving customers – nor can you put a person who cooks to work while charging customers.
That’s why you should start looking for someone before you open your bakery.
Put a job offer on the Internet, in newspapers, or talk to people you know to let them know you’re looking for someone to work with.
The employees you hire should be friendly, have a good appearance and treat customers well, and do their jobs effectively.
A good idea is to put them on probation for a week or two to see if they work well.
If you need to hire a baker, you can ask him to bake you a couple of sweets to see if he’s good. Don’t settle for nothing, and make sure he’s a good cook.
In case you are going to be the one who cooks, and you have to hire someone to collect and serve customers, you should make sure that he is a kind and trustworthy person.
Remember that he or she will be the one to handle the money in the till, and for that task you will need a person you trust.
13. Decorate your premises to reflect the personality of your bakery
Good decoration, both inside and out, is essential to attract customers who want to come into your store and buy from you.
That’s why you should reflect the personality of your business and your products with your decoration.
If you are going to sell cakes aimed at a young audience, such as children or teenagers, the decorative elements of your store should be in line with this, for example by putting more childish details in the window or the interior.
On the other hand, if you want to set up a bakery aimed at adults, with an informal but elegant atmosphere, all your decoration should be soberer.
14. Open your business with a housewarming party
You’re all set to open your doors! Set a date on the calendar for the opening and let your buyers enjoy your delicious cakes.
A good idea is that a few days before you announce in different media such as your social networks, your shop window, with posters in the street or leaving leaflets in the mailboxes, that in a very short time it will be the opening and that you will give a small party to celebrate it.
You can give your visitors samples or exclusive offers just for that day (for example, give them a sweet when they buy another one) to make you known and attract more people.
In this way, you will gain customers and ensure a large part of the success of your bakery.
Setting up a bakery is not only a great business that will leave you with good profits from your products: it is also a fun experience that will provide you with the financial freedom you want by becoming your own boss.