Do you want to start a bakery business from home with almost no money? Here in this article, we list down the most important steps to follow to launch a profitable home-based bakery items-making business.
The bakery is a traditional industry. Also, it is one of the most promising businesses in the food processing industry. Bakery products are an item of mass consumption in view of their low price. Additionally, with the rapid growth and changing eating habits of people, bakery products have gained popularity among the masses.
This industry holds a large share in the global food packaging market. In addition, the industry is growing very fast. Product innovation and increased penetration in fast-growing regions such as Asia-Pacific and Latin America are the main drivers of this increase. However, pastries are the fastest-growing category among baked goods, accounting for almost 80% of absolute volume growth.
Currently, in-store bakeries are gaining importance both due to their lower prices and the convenience of one-stop shopping trips. Over the past five years, Western-style bread and bakery products have become more popular in emerging markets. The rising levels of affluence and changing consumer tastes have positively stimulated demand.
Here are the 14 Steps to Start a Small Bakery Business
1. Find your Niche
There are a variety of ways you can start a bakery. Furthermore, some of the most popular bakery items are bread, biscuits, cake, pastries, cupcakes, donuts, candies, fruitcakes, wafers, etc. You need to decide first what kind of bakery items you want to make.
The bakery is a highly crowded industry. Definitely, you will find a small bakery even in every small town in the world. However, all those are making profits out of their business. Do detailed market research identifying and defining your competitive advantages will keep you ahead of the other competitors.
2. Learn the Art of Baking
To be successful in developing a successful business, one needs to have passion and know-how for baking. If you feel you need to learn more about the process of baking, take training from competent people or from online courses on the internet which are plenty.
3. Write a Bakery Business Plan
Crafting a business plan is the most important aspect of commencing and running a successful business. By creating a business plan, you’ll force yourself to look at the business from every angle. In addition, if you are looking for funding, potential investors will have a close look at this document.
The bakery business plan defines your business, sets goals, creates a plan to generate revenue, lists expenses, describes your customer base, and examines your competition.
While documenting your bakery business plan, include the following topics:
- Executive Summary
- Company Overview and Description
- Market Analysis
- Business Offerings
- Management Structure
- Marketing and Public Relations Strategies
- Financial Projections
4. Choose a Business Model
This is another crucial aspect of starting a profitable business. There are many ways you can start and run a successful bakery business from home. Some of the legitimate options are
Online Selling: In this option, you don’t need to open a storefront for your business. You can start out online. With a killer website, pictures of your work, and a way to place an order, you can run a bakery from your home. Counter service bakery. With a small commercial space, customers can walk in and pick up baked goods from an employee-managed counter.
Home Service: You can start with a small commercial space. In this option, customers can walk in and pick up baked goods from an employee-managed counter.
Specialty Service: If you plan to specialize in a certain kind of baked goods, a specialty service is your best option.
Dine In Option: It’s a growing trend in the bakery industry right now. If you can afford some space at your home or at your backyard, you can make it a place where people can taste your baked items.
5. Register your Bakery Business
If you want to run a legally compliant bakery company, registering your business is a must. Every state and country offers different business structures under which one is going to run the business.
As an example, if you are planning to launch a bakery in the United States, forming an LLC is a popular choice. You can form an LLC of your own or hire a professional LLC registered agent to save time and legwork.
6. Name your Business
Selecting a catchy and unique business name for a bakery company goes a long way in building a sustainable bakery brand. Check our guide on how to name a business to learn more.
7. Get Licenses & Permits
The foodservice industry requires extensive sets of licenses and permits to start and run. You must obtain the required permits and licenses before opening your bakery business. The sets of licenses will depend on the location of your bakery unit. Contact your local competent authorities and learn in detail the required permits needed to run the bakery business.
8. Identify Target Audience for Your Bakery Products
This is an important consideration in starting a successful business. determine whether you will attract a niche or mass consumer. Depending on this, you will need to select the right products, business models, and marketing strategies. However, catering the mass consumers is the most profitable option. You can cater
- Families (Homes)
- Schools (boarding house and campus)
- Groceries Stores
- Shopping Malls
- Wedding Ceremonies
- Event Planners
- Sport Centers
- Corporate Organizations
- Clubs & recreation centers
9. Procure Equipment Needed to Run a Bakery
You need a wide array of equipment to manufacture baking items. Here we list down types of equipment need to run a bakery manufacturing unit commercially.
- Dough Preparation – commercial mixers, work tables for kneading, dough dividers, dough sheeters, and dough scales, holding and proofing cabinets, refrigerators.
- Baking Equipment: Convection ovens
- Storage: Shelving and storage racks.
- Cleaning and Warewashing: Compartment sink, disposable gloves, cleaning chemicals, sponges, scrubbers, and other essential cleaning items.
10. Arrange Startup Funds
You will need to arrange the startup fund for initiation and operation. However, we can define the fund requirement in two ways. One is your one-time investment. It goes mostly for the tools and equipment purchase. And the second is your working capital. Generally, it includes rents, staffing, ingredient purchase, marketing, and delivery expenses with other operating costs.
If you have no money to launch a bakery business, it is advised to apply for government grants. For example, if you are from the United States, visit the official site of SBA and check whether you qualify for receiving any grant. For residents of the UK, the site of GOV.UK is a good place for funding resources.
11. Secure Space
According to your business model, you will need to secure an ideal space for it. If you don’t have space at your home, hire a rented space within your budget. As your business grows, you can switch to a purchased property at any moment of time. Before finalizing the deal, check the property document. Additionally, do some local market surveys to know the price trend of that particular location.
12. Pricing Strategy
Fixing the right price is an important factor regardless of you are starting a product-based or service-based business. Initially, offering an average price or a little bit below the market price will definitely help to attract consumers. However, we would recommend, try to offer at least some innovative products with good profit margins.
The all-Inclusive payment policy is always a better proposition. Try to offer as many as various payment options to your customers. However, some of the basics are
- Cash payment
- Payment via Point of Sale (POS) Machine
- Online bank transfer (preferably for those that will order the products and would want doorstep delivery)
- Check payment from the institutional clients as well as from the B2B clients.
- Payment via Mobile money.
Find below a bakery business plan checklist that you need to follow before starting a bakery business:
13. Bakery Business Plan Checklist
It is most essential to finally monitor the status of the relevant steps mentioned above. Here are some steps to be checked out:
- First of all, check the business name availability
- Then go for business registration
- The opening of corporate bank accounts
- Securing Point of Sales (POS) machines
- Opening mobile money accounts
- Opening online payment platforms
- Application and obtaining registration and licenses
- Securing the Space
- Conducting feasibility studies
- Arranging startup capital
- Crafting a business plan
- Drafting of employee’s manual
- Drafting of contract documents and other relevant legal documents
- Design of the company’s logo
- Designing and printing of packaging and marketing / Promotional Materials
- Recruitment of employees
- Procurement of furniture, electronic appliances, and bakery equipment
- Creating an official website for the company
- Health, safety, and fire protection arrangement
- Compilation of the product list
- Arrangement for trainers and training facility
- Establishing a business relationship with vendors
- Arranging delivery vehicle
14. Have a Marketing Plan
Finally, to make your business more profitable, you must have a marketing plan. Additionally, you must have sales promotion strategies. Some of the options you can try to promote your bakery business are listed below
- Launch the business with a grand celebration party.
- Create a website and make an online presence.
- Tap the local market first
- Do some outdoor events for the product promotion
- Create a Logo
- Create the same products in innovative sizes and flavors at different prices.
- In addition, go for the electronic media advertisement to catch the mass consumers.
- You can sponsor relevant events, such as bakery competitions and wedding shows on TV, etc.
- Go for some outdoor or billboard advertising.
- Online promotion is a must. You can promote the products on social media and blogs.
- Finally, establish a solid distribution channel for your product.
Promote your bakery products at nearby retail stores, wholesale if possible. Creating a food blog will surely add value to customers about your business. You can also create a small retail online store to tap a wider audience.