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How To Start A Profitable Bakery

Who could possibly resist a delicious chocolate muffin? Bakeries are essential in just about any country and there are always market openings for you to start your own bakery.

However, much like other businesses, opening a bakery is not cheap. I learnt this myself many years ago when I embarked upon my own business venture. Here I am today to give you some tips that I wish I had known all those years ago.

1. Why Not Try Equipment Financing?

My largest expenditure when I first opened my bakery was equipment. I made sure that my bakery had the latest models of the POS, fridge and dough proofer. Ultimately, I regretted spending so much because it was really the love and labour put into making the goods that mattered and not so much the equipment.

If I had a second chance to open my bakery I would utilise equipment financing. Equipment financing makes sure that you have enough liquid capital for other expenses and it is much cheaper to lease out equipment rather than buy it.

You can even decide how long you will need the equipment so that you can pay for a shorter period of time. This flexible arrangement allows you to experiment around with equipment and find what best suits your recipes as well!

2. Leave Branding To Later

I know you have spent forever deciding on the right graphics for your bakery. But it is not necessary to brand every single item before starting operation. It is actually completely normal to serve your goods in a white paper bag for a few months.

It really is about the quality of the good over the branding. Because since your branding has not been built, your consumers are judging how delicious your baked goods are solely on taste.

Also, what if you find out that it is not the optimal size? Experiment around with your bags before branding them to avoid those losses!

3. Put Your Bakery Out There

A more logical way to build branding for your bakery is to put your business out there for the community.

Participate in events that you can support so that you can hand out samples and introduce your bakery to the neighbourhood. Give out name cards, coupons and engage with your potential customers and encourage them to pay your bakery a visit!

Word of mouth can work wonders and I would not be surprised if your bakery is a neighbourhood favourite after a short few months.

4. What Is Your Break-Even Point?

It is important to get familiar with the numbers. According to research, your variable costs should look like this:

  • 25% for cost of goods (ingredients and packaging)
  • 35% for labour 
  • 30% for overhead
  • 10% for profit

This makes sure that you are making profits at the end of the day. However, it is important to note that you may face losses during your first few years of business and that you should have sufficient capital to tide your business over.

You can also check out the SME funds that your government provides or consider taking up a personal loan!

Actionable Takeaway:

Figure out the unique selling point for your bakery! Make sure that your recipes stand out from the rest. Just one delicious and distinctive desert is often the key to becoming famous!

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