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What Do I Need To Start A Bakery
Baking and selling sweet treats may sound like an interesting business idea, but starting a bakery can be a messy endeavor without the right knowledge and skills.
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While cooking for others to enjoy can be rewarding and passion for baking is essential, your love of the craft will only take you so far. Come find out everything you need to know about starting a bakery business.
All retail bakeries sell baked goods directly to consumers, although some specialize in a specific baked product or service. You can choose from the following types of bakeries:
You should consider diversifying your product range to attract different customers, especially if you mainly sell something seasonal, such as wedding cakes for most occasions during the summer.
The type of bakery you want to use will determine other aspects of the business, such as the space, equipment, and ingredients you need. We will discuss this in detail later.
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Depending on the financial resources available, you can buy or rent a bakery space. Renting a space may be a more affordable option for new entrepreneurs, but buying a commercial property can be a long-term investment.
Your city or state may provide resources for finding business locations. Some also offer incentives like tax credits, so check with your local Small Business Administration office or Small Business Development Center.
Equipment is the second largest start-up expense for bakery owners after rent No matter what baked goods you sell, you can expect to purchase a bakery, commercial oven, and refrigerator. A bakery has large tables, called workbenches, mixers and dishwashers. Costs depend on your bakery’s offerings and the size of the premises.
Many bakery owners buy used equipment first, but some items may be worth buying completely new. A used oven or refrigerator can have lingering odors that can affect baked goods. The pastry case must be free of odor or damage so that the pastries look delicious. If purchasing is prohibited, equipment leasing will allow you to use the equipment you need for a certain period of time, but at the end of that period you will not own it.
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New bakery owners often think they can run the entire business alone, but hiring a manager, especially someone with industry experience, can be a huge help. A manager can take administrative tasks away from you, such as ordering inventory, and train all the workers you hire to make sure products stay consistent.
You can save time and money by hiring experienced employees and training employees. She said finding talented and qualified decorators who can meet deadlines can be difficult, but the right people can be invaluable.
Rent and equipment are usually the biggest expenses for bakery owners, but other running costs can add up. Salaries can be a big expense, depending on how much employees earn based on their skill level.
Economic factors often cause raw material prices to fluctuate, and forecasting your bakery’s inventory costs can be challenging. Natural disasters or weather events in other parts of the country can also affect the prices of raw materials such as wheat and vanilla extract. Buying basic ingredients in bulk also helps reduce inventory costs.
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The price of baked goods usually reflects the work and ingredients required to make them. To determine the cost of the product, estimate the time it takes to make the cake. If the price can withstand the increase, also consider electricity and water costs based on the cost of ingredients and the cost of keeping the bakery open, such as the time it takes to make the cake.
Advertising your bakery is an important step in getting customers in the door. Create social media accounts for your bakery and a website where you can post pictures of baked goods.
Engaging your social media followers with giveaways and contests will encourage people to interact with your brand and learn about your bakery. Make sure your social media output matches the actual experience of your bakery visit. Customers also expect consistency, so your offerings should look and taste the same each time they arrive.
If your personal savings aren’t enough to start a bakery, there are several business financing options that can give you an extra boost. Here are some financing options that may be suitable for new bakery owners.
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The SBA works with credit institutions to guarantee loans to small business owners. You can get an SBA-backed loan of up to $5 million to cover general business expenses. The SBA offers several programs, including the 7(a) loan program and the microloan program, both of which may be attractive to bakery owners.
A 7(a) loan is the SBA’s preferred offering Eligible small business owners can receive up to $5 million with repayment terms ranging from 7 to 25 years. These loans can be used to meet start-up costs or ongoing working capital needs. Microloans are small, with a maximum of $50,000. The SBA sets interest rate limits to prevent lenders from charging large amounts for loans. Competitive rates and terms make SBA loans an attractive financing option for many small business owners.
Alternative online business lenders can be a viable financing option for those who have difficulty obtaining traditional bank loans. Online lenders can accept borrowers with small business tenure and low credit scores. Online loan processing times are usually fast, and some lenders advertise approval within days or hours.
You can apply for term loans, equipment financing, invoice financing, cash advances and lines of credit from online lenders. However, there is a price to pay for quick financing and minimal requirements. Online lenders often charge higher interest rates and shorter repayment terms for loans, usually offering lower amounts than a bank offers.
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Crowdfunding allows business owners to raise capital from family, friends and the general public. Startups sometimes struggle to get business loans without significant experience or collateral, and crowdfunding can be a viable option. Online platforms like GoFundMe, Kickstarter, and Indiegogo allow you to set up a campaign that explains your business and your funding needs. Most platforms collect a fee for using the service and may require you to offer donors access to products or a partnership in your company in exchange for the money.
Fundraising time may be slow as it may take some time to fundraise and you may not raise as much as you hope. Competing with other crowdfunding platforms online can be challenging, but the exposure you get on platforms like GoFundMe or Kickstarter can be valuable in building your customer base.
While a formal background in culinary arts or business management will make starting a bakery easier, it is not a mandatory requirement. Local small business development centers or community colleges can provide training and guidance when deciding on your bakery.
To keep customers coming back, the food quality and store experience must be consistent. The key to maintaining consistency is effective bakery management. If you don’t have extensive experience in the industry, consider hiring a manager who can lead and manage your team or at least teach you how to run a bakery. The baker in you wants to spend your days making chewy cookies and decadent cakes. The entrepreneur in you wants to be your own boss and find out. But a realist knows that you may not have the resources or time to start your own bakery.
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Small businesses like these allow you to bake to your heart’s content, be your own boss and work from home instead of renting an expensive shop and hiring a bunch of staff.
If you’re trying to figure out how to start a bakery business from home, you’re in the right place. Here’s a step-by-step guide to turning your home kitchen into a small-scale production powerhouse.
A home bakery is a business, which means it is still subject to state and local food, business licensing and tax laws. Additionally, the sale of household foodstuffs is subject to a shorter set of laws.
Here are some general guidelines, but laws vary from place to place, so be sure to check with your local food and business regulator before proceeding!
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Home bakery is usually covered under the Act as Cottage Food. This classification distinguishes home bakeries from commercial or retail operations with specific store or production kitchens. Commercial bakeries must meet certain equipment and sanitation requirements, while cottage food operations are exempt from many of these regulations.
Cottage food is regulated by the state, but